Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2021 | |
Document and Entity Information [Abstract] | |
Document Type | S-1 |
Entity Registrant Name | iSpecimen Inc. |
Entity Emerging Growth Company | true |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Ex Transition Period | false |
Entity Central Index Key | 0001558569 |
Amendment Flag | false |
Balance Sheets
Balance Sheets - USD ($) | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | |||||||||
Cash | $ 9,790,732 | $ 695,909 | $ 53,893 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $108,096 and $0 at December 31, 2020 and 2019, respectively | 2,718,682 | 1,526,392 | 833,580 | ||||||
Accounts receivable - unbilled | 1,750,744 | 652,761 | 454,576 | ||||||
Prepaid expenses and other current assets | 459,321 | 417,929 | 134,135 | ||||||
Tax credit receivable, current portion | 179,376 | 179,376 | 104,478 | ||||||
Total current assets | 14,898,855 | 3,472,367 | 1,580,662 | ||||||
Property and equipment, net | 44,749 | 75,589 | 119,921 | ||||||
Internally developed software, net | 2,650,867 | 2,634,139 | 2,306,882 | ||||||
Tax credit receivable, net of current portion | 179,522 | ||||||||
Security deposits | 27,601 | 27,601 | 27,601 | ||||||
Total assets | 17,622,072 | 6,209,696 | 4,214,588 | ||||||
Current liabilities: | |||||||||
Accounts payable | 351,424 | 1,792,432 | 737,794 | ||||||
Accrued expenses | 1,025,136 | 810,910 | 471,348 | ||||||
Accrued interest | 7,510 | 3,696,944 | 1,745,515 | ||||||
Convertible notes payable, related parties, net of unamortized debt discount and debt issuance costs | 5,490,811 | 5,350,278 | |||||||
Derivative liability for embedded conversion features | 2,373,000 | 2,214,000 | |||||||
Bridge notes payable | 4,589,228 | 3,586,326 | |||||||
Bridge notes payable, related parties | 1,905,000 | 1,655,000 | |||||||
Note payable, current portion | 604,109 | ||||||||
Deferred revenue | 718,723 | 873,254 | |||||||
Total current liabilities | 2,102,793 | 22,135,688 | 15,760,261 | ||||||
Note payable, net of current portion | 178,899 | ||||||||
Term loan | 3,428,380 | ||||||||
Total liabilities | 5,531,173 | 22,314,587 | 15,760,261 | ||||||
Commitments and contingencies | |||||||||
Total convertible preferred stock | 11,173,076 | 11,173,076 | |||||||
Stockholders' equity (deficit) | |||||||||
Common stock, $0.0001 par value, 16,000,000 shares authorized, 967,213 issued and 936,213 outstanding at December 31, 2020 and 2019 | 697 | 94 | 94 | ||||||
Additional paid-in capital | 48,059,389 | 1,779,698 | 1,686,832 | ||||||
Treasury stock, 31,000 shares at December 31, 2020 and 2019, at cost | (172) | (172) | (172) | ||||||
Accumulated deficit | (35,969,015) | (29,057,587) | (24,405,503) | ||||||
Total stockholders' equity (deficit) | 12,090,899 | $ 10,679,275 | $ (31,219,422) | (27,277,967) | $ (25,696,691) | $ (24,479,488) | $ (24,334,683) | (22,718,749) | $ (18,423,752) |
Total liabilities, convertible preferred stock and stockholders' equity (deficit) | 17,622,072 | 6,209,696 | 4,214,588 | ||||||
Series B Convertible Preferred Stock | |||||||||
Current liabilities: | |||||||||
Total convertible preferred stock | 0 | 0 | 7,999,997 | 7,999,997 | 7,999,997 | 7,999,997 | 7,999,997 | 7,999,997 | 7,999,997 |
Series A-1 Convertible Preferred Stock | |||||||||
Current liabilities: | |||||||||
Total convertible preferred stock | 0 | 0 | 561,041 | 561,041 | 561,041 | 561,041 | 561,041 | 561,041 | 561,041 |
Series A Convertible Preferred Stock | |||||||||
Current liabilities: | |||||||||
Total convertible preferred stock | $ 0 | $ 0 | $ 2,612,038 | $ 2,612,038 | $ 2,612,038 | $ 2,612,038 | $ 2,612,038 | $ 2,612,038 | $ 2,612,038 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Accounts receivable, allowance for doubtful accounts | $ 108,096 | $ 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 16,000,000 | 16,000,000 |
Common Stock, Shares, Issued | 967,213 | 967,213 |
Common Stock, Shares, Outstanding | 936,213 | 936,213 |
Treasury Stock, Shares | 31,000 | 31,000 |
Convertible Preferred Stock | ||
Temporary Equity, Par or Stated Value Per Share | $ 0.0001 | |
Temporary Equity, Shares Authorized | 8,000,000 | |
Series B Convertible Preferred Stock | ||
Temporary Equity, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Temporary Equity, Shares Authorized | 3,200,000 | 3,200,000 |
Temporary Equity, Shares Issued | 572,465 | 572,465 |
Temporary Equity, Shares Outstanding | 572,465 | 572,465 |
Preference in liquidation | $ 10,604,240 | $ 10,604,240 |
Series A-1 Convertible Preferred Stock | ||
Temporary Equity, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Temporary Equity, Shares Authorized | 556,550 | 556,550 |
Temporary Equity, Shares Issued | 100,365 | 100,365 |
Temporary Equity, Shares Outstanding | 100,365 | 100,365 |
Preference in liquidation | $ 780,170 | $ 780,170 |
Series A Convertible Preferred Stock | ||
Temporary Equity, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Temporary Equity, Shares Authorized | 3,427,871 | 3,427,871 |
Temporary Equity, Shares Issued | 618,182 | 618,182 |
Temporary Equity, Shares Outstanding | 618,182 | 618,182 |
Preference in liquidation | $ 3,935,804 | $ 3,935,804 |
Statements of Operations
Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Condensed Statements of Operations | ||||||||||
Revenue | $ 2,718,534 | $ 2,250,147 | $ 8,586,217 | $ 5,466,375 | $ 8,184,106 | $ 4,298,350 | ||||
Operating expenses: | ||||||||||
Cost of revenue | 913,833 | 903,862 | 4,026,680 | 2,032,111 | 3,585,477 | 2,127,900 | ||||
Technology | 543,581 | 413,381 | 1,315,331 | 1,131,695 | 1,426,473 | 993,329 | ||||
Sales and marketing | 513,107 | 506,641 | 1,690,085 | 1,305,897 | 1,775,347 | 1,413,059 | ||||
Supply development | 171,595 | 133,007 | 383,864 | 395,200 | 495,967 | 792,778 | ||||
Fulfillment | 399,145 | 241,785 | 955,516 | 642,140 | 853,450 | 914,633 | ||||
General and administrative | 1,636,346 | 774,550 | 4,144,989 | 1,431,262 | 2,453,772 | 1,936,740 | ||||
Total operating expenses | 4,177,607 | 2,973,226 | 12,516,465 | 6,938,305 | 10,590,486 | 8,178,439 | ||||
Loss from operations | (1,459,073) | (723,079) | (3,930,248) | (1,471,930) | (2,406,380) | (3,880,089) | ||||
Other income (expense), net | ||||||||||
Interest expense | (75,922) | (469,477) | (2,062,548) | (1,517,697) | (2,096,795) | (1,724,450) | ||||
Change in fair value of derivative liability | (54,000) | (271,000) | (76,000) | (159,000) | 551,000 | |||||
Change in fair value of derivative liability on bridge notes and bridge notes, related parties | 1,582,700 | |||||||||
Gain (loss) on extinguishment of bridge notes and bridge notes, related parties | (2,740,425) | |||||||||
Loss on extinguishment of convertible notes and convertible notes, related parties | (260,185) | |||||||||
Gain on extinguishment of note payable | 788,156 | |||||||||
Other income | 9,654 | 168,859 | ||||||||
Other expense, net | (21,687) | (21,756) | 6,691 | |||||||
Interest income | 437 | 630 | ||||||||
Interest income | 3,659 | 87 | 3,878 | 396 | ||||||
Other expense, net | (93,950) | (523,390) | (2,981,180) | (1,586,610) | (2,245,704) | (1,003,961) | ||||
Net loss before benefit from income taxes | (1,553,023) | (1,246,469) | (6,911,428) | (3,058,540) | (4,652,084) | (4,884,050) | ||||
Benefit from income taxes | 0 | 157,000 | ||||||||
Net loss | $ (1,553,023) | $ (1,394,914) | $ (3,963,491) | $ (1,246,469) | $ (174,092) | $ (1,637,979) | $ (6,911,428) | $ (3,058,540) | $ (4,652,084) | $ (4,727,050) |
Net loss per share | ||||||||||
Basic and diluted (in dollar per share) | $ (0.22) | $ (1.33) | $ (2.17) | $ (3.27) | $ (4.97) | $ (5.05) | ||||
Weighted average common shares outstanding | ||||||||||
Basic and diluted (in shares) | 6,960,330 | 936,213 | 3,190,060 | 936,213 | 936,213 | 936,096 |
Statements of Changes in Conver
Statements of Changes in Convertible Preferred Stock and Stockholders' Deficit - USD ($) | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated DeficitCumulative Effect, Period of Adoption, Adjustment [Member] | Accumulated Deficit | Series B Convertible Preferred Stock | Series A-1 Convertible Preferred Stock | Series A Convertible Preferred Stock | Cumulative Effect, Period of Adoption, Adjustment [Member] | Total |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Cumulative effect from adoption of ASC 606 | $ 94 | $ (172) | $ 1,322,779 | $ (19,746,453) | $ (18,423,752) | |||||
Balance at the beginning at Dec. 31, 2018 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | |||||||
Balance at the beginning (in shares) at Dec. 31, 2018 | 572,465 | 100,365 | 618,182 | |||||||
Balances at the end at Dec. 31, 2019 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | 11,173,076 | ||||||
Balances at the end (in shares) at Dec. 31, 2019 | 572,465 | 100,365 | 618,182 | |||||||
Balance at the beginning at Dec. 31, 2018 | $ 94 | $ (172) | 1,322,779 | (19,746,453) | $ (18,423,752) | |||||
Balance at the beginning (in shares) at Dec. 31, 2018 | 935,651 | 31,000 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Issuance of common stock through exercise of warrants (in shares) | 0 | |||||||||
Issuance of common stock through exercise of stock options | 3,674 | $ 3,674 | ||||||||
Issuance of common stock through exercise of stock options (in shares) | 562 | 562 | ||||||||
Share-based compensation expense | 360,379 | $ 360,379 | ||||||||
Net loss | (4,727,050) | (4,727,050) | ||||||||
Balance at the end at Dec. 31, 2019 | $ 94 | $ (172) | 1,686,832 | $ 68,000 | (24,405,503) | $ 68,000 | (22,718,749) | |||
Balance at the end (in shares) at Dec. 31, 2019 | 936,213 | 31,000 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Cumulative effect from adoption of ASC 606 | $ 94 | $ (172) | 1,686,832 | 68,000 | (24,405,503) | 68,000 | (22,718,749) | |||
Balances at the end at Mar. 31, 2020 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | |||||||
Balances at the end (in shares) at Mar. 31, 2020 | 572,465 | 100,365 | 618,182 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Share-based compensation expense | 22,045 | 22,045 | ||||||||
Net loss | (1,637,979) | (1,637,979) | ||||||||
Balance at the end at Mar. 31, 2020 | $ 94 | $ (172) | 1,708,877 | (26,043,482) | (24,334,683) | |||||
Balance at the end (in shares) at Mar. 31, 2020 | 936,213 | 31,000 | ||||||||
Balance at the beginning at Dec. 31, 2019 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | 11,173,076 | ||||||
Balance at the beginning (in shares) at Dec. 31, 2019 | 572,465 | 100,365 | 618,182 | |||||||
Balances at the end at Sep. 30, 2020 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | |||||||
Balances at the end (in shares) at Sep. 30, 2020 | 572,465 | 100,365 | 618,182 | |||||||
Balance at the beginning at Dec. 31, 2019 | $ 94 | $ (172) | 1,686,832 | 68,000 | (24,405,503) | 68,000 | (22,718,749) | |||
Balance at the beginning (in shares) at Dec. 31, 2019 | 936,213 | 31,000 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Net loss | (3,058,540) | |||||||||
Balance at the end at Sep. 30, 2020 | $ 94 | $ (172) | 1,767,430 | (27,464,043) | (25,696,691) | |||||
Balance at the end (in shares) at Sep. 30, 2020 | 936,213 | 31,000 | ||||||||
Balance at the beginning at Dec. 31, 2019 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | 11,173,076 | ||||||
Balance at the beginning (in shares) at Dec. 31, 2019 | 572,465 | 100,365 | 618,182 | |||||||
Balances at the end at Dec. 31, 2020 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | 11,173,076 | ||||||
Balances at the end (in shares) at Dec. 31, 2020 | 572,465 | 100,365 | 618,182 | |||||||
Balance at the beginning at Dec. 31, 2019 | $ 94 | $ (172) | 1,686,832 | $ 68,000 | (24,405,503) | $ 68,000 | $ (22,718,749) | |||
Balance at the beginning (in shares) at Dec. 31, 2019 | 936,213 | 31,000 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Issuance of common stock through exercise of warrants (in shares) | 0 | |||||||||
Share-based compensation expense | 92,866 | $ 92,866 | ||||||||
Net loss | (4,652,084) | (4,652,084) | ||||||||
Balance at the end at Dec. 31, 2020 | $ 94 | $ (172) | 1,779,698 | (29,057,587) | (27,277,967) | |||||
Balance at the end (in shares) at Dec. 31, 2020 | 936,213 | 31,000 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Cumulative effect from adoption of ASC 606 | $ 94 | $ (172) | 1,708,877 | (26,043,482) | (24,334,683) | |||||
Balance at the beginning at Mar. 31, 2020 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | |||||||
Balance at the beginning (in shares) at Mar. 31, 2020 | 572,465 | 100,365 | 618,182 | |||||||
Balances at the end at Jun. 30, 2020 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | |||||||
Balances at the end (in shares) at Jun. 30, 2020 | 572,465 | 100,365 | 618,182 | |||||||
Balance at the beginning at Mar. 31, 2020 | $ 94 | $ (172) | 1,708,877 | (26,043,482) | (24,334,683) | |||||
Balance at the beginning (in shares) at Mar. 31, 2020 | 936,213 | 31,000 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Share-based compensation expense | 29,287 | 29,287 | ||||||||
Net loss | (174,092) | (174,092) | ||||||||
Balance at the end at Jun. 30, 2020 | $ 94 | $ (172) | 1,738,164 | (26,217,574) | (24,479,488) | |||||
Balance at the end (in shares) at Jun. 30, 2020 | 936,213 | 31,000 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Cumulative effect from adoption of ASC 606 | $ 94 | $ (172) | 1,738,164 | (26,217,574) | (24,479,488) | |||||
Balances at the end at Sep. 30, 2020 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | |||||||
Balances at the end (in shares) at Sep. 30, 2020 | 572,465 | 100,365 | 618,182 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Share-based compensation expense | 29,266 | 29,266 | ||||||||
Net loss | (1,246,469) | (1,246,469) | ||||||||
Balance at the end at Sep. 30, 2020 | $ 94 | $ (172) | 1,767,430 | (27,464,043) | (25,696,691) | |||||
Balance at the end (in shares) at Sep. 30, 2020 | 936,213 | 31,000 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Cumulative effect from adoption of ASC 606 | $ 94 | $ (172) | 1,767,430 | (27,464,043) | (25,696,691) | |||||
Cumulative effect from adoption of ASC 606 | 94 | (172) | 1,779,698 | (29,057,587) | (27,277,967) | |||||
Balance at the beginning at Dec. 31, 2020 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | 11,173,076 | ||||||
Balance at the beginning (in shares) at Dec. 31, 2020 | 572,465 | 100,365 | 618,182 | |||||||
Balances at the end at Mar. 31, 2021 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | |||||||
Balances at the end (in shares) at Mar. 31, 2021 | 572,465 | 100,365 | 618,182 | |||||||
Balance at the beginning at Dec. 31, 2020 | $ 94 | $ (172) | 1,779,698 | (29,057,587) | (27,277,967) | |||||
Balance at the beginning (in shares) at Dec. 31, 2020 | 936,213 | 31,000 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Share-based compensation expense | 22,036 | 22,036 | ||||||||
Net loss | (3,963,491) | (3,963,491) | ||||||||
Balance at the end at Mar. 31, 2021 | $ 94 | $ (172) | 1,801,734 | (33,021,078) | (31,219,422) | |||||
Balance at the end (in shares) at Mar. 31, 2021 | 936,213 | 31,000 | ||||||||
Balance at the beginning at Dec. 31, 2020 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | 11,173,076 | ||||||
Balance at the beginning (in shares) at Dec. 31, 2020 | 572,465 | 100,365 | 618,182 | |||||||
Balances at the end at Sep. 30, 2021 | $ 0 | $ 0 | $ 0 | |||||||
Balances at the end (in shares) at Sep. 30, 2021 | 0 | 0 | 0 | |||||||
Balance at the beginning at Dec. 31, 2020 | $ 94 | $ (172) | 1,779,698 | (29,057,587) | (27,277,967) | |||||
Balance at the beginning (in shares) at Dec. 31, 2020 | 936,213 | 31,000 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Net loss | (6,911,428) | |||||||||
Balance at the end at Sep. 30, 2021 | $ 697 | $ (172) | 48,059,389 | (35,969,015) | 12,090,899 | |||||
Balance at the end (in shares) at Sep. 30, 2021 | 6,965,758 | 31,000 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Cumulative effect from adoption of ASC 606 | $ 94 | $ (172) | 1,801,734 | (33,021,078) | (31,219,422) | |||||
Balance at the beginning at Mar. 31, 2021 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | |||||||
Balance at the beginning (in shares) at Mar. 31, 2021 | 572,465 | 100,365 | 618,182 | |||||||
Convertible preferred Stock | ||||||||||
Conversion of redeemable convertible preferred stock into common stock upon initial public offering | $ (7,999,997) | $ (561,041) | $ (2,612,038) | |||||||
Conversion of redeemable convertible preferred stock into common stock upon initial public offering (in shares) | (572,465) | (100,365) | (618,182) | |||||||
Balances at the end at Jun. 30, 2021 | $ 0 | $ 0 | $ 0 | |||||||
Balances at the end (in shares) at Jun. 30, 2021 | 0 | 0 | 0 | |||||||
Balance at the beginning at Mar. 31, 2021 | $ 94 | $ (172) | 1,801,734 | (33,021,078) | (31,219,422) | |||||
Balance at the beginning (in shares) at Mar. 31, 2021 | 936,213 | 31,000 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Issuance of common stock through exercise of stock options | $ 4 | 39,629 | 39,633 | |||||||
Issuance of common stock through exercise of stock options (in shares) | 39,461 | |||||||||
Share-based compensation expense | 28,374 | 28,374 | ||||||||
Net loss | (1,394,914) | (1,394,914) | ||||||||
Balance at the end at Jun. 30, 2021 | $ 657 | $ (172) | 45,094,782 | (34,415,992) | 10,679,275 | |||||
Balance at the end (in shares) at Jun. 30, 2021 | 6,565,729 | 31,000 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Cumulative effect from adoption of ASC 606 | $ 657 | $ (172) | 45,094,782 | (34,415,992) | 10,679,275 | |||||
Balances at the end at Sep. 30, 2021 | $ 0 | $ 0 | $ 0 | |||||||
Balances at the end (in shares) at Sep. 30, 2021 | 0 | 0 | 0 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Issuance of common stock through exercise of warrants (in shares) | 17,889 | |||||||||
Issuance of common stock through exercise of stock options | 4,761 | 4,761 | ||||||||
Issuance of common stock through exercise of stock options (in shares) | 4,761 | |||||||||
Share-based compensation expense | $ 4 | 399,817 | 399,821 | |||||||
Net loss | (1,553,023) | (1,553,023) | ||||||||
Balance at the end at Sep. 30, 2021 | $ 697 | $ (172) | 48,059,389 | (35,969,015) | 12,090,899 | |||||
Balance at the end (in shares) at Sep. 30, 2021 | 6,965,758 | 31,000 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||
Cumulative effect from adoption of ASC 606 | $ 697 | $ (172) | $ 48,059,389 | $ (35,969,015) | $ 12,090,899 |
Statements of Cash Flows
Statements of Cash Flows | 12 Months Ended |
Dec. 31, 2019USD ($) | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |
Net loss | $ (4,727,050) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
Share-based compensation | 360,379 |
Amortization of internally developed software | 577,605 |
Depreciation of property and equipment | 57,360 |
Amortization of discount and debt issuance costs on convertible notes | 551,993 |
Change in fair value of derivative liabilities | (551,000) |
Change in operating assets and liabilities: | |
Accounts receivable | 192,253 |
Accounts receivable-unbilled | (305,576) |
Prepaid expenses and other current assets | 13,170 |
Tax credit receivable | (157,000) |
Accounts payable | 40,882 |
Accrued expenses | 94,725 |
Accrued interest | 1,172,359 |
Net cash used in operating activities | (2,679,900) |
CASH FLOWS FROM INVESTING ACTIVITIES: | |
Purchase of property and equipment | (28,183) |
Capitalization of internally developed software | (1,447,062) |
Net cash used in investing activities | (1,475,245) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
Proceeds from issuance of bridge notes payable | 3,075,000 |
Proceeds from exercise of stock options | 3,674 |
Net cash provided by financing activities | 3,078,674 |
Net increase in cash | (1,076,471) |
Cash at beginning of period | 1,130,364 |
Cash at end of period | 53,893 |
Supplemental disclosure of non-cash investing and financing activities: | |
Debt issuance costs included in accrued expenses | $ (3,862) |
NATURE OF BUSINESS
NATURE OF BUSINESS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | ||
NATURE OF BUSINESS | 1. NATURE OF BUSINESS AND BASIS OF PRESENTATION Business iSpecimen Inc. (“iSpecimen” or the “Company”) was incorporated in 2009 under the laws of the state of Delaware. The Company has developed and launched a proprietary online marketplace platform that connects medical researchers who need access to subjects, samples, and data, with hospitals, laboratories, and other organizations who have access to them. iSpecimen is a technology-driven company founded to address a critical challenge: how to connect life science researchers who need human biofluids, tissues, and living cells (“biospecimens”) for their research, with biospecimens available (but not easily accessible) in healthcare provider organizations worldwide. The Company’s proprietary platform - the iSpecimen Marketplace platform is designed to help solve this problem and transform the biospecimen procurement process to accelerate medical discovery. The Company is headquartered in Lexington, Massachusetts and its principal market is North America. The Company operates as one operating and reporting segment. Basis of Presentation The accompanying unaudited interim condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) as determined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for interim financial information, and, pursuant to the rules and regulations of Article 10 of Regulation S-X of the Securities Act of 1933, as amended (the “Securities Act”), published by the Securities and Exchange Commission (“SEC”) for interim financial statements. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited interim condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results of operations for the periods presented. They may not include all of the information and footnotes required by GAAP for complete financial statements. Therefore, these financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2020 included in the Company’s final prospectus dated June 16, 2021, pursuant to Rule 424(b) under the Securities Act , as amended (the “Prospectus”). The results of operations for any interim periods are not necessarily indicative of the results that may be expected for the entire fiscal year or any other interim period. On March 30, 2021, the Company effected a 1-for-5.545 Initial Public Offering On June 21, 2021, the Company consummated its initial public offering (“IPO”) in which the Company issued and sold 2,250,000 shares of its common stock at a public offering price of $8.00 per share, for aggregate gross proceeds of $18 million. The net proceeds from the IPO were $15.7 million after deducting underwriting discounts of $1.7 million and other offering costs of $0.6 million. The shares of common stock commenced trading on the Nasdaq Stock Market LLC on June 17, 2021 under the ticker symbol “ISPC.” On July 1, 2021, the Company sold an additional 337,500 shares of its common stock, pursuant to the underwriters’ full exercise of the overallotment option, at a public offering price of $8.00 per share, for aggregate gross proceeds of $2.7 million. In aggregate, the Company received approximately $18.2 million after deducting for all underwriting discounts of $1.9 million and other offering costs of $0.6 million. Upon closing of the IPO, all of the then-outstanding shares of redeemable convertible preferred stock automatically converted into common stock at a ratio of 1:1, resulting in the issuance of 1,291,012 shares of common stock. Subsequent to the closing of the IPO, there were no shares of convertible preferred stock outstanding. 1. NATURE OF BUSINESS AND BASIS OF PRESENTATION (continued) Upon closing of the IPO, the Company converted all $5.5 million of its outstanding principal and all unpaid and accrued interest of approximately $1.3 million of the Convertible Notes (as defined below) into 1,206,614 shares of common stock at a conversion price of $5.60 per share. The Company incurred an approximately $0.3 million loss on conversion of the Convertible Notes during the nine months ended September 30, 2021. As of September 30, 2021, there were no Convertible Notes or Bridge Notes outstanding. Additionally, upon closing of the IPO, the Company converted $4 million of its outstanding principal and accrued and unpaid interest of approximately $0.7 million of the Bridge Notes (as defined below), as amended, into 842,429 shares of common stock at a conversion price of $5.60 per share. During the three months ended September 30, 2021, the Company paid off the remaining principal balance of $3.0 million on the Bridge Notes and accrued interest of $64,110. Liquidity and Going Concern The Company has recognized recurring losses and at September 30, 2021, the Company had working capital of $12,796,062, an accumulated deficit of $35,969,015, cash of $9,790,732 and accounts payable and accrued expenses of $1,376,560. On August 13, 2021, the Company entered into a loan agreement (the "Term Loan") and as a result, received proceeds of $3.5 million. This funding was used to pay the remaining balance of $3.0 million on the Bridge Notes. As of September 30, 2021, there were no Bridge Notes outstanding. Management believes that the Company’s existing cash and cash equivalents, which include the net proceeds from the IPO and the proceeds of the Term Loan, will allow the Company to continue its operations for at least the next 12 months from the date these financial statements are issued and therefore the conditions raising substantial doubt raised in prior periods has been alleviated. As a result of recurring losses, the continued viability of the Company beyond November 2022 may be dependent on its ability to continue to raise additional capital to finance its operations. Impact of the COVID-19 Pandemic the Company's Operations In December 2019, the novel coronavirus SARS-Cov2, or COVID-19 outbreak, was reported to have surfaced in China. On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency due to the risks to the international community as the virus spread globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The Company is subject to the risks arising from the COVID-19 outbreak’s social and economic impacts on the healthcare services industry. The Company's management believes that the social and economic impacts could have a significant impact on future financial condition, liquidity, and results of operations, which include but are not limited to the following: (i) restrictions on in-person activities arising from shelter-in-place, or similar isolation orders; (ii) inability to source specimens from the Company's suppliers arising from shelter-in-place, or similar isolation orders; (iii) reduced capacity if personnel are infected or quarantined; (iv) decline in researcher demand for specimens; and (v) deteriorating economic conditions, such as increased unemployment rates and recessionary conditions. The COVID-19 outbreak has continued to impact the Company’s operations during the nine months ended September 30, 2021. In response to the COVID-19 outbreak, the Company initially implemented measures to help stabilize revenue as well as measures to reduce costs. To stabilize revenue, the Company added COVID-19 samples to its product line to support growing research in this area and also implemented mobile phlebotomy to more easily access research subjects. While research continues in this area, through September 2021, specimen requests for COVID-19 samples are declining, when compared to the same period in 2020. Given the evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company expects this matter to continue to have an impact on its results of operations, financial condition, and liquidity. However, the extent of the financial impact and the duration cannot be reasonably estimated at this time. | 1. iSpecimen Inc. (“iSpecimen” or the “Company”) was incorporated in 2009 under the laws of the state of Delaware. The Company has developed and launched a proprietary online marketplace platform that connects medical researchers who need access to subjects, samples, and data, with hospitals, laboratories, and other organizations who have access to them. iSpecimen is a technology-driven company founded to address a critical challenge: how to connect life science researchers who need human biofluids, tissues, and living cells (“biospecimens”) for their research, with biospecimens available (but not easily accessible) in healthcare provider organizations worldwide. The iSpecimen Marketplace platform was designed to solve this problem and transform the biospecimen procurement process to accelerate medical discovery. The Company is headquartered in Lexington, Massachusetts and its principal market is North America. The Company operates as one operating and reporting segment. Liquidity and Going Concern The Company has recognized recurring losses. At December 31, 2020, the Company had a working capital deficit of $18,663,321, an accumulated deficit of $29,057,587, cash of $695,909 and accounts payable and accrued expenses of $2,603,342. In addition, the Company’s bridge notes payable totaling $6,494,228 mature on or before April 30, 2021. Since inception, the Company has relied upon raising capital to finance operations and at December 31, 2020, the Company did not have sufficient capital to fund its operations. The future success of the Company is dependent on its ability to successfully obtain additional working capital and to ultimately attain profitable operations. In addition, the Company plans to add additional customers and suppliers to increase revenue and to manage expenditures to improve its financial position and fund operations. However, as certain elements of the Company’s operating plan are outside of the Company’s control, they cannot be considered probable. The Company may seek to fund its operations through public equity, private equity, or debt financings, as well as other sources. The Company may obtain and renegotiate debt financing to support operations. However, the Company may be unable to raise additional capital, or if it is able to raise additional capital, it may be unable to do so on commercially favorable terms. The Company’s failure to raise capital, or enter into such other arrangements if and when needed, would have a negative impact on the Company’s business, results of operations and financial condition and the Company’s ability to continue as a going concern. If the Company does not receive additional capital from future anticipated capital raises, its business plan will be scaled down. These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year after the date the financial statements are issued. Management’s plan to mitigate the conditions that raise substantial doubt include renegotiation of maturing debt, delaying certain projects and capital expenditures and eliminating certain future operating expenses in order to fund operations at reduced levels for the Company to continue as a going concern. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above. 1. Impact of the COVID-19 Pandemic on our Operations In December 2019, the novel coronavirus SARS-Cov2, or COVID-19 outbreak, was reported to have surfaced in China. On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency due to the risks to the international community as the virus spread globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. iSpecimen is subject to the risks arising from the COVID-19 outbreak’s social and economic impacts on the healthcare services industry. Our management believes that the social and economic impacts, which include but are not limited to the following, could have a significant impact on future financial condition, liquidity, and results of operations: (i) restrictions on in-person activities arising from shelter-in-place, or similar isolation orders; (ii) inability to source specimens from our suppliers arising from shelter-in-place, or similar isolation orders; (iii) reduced capacity if personnel are infected or quarantined; (iv) decline in researcher demand for specimens; and (v) deteriorating economic conditions, such as increased unemployment rates and recessionary conditions. The COVID-19 outbreak has impacted the Company’s operations during the year ended December 31, 2020. In response to the COVID-19 outbreak, the Company implemented measures to help stabilize revenue as well as measures to reduce costs. To stabilize revenue, the Company added COVID-19 samples to its product line to support growing research in this area and also implemented mobile phlebotomy to more easily access research subjects. Cost saving measures included the elimination of non-essential travel and in-person training activities, the deferral of certain planned expenditures, and the furlough of a small number of employees in August 2020. Given the evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company expects this matter to continue to have an impact on its results of operations, financial condition, and liquidity. However, the extent of the financial impact and the duration cannot be reasonably estimated at this time. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company’s significant accounting policies and recent accounting standards are summarized in Note 2 of the Company’s financial statements for the year ended December 31, 2020. There were no significant changes to these accounting policies during the nine months ended September 30, 2021. Use of Estimates The preparation of the Company’s unaudited interim condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company utilizes certain estimates in the determination of the fair value of its warrants, deferred tax valuation allowances, revenue recognition, share-based compensation, derivative liabilities for embedded conversion features, and accrued expenses amongst others. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results could differ from such estimates. Off-Balance Sheet Risk and Concentrations of Credit Risk The Company has no significant off-balance sheet risks, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Cash accounts are maintained at financial institutions that potentially subject the Company to concentrations of credit risk. At September 30, 2021 and December 31, 2020, substantially all of the Company’s cash was deposited in accounts at one financial institution. The Company maintains its cash deposits, which at times may exceed the federally insured limits, with a reputable financial institution and, accordingly, the Company believes such funds are subject to minimal credit risk. Concentration of credit risk with respect to accounts receivable is typically related to customers who account for a significant portion of revenue. During the three months ended September 30, 2021, one customer represented approximately 16% of the Company’s revenues. During the three months ended September 30, 2020, two customers represented approximately 10% and 32% of the Company’s revenues. During the nine months ended September 30, 2021, one customer represented approximately 10% of the Company’s revenues. During the nine months ended September 30, 2020, two customers represented approximately 21% and 15% of the Company’s revenues. As of September 30, 2021, three customers each represented accounts As of September 30, 2021, three customers represented 23%, 17%, and 13%, respectively, of the Company’s unbilled accounts receivable balance. As of September 30, 2020, there were no customers with unbilled accounts receivable balances in excess of 10% of the total. During the three months ended September 30, 2021 and 2020, revenue attributable to customers located in foreign countries represented approximately 4% and 6% of revenue, respectively. During the nine months ended September 30, 2021 and 2020, revenue attributable to customers located in foreign countries represented approximately 5% and 6% of revenue, respectively. As of September 30, 2021 and 2020, accounts receivable attributable to customers located in foreign countries represented approximately 4% and 8% of accounts receivable, respectively. As of September 30, 2021 and 2020, accounts receivable-unbilled attributable to customers located in foreign countries represented approximately 5% and 12% of accounts receivable-unbilled, respectively. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: Ø Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets. Ø Level 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Ø Level 3 — Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. For certain financial instruments, including cash, accounts receivable, and accounts payable, the carrying amounts approximate their fair values as of September 30, 2021 and December 31, 2020 because of their short-term nature. The liability in connection with conversion features included within certain of the Company’s Convertible Notes and Bridge Notes was classified as a derivative liability for embedded conversion features on the balance sheets and were considered to be a Level 3 liability. Deferred Initial Public Offering Costs The Company capitalizes certain legal, professional, accounting and other third-party fees that are directly associated with in-process equity issuances as deferred initial public offering costs until such equity issuances are consummated. After consummation of the equity issuance, these costs are recorded as a reduction in the capitalized amount associated with the equity issuance. Should the equity issuance be abandoned, the deferred initial public offering costs would be expensed immediately as a charge to operating expenses in the consolidated statement of operations. On June 21, 2021, the Company consummated its IPO; accordingly, the Company recognized deferred initial public offering costs of approximately $0.6 million as a reduction from gross proceeds associated with the IPO through additional paid-in capital in the accompanying condensed consolidated balance sheet. The Company recorded approximately $2.3 million of offering costs in additional paid-in capital in connection with the IPO. Accordingly, there were no deferred offering costs as of September 30, 2021. The Company had approximately $265,000 of deferred offering costs related to the IPO which were recorded in other current assets on the balance sheet as of December 31, 2020. Derivative Liability for Embedded Conversion Features The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivatives to be accounted for separately. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other bifurcated embedded derivative instruments in the convertible instrument, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The result of this accounting treatment is that the fair value of the embedded derivative is recorded as a liability and marked-to-market each balance sheet date, with the change in fair value recorded in the statements of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Revenue Recognition and Accounts Receivable The Company recognizes revenue using the five step approach as follows: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) we satisfy the performance obligations. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The Company generates revenue by procuring various specimens from hospitals, laboratories, and other supply sites, for the Company’s medical research customers using the Company’s proprietary software, the iSpecimen Marketplace, to identify, locate, and ultimately validate the required specimens to the Company’s customers’ requested specifications. The Company’s performance obligation is to procure a specimen meeting the customer specification(s) from a supplier, on a “best efforts” basis, for the Company’s customer at the agreed price per specimen as indicated in the customer contract with the Company. The Company does not currently charge suppliers or customers for the use of the Company’s proprietary software. Each customer will execute a material and data use agreement with the Company or agrees to online purchase terms, each of which includes terms such as specimen and data use, shipment terms, payment and cancellation terms. These are then supplemented by purchase orders that specify specimen requirements including detailed inclusion/exclusion criteria, quantities to be collected, and pricing. Collectively, these customer agreements represent the Company’s contracts with its customer. Generally, contracts have fixed unit pricing. For certain specimen orders, a refundable customer deposit may be required prior to order fulfillment depending on project set-up requirements, presented as deferred revenue. The Company expects to recognize the deferred revenue within the next twelve months. Specimen collections occur at supply sites within the Company’s network. “Collection” is when the specimen has been removed, or “collected” from the patient or donor. A specimen is often collected specifically for a particular Company order. Once collected, the specimen is assigned by the supplier to the Company and control of the specimen passes to the Company. “Accession” is the process whereby a collected specimen and associated data are registered and assigned in the iSpecimen Marketplace to a particular customer order, which can occur while a specimen is at the supplier site or while at the Company site and is when control of the specimen passes to the customer. Suppliers may ship specimens to the Company or directly to the customer, if specimens must be delivered within a short time period (less than 24 hours after collection) or shipping to the Company is not practical. The Company has evaluated principal versus agent considerations as part of the Company’s revenue recognition policy. The Company has concluded that it acts as principal in the arrangement as it manages the procurement process from beginning to end and determines which suppliers will be used to fulfill an order, usually take physical possession of the specimens, set prices for the specimens, and bear the responsibility for customer credit risk. The Company recognizes revenue over time, as the Company has created an asset with no alternative use to the Company which has an enforceable right to payment for performance completed to date. At contract inception, the Company reviews a contract, and related order upon receipt, to determine if the specimen ordered has an alternative use by us. Generally, specimens ordered do not have an alternative future use to the Company and the performance obligation is satisfied when the related specimens are accessioned. The Company uses an output method to recognize revenue for specimens with no alternative future use. The output is measured based on the number of specimens accessioned. In the rare circumstances where specimens do have an alternative future use, the Company's performance obligation is satisfied at the time of shipment. Customers are typically invoiced upon shipment. Depending on the quantity of specimens ordered, it may take several accounting periods to completely fulfill a purchase order. In other words, there can be multiple invoices issued for a single purchase order, reflecting the specimens being accessioned over time. However, specimens are generally shipped as soon as possible after they have been accessioned. Once a specimen that has no alternative future use, and for which the Company has an enforceable right to payment, has been accessioned, the Company records the offset to revenue in accounts receivable — unbilled. Once the specimen has been shipped and invoiced, a reclassification is made from accounts receivable — unbilled to accounts receivable. Customers are generally given fourteen days from the receipt of specimens to inspect the specimens to ensure compliance with specifications set forth in the purchase order documentation. Customers are entitled to either receive replacement specimens or receive reimbursement of payments made for such specimens. The Company has a nominal history of returns for nonacceptance of specimens delivered. When this has occurred, the Company has given the customer a credit for the returns. The Company has not recorded a returns allowance. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The following table summarizes the Company’s revenue for the following periods: Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Specimens – contracts with customers $ 2,671,655 $ 2,223,057 $ 8,448,164 $ 5,408,012 Shipping and other 46,879 27,090 138,053 58,363 Revenue $ 2,718,534 $ 2,250,147 $ 8,586,217 $ 5,466,375 The Company carries its accounts receivable at the invoiced amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable to determine if an allowance for doubtful accounts is necessary, based on economic conditions and each customer’s payment history. Receivables are written off when deemed uncollectible, with any future recoveries recorded as income when received. As of September 30, 2021 and December 31, 2020, the Company had an allowance for doubtful accounts of $141,952 and $108,096, respectively. The Company applies the practical expedient to account for shipping and handling activities as fulfillment cost rather than as a separate performance obligation. Shipping and handling costs incurred are included in cost of revenue. Restricted Stock Units (RSUs) The Company recognizes share-based compensation expense from restricted stock units (RSUs) ratably over the specified vesting period. The fair value of RSUs is determined to be the closing share price of the Company's common stock on the grant date. Common Stock Warrants The Company accounts for common stock warrants as either equity instruments or liabilities, depending on the specific terms of the warrant agreement. The warrants shall be classified as a liability if 1) the underlying shares are classified as liabilities or 2) the entity can be required under any circumstances to settle the warrant by transferring cash or other assets. The measurement of equity-classified nonemployee share-based payments is generally fixed on the grant date and are considered compensatory. For additional discussion on warrants, see Note 9. Net Loss Per Share Basic net loss per share is calculated by dividing net loss applicable to common stockholders by the weighted- average number of shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting the weighted-average number of shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net loss per share calculation, the potential impact of shares to be issued upon conversion of Series A, Series A-1 and Series B preferred stock, stock options, and warrants to purchase common stock are considered to be common stock equivalents, but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share applicable to common stockholders were the same for all periods presented. The table below provides common stock equivalents excluded from diluted net loss per share for the following periods: Nine months ended September 30, 2021 2020 Shares issuable upon conversion of preferred stock — 1,291,012 Shares issuable upon vesting of RSUs 284,267 — Shares issuable upon exercise of stock options 269,770 253,575 Shares issuable upon exercise of Lender Warrant to purchase common stock 12,500 23,309 Shares issuable upon exercise of Underwriter Warrants to purchase common stock 90,000 — 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Recent Accounting Standards From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. The Company has elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The Company’s financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). Use of Estimates The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company utilizes certain estimates in the determination of the fair value of its common stock and warrants, deferred tax valuation allowances, revenue recognition, share-based compensation, and accrued expenses amongst others. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results could differ from such estimates. Off-Balance Sheet Risk and Concentrations of Credit Risk The Company has no significant off-balance sheet risks, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Cash accounts are maintained at financial institutions that potentially subject the Company to concentrations of credit risk. At December 31, 2020 and 2019, substantially all of the Company’s cash was deposited in accounts at one financial institution. The Company maintains its cash deposits, which at times may exceed the federally insured limits, with a reputable financial institution and, accordingly, the Company believes such funds are subject to minimal credit risk. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Concentration of credit risk with respect to accounts receivable is typically related to customers who account for a significant portion of revenue. During 2020, two customers represented approximately 11% and 10% of the Company’s 2020 revenues and comprised 0% and 0% of accounts receivable and 0% and 5% of accounts receivable-unbilled at December 31, 2020. During 2019, three customers represented approximately 20%, 11%, and 10% of the Company’s 2019 revenues and comprised 4%, 44%, and 1% of accounts receivable, and 0%, 0%, and 0% of accounts receivable-unbilled at December 31, 2019. During the years ended December 31, 2020 and 2019, revenue attributable to customers located in foreign countries is approximately 6% and 23% of revenue, respectively. During the years ended December 31, 2020 and 2019, accounts receivable attributable to customers located in foreign countries is approximately 11% and 5% of accounts receivable, respectively. During the years ended December 31, 2020 and 2019, accounts receivable-unbilled attributable to customers located in foreign countries is approximately 0% and 17% of accounts receivable-unbilled, respectively. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: ➢ Level 1 — ➢ Level 2 — ➢ Level 3 — For certain financial instruments, including cash, accounts receivable, and accounts payable, the carrying amounts approximate their fair values as of December 31, 2020 and 2019 because of their short-term nature. The liability in connection with conversion features included within certain of the Company’s convertible notes payable is classified as a derivative liability for embedded conversion features on the balance sheets and is considered to be a Level 3 liability. Derivative Liability for Embedded Conversion Features The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates its convertible notes to determine if those contracts or embedded components of those contracts qualify as derivatives to be accounted for separately. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other bifurcated embedded derivative instruments in the convertible instrument, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The result of this accounting treatment is that the fair value of the embedded derivative is recorded as a liability and marked-to-market each balance sheet date, with the change in fair value recorded in the statements of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Recent Accounting Standards From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company. Accounting Standards Issued, Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses Measurement of Credit Losses on Financial Instruments In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity Revenue Recognition and Accounts Receivable The Company recognizes revenue using the five step approach as follows: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) we satisfy the performance obligations. The Company generates revenue by procuring various specimens from hospitals, laboratories, and other supply sites, for our medical research customers using our proprietary software, the iSpecimen Marketplace, to identify, locate, and ultimately validate the required specimens to our customers’ requested specifications. The Company’s performance obligation is to procure a specimen meeting the customer specification(s) from a supplier, on a “best efforts” basis, for our customer at the agreed price per specimen as indicated in the customer contract with the Company. The Company does not currently charge suppliers or customers for the use of our proprietary software. Each customer will execute a material and data use agreement with the Company or agrees to online purchase terms, each of which includes terms such as specimen and data use, shipment terms, payment and cancellation terms. These are then supplemented by purchase orders that specify specimen requirements including detailed inclusion/exclusion criteria, quantities to be collected, and pricing. Collectively, these customer agreements represent the Company’s contracts with its customer. Generally, contracts have fixed unit pricing. For certain specimen orders, a refundable customer deposit may be required prior to order fulfillment depending on project set-up requirements, presented as deferred revenue. The Company expects to recognize the deferred revenue within the next twelve months. Specimen collections occur at supply sites within our network. “Collection” is when the specimen has been removed, or “collected” from the patient or donor. A specimen is often collected specifically for a particular Company order. Once collected, the specimen is assigned by the supplier to the Company and control of the specimen passes to the Company. “Accession” is the process whereby a collected specimen and associated data are registered and assigned in the iSpecimen Marketplace to a particular customer order, can occur while a specimen is at the supplier site or while at the Company site and is when control of the specimen passes to the customer. Suppliers may ship specimens to the Company or directly to the customer, if specimens must be delivered within a short time period (less than 24 hours after collection) or shipping to the Company is not practical. The Company has evaluated principal versus agent considerations as part of our revenue recognition policy. The Company has concluded that we act as principal in the arrangement as we manage the procurement process from beginning to end and determine which suppliers will be used to fulfill an order, usually take physical possession of the specimens, set prices for the specimens, and bear the responsibility for customer credit risk. The Company recognizes revenue over time, as we have created an asset with no alternative use to the Company and has an enforceable right to payment for performance completed to date. At contract inception, the Company reviews a contract and related order upon receipt to determine if the specimen ordered has an alternative use by us. In the rare circumstances where specimens do have an alternative future use, our performance obligation is satisfied at the time of shipment. Generally, specimens ordered do not have an alternative future use to the Company and the performance obligation is satisfied when the related specimens are accessioned. The Company uses an output method to recognize revenue for specimens with no alternative future use. The output is measured based on the number of specimens accessioned. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Customers are typically invoiced upon shipment. Depending on the quantity of specimens ordered, it may take several accounting periods to completely fulfill a purchase order. In other words, there can be multiple invoices issued for a single purchase order, reflecting the specimens being accessioned over time. However, specimens are generally shipped as soon as possible after they have been accessioned. Once a specimen that has no alternative future use, and for which we have an enforceable right to payment, has been accessioned, we record the offset to revenue in accounts receivable - unbilled. Once the specimen has been shipped and invoiced, a reclassification is made from accounts receivable - unbilled to accounts receivable. Customers are generally given fourteen days from the receipt of specimens to inspect the specimens to ensure compliance with specifications set forth in the purchase order documentation. Customers are entitled to either receive replacement specimens or receive reimbursement of payments made for such specimens. We have a nominal history of returns for nonacceptance of specimens delivered. When this has occurred, we have given the customer a credit for the returns. We have not recorded a returns allowance. The following table summarizes the Company’s revenue for the years ended December 31: 2020 2019 Specimens – contracts with customers $ 8,086,324 $ 4,215,002 Shipping and other 97,782 83,348 Revenue $ 8,184,106 $ 4,298,350 The Company carries its accounts receivable at the invoiced amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable to determine if an allowance for doubtful accounts is necessary, based on economic conditions and each customer’s payment history. Receivables are written off when deemed uncollectible, with any future recoveries recorded as income when received. As of December 31, 2020, and 2019, the Company had an allowance for doubtful accounts of $108,096 and $0, respectively. The Company applies the practical expedient to account for shipping and handling activities as fulfillment cost rather than as a separate performance obligation. Shipping and handling costs incurred are included in cost of revenue. Property and Equipment, net Property and equipment are stated at cost, net of accumulated depreciation and amortization. When an item is sold or retired, the costs and related accumulated depreciation or amortization are eliminated, and the resulting gain or loss, if any, is credited or charged to income in the statement of operations. The Company provides for depreciation and amortization using the straight-line method over the estimated useful lives of the respective assets. A summary of estimated useful lives is as follows: 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 Major improvements are capitalized while replacement, maintenance and repairs which do not improve or extend the lives of the respective assets are expensed as incurred. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Internally Developed Software, net The Company capitalizes certain internal and external costs incurred during the application development stage of internal-use software projects until the software is ready for its intended use. Amortization of the asset commences when the software is complete and placed into service and is recorded in operating expenses. The Company amortizes completed internal-use software over its estimated useful life of five years on a straight-line basis. Costs incurred during the planning, training and post-implementation stages of the software development life cycle are classified as technology and are expensed to operations as incurred. Impairment of Long-Lived Assets Management reviews long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable. An impairment loss is recognized when expected cash flows are less than the asset’s carrying value. Long-lived assets consist of property and equipment and internal-use software. No impairment charges were recorded for the years ended December 31, 2020 and 2019. Debt Issuance Costs Debt issuance costs are recorded net against the related debt and amortized to interest expense over the life of the related debt. During the years ended December 31, 2020 and 2019, amortized debt issuance costs of $9,185 and $7,252, respectively, were recorded as a component of interest expense. Cost of Revenue Cost of revenue primarily consists of the purchase price to acquire specimens from hospitals and laboratories; inbound and outbound shipping costs; supply costs related to samples; payment processing and related transaction costs; and costs paid to the supply sites to support sample collections. Shipping costs upon receipt of products from suppliers are recognized in cost of revenue. For the year ended December 31, 2020, the Company acquired approximately 21% of specimens from one vendor. For the year ended December 31, 2019, the Company acquired approximately 22%, 10%, and 10% of specimens from three vendors. Technology Technology costs include payroll and related expenses for employees involved in the development and implementation of iSpecimen’s technology; software license and system maintenance fees; outsourced data center costs; data management costs; depreciation and amortization; and other expenses necessary to support technology initiatives. Collectively, these costs reflect the investments the Company makes in order to offer a wide variety of products and services to customers. Technology and data costs are generally expensed as incurred. A portion of technology costs are related to research and development. Costs incurred for research and development are expensed as incurred, except for software development costs that are eligible for capitalization. Research and development costs primarily include salaries and related expenses, in addition to the cost of external service providers. For the years ended December 31, 2020 and 2019, research and development costs totaled $319,235 and $155,244, respectively. Sales and Marketing Sales and marketing costs primarily consist of payroll and related expenses for personnel engaged in marketing and selling activities, including salaries and sales commissions; travel expenses; public relations and social media costs; ispecimen.com website development and maintenance costs; search engine optimization fees; advertising costs; direct marketing costs; trade shows and events fees; marketing and customer relationship management software; and other marketing-related costs. Advertising expenses consist primarily of marketing, public relations, and promotional materials. Advertising costs are expensed as incurred and totaled $111,304 and $168,115 for the years ended December 31, 2020 and 2019, respectively. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Supply Development The Company has agreements with supply partners that allow the Company to procure specimens from them and distribute these samples to customers. Supply development costs primarily include payroll and related expenses for personnel engaged in the development and management of this supply network; related travel expenses; regulatory compliance costs to support the network; and other supply development and management costs. Fulfillment Fulfillment costs primarily consist of those costs incurred in operating and staffing operations and customer service teams, including costs attributable to assess the feasibility of specimen requests; creating and managing orders; picking non-capitalizable, packaging, and preparing customer orders for shipment; responding to inquiries from customers; and laboratory equipment and supplies. General and Administrative General and administrative expenses primarily consist of costs for corporate functions, including payroll and related expenses for human resources, legal, finance, and executive teams; associated software licenses; facilities and equipment expenses, such as depreciation and amortization expense and rent, outside legal expenses, insurance costs, and other general and administrative costs. Share-Based Compensation The Company records share-based compensation for options granted to employees, non-employees, and to members of the board of directors for their services on the board of directors based on the grant date fair value of awards issued, and the expense is recorded on a straight-line basis over the requisite service period. Forfeitures are recognized when they occur. The Company uses the Black-Scholes-Merton option pricing model to determine the fair value of stock options. The use of the Black-Scholes-Merton option-pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock. The Company has concluded that its historical share option exercise experience does not provide a reasonable basis upon which to estimate expected term. Therefore, the expected term was determined according to the simplified method, which is the average of the vesting tranche dates and the contractual term. Due to the lack of company specific historical and implied volatility data, the estimate of expected volatility is primarily based on the historical volatility of a group of similar companies that are publicly traded. For these analyses, companies with comparable characteristics are selected, including enterprise value and position within the industry, and with historical share price information sufficient to meet the expected life of the share-based awards. The Company computes the historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of its share-based awards. The risk-free interest rate is determined by reference to U.S. Treasury zero-coupon issues with remaining maturities similar to the expected term of the options. The Company has not paid, and does not anticipate paying, cash dividends on shares of its common stock. In order to determine the fair value of the Company’s common stock, the Company considered, among other things, contemporaneous valuations of the Company’s common stock, the Company’s business, financial condition and results of operations, including related industry trends affecting its operations; the likelihood of achieving a liquidity event, such as an initial public offering, or IPO, or sale, given prevailing market conditions; the lack of marketability of the Company’s common stock; the market performance of comparable publicly traded companies; and U.S. and global economic and capital market conditions. The fair value of the Company’s common stock was estimated to be $3.83 and $1.61 at December 31, 2020 and 2019, respectively. The Company conducted multiple valuations throughout the year ended December 31, 2020 and the estimate of the fair value of the Company’s common stock ranged from $0.39 and $3.83 as a result of the changes in the factors described above. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Income Taxes The Company provides for income taxes using the asset and liability method. The Company provides deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the Company’s financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. A valuation allowance is provided to reduce the deferred tax assets to the amount that will more likely than not be realized. The Company does not have any material uncertain tax positions for which reserves would be required. The Company will recognize interest and penalties related to uncertain tax positions, if any, in income tax expense. Deferred Offering Costs Deferred offering costs are included in prepaid and other current assets and consists of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly related to the planned initial public offering and that will be charged to additional paid-in capital upon the completion of the planned initial public offering. Should the planned initial public offering prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, will be charged to operations. For the year-ended December 31, 2020, the Company capitalized approximately $265,000 of deferred offering costs related to the planned initial public offering. Net Loss Per Share Basic net loss per share is calculated by dividing net loss applicable to common stockholders by the weighted- average number of shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting the weighted-average number of shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net loss per share calculation, the potential impact of shares to be issued upon conversion of Series A, Series A-1 and Series B preferred stock, stock options, and warrants to purchase common stock are considered to be common stock equivalents, but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share applicable to common stockholders were the same for all periods presented. The table below provides total shares outstanding, as of December 31: 2020 2019 Shares issuable upon conversion of preferred stock 1,291,012 1,291,012 Shares issuable upon exercise of stock options 251,847 224,884 Shares issuable upon exercise of warrants to purchase common stock 23,309 23,309 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
PROPERTY AND EQUIPMENT, NET | ||
PROPERTY AND EQUIPMENT, NET | 4. PROPERTY AND EQUIPMENT, NET Property and equipment, net consisted of the following at the dates indicated: September 30, December 31, 2021 2020 (unaudited) Website $ 107,926 $ 105,376 Computer equipment and purchased software 84,589 84,589 Equipment 35,449 35,449 Furniture and fixtures 87,184 87,184 Leasehold improvements 24,935 24,935 Total property and equipment 340,083 337,533 Accumulated depreciation (295,334) (261,944) Total property and equipment, net $ 44,749 $ 75,589 Depreciation expense for property and equipment was $11,130 and $4,883 for the three months ended September 30, 2021 and 2020, respectively, and $33,390 and $33,563 for the nine months ended September 30, 2021 and 2020, respectively. | 3. Property and equipment, net consisted of the following at December 31: 2020 2019 Website $ 105,376 $ 105,376 Computer equipment and purchased software 84,589 84,481 Equipment 35,449 35,134 Furniture and fixtures 87,184 87,184 Leasehold improvements 24,935 24,935 Total property and equipment 337,533 337,110 Accumulated depreciation (261,944) (217,189) Total property and equipment, net $ 75,589 $ 119,921 Depreciation expense for property and equipment was $44,758 and $57,360 for the years ended December 31, 2020 and 2019, respectively. |
INTERNALLY DEVELOPED SOFTWARE,
INTERNALLY DEVELOPED SOFTWARE, NET | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
INTERNALLY DEVELOPED SOFTWARE, NET | ||
INTERNALLY DEVELOPED SOFTWARE, NET | 5. INTERNALLY DEVELOPED SOFTWARE, NET During the nine months ended September 30, 2021 and 2020, the Company capitalized $731,172 and $864,921, respectively, of internally developed software costs in connection with the development and continued enhancement of the technology platform and web interfaces. Capitalized costs primarily consist of payroll and payroll-related costs for the Company’s employees. The Company recognized $242,860 and $179,168 of amortization expense associated with capitalized internally developed software costs during the three months ended September 30, 2021 and 2020, respectively. The Company recognized $714,444 and $599,425 of amortization expense associated with capitalized internally developed software costs during the nine months ended September 30, 2021 and 2020, respectively. | 4. During 2020 and 2019, the Company capitalized $1,102,186 and $1,447,062, respectively, of internally developed software costs in connection with the development and continued enhancement of the technology platform and web interfaces. Capitalized costs primarily consist of payroll and payroll-related costs for the Company’s employees. The Company recognized $774,929 and $577,605 of amortization expense associated with capitalized internally developed software costs during the years ended December 31, 2020 and 2019, respectively. |
DEBT
DEBT | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
DEBT | ||
DEBT | 6. DEBT Note Payable In May 2020, the Company applied for and received $783,008 in unsecured loan funding from the Paycheck Protection Program (the “PPP Loan”), established pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and administered by the U.S. Small Business Administration (“SBA”). Under the terms of the promissory note (the “PPP Note”) and the PPP Loan, interest accrued on the outstanding principal at the rate of 1% per annum. Interest expense under the PPP Loan amounted to $0 and $1,961 for the three months ended September 30, 2021 and 2020, respectively. Interest expense under the PPP Loan amounted to $279 and $2,518 for the nine months ended September 30, 2021 and 2020, respectively. The Company received full forgiveness of all outstanding principal of, and accrued and unpaid interest on the PPP Loan as of January 13, 2021. The forgiveness of the PPP Loan qualified for debt extinguishment and as a result, the outstanding principal and accrued and unpaid interest on the PPP Loan was recorded as a net gain on extinguishment of the PPP Loan totaling $788,156 for the nine months ended September 30, 2021 and the debt was eliminated from the Company’s balance sheet. 6. DEBT (continued) Related Party Convertible Notes Payable During 2017 and 2018, the Company issued Related Party Convertible Promissory Notes (the “Convertible Notes”) to related parties totaling $5,500,000. The Convertible Notes bear interest at a rate of six percent (6%) per annum, without compounding. The Convertible Notes are convertible into shares of the Company’s preferred stock, upon the following: (i) a new permanent equity financing yielding gross proceeds of in excess of $10,000,000, including conversion of the outstanding principal of the Convertible Notes (a “Qualified Equity Financing”), (ii) achievement of positive free cash flow from operations on a quarterly basis for the two consecutive quarters ending 90 days prior to the maturity date, (iii) an acquisition, or (iv) upon election of the holders of the majority of the aggregate principal outstanding (the “Majority Lenders”). Preferred stock issued on conversion shall be shares of the Company’s stock that have substantially the same rights and preferences as the Company’s Series B Preferred Stock or that which is issued in such Qualified Equity Financing, depending on the applicable conversion event. During 2021, there have been no changes to the conversion prices which are detailed in the Company’s audited financial statements for the years ended December 31, 2020 and 2019. The conversion rate shall be equal to the issue price of the IPO Stock less a thirty percent ( 30 )% discount. The maturity date on the Convertible Notes is the earliest occurrence of (i) the closing of a Qualified Equity Financing, (ii) the date upon which prepayment by the Company occurs with the consent of the Majority Lenders, (iii) the date upon which the Convertible Notes are otherwise converted into equity securities, or (iv) March 31, 2020. In March 2020, the Majority Lenders elected to extend the maturity date through September 30, 2020. On October 1, 2020, the maturity date was further extended to March 31, 2021. On March 8, 2021, the maturity date was further extended to June 30, 2021. The Company has determined that the terms related to the Qualified Equity Financing conversion and acquisition conversion features (collectively, the “Embedded Conversion Features”) were determined to not be clearly and closely related to the Convertible Note host instrument and meet the definition of a derivative. Therefore, the Embedded Conversion Features were bifurcated from the Convertible Notes and separately measured at fair value. The derivative liability has been subsequently marked-to-market each reporting period with changes in fair value recognized in the statement of operations (see Note 7). Interest expense on the Convertible Notes totaled $0 and $83,178 for the three months ended September 30, 2021 and 2020, respectively. Interest expense on the Convertible Notes totaled $156,411 and $247,726 for the nine months ended September 30, 2021 and 2020, respectively. Unamortized debt issuance costs on the Convertible Notes totaled $0 and $9,189 at September 30, 2021 and December 31, 2020, respectively. Debt discounts on the Convertible Notes totaled $0 and $0 as of September 30, 2021 and December 31, 2020, respectively. During the nine months ended September 30, 2021 and 2020, amortization of debt discounts amounted to $1,088 and $141,628, respectively. Conversion of Convertible Notes Payable In connection with the consummation of the IPO, the Company converted all $5,491,663 of its outstanding principal and all unpaid and accrued interest of $1,257,066 of the Convertible Notes into 1,206,614 shares of common stock on June 21, 2021 at a conversion price of $5.60 per share. As of September 30, 2021, there were no Convertible Notes outstanding. The Company incurred an approximate $260,000 loss on conversion of the Convertible Notes during the nine months ended September 30, 2021. Bridge Financing During 2020, 2019, and 2018, the Company issued certain Secured Promissory Notes (the “Bridge Notes”) to new investors and existing stockholders in an amount of $6,500,000 in order to finance the Company’s interim working capital needs. Of this amount, $1,905,000 was issued to related parties (“Related Party Bridge Notes”). The Bridge Notes, including the Related Party Bridge Notes, have identical terms. 6. DEBT (continued) On April 16, 2021 and May 20, 2021, the Company issued additional Related Party Bridge Notes to related parties in the aggregate amount of $500,000 in order to finance the Company's working capital needs. The terms of the notes are identical to the Amended Bridge Notes (see further details below). The Bridge Notes bear interest at a rate of twenty-four percent (24%) per annum, without compounding. The Bridge Notes and all accrued interest are due and payable on the earliest occurrence of (i) a Qualified Equity Financing, (ii) the sale of the Company, (iii) prepayment by the Company, or (iv) December 31, 2019, which was subsequently extended to June 30, 2020. In June 2020, the Bridge Notes were amended to further extend the maturity date through September 30, 2020. On October 1, 2020, the Company amended the Bridge Notes to extend the maturity date to March 31, 2021 and to increase the interest rate from 24% to 30% after October 1, 2020. On March 15, 2021, the Company entered into an Amendment to the Bridge Notes and the maturity date was further extended to April 30, 2021. The Bridge Notes will be repayable upon demand of the Majority Lenders of the Bridge Notes at any time on or after the maturity date. The Bridge Notes are senior in right of payment and priority to any Convertible Debt and subordinated to any Senior Debt. The investors that hold the Bridge Notes are granted a security interest in substantially all assets of the Company (“Collateral”). On March 15, 2021, the Company entered into a Fifth Amendment (the “Amendment”) to the Note Subscription Agreements and Secured Promissory Notes. The Bridge Notes are hereafter referred to as the “Amended Bridge Notes”. The terms of the Amendment are as follows: Maturity Date The Amended Bridge Notes shall bear interest, on a non-compounding basis, at a rate of thirty percent (30%) per annum from and after October 1, 2020, due on maturity on the earlier of (i) the closing of an initial public offering yielding gross proceeds in excess of $18,000,000, exclusive of any existing Convertible Notes (a “Qualified IPO”), (ii) the sale of the Company, (iii) prepayment by the Company, or (iv) April 30, 2021. The Majority Lenders may, with the approval of the Company, elect to extend the maturity date one or more times, at their discretion. On April 28, 2021, the maturity date was further extended to May 31, 2021. On May 12, 2021, the maturity date was further extended to June 30, 2021. Elective Conversion Upon a Qualified IPO The holders of the Amended Bridge Notes may voluntarily elect, at any time prior the maturity date and up to March 19, 2021, to convert 50% or more of the outstanding unpaid principal plus any amount of outstanding unpaid interest at the time of the Qualified IPO, into the same class or series of securities of the Company to be offered and issued in the Qualified IPO (the “IPO Stock”). The conversion rate shall be equal to the issue price of the IPO Stock less a thirty percent (30%) discount (“the Elective Conversion Stock”). The elective conversion amount shall be deducted from the amount of principal and interest outstanding in order to arrive at an adjusted principal and interest repayment amount. The sum of the amounts being converted on the Amended Bridge Notes shall first convert the outstanding principal and then the outstanding interest second. Repayment of Adjusted Outstanding Interest and Principal Upon a Qualified IPO If a Qualified IPO is consummated prior to the maturity date, and the holders have not voluntarily converted, the Company shall make a cash payment to the holders of the Amended Bridge Notes equal to the greater of either the total adjusted outstanding interest or one and one-half times ( 1.50 6. DEBT (continued) Repayments shall first be applied to the adjusted outstanding interest due in cash to the holders of the Amended Bridge Notes . The residual value shall be next applied to the adjusted outstanding principal (the “Principal Repayment Proceeds”). The remaining cash repayment shall be calculated by multiplying the Principal Repayment Proceeds by a fraction, the numerator of which is equal to the adjusted principal repayment amount of such note holder, and the denominator of which is equal to the total adjusted outstanding principal to all note holders. In no event shall any cash payment be made to any note holder exceed the sum of the adjusted interest repayment amount plus the adjusted principal repayment amount for such note holder. Automatic Conversion or Debt Extension Any remaining unpaid principal, calculated by subtracting the Principal Repayment Proceeds from the total adjusted outstanding principal (the “Automatic Principal Conversion Amount”), shall then automatically convert into IPO Stock at a rate equal to the issue price of the IPO Stock less a ten percent (10%) discount (that is, at a rate of ninety percent (90%) of the issue price of the IPO Stock; such discounted IPO Stock; the “Automatic Conversion Stock”). If the Company is unable to repay at least twenty-five percent (25%) of the total adjusted outstanding principal of the Amended Bridge Notes (“the “Principal Repayment Floor”), then no Automatic Conversion Stock shall be issued and the total adjusted outstanding principal on the Amended Bridge Notes shall remain on the books of the Company under their existing Bridge Notes which shall automatically be amended to (i) have their interest rates adjusted to a rate of fifteen percent (15%) per annum and (ii) have their maturity date set to a date that is eighteen (18) months from the date of the Qualified IPO. Amended Bridge Notes Embedded Conversion Features The Company has determined that the terms related to the elective and automatic conversion features (collectively, the “Amended Bridge Notes Embedded Conversion Features”) were determined to not be clearly and closely related to the Amended Bridge Notes host instrument and meet the definition of a derivative. Therefore, the Amended Bridge Notes Embedded Conversion Features were bifurcated from the Amended Bridge Notes and separately measured at fair value. The derivative liability has been subsequently marked-to- market each reporting period with changes in fair value recognized in the statement of operations. The Amended Bridge Notes Embedded Conversion Features were initially recorded as a component of the loss on debt extinguishment with an offset to the derivative liability at fair value. No related discount will be recorded on the Amended Bridge Notes, and the derivative liability will not be amortized using the effective interest rate over the term of the Amended Bridge Notes. Debt Extinguishment The Company evaluated the terms of the March 15, 2021 Amendment. This evaluation included analyzing whether there are significant and consequential changes to the economic substance of the Bridge Notes. If the change is deemed insignificant then the change is considered a debt modification, whereas if the change is substantial the change is reflected as a debt extinguishment. A modification or an exchange that adds or eliminates a substantive conversion option as of the conversion date would always be considered substantial and require extinguishment accounting. The addition of the elective and mandatory conversion options, as described above, would be considered substantive based on the likelihood of the option being exercised in the near future in connection with a Qualified IPO event. Accordingly, the Company accounted for the amendment of the Notes as an extinguishment of the original Bridge Notes. As a result, the Company recorded a loss on extinguishment of $2,740,425. The extinguishment loss also included a write-off of unamortized debt issuance costs of approximately $5,700. Additionally, the Company recorded a discount on the Amended Bridge Notes of approximately $869,600, which was amortized through interest expense over the life of the Amended Bridge Notes (i.e., March 15, 2021 through April 30, 2021). 6. DEBT (continued) Interest expense on the Bridge Notes, including $5,876 and $48,371 of related party interest expense, totaled $54,247 and $382,521 for the three months ended September 30, 2021 and 2020, respectively. Interest expense on the Bridge Notes, including $320,469 and $694,189 of related party interest expense, totaled $1,014,657 and $1,123,890 for the nine months ended September 30, 2021 and 2020, respectively. Unamortized debt issuance costs on the Bridge Notes totaled $0 and $7,222 as of September 30, 2021 and 2020, respectively. Amortization of the debt discount on the Amended Bridge Notes totaled approximately $0 and $0 for the three months ended September 30, 2021 and 2020, respectively. Amortization of the debt discount on the Amended Bridge Notes totaled approximately $869,600 and $136,185 for the nine months ended September 30, 2021 and 2020, respectively. Conversion of Bridge Notes Upon the completion of the IPO, the Company converted $4,000,000 of its outstanding principal and accrued interest of $717,646 of the Bridge Notes, as amended, into 842,429 shares of common stock at a conversion price of $5.60 per share. The Company recognized a gain on the conversion of $9,746. The conversion of the Amended Bridge Notes and Convertible Notes upon the consummation of the IPO resulted in an increase in total stockholder’s equity of $16,392,344. The components of this non-cash transaction are as follows for the nine months ended September 30, 2021: Write off of derivative liability relating to the Convertible Notes $ 2,644,000 Extinguishment of Convertible Notes principal 5,486,199 Accrued and unpaid interest on the Convertible Notes 1,257,066 Accumulated amortization on debt issuance costs 33,035 Loss on extinguishment of Convertible Notes 260,185 Write off of debt issuance costs (27,573) Write off of derivative liability relating to the Bridge Notes 2,031,300 Extinguishment of Bridge Notes principal 4,000,000 Accrued and unpaid interest on the Bridge Notes 717,646 Gain on extinguishment of Bridge Notes (9,514) Total conversion of Convertible Notes and Bridge Notes into common stock $ 16,392,344 During the three months ended September 30, 2021, the Company paid off remaining principal of $3,000,000 and accrued interest of $64,110. As of September 30, 2021, there were no Bridge Notes outstanding. Term Loan On August 13, 2021 (the "Closing Date"), the Company entered into a Loan and Security Agreement with Western Alliance Bank (the “Lender”) in the amount of $3,500,000 for working capital needs (the “Term Loan”). The Company has the option to request an additional advance in the amount of $1,500,000, which the Company has not yet borrowed as of September 30, 2021. The additional advance of $1,500,000 is available to the Company during the "Draw Period," which is defined in the Term Loan as the "period commencing on the Closing Date and ending the earlier to occur of (a) February 13, 2023, and (b) an Event of Default." The Term Loan bears interest at a rate equal to three-quarters of one percent (0.75%) above the Prime Rate. As of September 30, 2021, the interest rate on the Term Loan is 4.00% which is equal to 0.75% above the Prime Rate of 3.25%. Interest is due and payable on the tenth ( 10 30 6. DEBT (continued) The Company shall have the option to prepay all, but not less than all, of the outstanding loan balance, provided the Company a) delivers written notice to the financial institution of their election to prepay such Term Loan at least ten (10) days prior to such prepayment and b) pay, on the date of such prepayment, (1) all outstanding principal with respect to the Term Loan, plus accrued but unpaid interest, plus (2) all fees (including any late fee), and other sums, including bank expenses, if any, that shall have become due and payable. The Lender which holds the Term Loan is granted a security interest in substantially all assets of the Company (“Collateral”). The Term Loan contains certain covenants that the Company considers usual and customary for an agreement of this type for comparable commercial borrowers, and as of September 30, 2021 we were in compliance with all Term Loan covenants. Interest expense on the Term Loan totaled $18,399 and $0 for the three and nine months ended September 30, 2021 and 2020, respectively. Debt issuance costs totaled $74,897, comprised of a warrant to purchase 12,500 shares of common stock issued to the Lender with a fair value of $49,072, Unamortized debt issuance costs on the Term Loan totaled $71,620 and $0 at September 30, 2021 and December 31, 2020, respectively. | 5. Note Payable In May 2020, the Company applied for and received $783,008 in unsecured loan funding from the Paycheck Protection Program (the “PPP Loan”), established pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and administered by the U.S. Small Business Administration (“SBA”). Under the terms of the promissory note (the “PPP Note”) and the PPP Loan, interest accrues on the outstanding principal at the rate of 1% per annum. Interest expense under the PPP Loan amounted to $5,127 for the year ended December 31, 2020. The PPP Loan is a forgivable loan and subsequent to year end, the Company received full forgiveness of all principal and interest in January 2021. 5. Related Party Convertible Notes Payable During 2017 and 2018, the Company issued Related Party Convertible Promissory Notes (the “Convertible Notes”) to related parties totaling $5,500,000. The Convertible Notes bear interest at a rate of six percent (6%) per annum, without compounding. The Convertible Notes are convertible into shares of the Company’s preferred stock, upon the following: (i) a new permanent equity financing yielding gross proceeds of in excess of $10,000,000, including conversion of the outstanding principal of the Convertible Notes (a “Qualified Equity Financing”), (ii) achievement of positive free cash flow from operations on a quarterly basis for the two consecutive quarters ending 90 days prior to the maturity date, (iii) an acquisition, or (iv) upon election of the holders of the majority of the aggregate principal outstanding (the “Majority Lenders”). An “acquisition” shall mean the sale of all or substantially all of the capital stock or assets of the Company in a business combination or other acquisition; a merger, consolidation or reorganization of Conversion Prices The conversion price of the Convertible Notes may vary based on the type and timing of the triggering event which causes conversion of the Convertible Notes. If the Qualified Equity Financing occurs within 12 months from the issuance date of the Convertible Note, the conversion price will be the lesser of (A) if (i) the holder is a Majority Lender, the issue price of the preferred stock less a twenty percent ( 20% ) discount to the issue price of such preferred stock (that is, at a rate of eighty percent ( 80% ) of the issue price of the preferred stock), or (ii) the holder is not a Majority Lender, the issue price of the preferred stock less a ten percent ( 10% ) discount to the issue price of such preferred stock (that is, at a rate of ninety percent ( 90% ) of the issue price of the preferred stock), or (B) such price per share commensurate with a pre-money valuation of the Company, as defined in the note subscription agreement, calculated on a fully-diluted basis. If the Qualified Equity Financing occurs later than 12 months from the issuance date of the Convertible Note, the conversion price ranges from the lesser of (A) if (i) the holder is a Majority Lender, the issue price of the preferred stock less a thirty percent (30%) discount to the issue price of such preferred stock (that is, at a rate of seventy percent (70%) of the issue price of the preferred stock),or (ii) the holder is not a Majority Lender, the issue price of the preferred stock less a twenty percent (20%) discount to the issue price of such preferred stock (that is, at a rate of eighty percent (80%) of the issue price of the preferred stock),or (B) such price per share commensurate with a pre-money valuation of the Company, as defined in the note subscription agreement, calculated on a fully-diluted basis. In the event that the Company is sold, the Convertible Notes shall either be repaid in full or converted into common stock at the option of the Majority Lenders. The conversion price shall be the quotient of the aggregate principal and accrued interest outstanding on the Convertible Notes divided by a price per share determined in accordance with the same two scenarios noted above in the event of a Qualified Equity Financing. Should the Company achieve positive free cash flows pursuant to the note subscription agreement or the Majority Lenders elect to convert the Convertible Notes prior to or at maturity, the conversion price per share shall be commensurate with a pre-money valuation of the Company, as defined in the note subscription agreement, calculated on a fully-diluted basis. 5. Embedded Conversion Features The Company has determined that the terms related to the Qualified Equity Financing conversion and acquisition conversion features (collectively, the “Embedded Conversion Features”) were determined to not be clearly and closely related to the Convertible Note host instrument and meet the definition of a derivative. Therefore, the Embedded Conversion Features were bifurcated from the Convertible Notes and separately measured at fair value. The derivative liability has been subsequently marked-to-market each reporting period with changes in fair value recognized in the statement of operations. The Embedded Conversion Features were initially recorded as a debt discount with an offset to the derivative liability at fair value. The debt discount is amortized using the effective interest rate over the original term of the Convertible Notes. Maturity Date The maturity date on the Convertible Notes is the earliest occurrence of (i) the closing of a Qualified Equity Financing, (ii) the date upon which prepayment by the Company occurs with the consent of the Majority Lenders, (iii) the date upon which the Convertible Notes are otherwise converted into equity securities, or (iv) June 30, 2019. In August 2018, the maturity date was extended to March 31, 2020. If, upon the maturity date, the Convertible Notes have not been converted into preferred stock, then the Majority Lenders may elect to (i) demand repayment of the outstanding principal and accrued interest, (ii) convert the Notes into two times the Participating Preferred Stock (as defined in the note subscription agreement) and Conversion Preferred Stock (as defined in the note subscription agreement), or (iv) extend the maturity date by up to an additional 18 months. In March 2020, the Majority Lenders elected to extend the maturity date through September 30, 2020. On October 1, 2020, the maturity date was further extended to March 31, 2021. On March 8, 2021, the maturity date was further extended to June 30, 2021. The Company may not prepay the Convertible Notes without the written consent of the Majority Lender. The Convertible Notes are subordinated in right of payment and priority to any Senior Debt. “Senior Debt” refers to all present and future indebtedness for money borrowed of the Company from institutional lenders, commercial credit companies, commercial banks, credit unions, government agencies, venture debt firms, and other commercial lenders. Interest expense on the Convertible Notes totaled $330,904 and $330,000 for the years ended December 31, 2020 and 2019, respectively. Unamortized debt issuance costs on the Convertible Notes totaled $9,189 and $13,539 at December 31, 2020 and December 31, 2019, respectively. Debt discounts on the Convertible Notes totaled $0 and $136,185 for the years ended December 31, 2020 and 2019, respectively. During the years ended December 31, 2020 and 2019, amortization of debt discounts amounted to $136,185 and $544,741, respectively. Bridge Financing During 2020, 2019, and 2018, the Company issued Secured Promissory Notes (the “Bridge Notes”) to new investors and existing stockholders in an amount of $6,500,000 in order to finance the Company’s interim working capital needs. Of this amount, $1,905,000 is held by related parties. The Bridge Notes bear interest at a rate of twenty-four percent (24%) per annum, without compounding. The Bridge Notes and all accrued interest are due and payable on the earliest occurrence of (i) a Qualified Equity Financing, (ii) the sale of the Company, (iii) prepayment by the Company, or (iv) December 31, 2019, which was subsequently extended to June 30, 2020. In June 2020, the Bridge Notes were amended to further extend the maturity date through September 30, 2020. On October 1, 2020, the Company amended the Bridge Notes to extend the maturity date to March 31, 2021 and to increase the interest rate from 24% to 30% after October 1, 2020. On March 15, 2021, the maturity date was further extended to April 30, 2021. The Bridge Notes will be repayable upon demand of the Majority Lenders of the Bridge Notes at any time on or after the maturity date. The Bridge Notes are senior in right of payment and priority to any Convertible Debt and subordinated to any Senior Debt. The investors that hold the Bridge Notes are granted a security interest in substantially all assets of the Company (“Collateral”). 5. Interest expense on the Bridge Notes totaled $1,168,738 and $549,248 for the years ended December 31, 2020 and 2019, respectively. Unamortized debt issuance costs on the Bridge Notes totaled $5,771 and $8,673 for the years ended December 31, 2020 and 2019, respectively. Related Party Bridge Notes During 2018, 2019 and 2020 the Company issued Secured Promissory Notes (“Related Party Bridge Notes”) to various related parties including executives and their immediate family members. As of December 31, 2020 and 2019, Related Party Bridge Notes amounted to $1,905,000 and $1,655,000, respectively. The Related Party Bridge Notes bear interest at a rate of twenty-four percent (24%) per annum, without compounding. The principal and all accrued interest are due and payable on the earliest occurrence of (i) a Qualified Equity Financing, (ii) the sale of the Company, prepayment by the Company, or (iii) December 31, 2019, which has been extended to June 30, 2020. In June 2020, the Company extended the maturity date through September 30, 2020. On October 1, 2020, the Company amended the Bridge Notes to extend the maturity date to March 31, 2021 and to increase the interest rate from 24% to 30% after October 1, 2020. On March 15, 2021, the maturity date was further extended to April 30, 2021. The interest expense associated with the Related Party Bridge Notes was $446,660 and $292,938 for the years ended December 31, 2020 and 2019, respectively. |
FAIR VALUE OF DERIVATIVE LIABIL
FAIR VALUE OF DERIVATIVE LIABILITY | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
FAIR VALUE OF DERIVATIVE LIABILITIES | ||
FAIR VALUE OF DERIVATIVE LIABILITY | 7. FAIR VALUE OF DERIVATIVE LIABILITIES Financial liabilities measured at fair value on a recurring basis are summarized below and disclosed on the Company’s balance sheets as of the following dates indicated: Fair Value at September 30, 2021 Total Level 1 Level 2 Level 3 Liabilities: Derivative liability on convertible notes payable, related parties $ — $ — $ — $ — Derivative liability on bridge notes payable and bridge notes payable, related parties — — — $ — Total liabilities $ — $ — $ — $ — Fair value at December 31, 2020 Total Level 1 Level 2 Level 3 Liabilities: Derivative liability on convertible notes payable, related parties $ 2,373,000 $ — $ — $ 2,373,000 Total liabilities $ 2,373,000 $ — $ — $ 2,373,000 The table below provides a summary of the changes in fair value of the derivative liabilities measured on a recurring basis using significant unobservable inputs (Level 3) during the nine months ended September 30: 2021 2020 Balance, beginning of period $ 2,373,000 $ 2,214,000 Derivative liability on bridge notes payable and bridge notes payable, related parties 3,614,000 — (Gain) loss included in earnings (1,311,700) 76,000 Write off of derivative liabilities in connection with debt conversion (4,675,300) — Balance, end of period (unaudited) $ — $ 2,290,000 7. FAIR VALUE OF DERIVATIVE LIABILITIES (continued) Derivative Liability on Convertible Notes Payable, Related Parties The Embedded Conversion Features are separately measured at fair value, with changes in fair value recognized in current operations. The Company used a scenario-based analysis to estimate the fair value of the Embedded Conversion Features at issuance of the Convertible Notes. The scenario-based analysis estimates the fair value of the Convertible Notes based on the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to the noteholders, including various IPO, settlement, equity financing, corporate transaction and dissolution scenarios. Estimating fair values of Embedded Conversion Features requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. Because the Embedded Conversion Features are initially and subsequently carried at fair values, the Company’s income will reflect the volatility in these estimate and assumption changes. The original values of the Embedded Conversion Features were recorded as a derivative liability with the offset as a debt discount to the Convertible Notes which was amortized over the original term of the Convertible Notes. The derivative liability on the Related Party Convertible Notes was written-off on June 21, 2021, upon the conversion of the Convertible Notes to common stock in connection with the consummation of the IPO. Immediately prior to the IPO, the derivative liability was marked to fair value resulting in a loss of $117,000 for the three months ended June 30, 2021. Derivative Liability on Bridge Notes Payable and Bridge Notes Payable, Related Parties The Embedded Conversion Features are separately measured at fair value, with changes in fair value recognized in current operations. The Company used a scenario-based analysis to estimate the fair value of the Embedded Conversion Features at issuance of the Amended Bridge Notes. The scenario-based analysis estimates the fair value of the Amended Bridge Notes based on the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to the noteholders, including various IPO, and settlement scenarios. Estimating fair values of Embedded Conversion Features requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. Because the Embedded Conversion Features are initially and subsequently carried at fair values, the Company’s income will reflect the volatility in these estimate and assumption changes. The Amended Bridge Notes Embedded Conversion Features were initially recorded as a component of the loss on debt extinguishment with an offset to the derivative liability at fair value. No related discount will be recorded on the Amended Bridge Notes, and the derivative liability will not be amortized using the effective interest rate over the term of the Amended Bridge Notes. The derivative liability balance on the Amended Bridge Notes payable of $2,031,300 was written off on June 21, 2021, upon the conversion of the Amended Bridge Notes to common stock in connection with the consummation of the IPO, as the Amended Bridge Notes did not contain any further conversion features subsequent to the IPO. Immediately prior to the IPO, the derivative liability was marked to fair value. A portion of the Bridge Note holders did not elect to convert at the IPO, as a result, the Company recorded a gain of $ 1,630,700 for the three months ended June 30, 2021. | 6. Financial liabilities measured at fair value on a recurring basis are summarized below and disclosed on the Company’s balance sheets as of the following dates indicated: Fair value at December 31, 2020 Total Level 1 Level 2 Level 3 Liabilities: Derivative liability $ 2,373,000 $ — $ — $ 2,373,000 Total liabilities $ 2,373,000 $ — $ — $ 2,373,000 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 The table below provides a summary of the changes in fair value of the derivative liability measured on a recurring basis using significant unobservable inputs (Level 3) during the year ended December 31: 2020 2019 Balance, beginning of period $ 2,214,000 $ 2,765,000 Loss (gain) included in earnings 159,000 (551,000) Balance, end of period $ 2,373,000 $ 2,214,000 6. The Embedded Conversion Features are separately measured at fair value, with changes in fair value recognized in current operations. The Company used a scenario-based analysis to estimate the fair value of the Embedded Conversion Features at issuance of the Convertible Notes and as of December 31, 2020 and 2019. The scenario-based analysis estimates the fair value of the convertible promissory notes based on the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to the noteholders, including various IPO, settlement, equity financing, corporate transaction and dissolution scenarios. Estimating fair values of Embedded Conversion Features requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. Because the Embedded Conversion Features are initially and subsequently carried at fair values, the Company’s income will reflect the volatility in these estimate and assumption changes. The original values of the Embedded Conversion Features were recorded as a derivative liability with the offset as a debt discount to the Convertible Notes which was amortized over the original term of the Convertible Notes. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
COMMITMENTS AND CONTINGENCIES | ||
COMMITMENTS AND CONTINGENCIES | 8. COMMITMENTS AND CONTINGENCIES Leases The Company leases its office space in Lexington, Massachusetts under a non-cancelable operating lease that was entered into in September 2012 and most recently amended on April 10, 2017. The lease requires monthly rental payments, presented by year in the table below, which escalate during the lease term and expires on February 28, 2024. The difference between straight-line rent expense and rent paid is immaterial as of September 30, 2021. Year Ending December 31, Operating Leases 2021 (remaining) $ 40,353 2022 163,158 2023 165,254 2024 27,601 Total $ 396,366 Rent expense for the three months ended September 30, 2021 and 2020 amounted to $46,261 and $13,276, respectively. Rent expense for the nine months ended September 30, 2021 and 2020 amounted to $113,341, and $82,794, respectively. Legal Proceedings From time to time the Company is involved in litigation, claims, and other proceedings arising in the ordinary course of business. Such litigation and other proceedings may include, but are not limited to, actions relating to employment law and misclassification, intellectual property, commercial or contractual claims, or other consumer protection statutes. Litigation and other disputes are inherently unpredictable and subject to substantial uncertainties and unfavorable resolutions could occur. As of September 30, 2021, there was no material litigation against the Company. | 7. Leases The Company leases its office space in Lexington, Massachusetts under a non-cancelable operating lease that was entered into in September 2012 and most recently amended on April 10, 2017. The lease requires monthly rental payments, presented by year in the table below, which escalate during the lease term and expires on February 28, 2024. The difference between straight-line rent expense and rent paid is immaterial. Operating Years Ended December 31, Leases 2021 $ 161,062 2022 163,158 2023 165,254 2024 27,601 Total $ 517,075 Rent expense for the years ended December 31, 2020 and 2019 amounted to $136,281 and $172,621, respectively. Legal Proceedings From time to time the Company is involved in litigation, claims, and other proceedings arising in the ordinary course of business. Such litigation and other proceedings may include, but are not limited to, actions relating to employment law and misclassification, intellectual property, commercial or contractual claims, or other consumer protection statutes. Litigation and other disputes are inherently unpredictable and subject to substantial uncertainties and unfavorable resolutions could occur. As of December 31, 2020, there was no material litigation against the Company. |
CONVERTIBLE PREFERRED STOCK AND
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT | ||
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT | 9. CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT Immediately following the closing of the IPO, pursuant to the Company’s fourth amended and restated certificate of incorporation, the Company’s authorized capital is 250,000,000 shares, of which (1) 200,000,000 shares are common stock, par value $0.0001 per share and (2) 50,000,000 are preferred stock, par value $0.0001 per share, which may, at the sole discretion of the Company’s board of directors be issued in one or more series. Redeemable Convertible Preferred Stock Upon the consummation of the IPO, 1,291,012 shares of outstanding preferred stock automatically converted into 1,291,012 shares of common stock. As of September 30, 2021, there were no shares of preferred stock outstanding. Common Stock The Company issued 2,250,000 shares of common stock in connection with the IPO during the nine months ended September 30, 2021. Additionally, the Company issued 1,206,614 shares of common stock in connection with the conversion of all the Convertible Notes and accrued interest and 842,429 shares of common stock in connection with the conversion of $4.7 million of the outstanding principal and accrued interest on the Bridge Notes. On July 1, 2021, the Company issued and sold 337,500 additional shares of common stock, pursuant to the underwriters' exercise of its overallotment option, at a public offering price of $8.00 per share, for aggregate gross proceeds of $2.7 million. The net proceeds from the overallotment were $2.5 million after deducting underwriting discounts of $0.2 million. Inclusive of the underwriters' option to purchase additional shares, the Company received approximately $18.2 million in net proceeds from the IPO, after deducting underwriting discounts of $1.9 million and other offering costs of $0.6 million. 9. CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT (continued) On August 1, 2021, the Company issued 2,000 shares of common stock in exchange for investor relations services. The shares of common stock had a fair value of $6.25 per share for a total aggregate value of $12,500. Underwriter Warrants In connection with the Company’s underwriting agreement with ThinkEquity, the Company entered into a warrant agreement to purchase up to 90,000 shares of common stock, par value $0.0001 (the “Underwriter Warrant”). The Underwriter Warrant is exercisable at a per share exercise price of $10.00, and is exercisable at any time and from time to time, in whole or in part, during the four- and one-half year period commencing 180 days from the effective date of the registration statement. The Warrant becomes exercisable on or after December 16, 2021 (six months from the effective date of the offering) and expires on June 15, 2026. Upon issuance of these warrants, as partial compensation for its services as an underwriter, the fair value of approximately $0.4 million was recorded as equity issuance costs. Warrants During the three and nine months ended September 30, 2021, the warrant holders exercised 17,889 warrants to purchase common stock, resulting in the issuance of 17,889 shares of common stock for total proceeds of $992. As of September 30, 2021, 5,420 warrants expired, and were not exercised. Lender Warrant In connection with the Term Loan entered into on August 13, 2021, the Company issued a Lender Warrant to purchase 12,500 shares of common stock to the Lender. The Lender Warrant is exercisable at a per share exercise price of $8.00, and is exercisable at any time on or after August 13, 2021 through August 12, 2031. The Company determined that the Lender Warrant is equity-classified. As of September 30, 2021, The Lender Warrant had not been exercised, and has a weighted average exercise price of $8.00 and a remaining weighted average time to expiration of 9.87 years The following assumptions were used to estimate the fair value of warrants granted using the Black-Scholes-Merton option pricing model during the nine months ended September 30: 2021 2020 Assumptions: Risk-free interest rate 0.90% - 1.30 % — % Expected term (in years) 5.00 - 10.00 — Expected volatility 61% - 69 % — % Expected dividend yield — % — % A summary of warrant activity during the is as follows: Weighted Average Remaining Options Weighted Average Contractual Term Outstanding Exercise Price in Years Balance at December 31, 2020 23,309 $ 0.06 0.75 Granted 102,500 $ 9.76 5.34 Exercised (17,889) $ 0.06 — Expired (5,420) $ 0.06 — Balance at September 30, 2021 102,500 $ 9.76 5.34 | 8. The Company is authorized to issue 16,000,000 shares of common stock with a par value of $0.0001 per share and 8,000,000 shares of convertible preferred stock with a par value of $0.0001 per share, of which 3,427,871 shares are designated Series A convertible preferred stock (“Series A”), 556,550 shares are designated Series A-1 convertible preferred stock (“Series A-1”) and 3,200,000 shares are designated Series B convertible preferred stock (“Series B”). The Company has 815,579 shares of preferred stock that are undesignated. The Series A, Series A-1, and Series B are presented in temporary or “mezzanine” equity as the convertible preferred stock give the holders (by majority vote) the option if there is a sale, merger or change of control to redeem shares for cash. The convertible preferred stock is recorded at fair value as of the date of issuance. No subsequent adjustment of the initial measurement amounts for these contingently redeemable Series A, Series A-1, and Series B is necessary unless the redemption of the convertible preferred shares becomes probable. Accordingly, the amount presented as temporary equity for the contingently redeemable Series A, Series A-1, and Series B outstanding is its issuance-date fair value. The rights and preferences of the Series B, Series A-1, Series A convertible preferred stock collectively, preferred stock, are as follows: Preferred Stock Dividends Cumulative Dividends Commencing on the date of original issuance, dividends shall accrue, whether or not declared by the Board, on each share of the preferred stock on a cumulative, non-compounding basis at the annual rate of 6% of the original issue price (the “Original Issue Price”). The Original Issue Price for Series A, Series A-1, and Series B is equal to $4.22529, $5.58985, and $13.97445 per share, respectively. The cumulative aggregate amounts of arrearages in preferred dividends as of December 31, 2020 for Series A, Series A-1, and Series B preferred stock were $1,323,766, $219,129, and $2,604,243, respectively. The per-share amounts of arrearages in cumulative preferred dividends as of December 31, 2020 for Series A, Series A-1, and Series B preferred stock were $2.14, $2.18, and $4.55, respectively. Cumulative dividends shall be payable only in the event of a liquidation, dissolution, or winding-up of the Company. Upon voluntary conversion of the preferred stock or a Qualified Public Offering, as defined, no accrued but unpaid cumulative dividends shall be payable. Dividends on preferred stock will be in preference to dividends paid on any other equity securities. Participating Dividends In the event the Board declares a cash dividend payable on the then outstanding shares of common stock, the holders of preferred stock shall be entitled to the amount of dividends as would be declared payable on the largest number of shares of common stock into which the shares of preferred stock held could be then converted. There have been no dividends declared to date. Liquidation Preferences In the event of any liquidation event, as defined, either voluntary or involuntary, the holders of the Series B preferred stock are entitled to receive, prior and in preference to holders of Series A preferred stock, Series A-1 preferred stock, and common stock. The “Series B Liquidation Preference” is defined as a per share amount equal to the Original Issue Price of the Series B preferred stock, plus any declared but unpaid cumulative dividends. In lieu of receiving the Series B Liquidation Preference amount, the holders of the Series B preferred stock may elect to convert to common stock at any time prior to liquidation, dissolution or winding up. 8. If the assets of the Company are insufficient to pay the full aforesaid preferential amounts to the holders of the Series B preferred stock, then the entire proceeds legally available for distribution shall be distributed ratably among the holders of the Series B preferred stock in proportion to the full preferential amount that each such holder is otherwise entitled to receive. In the event of any liquidation event, as defined, either voluntary or involuntary, the holders of the Series A preferred stock and Series A-1 preferred stock are entitled to receive, prior and in preference to holders of common stock. The Series A Liquidation Preference and Series A-1 Liquidation Preference are each defined as a per share amount equal to the Original Issue Price of the Series A preferred stock and the Original Issue Price of the Series A-1 preferred stock, respectively, plus any respective declared but unpaid cumulative dividends. In lieu of receiving the Series A Liquidation Preference amount and Series A-1 Liquidation Preference amount, the holders of the Series A preferred stock and Series A-1 preferred stock may elect to convert to common stock at any time prior to liquidation, dissolution or winding up. If the assets of the Company are insufficient to pay the full aforesaid preferential amounts to the holders of Series A preferred stock and Series A-1 preferred stock, then the entire proceeds legally available for distribution to Series A preferred stock and Series A-1 preferred stock shall be distributed ratably among the holders of Series A preferred stock and Series A-1 preferred stock in proportion to the full preferential amount that each such holder is otherwise entitled to receive. Conversion The preferred stock may be converted at any time, at the option of the holder, into shares of common stock. The conversion rate for preferred stock is equal to the Original Issuance Price divided by the Conversion Value. The Conversion Value shall initially be equal to the Original Issuance Price, subject to adjustments including anti-dilution protection. In the event that the Company issue or sell shares of common stock or equivalents, without consideration or at a price per share less than the applicable preferred stock conversion value then the applicable preferred stock conversion value shall be lowered. Each share of the preferred stock shall automatically convert into common stock at the then applicable conversion rate, upon (i) the closing of a firmly underwritten public offering of common stock with total gross proceeds of at least $25,000,000, or (ii) at the written consent of the majority holders of the Series A preferred stock and Series A-1 preferred stock, voting together as a single series, or (iii) at the written consent of the majority holders of the Series B preferred stock. Additionally, the holders of the Series A preferred stock and Series A-1 preferred stock cannot compel conversion of the Series B preferred stock, and the holders of the Series B preferred stock cannot compel conversion of the Series A preferred stock and Series A-1 preferred stock. Voting The holders of preferred stock shall be entitled to vote with respect to all matters voted on by the stockholders of the Company. Each holder of preferred stock shall be entitled to that number of votes on the largest number of shares of common stock into which the shares of preferred stock held could be then converted. The holders of the Series A preferred stock and Series A-1 preferred stock, voting together, have the right to elect one director. The holders of the Series B preferred stock have the right to elect one director. Common Stock The rights and preferences of the common stock are as follows: Voting The holders of common stock shall be entitled to one vote for each share held with respect to all matters voted on by the stockholders of the Company. The holders of common stock shall be entitled to elect one director. 8. Dividends Subject to the preferential rights of the preferred stock, the holders of common stock are entitled to receive dividends, when and if declared by the Board. Liquidation Rights In certain events, including the liquidation, dissolution or winding-up of the Company, immediately after the holders of preferred stock have been paid in full preference, the remaining assets of the Company shall be distributed ratably among the holders of common stock. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
SHARE-BASED COMPENSATION | ||
SHARE-BASED COMPENSATION | 10. SHARE-BASED COMPENSATION Stock Options As of September 30, 2021, there were 99,493 and 188,455 shares available for future grants under the Company’s 2013 Stock Incentive Plan and 2021 Stock Incentive Plan, respectively. The following assumptions were used to estimate the fair value of stock options granted using the Black- Scholes-Merton option pricing model during the nine months ended September 30: 2021 2020 Assumptions: Risk-free interest rate 0.47% – 0.66 % 1.35% – 1.41 % Expected term (in years) 5.81 – 5.89 5.57 – 6.14 Expected volatility 49.83% – 49.98 % 43.11% – 43.91 % Expected dividend yield — % — % A summary of stock option activity under the Plans is as follows: Weighted Average Remaining Options Weighted Average Contractual Term Aggregate Outstanding Exercise Price in Years Intrinsic Value Balance at December 31, 2020 251,847 $ 1.00 8.06 $ 89,100 Granted 70,164 $ 5.74 9.64 140,436 Exercised (44,222) $ 1.00 — — Cancelled/forfeited (8,019) $ 1.00 — — Balance at September 30, 2021 269,770 $ 2.27 8.03 $ 1,103,834 Options exercisable at September 30, 2021 207,481 $ 1.00 7.54 $ 867,665 The aggregate intrinsic value in the table above represents the difference between the Company’s stock price as of the balance sheet date and the exercise price of each in-the-money option on the last day of the period. The total intrinsic value of stock options exercised was approximately $23,019 and $213,813 an during the three and nine months ended September 30, 2021, respectively. The weighted-average grant date fair value of stock options issued in the nine months ended September 30, 2021 and 2020 was $3.94 and $0.72, respectively. The Company recorded $399,821 and $29,287 of compensation expense for the three months ended September 30, 2021 and 2020, respectively. The Company recorded $450,231 and $80,598 of compensation expense for nine months ended September 30, 2021 and 2020, respectively. A total of $261,676 of unamortized compensation expense at September 30, 2021, will be recognized over the remaining requisite service period of 0.9 years. During the nine months period ending September 30, 2021 and 2020, the Company received proceeds of $44,390 and $0 from the exercise of stock options, respectively. 2021 Stock Incentive Plan On June 16, 2021, the Company adopted the iSpecimen Inc. 2021 Stock Incentive Plan (“the 2021 Plan”). The 2021 Plan was adopted to enhance our ability to attract, retain and motivate employees, officers, directors, consultants and advisors by providing such persons with equity ownership opportunities and performance-based incentives. The 2021 Plan authorizes options, restricted stock, restricted stock units and other stock-based awards. The Company’s Board of Directors, or any committee to which the Board of Directors delegates such authority, has the sole discretion in administering, interpreting, amending or accelerating the 2021 Plan. Awards may be made under the 2021 Plan for up to 608,000 shares of the Company’s common stock, and the 2021 Plan was made effective with the completion of the IPO. During the three months ended September 30, 2021, 419,545 equity awards were issued from the 2021 Plan. 10. SHARE-BASED COMPENSATION (continued) Restricted Stock Units During the three months ended September 30, 2021, the Company granted 120,250 restricted stock units to employees, resulting in expense of $48,957 recorded in general and administrative expense. These restricted stock units are subject to one-year cliff vesting, with 25% of the restricted stock units vesting on the first anniversary of issuance. The remaining During July 2021, the Company granted 189,396 restricted stock units to members of the executive team, resulting in expense of $293,588 recorded in general and administrative expense. These restricted stock units are subject to a four-year vesting period, with 20% of the units vesting immediately upon issuance. The remaining During July 2021, the Company granted 12,500 restricted stock units to board directors, resulting in expense of $13,083 recorded in general and administrative expense. These restricted stock units vest quarterly over a one-year period. As of September 30, 2021, unrecognized stock-based compensation expense related to the unvested restricted stock units was $65,417 which the Company expects to recognize on a straight-line basis over a weighted average period of approximately 0.83 years. Weighted Average Shares Grant Date Fair Value Unvested balance at January 1, 2020 — $ — Granted 322,146 6.40 Vested (37,879) (6.34) Unvested balance at December 31, 2020 284,267 $ 6.41 Performance Stock Units During July 2021, the Company issued 47,349 performance stock units to four members of the executive team pursuant to each executive's employment agreement executed in connection with the IPO. The performance stock units are subject to certain performance obligations relating to certain revenue and cost of revenue metrics to be determined at the beginning of each fiscal year within the four | 9. Stock Options In April 2013, the Company established the 2013 Stock Incentive Plan (the “2013 Plan”). Pursuant to the 2013 Plan, the Company’s Board of Directors (or committees and/or executive officers delegated by the Board of Directors) may grant incentive and nonqualified stock options, restricted stock and other share-based awards to the Company’s employees, officers, directors, consultants, and advisors. In November 2015, the 2013 Plan was amended to increase the number of shares that may be authorized for issuance to 309,029 shares. As of December 31, 2020, there were 111,589 shares available for future grants. The Company also maintains a 2010 Stock Incentive Plan (the “2010 Plan”). A total of 270,513 shares of common stock were authorized to be issued pursuant to the 2010 Plan, 156,603 shares have been issued, and there are no shares available for issuance, under the 2010 Plan. The following assumptions were used to estimate the fair value of stock options granted using the Black- Scholes-Merton option pricing model at December 31: 2020 2019 Assumptions: Risk-free interest rate 0.30% - 1.41% 1.59% - 2.58% Expected term (in years) 5.32 - 5.00 - 6.14 Expected volatility 43.11% - 50.14% 41.00% - 43.92% Expected dividend yield —% —% A summary of stock option activity under the Plans is as follows: Weighted Average Remaining Options Weighted Average Contractual Term Outstanding Exercise Price in Years Balance at January 1, 2019 90,799 $ 2.57 8.78 Granted 162,016 $ 1.13 Exercised (562) $ 6.52 Cancelled/forfeited (27,369) $ 6.09 Balance at December 31, 2019 224,884 $ 1.08 8.78 Granted 43,259 $ 1.00 Exercised — $ 1.00 Cancelled/forfeited (16,296) $ 4.20 Balance at December 31, 2020 251,847 $ 1.00 8.06 Options exercisable at December 31, 2020 180,716 $ 1.00 7.85 9. The weighted-average grant date fair value of stock options issued in 2020 and 2019 was $0.55 and $2.33, respectively. The Company recorded $92,866 and $360,379 of compensation expense in 2020 and 2019, respectively. A total of $109,629 of unamortized compensation expense at December 31, 2020, will be recognized over the remaining requisite service period of 2.48 years. During 2020 and 2019, the Company received proceeds of $0 and $3,674 from the exercise of stock options, respectively. On September 4, 2020, the Board of Directors of the Company approved the repricing of 253,349 then outstanding stock options to an exercise price of $1.00, accordingly the summary of stock option activity above has been updated to reflect the exercise price of $1.00 for all outstanding options. No other changes to the original stock option grant terms were made. The incremental compensation cost was measured as the fair value of the stock options immediately before and immediately after the modification. The Company determined the total incremental compensation cost from the modification to be $9,900 of which $7,078 related to fully vested options and was expensed as stock based compensation expense, and $2,822 related to unvested options and will be recognized over the remaining service period. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2020 | |
WARRANTS | |
WARRANT | 10. At December 31, 2020, the Company had outstanding warrants to purchase 23,309 shares of common stock at an exercise price of $0.06 per share, which expire in September 2021. The weighted average exercise price is $0.06 and the weighted average time to expiration is 0.75 years. During 2020 and 2019, no warrants to purchase common stock were issued, exercised or expired. |
INCOME TAXES
INCOME TAXES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
INCOME TAXES | ||
INCOME TAXES | 11. INCOME TAXES As of September 30, 2021, the Company had federal net operating loss carryforwards of approximately $28,400,000 of which approximately $13,000,000 expire at various periods through 2037 and approximately $15,400,000 can be carried forward indefinitely. As of September 30, 2021, the Company had state net operating loss carryforwards of approximately $21,300,000 that expire at various periods through 2041. At September 30, 2021, the Company had federal and state tax credits of approximately $800,000 available for future periods that expire at various periods through 2041. The Company has recorded a full valuation allowance against net deferred income tax assets due to a history of losses generated since inception. | 11. There was no provision for income taxes for the years ended December 31, 2020 and 2019 due to the Company’s operating losses and a full valuation allowance on deferred tax assets. The Company completed research and development studies covering all tax years currently under the applicable statute of limitations. The benefits of the study are reflected in the 2020 and 2019 financial statements as a tax credit receivable in the amount of $179,000 and $284,000, respectively. Significant components of the Company’s deferred tax assets and liabilities as of December 31 are as follows: 2020 2019 Deferred tax assets: Operating loss carryforwards $ 6,600,000 $ 5,600,000 Other 700,000 1,000,000 Total deferred tax assets 7,300,000 6,600,000 Deferred tax liability: Intangibles (250,000) (150,000) Total deferred tax liabilities (250,000) (150,000) Net deferred tax assets before valuation allowance 7,050,000 6,450,000 Valuation allowance (7,050,000) (6,450,000) Net deferred tax asset $ — $ — The Company has provided a valuation allowance against the deferred tax assets as it has incurred significant losses since its inception. Management currently believes that it is more likely than not that the deferred tax assets will not be realized in the future. The change in the valuation allowance during 2020 was an increase of $600,000. 11. At December 31, 2020, the Company had federal net operating loss (“NOL”) carryforwards of approximately $24,200,000 of which approximately $13,000,000 expire at various periods through 2037 and approximately $11,200,000 can be carried forward indefinitely. The Company also had state NOL carryforwards of approximately $18,900,000 that expire at various periods through 2040. At December 31, 2019 the Company had federal and state tax credits of approximately $700,000 available for future periods that expire at various periods through 2040. Due to changes in ownership provisions of the Internal Revenue Code, the availability of the Company’s NOL carryforwards may be subject to annual limitations under Section 382 of the Internal Revenue Code against taxable income in the future period, which could substantially limit the eventual utilization of such carryforwards. The Company applies the standards on uncertainty in income taxes. The Company did not have any significant unrecognized tax benefits during the year ended December 31, 2020. The Company’s U.S. federal operating losses have occurred since its inception and as such, tax years subject to potential tax examination could apply from that date because the utilization of net operating losses from prior years opens the relevant year to audit by the IRS and/or state taxing authorities. The Company’s income tax provision was computed using the federal statutory rate and average state statutory rates, net of related federal benefit. The following represents a reconciliation of the statutory income tax rates to the effective rates at December 31: 2020 2019 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) — % — % |
EMPLOYEE BENEFITS PLAN
EMPLOYEE BENEFITS PLAN | 12 Months Ended |
Dec. 31, 2020 | |
EMPLOYEE BENEFITS PLAN | |
EMPLOYEE BENEFITS PLAN | 12. The Company has established a defined contribution savings plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”). The 401(k) Plan is available to all eligible employees. The 401(k) Plan allows participants to defer a portion of their annual compensation subject to certain Internal Revenue Service limitations. The Company may make matching contributions and additional profit-sharing contributions at its discretion. The Company has not made any matching contributions to the 401(k) Plan during the years ended December 31, 2020 and 2019. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
SUBSEQUENT EVENTS | ||
SUBSEQUENT EVENTS | 12. SUBSEQUENT EVENTS Pursuant to the 2021 Plan, the Company granted 12,000 restricted stock units to employees during October 2021. Each restricted stock unit represents the right to receive one share of the Company’s common stock, subject to the terms and conditions set forth in the restricted stock unit award agreement and the 2021 Plan. The restricted stock units vest as follows: 25% from the one year anniversary of the vesting start date, and then the remainder of the shares will time-vest quarterly beginning fifteen months after the vesting start date and then every three months thereafter, through the fourth yearly anniversary of the vesting start date. | 13. Factoring Agreement On January 1, 2021 the Company entered into a Factoring Agreement (the “Agreement”) with Versant Funding LLC (“Versant”), in which the Company has agreed to sell a minimum of $1.2 million of its accounts receivable without recourse, and which we have granted Versant a security interest in substantially all of our assets, in accordance with the terms of the Agreement. Through March 26, 2021, the Company has factored, without recourse, approximately $2.3 million of its accounts receivable to Versant. Note Payable Loan Forgiveness On January 13, 2021, the PPP Loan was fully forgiven by the SBA. Related Party Convertible Notes Payable On March 8, 2021, the maturity date was further extended to June 30, 2021, for the Convertible Notes. 13. Bridge Notes and Related Party Bridge Notes On March 15, 2021, the Company entered into a Fifth Amendment to the Note Subscription Agreements and Secured Promissory Notes (referred to herein as the Bridge Notes and Related Party Bridge Notes in Note 6) (the “Amendment”). The terms of the Amendment are as follows: Maturity Date The Bridge Notes and Related Party Bridge Notes shall bear interest, on a non-compounding basis, at a rate of twenty four percent (24%) per annum prior to October 1, 2020 and at a rate of thirty percent (30%) per annum from and after October 1, 2020, due on maturity on the earlier of (i) the closing of an initial public offering yielding gross proceeds in excess of $18,000,000, exclusive of any existing Convertible Notes (a “Qualified IPO”), (ii) the sale of the Company, (iii) prepayment by the Company, or (iv) April 30, 2021. The Majority Lenders (defined in Note 6) may, with the approval of the Company, elect to extend the maturity date one or more times, at their discretion. Elective Conversion Upon a Qualified IPO The holders of the Bridge Notes and Related Party Bridge Notes may voluntarily elect, at any time prior the maturity date and up to March 19, 2021, to convert 50% or more of the outstanding unpaid principal plus any amount of outstanding unpaid interest at the time of the Qualified IPO, into the same class or series of securities of the Company to be offered and issued in the Qualified IPO (the “IPO Stock”). The conversion rate shall be equal to the issue price of the IPO Stock less a thirty percent (30%) discount (“the Elective Conversion Stock”). The elective conversion amount shall be deducted from the amount of principal and interest outstanding in order to arrive at an adjusted principal and interest repayment amount. The sum of the amounts being converted on the Bridge Notes and Related Party Bridge Notes shall first convert the outstanding principal and then the outstanding interest second. As of March 19, 2021, Bridge Notes and Related Party Bridge Note holders have elected to voluntarily convert approximately $3.8 million of outstanding principal and accrued interest to common stock at the time of the Qualified IPO. Repayment of Adjusted Outstanding Interest and Principal Upon a Qualified IPO If a Qualified IPO is consummated prior to the maturity date, and the holders have not voluntarily converted, the Company shall make a cash payment to the holders of the Bridge Notes and Related Party Bridge Notes equal to the greater of either the total adjusted outstanding interest or one and one-half times (1.50X) the Third-Party Loan Proceeds (“Note Repayment Proceeds”). Third-Party Loan Proceeds are defined as the net cash proceeds received by the Company from an institutional lender, commercial bank, or other similar lender consummated on or about the time of the Qualified IPO (or contingent upon the closing of the Qualified IPO). Repayments shall first be applied to the adjusted outstanding interest due in cash to the holders of the Bridge Notes and Related Party Bridge Notes. The residual value shall be next applied to the adjusted outstanding principal (the “Principal Repayment Proceeds”). The remaining cash repayment shall be calculated by multiplying the Principal Repayment Proceeds by a fraction, the numerator of which is equal to the adjusted principal repayment amount of such note holder, and the denominator of which is equal to the total adjusted outstanding principal to all note holders. In no event shall any cash payment be made to any note holder exceed the sum of the adjusted interest repayment amount plus the adjusted principal repayment amount for such note holder. 13. Automatic Conversion or Debt Extension Any remaining unpaid principal, calculated by subtracting the Principal Repayment Proceeds from the total adjusted outstanding principal ( the “Automatic Principal Conversion Amount”), shall then automatically convert into IPO Stock at a rate equal to the issue price of the IPO Stock less a ten percent (10%) discount (that is, at a rate of ninety percent (90%) of the issue price of the IPO Stock; such discounted IPO Stock; the “Automatic Conversion Stock”). If the Company is unable to repay at least twenty-five percent (25%) of the total adjusted outstanding principal of the Bridge Notes and Related Party Bridge Notes (“the “Principal Repayment Floor”), then no Automatic Conversion Stock shall be issued and the total adjusted outstanding principal on the Bridge Notes and Related Party Bridge Notes shall remain on the books of the Company under their existing Bridge Notes and Related Party Bridge Notes which shall automatically be amended to (i) have their interest rates adjusted to a rate of fifteen percent ( 15% ) per annum and (ii) have their maturity date set to a date that is eighteen (18) months from the date of the Qualified IPO. Reverse Stock Split On March 16, 2021, the Company approved a 1-for-5.545 reverse stock split (“reverse stock split”) of the Company’s common stock and preferred stock. On March 29, 2021, through a shareholder resolution, the shareholders of the Company approved the reverse stock split. All fractional shares as a result of the reverse stock split were rounded down and no fractional shares were issued in connection with the reverse stock split. The par value, authorized share amount, and other terms of the common stock and preferred stock were not affected by the reverse stock split. All share and per share amounts, including stock options, warrants, and restricted stock awards have been retroactively adjusted in these financial statements for all periods presented to reflect the reverse stock split. Further, exercise prices of stock options and warrants have been retroactively adjusted in these financial statements for all periods presented to reflect the reverse stock split. 2021 Stock Incentive Plan On June 16, 2021, the Company adopted the iSpecimen Inc. 2021 Stock Incentive Plan (“2021 Plan”). The 2021 Plan was adopted to enhance our ability to attract, retain and motivate employees, officers, directors, consultants and advisors by providing such persons with equity ownership opportunities and performance- based incentives. The 2021 Plan authorizes options, restricted stock, restricted stock units and other stock- based awards. Our Board of Directors, or any committee to which the Board of Directors delegates such authority, has the sole discretion in administering, interpreting, amending or accelerating the 2021 Plan. Awards may be made under the 2021 Plan for up to 608,000 shares of our common stock. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Basis of Presentation | Basis of Presentation The Company’s financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). | |
Use of Estimates | Use of Estimates The preparation of the Company’s unaudited interim condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company utilizes certain estimates in the determination of the fair value of its warrants, deferred tax valuation allowances, revenue recognition, share-based compensation, derivative liabilities for embedded conversion features, and accrued expenses amongst others. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results could differ from such estimates. | Use of Estimates The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company utilizes certain estimates in the determination of the fair value of its common stock and warrants, deferred tax valuation allowances, revenue recognition, share-based compensation, and accrued expenses amongst others. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results could differ from such estimates. |
Off-Balance Sheet Risk and Concentrations of Credit Risk | Off-Balance Sheet Risk and Concentrations of Credit Risk The Company has no significant off-balance sheet risks, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Cash accounts are maintained at financial institutions that potentially subject the Company to concentrations of credit risk. At September 30, 2021 and December 31, 2020, substantially all of the Company’s cash was deposited in accounts at one financial institution. The Company maintains its cash deposits, which at times may exceed the federally insured limits, with a reputable financial institution and, accordingly, the Company believes such funds are subject to minimal credit risk. Concentration of credit risk with respect to accounts receivable is typically related to customers who account for a significant portion of revenue. During the three months ended September 30, 2021, one customer represented approximately 16% of the Company’s revenues. During the three months ended September 30, 2020, two customers represented approximately 10% and 32% of the Company’s revenues. During the nine months ended September 30, 2021, one customer represented approximately 10% of the Company’s revenues. During the nine months ended September 30, 2020, two customers represented approximately 21% and 15% of the Company’s revenues. As of September 30, 2021, three customers each represented accounts As of September 30, 2021, three customers represented 23%, 17%, and 13%, respectively, of the Company’s unbilled accounts receivable balance. As of September 30, 2020, there were no customers with unbilled accounts receivable balances in excess of 10% of the total. During the three months ended September 30, 2021 and 2020, revenue attributable to customers located in foreign countries represented approximately 4% and 6% of revenue, respectively. During the nine months ended September 30, 2021 and 2020, revenue attributable to customers located in foreign countries represented approximately 5% and 6% of revenue, respectively. As of September 30, 2021 and 2020, accounts receivable attributable to customers located in foreign countries represented approximately 4% and 8% of accounts receivable, respectively. As of September 30, 2021 and 2020, accounts receivable-unbilled attributable to customers located in foreign countries represented approximately 5% and 12% of accounts receivable-unbilled, respectively. | Off-Balance Sheet Risk and Concentrations of Credit Risk The Company has no significant off-balance sheet risks, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Cash accounts are maintained at financial institutions that potentially subject the Company to concentrations of credit risk. At December 31, 2020 and 2019, substantially all of the Company’s cash was deposited in accounts at one financial institution. The Company maintains its cash deposits, which at times may exceed the federally insured limits, with a reputable financial institution and, accordingly, the Company believes such funds are subject to minimal credit risk. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Concentration of credit risk with respect to accounts receivable is typically related to customers who account for a significant portion of revenue. During 2020, two customers represented approximately 11% and 10% of the Company’s 2020 revenues and comprised 0% and 0% of accounts receivable and 0% and 5% of accounts receivable-unbilled at December 31, 2020. During 2019, three customers represented approximately 20%, 11%, and 10% of the Company’s 2019 revenues and comprised 4%, 44%, and 1% of accounts receivable, and 0%, 0%, and 0% of accounts receivable-unbilled at December 31, 2019. During the years ended December 31, 2020 and 2019, revenue attributable to customers located in foreign countries is approximately 6% and 23% of revenue, respectively. During the years ended December 31, 2020 and 2019, accounts receivable attributable to customers located in foreign countries is approximately 11% and 5% of accounts receivable, respectively. During the years ended December 31, 2020 and 2019, accounts receivable-unbilled attributable to customers located in foreign countries is approximately 0% and 17% of accounts receivable-unbilled, respectively. |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: Ø Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets. Ø Level 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Ø Level 3 — Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. For certain financial instruments, including cash, accounts receivable, and accounts payable, the carrying amounts approximate their fair values as of September 30, 2021 and December 31, 2020 because of their short-term nature. The liability in connection with conversion features included within certain of the Company’s Convertible Notes and Bridge Notes was classified as a derivative liability for embedded conversion features on the balance sheets and were considered to be a Level 3 liability. | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: ➢ Level 1 — ➢ Level 2 — ➢ Level 3 — For certain financial instruments, including cash, accounts receivable, and accounts payable, the carrying amounts approximate their fair values as of December 31, 2020 and 2019 because of their short-term nature. The liability in connection with conversion features included within certain of the Company’s convertible notes payable is classified as a derivative liability for embedded conversion features on the balance sheets and is considered to be a Level 3 liability. |
Derivative Liability for Embedded Conversion Features | Derivative Liability for Embedded Conversion Features The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivatives to be accounted for separately. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other bifurcated embedded derivative instruments in the convertible instrument, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The result of this accounting treatment is that the fair value of the embedded derivative is recorded as a liability and marked-to-market each balance sheet date, with the change in fair value recorded in the statements of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. | Derivative Liability for Embedded Conversion Features The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates its convertible notes to determine if those contracts or embedded components of those contracts qualify as derivatives to be accounted for separately. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other bifurcated embedded derivative instruments in the convertible instrument, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The result of this accounting treatment is that the fair value of the embedded derivative is recorded as a liability and marked-to-market each balance sheet date, with the change in fair value recorded in the statements of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. |
Recent Accounting Standards | Recent Accounting Standards From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. The Company has elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. | Recent Accounting Standards From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company. Accounting Standards Issued, Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses Measurement of Credit Losses on Financial Instruments In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity |
Revenue Recognition and Accounts Receivable | Revenue Recognition and Accounts Receivable The Company recognizes revenue using the five step approach as follows: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) we satisfy the performance obligations. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The Company generates revenue by procuring various specimens from hospitals, laboratories, and other supply sites, for the Company’s medical research customers using the Company’s proprietary software, the iSpecimen Marketplace, to identify, locate, and ultimately validate the required specimens to the Company’s customers’ requested specifications. The Company’s performance obligation is to procure a specimen meeting the customer specification(s) from a supplier, on a “best efforts” basis, for the Company’s customer at the agreed price per specimen as indicated in the customer contract with the Company. The Company does not currently charge suppliers or customers for the use of the Company’s proprietary software. Each customer will execute a material and data use agreement with the Company or agrees to online purchase terms, each of which includes terms such as specimen and data use, shipment terms, payment and cancellation terms. These are then supplemented by purchase orders that specify specimen requirements including detailed inclusion/exclusion criteria, quantities to be collected, and pricing. Collectively, these customer agreements represent the Company’s contracts with its customer. Generally, contracts have fixed unit pricing. For certain specimen orders, a refundable customer deposit may be required prior to order fulfillment depending on project set-up requirements, presented as deferred revenue. The Company expects to recognize the deferred revenue within the next twelve months. Specimen collections occur at supply sites within the Company’s network. “Collection” is when the specimen has been removed, or “collected” from the patient or donor. A specimen is often collected specifically for a particular Company order. Once collected, the specimen is assigned by the supplier to the Company and control of the specimen passes to the Company. “Accession” is the process whereby a collected specimen and associated data are registered and assigned in the iSpecimen Marketplace to a particular customer order, which can occur while a specimen is at the supplier site or while at the Company site and is when control of the specimen passes to the customer. Suppliers may ship specimens to the Company or directly to the customer, if specimens must be delivered within a short time period (less than 24 hours after collection) or shipping to the Company is not practical. The Company has evaluated principal versus agent considerations as part of the Company’s revenue recognition policy. The Company has concluded that it acts as principal in the arrangement as it manages the procurement process from beginning to end and determines which suppliers will be used to fulfill an order, usually take physical possession of the specimens, set prices for the specimens, and bear the responsibility for customer credit risk. The Company recognizes revenue over time, as the Company has created an asset with no alternative use to the Company which has an enforceable right to payment for performance completed to date. At contract inception, the Company reviews a contract, and related order upon receipt, to determine if the specimen ordered has an alternative use by us. Generally, specimens ordered do not have an alternative future use to the Company and the performance obligation is satisfied when the related specimens are accessioned. The Company uses an output method to recognize revenue for specimens with no alternative future use. The output is measured based on the number of specimens accessioned. In the rare circumstances where specimens do have an alternative future use, the Company's performance obligation is satisfied at the time of shipment. Customers are typically invoiced upon shipment. Depending on the quantity of specimens ordered, it may take several accounting periods to completely fulfill a purchase order. In other words, there can be multiple invoices issued for a single purchase order, reflecting the specimens being accessioned over time. However, specimens are generally shipped as soon as possible after they have been accessioned. Once a specimen that has no alternative future use, and for which the Company has an enforceable right to payment, has been accessioned, the Company records the offset to revenue in accounts receivable — unbilled. Once the specimen has been shipped and invoiced, a reclassification is made from accounts receivable — unbilled to accounts receivable. Customers are generally given fourteen days from the receipt of specimens to inspect the specimens to ensure compliance with specifications set forth in the purchase order documentation. Customers are entitled to either receive replacement specimens or receive reimbursement of payments made for such specimens. The Company has a nominal history of returns for nonacceptance of specimens delivered. When this has occurred, the Company has given the customer a credit for the returns. The Company has not recorded a returns allowance. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The following table summarizes the Company’s revenue for the following periods: Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Specimens – contracts with customers $ 2,671,655 $ 2,223,057 $ 8,448,164 $ 5,408,012 Shipping and other 46,879 27,090 138,053 58,363 Revenue $ 2,718,534 $ 2,250,147 $ 8,586,217 $ 5,466,375 The Company carries its accounts receivable at the invoiced amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable to determine if an allowance for doubtful accounts is necessary, based on economic conditions and each customer’s payment history. Receivables are written off when deemed uncollectible, with any future recoveries recorded as income when received. As of September 30, 2021 and December 31, 2020, the Company had an allowance for doubtful accounts of $141,952 and $108,096, respectively. The Company applies the practical expedient to account for shipping and handling activities as fulfillment cost rather than as a separate performance obligation. Shipping and handling costs incurred are included in cost of revenue. | Revenue Recognition and Accounts Receivable The Company recognizes revenue using the five step approach as follows: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) we satisfy the performance obligations. The Company generates revenue by procuring various specimens from hospitals, laboratories, and other supply sites, for our medical research customers using our proprietary software, the iSpecimen Marketplace, to identify, locate, and ultimately validate the required specimens to our customers’ requested specifications. The Company’s performance obligation is to procure a specimen meeting the customer specification(s) from a supplier, on a “best efforts” basis, for our customer at the agreed price per specimen as indicated in the customer contract with the Company. The Company does not currently charge suppliers or customers for the use of our proprietary software. Each customer will execute a material and data use agreement with the Company or agrees to online purchase terms, each of which includes terms such as specimen and data use, shipment terms, payment and cancellation terms. These are then supplemented by purchase orders that specify specimen requirements including detailed inclusion/exclusion criteria, quantities to be collected, and pricing. Collectively, these customer agreements represent the Company’s contracts with its customer. Generally, contracts have fixed unit pricing. For certain specimen orders, a refundable customer deposit may be required prior to order fulfillment depending on project set-up requirements, presented as deferred revenue. The Company expects to recognize the deferred revenue within the next twelve months. Specimen collections occur at supply sites within our network. “Collection” is when the specimen has been removed, or “collected” from the patient or donor. A specimen is often collected specifically for a particular Company order. Once collected, the specimen is assigned by the supplier to the Company and control of the specimen passes to the Company. “Accession” is the process whereby a collected specimen and associated data are registered and assigned in the iSpecimen Marketplace to a particular customer order, can occur while a specimen is at the supplier site or while at the Company site and is when control of the specimen passes to the customer. Suppliers may ship specimens to the Company or directly to the customer, if specimens must be delivered within a short time period (less than 24 hours after collection) or shipping to the Company is not practical. The Company has evaluated principal versus agent considerations as part of our revenue recognition policy. The Company has concluded that we act as principal in the arrangement as we manage the procurement process from beginning to end and determine which suppliers will be used to fulfill an order, usually take physical possession of the specimens, set prices for the specimens, and bear the responsibility for customer credit risk. The Company recognizes revenue over time, as we have created an asset with no alternative use to the Company and has an enforceable right to payment for performance completed to date. At contract inception, the Company reviews a contract and related order upon receipt to determine if the specimen ordered has an alternative use by us. In the rare circumstances where specimens do have an alternative future use, our performance obligation is satisfied at the time of shipment. Generally, specimens ordered do not have an alternative future use to the Company and the performance obligation is satisfied when the related specimens are accessioned. The Company uses an output method to recognize revenue for specimens with no alternative future use. The output is measured based on the number of specimens accessioned. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Customers are typically invoiced upon shipment. Depending on the quantity of specimens ordered, it may take several accounting periods to completely fulfill a purchase order. In other words, there can be multiple invoices issued for a single purchase order, reflecting the specimens being accessioned over time. However, specimens are generally shipped as soon as possible after they have been accessioned. Once a specimen that has no alternative future use, and for which we have an enforceable right to payment, has been accessioned, we record the offset to revenue in accounts receivable - unbilled. Once the specimen has been shipped and invoiced, a reclassification is made from accounts receivable - unbilled to accounts receivable. Customers are generally given fourteen days from the receipt of specimens to inspect the specimens to ensure compliance with specifications set forth in the purchase order documentation. Customers are entitled to either receive replacement specimens or receive reimbursement of payments made for such specimens. We have a nominal history of returns for nonacceptance of specimens delivered. When this has occurred, we have given the customer a credit for the returns. We have not recorded a returns allowance. The following table summarizes the Company’s revenue for the years ended December 31: 2020 2019 Specimens – contracts with customers $ 8,086,324 $ 4,215,002 Shipping and other 97,782 83,348 Revenue $ 8,184,106 $ 4,298,350 The Company carries its accounts receivable at the invoiced amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable to determine if an allowance for doubtful accounts is necessary, based on economic conditions and each customer’s payment history. Receivables are written off when deemed uncollectible, with any future recoveries recorded as income when received. As of December 31, 2020, and 2019, the Company had an allowance for doubtful accounts of $108,096 and $0, respectively. The Company applies the practical expedient to account for shipping and handling activities as fulfillment cost rather than as a separate performance obligation. Shipping and handling costs incurred are included in cost of revenue. |
Property and Equipment, net | Property and Equipment, net Property and equipment are stated at cost, net of accumulated depreciation and amortization. When an item is sold or retired, the costs and related accumulated depreciation or amortization are eliminated, and the resulting gain or loss, if any, is credited or charged to income in the statement of operations. The Company provides for depreciation and amortization using the straight-line method over the estimated useful lives of the respective assets. A summary of estimated useful lives is as follows: 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 Major improvements are capitalized while replacement, maintenance and repairs which do not improve or extend the lives of the respective assets are expensed as incurred. | |
Internally Developed Software, net | Internally Developed Software, net The Company capitalizes certain internal and external costs incurred during the application development stage of internal-use software projects until the software is ready for its intended use. Amortization of the asset commences when the software is complete and placed into service and is recorded in operating expenses. The Company amortizes completed internal-use software over its estimated useful life of five years on a straight-line basis. Costs incurred during the planning, training and post-implementation stages of the software development life cycle are classified as technology and are expensed to operations as incurred. | |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Management reviews long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable. An impairment loss is recognized when expected cash flows are less than the asset’s carrying value. Long-lived assets consist of property and equipment and internal-use software. No impairment charges were recorded for the years ended December 31, 2020 and 2019. | |
Debt Issuance Costs | Debt Issuance Costs Debt issuance costs are recorded net against the related debt and amortized to interest expense over the life of the related debt. During the years ended December 31, 2020 and 2019, amortized debt issuance costs of $9,185 and $7,252, respectively, were recorded as a component of interest expense. | |
Cost of Revenue | Cost of Revenue Cost of revenue primarily consists of the purchase price to acquire specimens from hospitals and laboratories; inbound and outbound shipping costs; supply costs related to samples; payment processing and related transaction costs; and costs paid to the supply sites to support sample collections. Shipping costs upon receipt of products from suppliers are recognized in cost of revenue. For the year ended December 31, 2020, the Company acquired approximately 21% of specimens from one vendor. For the year ended December 31, 2019, the Company acquired approximately 22%, 10%, and 10% of specimens from three vendors. | |
Technology | Technology Technology costs include payroll and related expenses for employees involved in the development and implementation of iSpecimen’s technology; software license and system maintenance fees; outsourced data center costs; data management costs; depreciation and amortization; and other expenses necessary to support technology initiatives. Collectively, these costs reflect the investments the Company makes in order to offer a wide variety of products and services to customers. Technology and data costs are generally expensed as incurred. A portion of technology costs are related to research and development. Costs incurred for research and development are expensed as incurred, except for software development costs that are eligible for capitalization. Research and development costs primarily include salaries and related expenses, in addition to the cost of external service providers. For the years ended December 31, 2020 and 2019, research and development costs totaled $319,235 and $155,244, respectively. | |
Sales and Marketing | Sales and Marketing Sales and marketing costs primarily consist of payroll and related expenses for personnel engaged in marketing and selling activities, including salaries and sales commissions; travel expenses; public relations and social media costs; ispecimen.com website development and maintenance costs; search engine optimization fees; advertising costs; direct marketing costs; trade shows and events fees; marketing and customer relationship management software; and other marketing-related costs. Advertising expenses consist primarily of marketing, public relations, and promotional materials. Advertising costs are expensed as incurred and totaled $111,304 and $168,115 for the years ended December 31, 2020 and 2019, respectively. | |
Supply Development | Supply Development The Company has agreements with supply partners that allow the Company to procure specimens from them and distribute these samples to customers. Supply development costs primarily include payroll and related expenses for personnel engaged in the development and management of this supply network; related travel expenses; regulatory compliance costs to support the network; and other supply development and management costs. | |
Fulfillment | Fulfillment Fulfillment costs primarily consist of those costs incurred in operating and staffing operations and customer service teams, including costs attributable to assess the feasibility of specimen requests; creating and managing orders; picking non-capitalizable, packaging, and preparing customer orders for shipment; responding to inquiries from customers; and laboratory equipment and supplies. | |
General and Administrative | General and Administrative General and administrative expenses primarily consist of costs for corporate functions, including payroll and related expenses for human resources, legal, finance, and executive teams; associated software licenses; facilities and equipment expenses, such as depreciation and amortization expense and rent, outside legal expenses, insurance costs, and other general and administrative costs. | |
Share-Based Compensation | Share-Based Compensation The Company records share-based compensation for options granted to employees, non-employees, and to members of the board of directors for their services on the board of directors based on the grant date fair value of awards issued, and the expense is recorded on a straight-line basis over the requisite service period. Forfeitures are recognized when they occur. The Company uses the Black-Scholes-Merton option pricing model to determine the fair value of stock options. The use of the Black-Scholes-Merton option-pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock. The Company has concluded that its historical share option exercise experience does not provide a reasonable basis upon which to estimate expected term. Therefore, the expected term was determined according to the simplified method, which is the average of the vesting tranche dates and the contractual term. Due to the lack of company specific historical and implied volatility data, the estimate of expected volatility is primarily based on the historical volatility of a group of similar companies that are publicly traded. For these analyses, companies with comparable characteristics are selected, including enterprise value and position within the industry, and with historical share price information sufficient to meet the expected life of the share-based awards. The Company computes the historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of its share-based awards. The risk-free interest rate is determined by reference to U.S. Treasury zero-coupon issues with remaining maturities similar to the expected term of the options. The Company has not paid, and does not anticipate paying, cash dividends on shares of its common stock. In order to determine the fair value of the Company’s common stock, the Company considered, among other things, contemporaneous valuations of the Company’s common stock, the Company’s business, financial condition and results of operations, including related industry trends affecting its operations; the likelihood of achieving a liquidity event, such as an initial public offering, or IPO, or sale, given prevailing market conditions; the lack of marketability of the Company’s common stock; the market performance of comparable publicly traded companies; and U.S. and global economic and capital market conditions. The fair value of the Company’s common stock was estimated to be $3.83 and $1.61 at December 31, 2020 and 2019, respectively. The Company conducted multiple valuations throughout the year ended December 31, 2020 and the estimate of the fair value of the Company’s common stock ranged from $0.39 and $3.83 as a result of the changes in the factors described above. | |
Income taxes | Income Taxes The Company provides for income taxes using the asset and liability method. The Company provides deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the Company’s financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. A valuation allowance is provided to reduce the deferred tax assets to the amount that will more likely than not be realized. The Company does not have any material uncertain tax positions for which reserves would be required. The Company will recognize interest and penalties related to uncertain tax positions, if any, in income tax expense. | |
Deferred Offering Costs | Deferred Offering Costs Deferred offering costs are included in prepaid and other current assets and consists of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly related to the planned initial public offering and that will be charged to additional paid-in capital upon the completion of the planned initial public offering. Should the planned initial public offering prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, will be charged to operations. For the year-ended December 31, 2020, the Company capitalized approximately $265,000 of deferred offering costs related to the planned initial public offering. | |
Deferred Initial Public Offering Costs | Deferred Initial Public Offering Costs The Company capitalizes certain legal, professional, accounting and other third-party fees that are directly associated with in-process equity issuances as deferred initial public offering costs until such equity issuances are consummated. After consummation of the equity issuance, these costs are recorded as a reduction in the capitalized amount associated with the equity issuance. Should the equity issuance be abandoned, the deferred initial public offering costs would be expensed immediately as a charge to operating expenses in the consolidated statement of operations. On June 21, 2021, the Company consummated its IPO; accordingly, the Company recognized deferred initial public offering costs of approximately $0.6 million as a reduction from gross proceeds associated with the IPO through additional paid-in capital in the accompanying condensed consolidated balance sheet. The Company recorded approximately $2.3 million of offering costs in additional paid-in capital in connection with the IPO. Accordingly, there were no deferred offering costs as of September 30, 2021. The Company had approximately $265,000 of deferred offering costs related to the IPO which were recorded in other current assets on the balance sheet as of December 31, 2020. | |
Restricted Stock Units (RSUs) | Restricted Stock Units (RSUs) The Company recognizes share-based compensation expense from restricted stock units (RSUs) ratably over the specified vesting period. The fair value of RSUs is determined to be the closing share price of the Company's common stock on the grant date. | |
Common Stock Warrants | Common Stock Warrants The Company accounts for common stock warrants as either equity instruments or liabilities, depending on the specific terms of the warrant agreement. The warrants shall be classified as a liability if 1) the underlying shares are classified as liabilities or 2) the entity can be required under any circumstances to settle the warrant by transferring cash or other assets. The measurement of equity-classified nonemployee share-based payments is generally fixed on the grant date and are considered compensatory. For additional discussion on warrants, see Note 9. | |
Net Loss Per Share | Net Loss Per Share Basic net loss per share is calculated by dividing net loss applicable to common stockholders by the weighted- average number of shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting the weighted-average number of shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net loss per share calculation, the potential impact of shares to be issued upon conversion of Series A, Series A-1 and Series B preferred stock, stock options, and warrants to purchase common stock are considered to be common stock equivalents, but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share applicable to common stockholders were the same for all periods presented. The table below provides common stock equivalents excluded from diluted net loss per share for the following periods: Nine months ended September 30, 2021 2020 Shares issuable upon conversion of preferred stock — 1,291,012 Shares issuable upon vesting of RSUs 284,267 — Shares issuable upon exercise of stock options 269,770 253,575 Shares issuable upon exercise of Lender Warrant to purchase common stock 12,500 23,309 Shares issuable upon exercise of Underwriter Warrants to purchase common stock 90,000 — | Net Loss Per Share Basic net loss per share is calculated by dividing net loss applicable to common stockholders by the weighted- average number of shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting the weighted-average number of shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net loss per share calculation, the potential impact of shares to be issued upon conversion of Series A, Series A-1 and Series B preferred stock, stock options, and warrants to purchase common stock are considered to be common stock equivalents, but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share applicable to common stockholders were the same for all periods presented. The table below provides total shares outstanding, as of December 31: 2020 2019 Shares issuable upon conversion of preferred stock 1,291,012 1,291,012 Shares issuable upon exercise of stock options 251,847 224,884 Shares issuable upon exercise of warrants to purchase common stock 23,309 23,309 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Summary of entity's revenue | Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Specimens – contracts with customers $ 2,671,655 $ 2,223,057 $ 8,448,164 $ 5,408,012 Shipping and other 46,879 27,090 138,053 58,363 Revenue $ 2,718,534 $ 2,250,147 $ 8,586,217 $ 5,466,375 | The following table summarizes the Company’s revenue for the years ended December 31: 2020 2019 Specimens – contracts with customers $ 8,086,324 $ 4,215,002 Shipping and other 97,782 83,348 Revenue $ 8,184,106 $ 4,298,350 |
Summary of total shares outstanding | 2020 2019 Shares issuable upon conversion of preferred stock 1,291,012 1,291,012 Shares issuable upon exercise of stock options 251,847 224,884 Shares issuable upon exercise of warrants to purchase common stock 23,309 23,309 | |
Summary of estimated useful lives | 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 | |
Schedule of common stock equivalents excluded from diluted net loss per share | Nine months ended September 30, 2021 2020 Shares issuable upon conversion of preferred stock — 1,291,012 Shares issuable upon vesting of RSUs 284,267 — Shares issuable upon exercise of stock options 269,770 253,575 Shares issuable upon exercise of Lender Warrant to purchase common stock 12,500 23,309 Shares issuable upon exercise of Underwriter Warrants to purchase common stock 90,000 — |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
PROPERTY AND EQUIPMENT, NET | ||
Summary of property and equipment, net | September 30, December 31, 2021 2020 (unaudited) Website $ 107,926 $ 105,376 Computer equipment and purchased software 84,589 84,589 Equipment 35,449 35,449 Furniture and fixtures 87,184 87,184 Leasehold improvements 24,935 24,935 Total property and equipment 340,083 337,533 Accumulated depreciation (295,334) (261,944) Total property and equipment, net $ 44,749 $ 75,589 | 2020 2019 Website $ 105,376 $ 105,376 Computer equipment and purchased software 84,589 84,481 Equipment 35,449 35,134 Furniture and fixtures 87,184 87,184 Leasehold improvements 24,935 24,935 Total property and equipment 337,533 337,110 Accumulated depreciation (261,944) (217,189) Total property and equipment, net $ 75,589 $ 119,921 |
FAIR VALUE OF DERIVATIVE LIAB_2
FAIR VALUE OF DERIVATIVE LIABILITY (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
FAIR VALUE OF DERIVATIVE LIABILITIES | ||
Summary of financial liabilities measured at fair value on a recurring basis | Fair Value at September 30, 2021 Total Level 1 Level 2 Level 3 Liabilities: Derivative liability on convertible notes payable, related parties $ — $ — $ — $ — Derivative liability on bridge notes payable and bridge notes payable, related parties — — — $ — Total liabilities $ — $ — $ — $ — Fair value at December 31, 2020 Total Level 1 Level 2 Level 3 Liabilities: Derivative liability on convertible notes payable, related parties $ 2,373,000 $ — $ — $ 2,373,000 Total liabilities $ 2,373,000 $ — $ — $ 2,373,000 | Fair value at December 31, 2020 Total Level 1 Level 2 Level 3 Liabilities: Derivative liability $ 2,373,000 $ — $ — $ 2,373,000 Total liabilities $ 2,373,000 $ — $ — $ 2,373,000 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 |
Summary of the changes in fair value of the derivative liabilities measured on a recurring basis using significant unobservable inputs (Level 3) | 2021 2020 Balance, beginning of period $ 2,373,000 $ 2,214,000 Derivative liability on bridge notes payable and bridge notes payable, related parties 3,614,000 — (Gain) loss included in earnings (1,311,700) 76,000 Write off of derivative liabilities in connection with debt conversion (4,675,300) — Balance, end of period (unaudited) $ — $ 2,290,000 | The table below provides a summary of the changes in fair value of the derivative liability measured on a recurring basis using significant unobservable inputs (Level 3) during the year ended December 31: 2020 2019 Balance, beginning of period $ 2,214,000 $ 2,765,000 Loss (gain) included in earnings 159,000 (551,000) Balance, end of period $ 2,373,000 $ 2,214,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
COMMITMENTS AND CONTINGENCIES | ||
Summary of monthly rental payments, presented by year | Year Ending December 31, Operating Leases 2021 (remaining) $ 40,353 2022 163,158 2023 165,254 2024 27,601 Total $ 396,366 | |
Summary of monthly rental payments, presented by year | Operating Years Ended December 31, Leases 2021 $ 161,062 2022 163,158 2023 165,254 2024 27,601 Total $ 517,075 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
SHARE-BASED COMPENSATION | ||
Summary of assumptions used to estimate the fair value of stock options granted using the Black-Scholes-Merton option pricing model | 2021 2020 Assumptions: Risk-free interest rate 0.47% – 0.66 % 1.35% – 1.41 % Expected term (in years) 5.81 – 5.89 5.57 – 6.14 Expected volatility 49.83% – 49.98 % 43.11% – 43.91 % Expected dividend yield — % — % | The following assumptions were used to estimate the fair value of stock options granted using the Black- Scholes-Merton option pricing model at December 31: 2020 2019 Assumptions: Risk-free interest rate 0.30% - 1.41% 1.59% - 2.58% Expected term (in years) 5.32 - 5.00 - 6.14 Expected volatility 43.11% - 50.14% 41.00% - 43.92% Expected dividend yield —% —% |
Summary of summary of stock option activity | Weighted Average Remaining Options Weighted Average Contractual Term Aggregate Outstanding Exercise Price in Years Intrinsic Value Balance at December 31, 2020 251,847 $ 1.00 8.06 $ 89,100 Granted 70,164 $ 5.74 9.64 140,436 Exercised (44,222) $ 1.00 — — Cancelled/forfeited (8,019) $ 1.00 — — Balance at September 30, 2021 269,770 $ 2.27 8.03 $ 1,103,834 Options exercisable at September 30, 2021 207,481 $ 1.00 7.54 $ 867,665 | A summary of stock option activity under the Plans is as follows: Weighted Average Remaining Options Weighted Average Contractual Term Outstanding Exercise Price in Years Balance at January 1, 2019 90,799 $ 2.57 8.78 Granted 162,016 $ 1.13 Exercised (562) $ 6.52 Cancelled/forfeited (27,369) $ 6.09 Balance at December 31, 2019 224,884 $ 1.08 8.78 Granted 43,259 $ 1.00 Exercised — $ 1.00 Cancelled/forfeited (16,296) $ 4.20 Balance at December 31, 2020 251,847 $ 1.00 8.06 Options exercisable at December 31, 2020 180,716 $ 1.00 7.85 9. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
INCOME TAXES | |
Summary of significant components of the Company's deferred tax assets and liabilities | 2020 2019 Deferred tax assets: Operating loss carryforwards $ 6,600,000 $ 5,600,000 Other 700,000 1,000,000 Total deferred tax assets 7,300,000 6,600,000 Deferred tax liability: Intangibles (250,000) (150,000) Total deferred tax liabilities (250,000) (150,000) Net deferred tax assets before valuation allowance 7,050,000 6,450,000 Valuation allowance (7,050,000) (6,450,000) Net deferred tax asset $ — $ — |
Summary of reconciliation of the statutory income tax rates to the effective rates | 2020 2019 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) — % — % |
NATURE OF BUSINESS (Details)
NATURE OF BUSINESS (Details) | Jun. 21, 2021USD ($)shares | Mar. 30, 2021 | Mar. 16, 2021 | Sep. 30, 2021USD ($) | Dec. 31, 2020USD ($)item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Mar. 15, 2021 | Dec. 31, 2019USD ($) |
Subsidiary, Sale of Stock [Line Items] | |||||||||
Number of Reporting Units | 1 | 1 | |||||||
Reverse stock split ratio | 0.18 | ||||||||
Number of convertible preferred shares outstanding | shares | 0 | ||||||||
Outstanding principal of convertible notes, converted | $ 5,500,000 | $ 4,000,000 | |||||||
Working capital deficit | 12,796,062 | $ 18,663,321 | |||||||
Accumulated deficit | (35,969,015) | (29,057,587) | $ (24,405,503) | ||||||
Cash | 9,790,732 | 695,909 | $ 53,893 | ||||||
Accounts payable and accrued expenses | $ 1,376,560 | 2,603,342 | |||||||
Bridge notes payable | $ 6,494,228 | ||||||||
Subsequent event | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Reverse stock split ratio | 5.545 | ||||||||
Interest rate | 15.00% | ||||||||
Convertible Notes to related parties | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Outstanding principal of convertible notes, converted | $ 5,491,663 | $ 5,500,000 | $ 5,500,000 | ||||||
Interest rate | 6.00% | 6.00% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - customer | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Concentration Risk [Line Items] | ||||||||
Number of Customers | 1 | 2 | 1 | 2 | 3 | |||
Concentration risk (as a percent) | 2.00% | |||||||
Customer One | ||||||||
Concentration Risk [Line Items] | ||||||||
Number of Customers | 1 | |||||||
Customer Three | ||||||||
Concentration Risk [Line Items] | ||||||||
Number of Customers | 3 | |||||||
Revenue | Customer concentration | Customer One | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 16.00% | 10.00% | 10.00% | 21.00% | 11.00% | 20.00% | ||
Revenue | Customer concentration | Customer Two | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 32.00% | 15.00% | 10.00% | 11.00% | ||||
Revenue | Customer concentration | Customer Three | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 10.00% | |||||||
Revenue | Geographic concentration | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 4.00% | 6.00% | 5.00% | 6.00% | ||||
Revenue | Geographic concentration | Customer One | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 6.00% | |||||||
Revenue | Geographic concentration | Customer Two | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 23.00% | |||||||
Account receivable | Credit concentration | Customer One | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 12.00% | 13.00% | 0.00% | 4.00% | ||||
Account receivable | Credit concentration | Customer Two | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 12.00% | 0.00% | 44.00% | |||||
Account receivable | Credit concentration | Customer Three | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 12.00% | 1.00% | ||||||
Account receivable | Geographic concentration | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 4.00% | 8.00% | ||||||
Account receivable | Geographic concentration | Customer One | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 11.00% | |||||||
Account receivable | Geographic concentration | Customer Two | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 5.00% | |||||||
Accounts receivable-unbilled | ||||||||
Concentration Risk [Line Items] | ||||||||
Number of Customers | 0 | |||||||
Percentage of unbilled excess accounts receivable | 10.00% | |||||||
Accounts receivable-unbilled | Customer Three | ||||||||
Concentration Risk [Line Items] | ||||||||
Number of Customers | 3 | |||||||
Accounts receivable-unbilled | Customer concentration | Customer One | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 0.00% | |||||||
Accounts receivable-unbilled | Customer concentration | Customer Two | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 0.00% | |||||||
Accounts receivable-unbilled | Customer concentration | Customer Three | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 0.00% | |||||||
Accounts receivable-unbilled | Credit concentration | Customer One | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 23.00% | 0.00% | ||||||
Accounts receivable-unbilled | Credit concentration | Customer Two | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 17.00% | 5.00% | ||||||
Accounts receivable-unbilled | Credit concentration | Customer Three | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 13.00% | |||||||
Accounts receivable-unbilled | Geographic concentration | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 5.00% | 12.00% | ||||||
Accounts receivable-unbilled | Geographic concentration | Customer One | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 0.00% | |||||||
Accounts receivable-unbilled | Geographic concentration | Customer Two | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 17.00% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Number of days from the receipt of specimens to inspect the specimens to ensure compliance | 14 days | 14 days |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition and Accounts Receivable (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||||||
Revenue | $ 2,718,534 | $ 2,250,147 | $ 8,586,217 | $ 5,466,375 | $ 8,184,106 | $ 4,298,350 |
Specimens | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 2,671,655 | 2,223,057 | 8,448,164 | 5,408,012 | 8,086,324 | 4,215,002 |
Shipping and other | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | $ 46,879 | $ 27,090 | $ 138,053 | $ 58,363 | $ 97,782 | $ 83,348 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Allowance for doubtful accounts (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Allowance for doubtful accounts | $ 141,952 | $ 108,096 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment, net (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Website | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life of property, plant and equipment | 3 years |
Computer equipment and purchased software | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life of property, plant and equipment | 5 years |
Equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life of property, plant and equipment | 5 years |
Furniture and fixtures | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life of property, plant and equipment | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Internally Developed Software, net (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Internal-use software | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life of software | 5 years |
Disclosure - SUMMARY OF SIGNIFI
Disclosure - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Impairment of Long-Lived Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Impairment charges | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Debt Issuance Costs (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Debt Issuance Costs | ||
Amortized debt issuance costs | $ 9,185 | $ 7,252 |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cost of Revenue (Details) - customer | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Concentration Risk [Line Items] | ||
Number of vendors | 1 | 3 |
Cost of Revenue | Vendor concentration | Vendor one | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 21.00% | 22.00% |
Cost of Revenue | Vendor concentration | Vendor two | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 10.00% | |
Cost of Revenue | Vendor concentration | Vendor three | ||
Concentration Risk [Line Items] | ||
Concentration Risk, Percentage | 10.00% |
SUMMARY OF SIGNIFICANT ACCOU_12
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Technology (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Communications and Information Technology [Abstract] | ||
Research and development costs | $ 319,235 | $ 155,244 |
SUMMARY OF SIGNIFICANT ACCOU_13
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Sales and Marketing (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Selling and Marketing Expense [Abstract] | ||
Advertising Expense | $ 111,304 | $ 168,115 |
SUMMARY OF SIGNIFICANT ACCOU_14
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Share Based Compensation (Details) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Estimated fair value of common stock | $ 0.39 | $ 1.61 |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Estimated fair value of common stock | $ 3.83 |
SUMMARY OF SIGNIFICANT ACCOU_15
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Deferred Offering Costs (Details) - USD ($) | Sep. 30, 2021 | Jun. 21, 2021 | Dec. 31, 2020 |
Deferred Costs | |||
Deferred Offering Costs | $ 0 | $ 600,000 | $ 265,000 |
SUMMARY OF SIGNIFICANT ACCOU_16
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Shares issuable upon conversion of preferred stock (Details) - shares | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Shares issuable upon conversion of preferred stock | 0 | 1,291,012 | 1,291,012 | 1,291,012 | |
Shares issuable upon exercise of stock options | 269,770 | 253,575 | 251,847 | 224,884 | 90,799 |
Shares issuable upon exercise of Lender Warrant to purchase common stock | 12,500 | 23,309 | 23,309 | 23,309 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment, Net, by Type [Abstract] | ||||||
Property and equipment, gross | $ 340,083 | $ 340,083 | $ 337,533 | $ 337,110 | ||
Accumulated depreciation | (295,334) | (295,334) | (261,944) | (217,189) | ||
Total property and equipment, net | 44,749 | 44,749 | 75,589 | 119,921 | ||
Depreciation expense | 11,130 | $ 4,883 | 33,390 | $ 33,563 | 44,758 | 57,360 |
Website | ||||||
Property, Plant and Equipment, Net, by Type [Abstract] | ||||||
Property and equipment, gross | 107,926 | 107,926 | 105,376 | 105,376 | ||
Computer equipment and purchased software | ||||||
Property, Plant and Equipment, Net, by Type [Abstract] | ||||||
Property and equipment, gross | 84,589 | 84,589 | 84,589 | 84,481 | ||
Equipment | ||||||
Property, Plant and Equipment, Net, by Type [Abstract] | ||||||
Property and equipment, gross | 35,449 | 35,449 | 35,449 | 35,134 | ||
Furniture and fixtures | ||||||
Property, Plant and Equipment, Net, by Type [Abstract] | ||||||
Property and equipment, gross | 87,184 | 87,184 | 87,184 | 87,184 | ||
Leasehold improvements | ||||||
Property, Plant and Equipment, Net, by Type [Abstract] | ||||||
Property and equipment, gross | $ 24,935 | $ 24,935 | $ 24,935 | $ 24,935 |
INTERNALLY DEVELOPED SOFTWARE_2
INTERNALLY DEVELOPED SOFTWARE, NET (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
INTERNALLY DEVELOPED SOFTWARE, NET | ||||||
Internally developed software capitalized | $ 731,172 | $ 864,921 | $ 1,102,186 | $ 1,447,062 | ||
Amortization expense | $ 242,860 | $ 179,168 | $ 714,444 | $ 599,425 | $ 774,929 | $ 577,605 |
DEBT (Details)
DEBT (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
May 31, 2021 | May 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
DEBT | |||||||
Proceeds from issuance of note payable | $ 3,500,000 | $ 783,008 | $ 783,008 | ||||
Gain on extinguishment of note payable | $ 788,156 | ||||||
PPP Loan | |||||||
DEBT | |||||||
Proceeds from issuance of note payable | $ 783,008 | $ 783,008 | |||||
Rate of interest accrued on outstanding principal | 1.00% | 1.00% | 1.00% | ||||
Interest expense | $ 0 | $ 1,961 | $ 279 | 2,518 | $ 5,127 | ||
Gain on extinguishment of note payable | $ 788,156 |
DEBT - Related Party Convertibl
DEBT - Related Party Convertible Notes Payable (Details) | Jun. 21, 2021USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($)item | Dec. 31, 2017USD ($)item |
DEBT | |||||||||
Outstanding principal of convertible notes, converted | $ 5,500,000 | $ 4,000,000 | |||||||
Convertible Notes to related parties | |||||||||
DEBT | |||||||||
Outstanding principal of convertible notes, converted | $ 5,491,663 | $ 5,500,000 | $ 5,500,000 | ||||||
Bearing interest rate | 6.00% | 6.00% | |||||||
Minimum gross proceeds from equity financing required for conversion of debt | $ 10,000,000 | $ 10,000,000 | |||||||
Number of consecutive quarters for achievement of positive free cash flow from operations required for conversion of debt | item | 2 | 2 | |||||||
Term prior to maturity date for achievement of positive free cash flow from operations required for conversion of debt | 90 days | 90 days | |||||||
Interest expense on the Convertible Notes | $ 0 | $ 83,178 | 156,411 | $ 247,726 | |||||
Unamortized debt issuance costs | 0 | 0 | $ 9,189 | ||||||
Debt discounts | $ 0 | 0 | $ 0 | ||||||
Amortization of debt discounts | $ 1,088 | $ 141,628 | |||||||
Conversion rate | 30.00% | 30.00% | |||||||
Convertible Notes | |||||||||
DEBT | |||||||||
Interest expense on the Convertible Notes | $ 330,904 | $ 330,000 | |||||||
Unamortized debt issuance costs | 9,189 | 13,539 | |||||||
Debt discounts | 0 | 136,185 | |||||||
Amortization of debt discounts | $ 136,185 | $ 544,741 |
DEBT - Conversion of Convertibl
DEBT - Conversion of Convertible Notes Payable (Details) - USD ($) | Jun. 21, 2021 | Sep. 30, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
DEBT | ||||
Accrued interest | $ 1,300,000 | $ 64,110 | ||
Number of shares issued upon conversion | 1,206,614 | 842,429 | ||
Conversion price | $ 5.60 | $ 5.60 | $ 5.60 | |
Convertible Notes outstanding | $ 0 | $ 0 | ||
If the Qualified Equity Financing Occurs Within 12 months, if the Holder is Majority Lender [Member] | ||||
DEBT | ||||
Discount to issue price (as a percent) | 20.00% | |||
Percentage of Issue Price After Discount | 80.00% | |||
If the Qualified Equity Financing Occurs Within 12 months, if the holder is not Majority Lender [Member] | ||||
DEBT | ||||
Discount to issue price (as a percent) | 10.00% | |||
Percentage of Issue Price After Discount | 90.00% | |||
If the Qualified Equity Financing Occurs Later Than 12 months, if the Holder is Majority Lender [Member] | ||||
DEBT | ||||
Discount to issue price (as a percent) | 30.00% | |||
Percentage of Issue Price After Discount | 70.00% | |||
If the Qualified Equity Financing Occurs Later Than 12 months, if the holder is not Majority Lender [Member] | ||||
DEBT | ||||
Discount to issue price (as a percent) | 20.00% | |||
Percentage of Issue Price After Discount | 80.00% | |||
Convertible Notes | ||||
DEBT | ||||
Extension term of debt | 18 months |
DEBT - Bridge Financing (Detail
DEBT - Bridge Financing (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | May 20, 2021USD ($) | Apr. 16, 2021USD ($) | Oct. 01, 2020 | Dec. 31, 2018USD ($) | |
Bridge Notes | ||||||||||
DEBT | ||||||||||
Face amount of debt | $ 6,500,000 | $ 6,500,000 | $ 6,500,000 | |||||||
Interest rate | 15.00% | 15.00% | 30.00% | |||||||
Percentage of outstanding unpaid principal, holders may elect to convert | 50.00% | |||||||||
Discount rate on issue price of stock in elective conversion stock | 30.00% | |||||||||
Number of times of third party loan proceeds | 1.50 | |||||||||
Interest Expense, Debt | $ 54,247 | $ 382,521 | $ 1,014,657 | $ 1,123,890 | 1,168,738 | 549,248 | ||||
Debt Issuance Costs, Net | 0 | 7,222 | 0 | 7,222 | 5,771 | 8,673 | ||||
Interest expense associated with Related Party Bridge Notes | $ 5,876 | $ 48,371 | $ 320,469 | $ 694,189 | ||||||
Related Party Bridge Notes | ||||||||||
DEBT | ||||||||||
Face amount of debt | 1,905,000 | 1,905,000 | $ 500,000 | $ 500,000 | $ 1,905,000 | |||||
Amount outstanding | 1,905,000 | 1,655,000 | ||||||||
Interest expense associated with Related Party Bridge Notes | $ 446,660 | $ 292,938 | ||||||||
Minimum | Bridge Notes | ||||||||||
DEBT | ||||||||||
Interest rate | 24.00% | |||||||||
Minimum | Related Party Bridge Notes | ||||||||||
DEBT | ||||||||||
Interest rate | 24.00% | |||||||||
Maximum | Bridge Notes | ||||||||||
DEBT | ||||||||||
Interest rate | 30.00% | |||||||||
Maximum | Related Party Bridge Notes | ||||||||||
DEBT | ||||||||||
Interest rate | 30.00% |
FAIR VALUE OF DERIVATIVE LIAB_3
FAIR VALUE OF DERIVATIVE LIABILITY - Derivative liabilities (Details) - Recurring - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Liabilities: | |||
Derivative liability | $ 0 | $ 2,373,000 | $ 2,214,000 |
Convertible notes payable, related parties | |||
Liabilities: | |||
Derivative liability | 0 | 2,373,000 | |
Bridge Notes | |||
Liabilities: | |||
Derivative liability | 0 | ||
Level 1 | |||
Liabilities: | |||
Derivative liability | 0 | ||
Level 1 | Convertible notes payable, related parties | |||
Liabilities: | |||
Derivative liability | 0 | 0 | |
Level 1 | Bridge Notes | |||
Liabilities: | |||
Derivative liability | 0 | ||
Level 2 | |||
Liabilities: | |||
Derivative liability | 0 | ||
Level 2 | Convertible notes payable, related parties | |||
Liabilities: | |||
Derivative liability | 0 | 0 | |
Level 2 | Bridge Notes | |||
Liabilities: | |||
Derivative liability | 0 | ||
Level 3 | |||
Liabilities: | |||
Derivative liability | 0 | 2,373,000 | $ 2,214,000 |
Level 3 | Convertible notes payable, related parties | |||
Liabilities: | |||
Derivative liability | 0 | $ 2,373,000 | |
Level 3 | Bridge Notes | |||
Liabilities: | |||
Derivative liability | $ 0 |
FAIR VALUE OF DERIVATIVE LIAB_4
FAIR VALUE OF DERIVATIVE LIABILITY - Changes in fair value of the derivative liabilities measured on a recurring basis (Details) - Derivative Financial Instruments, Liabilities [Member] - Level 3 - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Balance, beginning of period | $ 2,373,000 | $ 2,214,000 | $ 2,214,000 | $ 2,765,000 |
Derivative liability on bridge notes payable and bridge notes payable, related parties | 3,614,000 | 0 | ||
Loss (gain) included in earnings | (1,311,700) | 76,000 | 159,000 | (551,000) |
Write off of derivative liabilities in connection with debt conversion | (4,675,300) | 0 | ||
Balance, end of period | $ 0 | $ 2,290,000 | $ 2,373,000 | $ 2,214,000 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Operating Leases | ||
2021 | $ 161,062 | |
2022 | 163,158 | |
2023 | 165,254 | |
2024 | 27,601 | |
Total | 517,075 | |
Rent expense | $ 136,281 | $ 172,621 |
CONVERTIBLE PREFERRED STOCK A_2
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT (Details) - $ / shares | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Number of shares authorized | 250,000,000 | ||
Common stock, shares authorized | 200,000,000 | 16,000,000 | 16,000,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 50,000,000 | ||
Preferred stock, par value | $ 0.0001 | ||
Convertible Preferred Stock | |||
Convertible preferred stock, authorized | 8,000,000 | ||
Convertible preferred stock, par value | $ 0.0001 | ||
Series A Convertible Preferred Stock | |||
Convertible preferred stock, authorized | 3,427,871 | 3,427,871 | 3,427,871 |
Convertible preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Series A-1 Convertible Preferred Stock | |||
Convertible preferred stock, authorized | 556,550 | 556,550 | 556,550 |
Convertible preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Series B Convertible Preferred Stock | |||
Convertible preferred stock, authorized | 3,200,000 | 3,200,000 | 3,200,000 |
Convertible preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Undesignated preferred stock | |||
Convertible preferred stock, authorized | 815,579 |
CONVERTIBLE PREFERRED STOCK A_3
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT - Preferred Stock Dividends - (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2020 | Sep. 30, 2021 | Jun. 21, 2021 | Sep. 30, 2020 | Dec. 31, 2019 | |
Convertible preferred stock, shares issued upon conversion | 1,291,012 | 0 | 1,291,012 | 1,291,012 | |
Dividends declared | $ 0 | ||||
Convertible Preferred Stock | |||||
Annual rate of dividend | 6.00% | ||||
Accrued but unpaid cumulative dividends | $ 0 | ||||
Series A Convertible Preferred Stock | |||||
Original Issue Price | $ 4.22529 | ||||
Cumulative aggregate amounts of arrearages in preferred dividends | $ 1,323,766 | ||||
Per-share amounts of arrearages in cumulative preferred dividends | $ 2.14 | ||||
Series A-1 Convertible Preferred Stock | |||||
Original Issue Price | $ 5.58985 | ||||
Cumulative aggregate amounts of arrearages in preferred dividends | $ 219,129 | ||||
Per-share amounts of arrearages in cumulative preferred dividends | $ 2.18 | ||||
Series B Convertible Preferred Stock | |||||
Original Issue Price | $ 13.97445 | ||||
Cumulative aggregate amounts of arrearages in preferred dividends | $ 2,604,243 | ||||
Per-share amounts of arrearages in cumulative preferred dividends | $ 4.55 | ||||
Initial Public Offering | |||||
Outstanding preferred stock | 0 | 1,291,012 | |||
Convertible preferred stock, shares issued upon conversion | 1,291,012 |
CONVERTIBLE PREFERRED STOCK A_4
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT - Conversion - (Details) | 12 Months Ended |
Dec. 31, 2020USD ($)director | |
Minimum gross proceeds required for automatic conversion of preferred stock | $ | $ 25,000,000 |
Series A and A-1 convertible preferred stock | |
Number of directors who may be appointed by shareholders | 1 |
Series B Convertible Preferred Stock | |
Number of directors who may be appointed by shareholders | 1 |
CONVERTIBLE PREFERRED STOCK A_5
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT - Common Stock - (Details) | Aug. 01, 2021USD ($)$ / sharesshares | Jul. 01, 2021USD ($)$ / sharesshares | Jun. 21, 2021USD ($)$ / sharesshares | Sep. 30, 2021USD ($) | Sep. 30, 2021USD ($)shares | Dec. 31, 2020directorVote |
Class of Stock [Line Items] | ||||||
Aggregate gross proceeds | $ 18,000,000 | |||||
Number of shares issued upon conversion | shares | 1,206,614 | 842,429 | ||||
Shares issued in exchange for investor relation services (in shares) | shares | 2,000 | |||||
Share price | $ / shares | $ 6.25 | |||||
Shares issued in exchange for investor relation services | $ 12,500 | $ 12,500 | ||||
Other offering costs | $ 2,339,816 | |||||
Common Stock | ||||||
Class of Stock [Line Items] | ||||||
Number of votes per share | Vote | 1 | |||||
Number of directors who may be appointed by shareholders | director | 1 | |||||
Initial Public Offering | ||||||
Class of Stock [Line Items] | ||||||
Number of shares issued and sold | shares | 2,250,000 | 2,250,000 | ||||
Underwriting discounts | $ 1,900,000 | |||||
Number of shares issued upon conversion | shares | 1,206,614 | |||||
Other offering costs | 600,000 | |||||
Net proceeds | $ 18,200,000 | $ 15,700,000 | ||||
Share price | $ / shares | $ 8 | |||||
Other offering costs | $ 600,000 | |||||
Overallotment | ||||||
Class of Stock [Line Items] | ||||||
Number of shares issued and sold | shares | 337,500 | |||||
Net proceeds from issuance of shares | $ 2,500,000 | |||||
Aggregate gross proceeds | 2,700,000 | |||||
Underwriting discounts | 200,000 | |||||
Net proceeds | $ 18,200,000 | |||||
Share price | $ / shares | $ 8 | |||||
Other offering costs | $ 600,000 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - shares | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | Nov. 30, 2015 | |
2013 Stock Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares that may be authorized for issuance | 309,029 | ||
Number of shares available for future grants | 111,589 | ||
Common Stock, Capital Shares Reserved for Future Issuance | 99,493 | ||
2010 Stock Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares that may be authorized for issuance | 270,513 | ||
Number of shares available for future grants | 0 | ||
Number of shares issued | 156,603 | ||
2021 Stock Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares that may be authorized for issuance | 608,000 | ||
Number of shares issued | 419,545 | ||
Common Stock, Capital Shares Reserved for Future Issuance | 188,455 |
SHARE-BASED COMPENSATION - Esti
SHARE-BASED COMPENSATION - Estimate the fair value of stock options (Details) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Assumptions used to estimate the fair value of stock options granted | ||||
Risk-free interest rate, minimum | 0.47% | 1.35% | ||
Risk-free interest rate, maximum | 0.66% | 1.41% | ||
Expected volatility, minimum | 49.83% | 43.11% | ||
Expected volatility, maximum | 49.98% | 43.91% | ||
Expected dividend yield | 0.00% | 0.00% | ||
Minimum | ||||
Assumptions used to estimate the fair value of stock options granted | ||||
Risk-free interest rate, minimum | 0.30% | 1.59% | ||
Expected term (in years) | 5 years 9 months 21 days | 5 years 6 months 25 days | 5 years 3 months 25 days | 5 years |
Expected volatility, minimum | 43.11% | 41.00% | ||
Maximum | ||||
Assumptions used to estimate the fair value of stock options granted | ||||
Risk-free interest rate, maximum | 1.41% | 2.58% | ||
Expected term (in years) | 5 years 10 months 20 days | 6 years 1 month 20 days | 6 years 1 month 20 days | 6 years 1 month 20 days |
Expected volatility, maximum | 50.14% | 43.92% |
SHARE-BASED COMPENSATION - Stoc
SHARE-BASED COMPENSATION - Stock option activity (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Options Outstanding | ||||
Balance at the beginning | 251,847 | 224,884 | 90,799 | |
Granted | 43,259 | 162,016 | ||
Exercised | (562) | |||
Cancelled/forfeited | (16,296) | (27,369) | ||
Balance at the end | 269,770 | 251,847 | 224,884 | 90,799 |
Options exercisable at the end | 180,716 | |||
Weighted Average Exercise Price | ||||
Balance at the beginning (in dollars per share) | $ 1 | $ 1.08 | $ 2.57 | |
Granted (in dollars per share) | 1 | 1.13 | ||
Exercised (in dollars per share) | 1 | 6.52 | ||
Cancelled/forfeited (in dollars per share) | 4.20 | 6.09 | ||
Balance at the end (in dollars per share) | 1 | $ 1.08 | $ 2.57 | |
Options exercisable at the end (in dollars per share) | $ 1 | |||
Weighted Average Remaining Contractual Term (in years) | ||||
Weighted Average Remaining Contractual Term (in years) | 8 years 21 days | 8 years 9 months 10 days | 8 years 9 months 10 days | |
Options exercisable at the end (in years) | 7 years 10 months 6 days | |||
2013 Stock Incentive Plan | ||||
Options Outstanding | ||||
Balance at the beginning | 251,847 | |||
Granted | 70,164 | |||
Exercised | (44,222) | |||
Cancelled/forfeited | (8,019) | |||
Balance at the end | 269,770 | 251,847 | ||
Options exercisable at the end | 207,481 | |||
Weighted Average Exercise Price | ||||
Balance at the beginning (in dollars per share) | $ 1 | |||
Granted (in dollars per share) | 5.74 | |||
Exercised (in dollars per share) | 1 | |||
Cancelled/forfeited (in dollars per share) | 1 | |||
Balance at the end (in dollars per share) | 2.27 | $ 1 | ||
Options exercisable at the end (in dollars per share) | $ 1 | |||
Weighted Average Remaining Contractual Term (in years) | ||||
Weighted Average Remaining Contractual Term (in years) | 8 years 10 days | 8 years 21 days | ||
Granted (in years) | 9 years 7 months 20 days | |||
Options exercisable at the end (in years) | 7 years 6 months 14 days | |||
Share Based Compensation Arrangement By Share Based Payment Award Options Aggregate Intrinsic Value | ||||
Aggregate Intrinsic Value (in dollars) | $ 1,103,834 | $ 89,100 | ||
Aggregate Granted Intrinsic Value (in dollars) | 140,436 | |||
Options exercisable at the end (in dollars) | $ 867,665 |
SHARE-BASED COMPENSATION - Outs
SHARE-BASED COMPENSATION - Outstanding principal and all unpaid and accrued interest (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
SHARE-BASED COMPENSATION | ||||||
Total intrinsic value of stock options exercised | $ 23,019 | $ 213,813 | ||||
Weighted-average grant date fair value | $ 3.94 | $ 0.72 | $ 0.55 | $ 2.33 | ||
Compensation expense | 399,821 | $ 29,287 | $ 450,231 | $ 80,598 | $ 92,866 | $ 360,379 |
Unamortized compensation expense | $ 261,676 | $ 261,676 | $ 109,629 | |||
Unamortized compensation expense recognized over the remaining requisite service period | 10 months 24 days | 2 years 5 months 23 days | ||||
Proceeds from exercise of stock options | $ 44,394 | $ 0 | $ 0 | $ 3,674 |
SHARE-BASED COMPENSATION - Addi
SHARE-BASED COMPENSATION - Additional Information (Details) - USD ($) | Jul. 21, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Sep. 04, 2020 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Compensation expense | $ 399,821 | $ 29,287 | $ 450,231 | $ 80,598 | $ 92,866 | $ 360,379 | ||
Repricing of number of shares outstanding | 253,349 | |||||||
Exercise price repriced | $ 1 | |||||||
Total incremental compensation cost from the modification | 9,900 | |||||||
Incremental compensation cost from the modification related to fully vested options and was expensed as stock based compensation expense | 7,078 | |||||||
Incremental compensation cost from the modification related to unvested options and will be recognized over the remaining service period | $ 2,822 | |||||||
Performance Shares [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of shares issued | 47,349 | |||||||
Compensation expense | $ 0 | $ 0 | ||||||
2021 Stock Incentive Plan | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of shares authorized | 608,000 | 608,000 | ||||||
Number of shares issued | 419,545 |
Warrants (Details)
Warrants (Details) - $ / shares | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
WARRANTS | ||||
Warrants to purchase shares of common stock | 23,309 | |||
Warrants, exercise price | $ 0.06 | |||
Warrants exercisable term | 9 years 10 months 13 days | 9 months | ||
Warrants to purchase common stock issued | 12,500 | 23,309 | 23,309 | 23,309 |
Issuance of common stock through exercise of warrants (in shares) | 0 | 0 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2021 | |
Operating Loss Carryforwards [Line Items] | |||
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | $ 600,000 | ||
Income Tax Expense (Benefit) | 0 | $ (157,000) | |
Tax Credit Carryforward, Amount | 179,000 | 284,000 | $ 800,000 |
Federal | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | 24,200,000 | 28,400,000 | |
Net operating loss carryforwards, subject to expiration | 13,000,000 | 13,000,000 | |
Net operating loss carryforwards, carried forward indefinitely | 11,200,000 | 15,400,000 | |
Tax Credit Carryforward, Amount | $ 700,000 | ||
State | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | $ 18,900,000 | $ 21,300,000 |
INCOME TAXES - Significant comp
INCOME TAXES - Significant components of the Company's deferred tax assets and liabilities (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Components of Deferred Tax Assets and Liabilities [Abstract] | ||
Deferred tax assets: Operating loss carryforwards | $ 6,600,000 | $ 5,600,000 |
Other | 700,000 | 1,000,000 |
Total deferred tax assets | 7,300,000 | 6,600,000 |
Deferred tax liability: | ||
Intangibles | (250,000) | (150,000) |
Total deferred tax liabilities | (250,000) | (150,000) |
Net deferred tax assets before valuation allowance | 7,050,000 | 6,450,000 |
Valuation allowance | (7,050,000) | (6,450,000) |
Net deferred tax asset | $ 0 | $ 0 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of the statutory income tax rates (Details) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Reconciliation to statutory rates | ||
Expected federal income taxes benefit at statutory rates | (21.00%) | (21.00%) |
Expected state tax benefit at statutory rates, net of federal benefit | (8.00%) | (8.00%) |
Change in valuation allowance | 29.00% | 29.00% |
Income tax expense (benefit) | 0.00% | 0.00% |
SUBSEQUENT EVENTS - Factoring A
SUBSEQUENT EVENTS - Factoring Agreement (Details) - Subsequent event - Factoring Agreement - Versant - USD ($) $ in Millions | Mar. 26, 2021 | Jan. 01, 2021 |
Subsequent Event [Line Items] | ||
Minimum amount agreed to factor, without recourse of its accounts receivable | $ 1.2 | |
Amount factored, without recourse of its accounts receivable | $ 2.3 |
SUBSEQUENT EVENTS - Bridge Note
SUBSEQUENT EVENTS - Bridge Notes and Related Party Bridge Notes (Details) - USD ($) | Mar. 19, 2021 | Mar. 15, 2021 | Oct. 01, 2020 |
Bridge Notes and Related Party Bridge Notes | |||
Subsequent Event [Line Items] | |||
Interest rate | 24.00% | ||
Subsequent event | |||
Subsequent Event [Line Items] | |||
Interest rate | 15.00% | ||
Subsequent event | Bridge Notes and Related Party Bridge Notes | |||
Subsequent Event [Line Items] | |||
Interest rate | 30.00% | ||
Maturity date based on gross proceeds of Qualified IPO | $ 18,000,000 | ||
Percentage of outstanding unpaid principal plus any amount of outstanding unpaid interest that the holders may elect to convert | 50.00% | ||
Discount to issue price (as a percent) | 30.00% | ||
Outstanding principal and accrued interest that the holders have elected to convert | $ 3,800,000 |
SUBSEQUENT EVENTS - Automatic C
SUBSEQUENT EVENTS - Automatic Conversion or Debt Extension (Details) | Mar. 19, 2021 | Mar. 15, 2021 | Oct. 01, 2020 |
Bridge Notes and Related Party Bridge Notes | |||
Subsequent Event [Line Items] | |||
Interest rate | 24.00% | ||
Subsequent event | |||
Subsequent Event [Line Items] | |||
Issue price of the preferred stock after discount (as a percent) | 90.00% | ||
Interest rate | 15.00% | ||
Subsequent event | Automatic Principal Conversion Amount | |||
Subsequent Event [Line Items] | |||
Discount to issue price (as a percent) | 10.00% | ||
Subsequent event | Bridge Notes and Related Party Bridge Notes | |||
Subsequent Event [Line Items] | |||
Discount to issue price (as a percent) | 30.00% | ||
Interest rate | 30.00% | ||
Maturity term | 18 months | ||
Subsequent event | Bridge Notes and Related Party Bridge Notes | Principal Repayment Floor | |||
Subsequent Event [Line Items] | |||
Principal Repayment Floor | 25.00% |
SUBSEQUENT EVENTS - Reverse Sto
SUBSEQUENT EVENTS - Reverse Stock Split (Details) | Mar. 30, 2021 | Mar. 16, 2021 | Mar. 29, 2021shares |
Subsequent Event [Line Items] | |||
Reverse stock split ratio | 0.18 | ||
Subsequent event | |||
Subsequent Event [Line Items] | |||
Reverse stock split ratio | 5.545 | ||
Number of fractional shares issued | 0 |
SUBSEQUENT EVENTS - 2021 Stock
SUBSEQUENT EVENTS - 2021 Stock Incentive Plan (Details) | Jun. 16, 2021shares |
Subsequent event | 2021 Plan | |
Subsequent Event [Line Items] | |
Number of shares that may be authorized for issuance | 608,000 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | |||||||||
Cash | $ 9,790,732 | $ 695,909 | $ 53,893 | ||||||
Accounts receivable - unbilled | 1,750,744 | 652,761 | 454,576 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $141,952 and $108,096 at September 30, 2021 and December 31, 2020, respectively | 2,718,682 | 1,526,392 | 833,580 | ||||||
Prepaid expenses and other current assets | 459,321 | 417,929 | 134,135 | ||||||
Tax credit receivable, current portion | 179,376 | 179,376 | 104,478 | ||||||
Total current assets | 14,898,855 | 3,472,367 | 1,580,662 | ||||||
Property and equipment, net | 44,749 | 75,589 | 119,921 | ||||||
Internally developed software, net | 2,650,867 | 2,634,139 | 2,306,882 | ||||||
Tax credit receivable, net of current portion | 179,522 | ||||||||
Security deposits | 27,601 | 27,601 | 27,601 | ||||||
Total assets | 17,622,072 | 6,209,696 | 4,214,588 | ||||||
Current liabilities: | |||||||||
Accounts payable | 351,424 | 1,792,432 | 737,794 | ||||||
Accrued expenses | 1,025,136 | 810,910 | 471,348 | ||||||
Accrued interest | 7,510 | 3,696,944 | 1,745,515 | ||||||
Convertible notes payable, related parties, net of unamortized debt discount and debt issuance costs | 5,490,811 | 5,350,278 | |||||||
Derivative liability for embedded conversion features on convertible notes payable | 2,373,000 | 2,214,000 | |||||||
Bridge notes payable, net of debt issuance costs | 4,589,228 | 3,586,326 | |||||||
Bridge notes payable, related parties | 1,905,000 | 1,655,000 | |||||||
Note payable, current portion | 604,109 | ||||||||
Deferred revenue | 718,723 | 873,254 | |||||||
Total current liabilities | 2,102,793 | 22,135,688 | 15,760,261 | ||||||
Note payable, net of current portion | 178,899 | ||||||||
Term loan | 3,428,380 | ||||||||
Total liabilities | 5,531,173 | 22,314,587 | 15,760,261 | ||||||
Commitments and contingencies | |||||||||
Total convertible preferred stock | 11,173,076 | 11,173,076 | |||||||
Stockholders' equity (deficit) | |||||||||
Common stock, $0.0001 par value, 200,000,000 shares authorized, 6,996,758 issued, and 6,965,758 outstanding at September 30, 2021, and 16,000,000 shares authorized, 967,213 issued and 936,213 outstanding at December 31, 2020 | 697 | 94 | 94 | ||||||
Additional paid-in capital | 48,059,389 | 1,779,698 | 1,686,832 | ||||||
Treasury stock, 31,000 shares at September 30, 2021 and December 31, 2020, at cost | (172) | (172) | (172) | ||||||
Accumulated deficit | (35,969,015) | (29,057,587) | (24,405,503) | ||||||
Total stockholders' equity (deficit) | 12,090,899 | $ 10,679,275 | $ (31,219,422) | (27,277,967) | $ (25,696,691) | $ (24,479,488) | $ (24,334,683) | (22,718,749) | $ (18,423,752) |
Total liabilities, convertible preferred stock and stockholders' equity (deficit) | 17,622,072 | 6,209,696 | 4,214,588 | ||||||
Series B Convertible Preferred Stock | |||||||||
Current liabilities: | |||||||||
Total convertible preferred stock | 0 | 0 | 7,999,997 | 7,999,997 | 7,999,997 | 7,999,997 | 7,999,997 | 7,999,997 | 7,999,997 |
Series A-1 Convertible Preferred Stock | |||||||||
Current liabilities: | |||||||||
Total convertible preferred stock | 0 | 0 | 561,041 | 561,041 | 561,041 | 561,041 | 561,041 | 561,041 | 561,041 |
Series A Convertible Preferred Stock | |||||||||
Current liabilities: | |||||||||
Total convertible preferred stock | $ 0 | $ 0 | $ 2,612,038 | $ 2,612,038 | $ 2,612,038 | $ 2,612,038 | $ 2,612,038 | $ 2,612,038 | $ 2,612,038 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2021 | Jun. 30, 2021 | Jun. 21, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Accounts receivable, allowance for doubtful accounts | $ 141,952 | $ 108,096 | $ 0 | |||||||
Temporary Equity, Shares Outstanding | 0 | |||||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||
Common Stock, Shares Authorized | 200,000,000 | 16,000,000 | 16,000,000 | |||||||
Common Stock, Shares, Issued | 6,996,758 | 967,213 | 967,213 | |||||||
Common Stock, Shares, Outstanding | 6,965,758 | 936,213 | 936,213 | |||||||
Treasury Stock, Shares | 31,000 | 31,000 | 31,000 | |||||||
Convertible Preferred Stock | ||||||||||
Temporary Equity, Par or Stated Value Per Share | $ 0.0001 | |||||||||
Temporary Equity, Shares Authorized | 8,000,000 | |||||||||
Series B Convertible Preferred Stock | ||||||||||
Temporary Equity, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||
Temporary Equity, Shares Authorized | 3,200,000 | 3,200,000 | 3,200,000 | |||||||
Temporary Equity, Shares Issued | 0 | 572,465 | 572,465 | |||||||
Temporary Equity, Shares Outstanding | 0 | 0 | 572,465 | 572,465 | 572,465 | 572,465 | 572,465 | 572,465 | 572,465 | |
Series A-1 Convertible Preferred Stock | ||||||||||
Temporary Equity, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||
Temporary Equity, Shares Authorized | 556,550 | 556,550 | 556,550 | |||||||
Temporary Equity, Shares Issued | 0 | 100,365 | 100,365 | |||||||
Temporary Equity, Shares Outstanding | 0 | 0 | 100,365 | 100,365 | 100,365 | 100,365 | 100,365 | 100,365 | 100,365 | |
Series A Convertible Preferred Stock | ||||||||||
Temporary Equity, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||
Temporary Equity, Shares Authorized | 3,427,871 | 3,427,871 | 3,427,871 | |||||||
Temporary Equity, Shares Issued | 0 | 618,182 | 618,182 | |||||||
Temporary Equity, Shares Outstanding | 0 | 0 | 618,182 | 618,182 | 618,182 | 618,182 | 618,182 | 618,182 | 618,182 |
Condensed Statements of Operati
Condensed Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Condensed Statements of Operations | ||||||||||
Revenue | $ 2,718,534 | $ 2,250,147 | $ 8,586,217 | $ 5,466,375 | $ 8,184,106 | $ 4,298,350 | ||||
Operating expenses: | ||||||||||
Cost of revenue | 913,833 | 903,862 | 4,026,680 | 2,032,111 | 3,585,477 | 2,127,900 | ||||
Technology | 543,581 | 413,381 | 1,315,331 | 1,131,695 | 1,426,473 | 993,329 | ||||
Sales and marketing | 513,107 | 506,641 | 1,690,085 | 1,305,897 | 1,775,347 | 1,413,059 | ||||
Supply development | 171,595 | 133,007 | 383,864 | 395,200 | 495,967 | 792,778 | ||||
Fulfillment | 399,145 | 241,785 | 955,516 | 642,140 | 853,450 | 914,633 | ||||
General and administrative | 1,636,346 | 774,550 | 4,144,989 | 1,431,262 | 2,453,772 | 1,936,740 | ||||
Total operating expenses | 4,177,607 | 2,973,226 | 12,516,465 | 6,938,305 | 10,590,486 | 8,178,439 | ||||
Loss from operations | (1,459,073) | (723,079) | (3,930,248) | (1,471,930) | (2,406,380) | (3,880,089) | ||||
Other expense, net | ||||||||||
Interest expense | (75,922) | (469,477) | (2,062,548) | (1,517,697) | (2,096,795) | (1,724,450) | ||||
Change in fair value of derivative liability on convertible notes | (54,000) | (271,000) | (76,000) | (159,000) | 551,000 | |||||
Change in fair value of derivative liability on bridge notes and bridge notes, related parties | 1,582,700 | |||||||||
Gain (loss) on extinguishment of bridge notes and bridge notes, related parties | (2,740,425) | |||||||||
Loss on extinguishment of convertible notes and convertible notes, related parties | (260,185) | |||||||||
Gain on extinguishment of note payable | 788,156 | |||||||||
Other income | (9,654) | (168,859) | ||||||||
Other expense, net | (21,687) | (21,756) | 6,691 | |||||||
Interest income | 437 | 630 | ||||||||
Interest income | 3,659 | 87 | 3,878 | 396 | ||||||
Other expense, net | (93,950) | (523,390) | (2,981,180) | (1,586,610) | (2,245,704) | (1,003,961) | ||||
Net loss before benefit from income taxes | (1,553,023) | (1,246,469) | (6,911,428) | (3,058,540) | (4,652,084) | (4,884,050) | ||||
Benefit from income taxes | 0 | 157,000 | ||||||||
Net loss | $ (1,553,023) | $ (1,394,914) | $ (3,963,491) | $ (1,246,469) | $ (174,092) | $ (1,637,979) | $ (6,911,428) | $ (3,058,540) | $ (4,652,084) | $ (4,727,050) |
Net loss per share | ||||||||||
Basic and diluted (in dollar per share) | $ (0.22) | $ (1.33) | $ (2.17) | $ (3.27) | $ (4.97) | $ (5.05) | ||||
Weighted average common shares outstanding | ||||||||||
Basic and diluted (in shares) | 6,960,330 | 936,213 | 3,190,060 | 936,213 | 936,213 | 936,096 |
Condensed Statements of Changes
Condensed Statements of Changes in Convertible Preferred Stock and Stockholders' Equity (Deficit) - USD ($) | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Deficit | Series B Convertible Preferred Stock | Series A-1 Convertible Preferred Stock | Series A Convertible Preferred Stock | Total |
Balance at the beginning at Dec. 31, 2018 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | |||||
Balance at the beginning (in shares) at Dec. 31, 2018 | 572,465 | 100,365 | 618,182 | |||||
Balances at the end at Dec. 31, 2019 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | $ 11,173,076 | ||||
Balances at the end (in shares) at Dec. 31, 2019 | 572,465 | 100,365 | 618,182 | |||||
Balance at the beginning at Dec. 31, 2018 | $ 94 | $ (172) | $ 1,322,779 | $ (19,746,453) | $ (18,423,752) | |||
Balance at the beginning (in shares) at Dec. 31, 2018 | 935,651 | 31,000 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock through exercise of warrants (in shares) | 0 | |||||||
Issuance of common stock through exercise of stock options | 3,674 | $ 3,674 | ||||||
Issuance of common stock through exercise of stock options (in shares) | 562 | 562 | ||||||
Share-based compensation expense | 360,379 | $ 360,379 | ||||||
Net loss | (4,727,050) | (4,727,050) | ||||||
Balance at the end at Dec. 31, 2019 | $ 94 | $ (172) | 1,686,832 | (24,405,503) | (22,718,749) | |||
Balance at the end (in shares) at Dec. 31, 2019 | 936,213 | 31,000 | ||||||
Balances at the end at Mar. 31, 2020 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | |||||
Balances at the end (in shares) at Mar. 31, 2020 | 572,465 | 100,365 | 618,182 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Share-based compensation expense | 22,045 | 22,045 | ||||||
Net loss | (1,637,979) | (1,637,979) | ||||||
Balance at the end at Mar. 31, 2020 | $ 94 | $ (172) | 1,708,877 | (26,043,482) | (24,334,683) | |||
Balance at the end (in shares) at Mar. 31, 2020 | 936,213 | 31,000 | ||||||
Balance at the beginning at Dec. 31, 2019 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | 11,173,076 | ||||
Balance at the beginning (in shares) at Dec. 31, 2019 | 572,465 | 100,365 | 618,182 | |||||
Balances at the end at Sep. 30, 2020 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | |||||
Balances at the end (in shares) at Sep. 30, 2020 | 572,465 | 100,365 | 618,182 | |||||
Balance at the beginning at Dec. 31, 2019 | $ 94 | $ (172) | 1,686,832 | (24,405,503) | (22,718,749) | |||
Balance at the beginning (in shares) at Dec. 31, 2019 | 936,213 | 31,000 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Conversion of principal and accrued interest of convertible notes and bridge notes into common stock upon initial public offering | 16,392,344 | |||||||
Net loss | (3,058,540) | |||||||
Balance at the end at Sep. 30, 2020 | $ 94 | $ (172) | 1,767,430 | (27,464,043) | (25,696,691) | |||
Balance at the end (in shares) at Sep. 30, 2020 | 936,213 | 31,000 | ||||||
Balance at the beginning at Dec. 31, 2019 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | 11,173,076 | ||||
Balance at the beginning (in shares) at Dec. 31, 2019 | 572,465 | 100,365 | 618,182 | |||||
Balances at the end at Dec. 31, 2020 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | 11,173,076 | ||||
Balances at the end (in shares) at Dec. 31, 2020 | 572,465 | 100,365 | 618,182 | |||||
Balance at the beginning at Dec. 31, 2019 | $ 94 | $ (172) | 1,686,832 | (24,405,503) | $ (22,718,749) | |||
Balance at the beginning (in shares) at Dec. 31, 2019 | 936,213 | 31,000 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock through exercise of warrants (in shares) | 0 | |||||||
Share-based compensation expense | 92,866 | $ 92,866 | ||||||
Net loss | (4,652,084) | (4,652,084) | ||||||
Balance at the end at Dec. 31, 2020 | $ 94 | $ (172) | 1,779,698 | (29,057,587) | (27,277,967) | |||
Balance at the end (in shares) at Dec. 31, 2020 | 936,213 | 31,000 | ||||||
Balance at the beginning at Mar. 31, 2020 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | |||||
Balance at the beginning (in shares) at Mar. 31, 2020 | 572,465 | 100,365 | 618,182 | |||||
Balances at the end at Jun. 30, 2020 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | |||||
Balances at the end (in shares) at Jun. 30, 2020 | 572,465 | 100,365 | 618,182 | |||||
Balance at the beginning at Mar. 31, 2020 | $ 94 | $ (172) | 1,708,877 | (26,043,482) | (24,334,683) | |||
Balance at the beginning (in shares) at Mar. 31, 2020 | 936,213 | 31,000 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Share-based compensation expense | 29,287 | 29,287 | ||||||
Net loss | (174,092) | (174,092) | ||||||
Balance at the end at Jun. 30, 2020 | $ 94 | $ (172) | 1,738,164 | (26,217,574) | (24,479,488) | |||
Balance at the end (in shares) at Jun. 30, 2020 | 936,213 | 31,000 | ||||||
Balances at the end at Sep. 30, 2020 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | |||||
Balances at the end (in shares) at Sep. 30, 2020 | 572,465 | 100,365 | 618,182 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Share-based compensation expense | 29,266 | 29,266 | ||||||
Net loss | (1,246,469) | (1,246,469) | ||||||
Balance at the end at Sep. 30, 2020 | $ 94 | $ (172) | 1,767,430 | (27,464,043) | (25,696,691) | |||
Balance at the end (in shares) at Sep. 30, 2020 | 936,213 | 31,000 | ||||||
Balance at the beginning at Dec. 31, 2020 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | 11,173,076 | ||||
Balance at the beginning (in shares) at Dec. 31, 2020 | 572,465 | 100,365 | 618,182 | |||||
Balances at the end at Mar. 31, 2021 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | |||||
Balances at the end (in shares) at Mar. 31, 2021 | 572,465 | 100,365 | 618,182 | |||||
Balance at the beginning at Dec. 31, 2020 | $ 94 | $ (172) | 1,779,698 | (29,057,587) | (27,277,967) | |||
Balance at the beginning (in shares) at Dec. 31, 2020 | 936,213 | 31,000 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Share-based compensation expense | 22,036 | 22,036 | ||||||
Net loss | (3,963,491) | (3,963,491) | ||||||
Balance at the end at Mar. 31, 2021 | $ 94 | $ (172) | 1,801,734 | (33,021,078) | (31,219,422) | |||
Balance at the end (in shares) at Mar. 31, 2021 | 936,213 | 31,000 | ||||||
Balance at the beginning at Dec. 31, 2020 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | 11,173,076 | ||||
Balance at the beginning (in shares) at Dec. 31, 2020 | 572,465 | 100,365 | 618,182 | |||||
Balances at the end at Sep. 30, 2021 | $ 0 | $ 0 | $ 0 | |||||
Balances at the end (in shares) at Sep. 30, 2021 | 0 | 0 | 0 | |||||
Balance at the beginning at Dec. 31, 2020 | $ 94 | $ (172) | 1,779,698 | (29,057,587) | (27,277,967) | |||
Balance at the beginning (in shares) at Dec. 31, 2020 | 936,213 | 31,000 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Conversion of principal and accrued interest of convertible notes and bridge notes into common stock upon initial public offering | 16,392,344 | |||||||
Net loss | (6,911,428) | |||||||
Balance at the end at Sep. 30, 2021 | $ 697 | $ (172) | 48,059,389 | (35,969,015) | 12,090,899 | |||
Balance at the end (in shares) at Sep. 30, 2021 | 6,965,758 | 31,000 | ||||||
Balance at the beginning at Mar. 31, 2021 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | |||||
Balance at the beginning (in shares) at Mar. 31, 2021 | 572,465 | 100,365 | 618,182 | |||||
Convertible preferred Stock | ||||||||
Conversion of redeemable convertible preferred stock into common stock upon initial public offering | $ (7,999,997) | $ (561,041) | $ (2,612,038) | |||||
Conversion of redeemable convertible preferred stock into common stock upon initial public offering (in shares) | (572,465) | (100,365) | (618,182) | |||||
Balances at the end at Jun. 30, 2021 | $ 0 | $ 0 | $ 0 | |||||
Balances at the end (in shares) at Jun. 30, 2021 | 0 | 0 | 0 | |||||
Balance at the beginning at Mar. 31, 2021 | $ 94 | $ (172) | 1,801,734 | (33,021,078) | (31,219,422) | |||
Balance at the beginning (in shares) at Mar. 31, 2021 | 936,213 | 31,000 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Conversion of redeemable convertible preferred stock into common stock upon initial public offering | $ 129 | 11,172,947 | 11,173,076 | |||||
Conversion of redeemable convertible preferred stock into common stock upon initial public offering (in shares) | 1,291,012 | |||||||
Conversion of principal and accrued interest of convertible notes and bridge notes into common stock upon initial public offering | $ 205 | 16,392,139 | 16,392,344 | |||||
Conversion of principal and accrued interest of convertible notes and bridge notes into common stock upon initial public offering (shares) | 2,049,043 | |||||||
Issuance of common stock in connection with public offering | $ 225 | 17,999,775 | 18,000,000 | |||||
Issuance of common stock in connection with public offering (in shares) | 2,250,000 | |||||||
Offering costs in connection with public offering | (2,339,816) | (2,339,816) | ||||||
Issuance of common stock through exercise of stock options | $ 4 | 39,629 | 39,633 | |||||
Issuance of common stock through exercise of stock options (in shares) | 39,461 | |||||||
Share-based compensation expense | 28,374 | 28,374 | ||||||
Net loss | (1,394,914) | (1,394,914) | ||||||
Balance at the end at Jun. 30, 2021 | $ 657 | $ (172) | 45,094,782 | (34,415,992) | 10,679,275 | |||
Balance at the end (in shares) at Jun. 30, 2021 | 6,565,729 | 31,000 | ||||||
Balances at the end at Sep. 30, 2021 | $ 0 | $ 0 | $ 0 | |||||
Balances at the end (in shares) at Sep. 30, 2021 | 0 | 0 | 0 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock in connection with public offering over-allotment option exercise | $ 34 | 2,497,467 | 2,497,501 | |||||
Issuance of common stock in connection with public offering over-allotment option exercise (in shares) | 337,500 | |||||||
Issuance of common stock in exchange for services | 12,500 | 12,500 | ||||||
Issuance of common stock in exchange for services (in shares) | 2,000 | |||||||
Issuance of common stock through exercise of warrants | $ 2 | 990 | 992 | |||||
Issuance of common stock through exercise of warrants (in shares) | 17,889 | |||||||
Issuance of warrants in connection with debt | 49,072 | 49,072 | ||||||
Issuance of common stock through exercise of stock options | 4,761 | 4,761 | ||||||
Issuance of common stock through exercise of stock options (in shares) | 4,761 | |||||||
Share-based compensation expense (in shares) | 37,879 | |||||||
Share-based compensation expense | $ 4 | 399,817 | 399,821 | |||||
Net loss | (1,553,023) | (1,553,023) | ||||||
Balance at the end at Sep. 30, 2021 | $ 697 | $ (172) | $ 48,059,389 | $ (35,969,015) | $ 12,090,899 | |||
Balance at the end (in shares) at Sep. 30, 2021 | 6,965,758 | 31,000 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net loss | $ (6,911,428) | $ (3,058,540) | $ (4,652,084) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Share-based compensation | 450,231 | 80,598 | 92,866 |
Common shares issued in exchange for services | 12,500 | ||
Amortization of internally developed software | 714,444 | 599,425 | 774,929 |
Depreciation of property and equipment | 33,390 | 33,563 | 44,758 |
Bad debt expense | 33,856 | 108,096 | |
Amortization of discount and debt issuance costs on convertible notes | 1,088 | 141,628 | 143,435 |
Amortization of debt issuance costs on note payable | 3,277 | ||
Amortization of discount on bridge notes | 869,600 | ||
Change in fair value of derivative liabilities | (1,311,700) | 76,000 | 159,000 |
Loss on extinguishment on bridge notes | 2,740,425 | ||
Loss on extinguishment of convertible notes | 260,185 | ||
Gain on extinguishment on note payable | (788,156) | ||
Change in operating assets and liabilities: | |||
Accounts receivable | (1,226,146) | (924,827) | (800,908) |
Accounts receivable-unbilled | (1,097,983) | 130,813 | (198,185) |
Prepaid expenses and other current assets | (41,392) | (6,970) | (226,374) |
Tax credit receivable | 104,624 | 104,624 | |
Accounts payable | (1,441,008) | 474,263 | 1,054,638 |
Accrued expenses | 214,226 | 129,644 | 282,142 |
Accrued interest | (1,709,579) | 1,374,139 | 1,951,429 |
Deferred revenue | (154,531) | 581,912 | 873,254 |
Net cash used in operating activities | (9,348,701) | (263,728) | (288,380) |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchase of property and equipment | (2,550) | (1,006) | |
Purchase of property and equipment | (426) | ||
Capitalization of internally developed software | (731,172) | (864,921) | (1,102,186) |
Net cash used in investing activities | (733,722) | (865,927) | (1,102,612) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from issuance of bridge notes payable | 500,000 | 1,250,000 | 1,250,000 |
Proceeds from issuance of note payable | 3,500,000 | 783,008 | 783,008 |
Proceeds from exercise of stock options | 44,394 | 0 | 0 |
Proceeds from issuance of common stock in connection with public offering | 18,000,000 | ||
Payment of offering costs in connection with the issuance of common stock in connection with public offering | (2,339,816) | ||
Proceeds from exercise of warrants | 992 | ||
Proceeds from issuance of over-allotment shares of common stock , net of transaction costs of $202,499 | 2,497,501 | ||
Payment of principal to bridge note holders | (3,000,000) | ||
Payment of debt issuance costs in connection with note payable | (25,825) | ||
Net cash provided by financing activities | 19,177,246 | 2,033,008 | 2,033,008 |
Net increase in cash | 9,094,823 | 903,353 | 642,016 |
Cash at beginning of period | 695,909 | 53,893 | 53,893 |
Cash at end of period | 9,790,732 | $ 957,246 | 695,909 |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest | 2,824,032 | ||
Supplemental disclosure of non-cash investing and financing activities: | |||
Conversion of redeemable convertible preferred stock into common stock | 11,173,076 | ||
Conversion of convertible notes and accrued interest into common stock | 6,748,729 | ||
Conversion of bridge notes and accrued interest into common stock | 4,717,646 | ||
Deferred offering costs included in accrued expenses | $ (57,420) | ||
Issuance of common stock warrants as offering costs in connection with public offering of common stock | 374,400 | ||
Issuance of common stock warrants in connection with Term Loan | $ 49,072 |
Condensed Statements of Cash _2
Condensed Statements of Cash Flows (Parenthetical) | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Condensed Statements of Cash Flows | |
Transaction costs | $ 202,499 |
NATURE OF BUSINESS AND BASIS OF
NATURE OF BUSINESS AND BASIS OF PRESENTATION | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | ||
NATURE OF BUSINESS AND BASIS OF PRESENTATION | 1. NATURE OF BUSINESS AND BASIS OF PRESENTATION Business iSpecimen Inc. (“iSpecimen” or the “Company”) was incorporated in 2009 under the laws of the state of Delaware. The Company has developed and launched a proprietary online marketplace platform that connects medical researchers who need access to subjects, samples, and data, with hospitals, laboratories, and other organizations who have access to them. iSpecimen is a technology-driven company founded to address a critical challenge: how to connect life science researchers who need human biofluids, tissues, and living cells (“biospecimens”) for their research, with biospecimens available (but not easily accessible) in healthcare provider organizations worldwide. The Company’s proprietary platform - the iSpecimen Marketplace platform is designed to help solve this problem and transform the biospecimen procurement process to accelerate medical discovery. The Company is headquartered in Lexington, Massachusetts and its principal market is North America. The Company operates as one operating and reporting segment. Basis of Presentation The accompanying unaudited interim condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) as determined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for interim financial information, and, pursuant to the rules and regulations of Article 10 of Regulation S-X of the Securities Act of 1933, as amended (the “Securities Act”), published by the Securities and Exchange Commission (“SEC”) for interim financial statements. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited interim condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results of operations for the periods presented. They may not include all of the information and footnotes required by GAAP for complete financial statements. Therefore, these financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended December 31, 2020 included in the Company’s final prospectus dated June 16, 2021, pursuant to Rule 424(b) under the Securities Act , as amended (the “Prospectus”). The results of operations for any interim periods are not necessarily indicative of the results that may be expected for the entire fiscal year or any other interim period. On March 30, 2021, the Company effected a 1-for-5.545 Initial Public Offering On June 21, 2021, the Company consummated its initial public offering (“IPO”) in which the Company issued and sold 2,250,000 shares of its common stock at a public offering price of $8.00 per share, for aggregate gross proceeds of $18 million. The net proceeds from the IPO were $15.7 million after deducting underwriting discounts of $1.7 million and other offering costs of $0.6 million. The shares of common stock commenced trading on the Nasdaq Stock Market LLC on June 17, 2021 under the ticker symbol “ISPC.” On July 1, 2021, the Company sold an additional 337,500 shares of its common stock, pursuant to the underwriters’ full exercise of the overallotment option, at a public offering price of $8.00 per share, for aggregate gross proceeds of $2.7 million. In aggregate, the Company received approximately $18.2 million after deducting for all underwriting discounts of $1.9 million and other offering costs of $0.6 million. Upon closing of the IPO, all of the then-outstanding shares of redeemable convertible preferred stock automatically converted into common stock at a ratio of 1:1, resulting in the issuance of 1,291,012 shares of common stock. Subsequent to the closing of the IPO, there were no shares of convertible preferred stock outstanding. 1. NATURE OF BUSINESS AND BASIS OF PRESENTATION (continued) Upon closing of the IPO, the Company converted all $5.5 million of its outstanding principal and all unpaid and accrued interest of approximately $1.3 million of the Convertible Notes (as defined below) into 1,206,614 shares of common stock at a conversion price of $5.60 per share. The Company incurred an approximately $0.3 million loss on conversion of the Convertible Notes during the nine months ended September 30, 2021. As of September 30, 2021, there were no Convertible Notes or Bridge Notes outstanding. Additionally, upon closing of the IPO, the Company converted $4 million of its outstanding principal and accrued and unpaid interest of approximately $0.7 million of the Bridge Notes (as defined below), as amended, into 842,429 shares of common stock at a conversion price of $5.60 per share. During the three months ended September 30, 2021, the Company paid off the remaining principal balance of $3.0 million on the Bridge Notes and accrued interest of $64,110. Liquidity and Going Concern The Company has recognized recurring losses and at September 30, 2021, the Company had working capital of $12,796,062, an accumulated deficit of $35,969,015, cash of $9,790,732 and accounts payable and accrued expenses of $1,376,560. On August 13, 2021, the Company entered into a loan agreement (the "Term Loan") and as a result, received proceeds of $3.5 million. This funding was used to pay the remaining balance of $3.0 million on the Bridge Notes. As of September 30, 2021, there were no Bridge Notes outstanding. Management believes that the Company’s existing cash and cash equivalents, which include the net proceeds from the IPO and the proceeds of the Term Loan, will allow the Company to continue its operations for at least the next 12 months from the date these financial statements are issued and therefore the conditions raising substantial doubt raised in prior periods has been alleviated. As a result of recurring losses, the continued viability of the Company beyond November 2022 may be dependent on its ability to continue to raise additional capital to finance its operations. Impact of the COVID-19 Pandemic the Company's Operations In December 2019, the novel coronavirus SARS-Cov2, or COVID-19 outbreak, was reported to have surfaced in China. On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency due to the risks to the international community as the virus spread globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The Company is subject to the risks arising from the COVID-19 outbreak’s social and economic impacts on the healthcare services industry. The Company's management believes that the social and economic impacts could have a significant impact on future financial condition, liquidity, and results of operations, which include but are not limited to the following: (i) restrictions on in-person activities arising from shelter-in-place, or similar isolation orders; (ii) inability to source specimens from the Company's suppliers arising from shelter-in-place, or similar isolation orders; (iii) reduced capacity if personnel are infected or quarantined; (iv) decline in researcher demand for specimens; and (v) deteriorating economic conditions, such as increased unemployment rates and recessionary conditions. The COVID-19 outbreak has continued to impact the Company’s operations during the nine months ended September 30, 2021. In response to the COVID-19 outbreak, the Company initially implemented measures to help stabilize revenue as well as measures to reduce costs. To stabilize revenue, the Company added COVID-19 samples to its product line to support growing research in this area and also implemented mobile phlebotomy to more easily access research subjects. While research continues in this area, through September 2021, specimen requests for COVID-19 samples are declining, when compared to the same period in 2020. Given the evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company expects this matter to continue to have an impact on its results of operations, financial condition, and liquidity. However, the extent of the financial impact and the duration cannot be reasonably estimated at this time. | 1. iSpecimen Inc. (“iSpecimen” or the “Company”) was incorporated in 2009 under the laws of the state of Delaware. The Company has developed and launched a proprietary online marketplace platform that connects medical researchers who need access to subjects, samples, and data, with hospitals, laboratories, and other organizations who have access to them. iSpecimen is a technology-driven company founded to address a critical challenge: how to connect life science researchers who need human biofluids, tissues, and living cells (“biospecimens”) for their research, with biospecimens available (but not easily accessible) in healthcare provider organizations worldwide. The iSpecimen Marketplace platform was designed to solve this problem and transform the biospecimen procurement process to accelerate medical discovery. The Company is headquartered in Lexington, Massachusetts and its principal market is North America. The Company operates as one operating and reporting segment. Liquidity and Going Concern The Company has recognized recurring losses. At December 31, 2020, the Company had a working capital deficit of $18,663,321, an accumulated deficit of $29,057,587, cash of $695,909 and accounts payable and accrued expenses of $2,603,342. In addition, the Company’s bridge notes payable totaling $6,494,228 mature on or before April 30, 2021. Since inception, the Company has relied upon raising capital to finance operations and at December 31, 2020, the Company did not have sufficient capital to fund its operations. The future success of the Company is dependent on its ability to successfully obtain additional working capital and to ultimately attain profitable operations. In addition, the Company plans to add additional customers and suppliers to increase revenue and to manage expenditures to improve its financial position and fund operations. However, as certain elements of the Company’s operating plan are outside of the Company’s control, they cannot be considered probable. The Company may seek to fund its operations through public equity, private equity, or debt financings, as well as other sources. The Company may obtain and renegotiate debt financing to support operations. However, the Company may be unable to raise additional capital, or if it is able to raise additional capital, it may be unable to do so on commercially favorable terms. The Company’s failure to raise capital, or enter into such other arrangements if and when needed, would have a negative impact on the Company’s business, results of operations and financial condition and the Company’s ability to continue as a going concern. If the Company does not receive additional capital from future anticipated capital raises, its business plan will be scaled down. These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year after the date the financial statements are issued. Management’s plan to mitigate the conditions that raise substantial doubt include renegotiation of maturing debt, delaying certain projects and capital expenditures and eliminating certain future operating expenses in order to fund operations at reduced levels for the Company to continue as a going concern. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above. 1. Impact of the COVID-19 Pandemic on our Operations In December 2019, the novel coronavirus SARS-Cov2, or COVID-19 outbreak, was reported to have surfaced in China. On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency due to the risks to the international community as the virus spread globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. iSpecimen is subject to the risks arising from the COVID-19 outbreak’s social and economic impacts on the healthcare services industry. Our management believes that the social and economic impacts, which include but are not limited to the following, could have a significant impact on future financial condition, liquidity, and results of operations: (i) restrictions on in-person activities arising from shelter-in-place, or similar isolation orders; (ii) inability to source specimens from our suppliers arising from shelter-in-place, or similar isolation orders; (iii) reduced capacity if personnel are infected or quarantined; (iv) decline in researcher demand for specimens; and (v) deteriorating economic conditions, such as increased unemployment rates and recessionary conditions. The COVID-19 outbreak has impacted the Company’s operations during the year ended December 31, 2020. In response to the COVID-19 outbreak, the Company implemented measures to help stabilize revenue as well as measures to reduce costs. To stabilize revenue, the Company added COVID-19 samples to its product line to support growing research in this area and also implemented mobile phlebotomy to more easily access research subjects. Cost saving measures included the elimination of non-essential travel and in-person training activities, the deferral of certain planned expenditures, and the furlough of a small number of employees in August 2020. Given the evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company expects this matter to continue to have an impact on its results of operations, financial condition, and liquidity. However, the extent of the financial impact and the duration cannot be reasonably estimated at this time. |
SUMMARY OF SIGNIFICANT ACCOU_17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company’s significant accounting policies and recent accounting standards are summarized in Note 2 of the Company’s financial statements for the year ended December 31, 2020. There were no significant changes to these accounting policies during the nine months ended September 30, 2021. Use of Estimates The preparation of the Company’s unaudited interim condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company utilizes certain estimates in the determination of the fair value of its warrants, deferred tax valuation allowances, revenue recognition, share-based compensation, derivative liabilities for embedded conversion features, and accrued expenses amongst others. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results could differ from such estimates. Off-Balance Sheet Risk and Concentrations of Credit Risk The Company has no significant off-balance sheet risks, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Cash accounts are maintained at financial institutions that potentially subject the Company to concentrations of credit risk. At September 30, 2021 and December 31, 2020, substantially all of the Company’s cash was deposited in accounts at one financial institution. The Company maintains its cash deposits, which at times may exceed the federally insured limits, with a reputable financial institution and, accordingly, the Company believes such funds are subject to minimal credit risk. Concentration of credit risk with respect to accounts receivable is typically related to customers who account for a significant portion of revenue. During the three months ended September 30, 2021, one customer represented approximately 16% of the Company’s revenues. During the three months ended September 30, 2020, two customers represented approximately 10% and 32% of the Company’s revenues. During the nine months ended September 30, 2021, one customer represented approximately 10% of the Company’s revenues. During the nine months ended September 30, 2020, two customers represented approximately 21% and 15% of the Company’s revenues. As of September 30, 2021, three customers each represented accounts As of September 30, 2021, three customers represented 23%, 17%, and 13%, respectively, of the Company’s unbilled accounts receivable balance. As of September 30, 2020, there were no customers with unbilled accounts receivable balances in excess of 10% of the total. During the three months ended September 30, 2021 and 2020, revenue attributable to customers located in foreign countries represented approximately 4% and 6% of revenue, respectively. During the nine months ended September 30, 2021 and 2020, revenue attributable to customers located in foreign countries represented approximately 5% and 6% of revenue, respectively. As of September 30, 2021 and 2020, accounts receivable attributable to customers located in foreign countries represented approximately 4% and 8% of accounts receivable, respectively. As of September 30, 2021 and 2020, accounts receivable-unbilled attributable to customers located in foreign countries represented approximately 5% and 12% of accounts receivable-unbilled, respectively. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: Ø Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets. Ø Level 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Ø Level 3 — Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. For certain financial instruments, including cash, accounts receivable, and accounts payable, the carrying amounts approximate their fair values as of September 30, 2021 and December 31, 2020 because of their short-term nature. The liability in connection with conversion features included within certain of the Company’s Convertible Notes and Bridge Notes was classified as a derivative liability for embedded conversion features on the balance sheets and were considered to be a Level 3 liability. Deferred Initial Public Offering Costs The Company capitalizes certain legal, professional, accounting and other third-party fees that are directly associated with in-process equity issuances as deferred initial public offering costs until such equity issuances are consummated. After consummation of the equity issuance, these costs are recorded as a reduction in the capitalized amount associated with the equity issuance. Should the equity issuance be abandoned, the deferred initial public offering costs would be expensed immediately as a charge to operating expenses in the consolidated statement of operations. On June 21, 2021, the Company consummated its IPO; accordingly, the Company recognized deferred initial public offering costs of approximately $0.6 million as a reduction from gross proceeds associated with the IPO through additional paid-in capital in the accompanying condensed consolidated balance sheet. The Company recorded approximately $2.3 million of offering costs in additional paid-in capital in connection with the IPO. Accordingly, there were no deferred offering costs as of September 30, 2021. The Company had approximately $265,000 of deferred offering costs related to the IPO which were recorded in other current assets on the balance sheet as of December 31, 2020. Derivative Liability for Embedded Conversion Features The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivatives to be accounted for separately. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other bifurcated embedded derivative instruments in the convertible instrument, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The result of this accounting treatment is that the fair value of the embedded derivative is recorded as a liability and marked-to-market each balance sheet date, with the change in fair value recorded in the statements of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Revenue Recognition and Accounts Receivable The Company recognizes revenue using the five step approach as follows: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) we satisfy the performance obligations. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The Company generates revenue by procuring various specimens from hospitals, laboratories, and other supply sites, for the Company’s medical research customers using the Company’s proprietary software, the iSpecimen Marketplace, to identify, locate, and ultimately validate the required specimens to the Company’s customers’ requested specifications. The Company’s performance obligation is to procure a specimen meeting the customer specification(s) from a supplier, on a “best efforts” basis, for the Company’s customer at the agreed price per specimen as indicated in the customer contract with the Company. The Company does not currently charge suppliers or customers for the use of the Company’s proprietary software. Each customer will execute a material and data use agreement with the Company or agrees to online purchase terms, each of which includes terms such as specimen and data use, shipment terms, payment and cancellation terms. These are then supplemented by purchase orders that specify specimen requirements including detailed inclusion/exclusion criteria, quantities to be collected, and pricing. Collectively, these customer agreements represent the Company’s contracts with its customer. Generally, contracts have fixed unit pricing. For certain specimen orders, a refundable customer deposit may be required prior to order fulfillment depending on project set-up requirements, presented as deferred revenue. The Company expects to recognize the deferred revenue within the next twelve months. Specimen collections occur at supply sites within the Company’s network. “Collection” is when the specimen has been removed, or “collected” from the patient or donor. A specimen is often collected specifically for a particular Company order. Once collected, the specimen is assigned by the supplier to the Company and control of the specimen passes to the Company. “Accession” is the process whereby a collected specimen and associated data are registered and assigned in the iSpecimen Marketplace to a particular customer order, which can occur while a specimen is at the supplier site or while at the Company site and is when control of the specimen passes to the customer. Suppliers may ship specimens to the Company or directly to the customer, if specimens must be delivered within a short time period (less than 24 hours after collection) or shipping to the Company is not practical. The Company has evaluated principal versus agent considerations as part of the Company’s revenue recognition policy. The Company has concluded that it acts as principal in the arrangement as it manages the procurement process from beginning to end and determines which suppliers will be used to fulfill an order, usually take physical possession of the specimens, set prices for the specimens, and bear the responsibility for customer credit risk. The Company recognizes revenue over time, as the Company has created an asset with no alternative use to the Company which has an enforceable right to payment for performance completed to date. At contract inception, the Company reviews a contract, and related order upon receipt, to determine if the specimen ordered has an alternative use by us. Generally, specimens ordered do not have an alternative future use to the Company and the performance obligation is satisfied when the related specimens are accessioned. The Company uses an output method to recognize revenue for specimens with no alternative future use. The output is measured based on the number of specimens accessioned. In the rare circumstances where specimens do have an alternative future use, the Company's performance obligation is satisfied at the time of shipment. Customers are typically invoiced upon shipment. Depending on the quantity of specimens ordered, it may take several accounting periods to completely fulfill a purchase order. In other words, there can be multiple invoices issued for a single purchase order, reflecting the specimens being accessioned over time. However, specimens are generally shipped as soon as possible after they have been accessioned. Once a specimen that has no alternative future use, and for which the Company has an enforceable right to payment, has been accessioned, the Company records the offset to revenue in accounts receivable — unbilled. Once the specimen has been shipped and invoiced, a reclassification is made from accounts receivable — unbilled to accounts receivable. Customers are generally given fourteen days from the receipt of specimens to inspect the specimens to ensure compliance with specifications set forth in the purchase order documentation. Customers are entitled to either receive replacement specimens or receive reimbursement of payments made for such specimens. The Company has a nominal history of returns for nonacceptance of specimens delivered. When this has occurred, the Company has given the customer a credit for the returns. The Company has not recorded a returns allowance. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The following table summarizes the Company’s revenue for the following periods: Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Specimens – contracts with customers $ 2,671,655 $ 2,223,057 $ 8,448,164 $ 5,408,012 Shipping and other 46,879 27,090 138,053 58,363 Revenue $ 2,718,534 $ 2,250,147 $ 8,586,217 $ 5,466,375 The Company carries its accounts receivable at the invoiced amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable to determine if an allowance for doubtful accounts is necessary, based on economic conditions and each customer’s payment history. Receivables are written off when deemed uncollectible, with any future recoveries recorded as income when received. As of September 30, 2021 and December 31, 2020, the Company had an allowance for doubtful accounts of $141,952 and $108,096, respectively. The Company applies the practical expedient to account for shipping and handling activities as fulfillment cost rather than as a separate performance obligation. Shipping and handling costs incurred are included in cost of revenue. Restricted Stock Units (RSUs) The Company recognizes share-based compensation expense from restricted stock units (RSUs) ratably over the specified vesting period. The fair value of RSUs is determined to be the closing share price of the Company's common stock on the grant date. Common Stock Warrants The Company accounts for common stock warrants as either equity instruments or liabilities, depending on the specific terms of the warrant agreement. The warrants shall be classified as a liability if 1) the underlying shares are classified as liabilities or 2) the entity can be required under any circumstances to settle the warrant by transferring cash or other assets. The measurement of equity-classified nonemployee share-based payments is generally fixed on the grant date and are considered compensatory. For additional discussion on warrants, see Note 9. Net Loss Per Share Basic net loss per share is calculated by dividing net loss applicable to common stockholders by the weighted- average number of shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting the weighted-average number of shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net loss per share calculation, the potential impact of shares to be issued upon conversion of Series A, Series A-1 and Series B preferred stock, stock options, and warrants to purchase common stock are considered to be common stock equivalents, but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share applicable to common stockholders were the same for all periods presented. The table below provides common stock equivalents excluded from diluted net loss per share for the following periods: Nine months ended September 30, 2021 2020 Shares issuable upon conversion of preferred stock — 1,291,012 Shares issuable upon vesting of RSUs 284,267 — Shares issuable upon exercise of stock options 269,770 253,575 Shares issuable upon exercise of Lender Warrant to purchase common stock 12,500 23,309 Shares issuable upon exercise of Underwriter Warrants to purchase common stock 90,000 — 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Recent Accounting Standards From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. The Company has elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The Company’s financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). Use of Estimates The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company utilizes certain estimates in the determination of the fair value of its common stock and warrants, deferred tax valuation allowances, revenue recognition, share-based compensation, and accrued expenses amongst others. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results could differ from such estimates. Off-Balance Sheet Risk and Concentrations of Credit Risk The Company has no significant off-balance sheet risks, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Cash accounts are maintained at financial institutions that potentially subject the Company to concentrations of credit risk. At December 31, 2020 and 2019, substantially all of the Company’s cash was deposited in accounts at one financial institution. The Company maintains its cash deposits, which at times may exceed the federally insured limits, with a reputable financial institution and, accordingly, the Company believes such funds are subject to minimal credit risk. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Concentration of credit risk with respect to accounts receivable is typically related to customers who account for a significant portion of revenue. During 2020, two customers represented approximately 11% and 10% of the Company’s 2020 revenues and comprised 0% and 0% of accounts receivable and 0% and 5% of accounts receivable-unbilled at December 31, 2020. During 2019, three customers represented approximately 20%, 11%, and 10% of the Company’s 2019 revenues and comprised 4%, 44%, and 1% of accounts receivable, and 0%, 0%, and 0% of accounts receivable-unbilled at December 31, 2019. During the years ended December 31, 2020 and 2019, revenue attributable to customers located in foreign countries is approximately 6% and 23% of revenue, respectively. During the years ended December 31, 2020 and 2019, accounts receivable attributable to customers located in foreign countries is approximately 11% and 5% of accounts receivable, respectively. During the years ended December 31, 2020 and 2019, accounts receivable-unbilled attributable to customers located in foreign countries is approximately 0% and 17% of accounts receivable-unbilled, respectively. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: ➢ Level 1 — ➢ Level 2 — ➢ Level 3 — For certain financial instruments, including cash, accounts receivable, and accounts payable, the carrying amounts approximate their fair values as of December 31, 2020 and 2019 because of their short-term nature. The liability in connection with conversion features included within certain of the Company’s convertible notes payable is classified as a derivative liability for embedded conversion features on the balance sheets and is considered to be a Level 3 liability. Derivative Liability for Embedded Conversion Features The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates its convertible notes to determine if those contracts or embedded components of those contracts qualify as derivatives to be accounted for separately. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other bifurcated embedded derivative instruments in the convertible instrument, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The result of this accounting treatment is that the fair value of the embedded derivative is recorded as a liability and marked-to-market each balance sheet date, with the change in fair value recorded in the statements of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Recent Accounting Standards From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company. Accounting Standards Issued, Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses Measurement of Credit Losses on Financial Instruments In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity Revenue Recognition and Accounts Receivable The Company recognizes revenue using the five step approach as follows: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) we satisfy the performance obligations. The Company generates revenue by procuring various specimens from hospitals, laboratories, and other supply sites, for our medical research customers using our proprietary software, the iSpecimen Marketplace, to identify, locate, and ultimately validate the required specimens to our customers’ requested specifications. The Company’s performance obligation is to procure a specimen meeting the customer specification(s) from a supplier, on a “best efforts” basis, for our customer at the agreed price per specimen as indicated in the customer contract with the Company. The Company does not currently charge suppliers or customers for the use of our proprietary software. Each customer will execute a material and data use agreement with the Company or agrees to online purchase terms, each of which includes terms such as specimen and data use, shipment terms, payment and cancellation terms. These are then supplemented by purchase orders that specify specimen requirements including detailed inclusion/exclusion criteria, quantities to be collected, and pricing. Collectively, these customer agreements represent the Company’s contracts with its customer. Generally, contracts have fixed unit pricing. For certain specimen orders, a refundable customer deposit may be required prior to order fulfillment depending on project set-up requirements, presented as deferred revenue. The Company expects to recognize the deferred revenue within the next twelve months. Specimen collections occur at supply sites within our network. “Collection” is when the specimen has been removed, or “collected” from the patient or donor. A specimen is often collected specifically for a particular Company order. Once collected, the specimen is assigned by the supplier to the Company and control of the specimen passes to the Company. “Accession” is the process whereby a collected specimen and associated data are registered and assigned in the iSpecimen Marketplace to a particular customer order, can occur while a specimen is at the supplier site or while at the Company site and is when control of the specimen passes to the customer. Suppliers may ship specimens to the Company or directly to the customer, if specimens must be delivered within a short time period (less than 24 hours after collection) or shipping to the Company is not practical. The Company has evaluated principal versus agent considerations as part of our revenue recognition policy. The Company has concluded that we act as principal in the arrangement as we manage the procurement process from beginning to end and determine which suppliers will be used to fulfill an order, usually take physical possession of the specimens, set prices for the specimens, and bear the responsibility for customer credit risk. The Company recognizes revenue over time, as we have created an asset with no alternative use to the Company and has an enforceable right to payment for performance completed to date. At contract inception, the Company reviews a contract and related order upon receipt to determine if the specimen ordered has an alternative use by us. In the rare circumstances where specimens do have an alternative future use, our performance obligation is satisfied at the time of shipment. Generally, specimens ordered do not have an alternative future use to the Company and the performance obligation is satisfied when the related specimens are accessioned. The Company uses an output method to recognize revenue for specimens with no alternative future use. The output is measured based on the number of specimens accessioned. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Customers are typically invoiced upon shipment. Depending on the quantity of specimens ordered, it may take several accounting periods to completely fulfill a purchase order. In other words, there can be multiple invoices issued for a single purchase order, reflecting the specimens being accessioned over time. However, specimens are generally shipped as soon as possible after they have been accessioned. Once a specimen that has no alternative future use, and for which we have an enforceable right to payment, has been accessioned, we record the offset to revenue in accounts receivable - unbilled. Once the specimen has been shipped and invoiced, a reclassification is made from accounts receivable - unbilled to accounts receivable. Customers are generally given fourteen days from the receipt of specimens to inspect the specimens to ensure compliance with specifications set forth in the purchase order documentation. Customers are entitled to either receive replacement specimens or receive reimbursement of payments made for such specimens. We have a nominal history of returns for nonacceptance of specimens delivered. When this has occurred, we have given the customer a credit for the returns. We have not recorded a returns allowance. The following table summarizes the Company’s revenue for the years ended December 31: 2020 2019 Specimens – contracts with customers $ 8,086,324 $ 4,215,002 Shipping and other 97,782 83,348 Revenue $ 8,184,106 $ 4,298,350 The Company carries its accounts receivable at the invoiced amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable to determine if an allowance for doubtful accounts is necessary, based on economic conditions and each customer’s payment history. Receivables are written off when deemed uncollectible, with any future recoveries recorded as income when received. As of December 31, 2020, and 2019, the Company had an allowance for doubtful accounts of $108,096 and $0, respectively. The Company applies the practical expedient to account for shipping and handling activities as fulfillment cost rather than as a separate performance obligation. Shipping and handling costs incurred are included in cost of revenue. Property and Equipment, net Property and equipment are stated at cost, net of accumulated depreciation and amortization. When an item is sold or retired, the costs and related accumulated depreciation or amortization are eliminated, and the resulting gain or loss, if any, is credited or charged to income in the statement of operations. The Company provides for depreciation and amortization using the straight-line method over the estimated useful lives of the respective assets. A summary of estimated useful lives is as follows: 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 Major improvements are capitalized while replacement, maintenance and repairs which do not improve or extend the lives of the respective assets are expensed as incurred. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Internally Developed Software, net The Company capitalizes certain internal and external costs incurred during the application development stage of internal-use software projects until the software is ready for its intended use. Amortization of the asset commences when the software is complete and placed into service and is recorded in operating expenses. The Company amortizes completed internal-use software over its estimated useful life of five years on a straight-line basis. Costs incurred during the planning, training and post-implementation stages of the software development life cycle are classified as technology and are expensed to operations as incurred. Impairment of Long-Lived Assets Management reviews long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable. An impairment loss is recognized when expected cash flows are less than the asset’s carrying value. Long-lived assets consist of property and equipment and internal-use software. No impairment charges were recorded for the years ended December 31, 2020 and 2019. Debt Issuance Costs Debt issuance costs are recorded net against the related debt and amortized to interest expense over the life of the related debt. During the years ended December 31, 2020 and 2019, amortized debt issuance costs of $9,185 and $7,252, respectively, were recorded as a component of interest expense. Cost of Revenue Cost of revenue primarily consists of the purchase price to acquire specimens from hospitals and laboratories; inbound and outbound shipping costs; supply costs related to samples; payment processing and related transaction costs; and costs paid to the supply sites to support sample collections. Shipping costs upon receipt of products from suppliers are recognized in cost of revenue. For the year ended December 31, 2020, the Company acquired approximately 21% of specimens from one vendor. For the year ended December 31, 2019, the Company acquired approximately 22%, 10%, and 10% of specimens from three vendors. Technology Technology costs include payroll and related expenses for employees involved in the development and implementation of iSpecimen’s technology; software license and system maintenance fees; outsourced data center costs; data management costs; depreciation and amortization; and other expenses necessary to support technology initiatives. Collectively, these costs reflect the investments the Company makes in order to offer a wide variety of products and services to customers. Technology and data costs are generally expensed as incurred. A portion of technology costs are related to research and development. Costs incurred for research and development are expensed as incurred, except for software development costs that are eligible for capitalization. Research and development costs primarily include salaries and related expenses, in addition to the cost of external service providers. For the years ended December 31, 2020 and 2019, research and development costs totaled $319,235 and $155,244, respectively. Sales and Marketing Sales and marketing costs primarily consist of payroll and related expenses for personnel engaged in marketing and selling activities, including salaries and sales commissions; travel expenses; public relations and social media costs; ispecimen.com website development and maintenance costs; search engine optimization fees; advertising costs; direct marketing costs; trade shows and events fees; marketing and customer relationship management software; and other marketing-related costs. Advertising expenses consist primarily of marketing, public relations, and promotional materials. Advertising costs are expensed as incurred and totaled $111,304 and $168,115 for the years ended December 31, 2020 and 2019, respectively. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Supply Development The Company has agreements with supply partners that allow the Company to procure specimens from them and distribute these samples to customers. Supply development costs primarily include payroll and related expenses for personnel engaged in the development and management of this supply network; related travel expenses; regulatory compliance costs to support the network; and other supply development and management costs. Fulfillment Fulfillment costs primarily consist of those costs incurred in operating and staffing operations and customer service teams, including costs attributable to assess the feasibility of specimen requests; creating and managing orders; picking non-capitalizable, packaging, and preparing customer orders for shipment; responding to inquiries from customers; and laboratory equipment and supplies. General and Administrative General and administrative expenses primarily consist of costs for corporate functions, including payroll and related expenses for human resources, legal, finance, and executive teams; associated software licenses; facilities and equipment expenses, such as depreciation and amortization expense and rent, outside legal expenses, insurance costs, and other general and administrative costs. Share-Based Compensation The Company records share-based compensation for options granted to employees, non-employees, and to members of the board of directors for their services on the board of directors based on the grant date fair value of awards issued, and the expense is recorded on a straight-line basis over the requisite service period. Forfeitures are recognized when they occur. The Company uses the Black-Scholes-Merton option pricing model to determine the fair value of stock options. The use of the Black-Scholes-Merton option-pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock. The Company has concluded that its historical share option exercise experience does not provide a reasonable basis upon which to estimate expected term. Therefore, the expected term was determined according to the simplified method, which is the average of the vesting tranche dates and the contractual term. Due to the lack of company specific historical and implied volatility data, the estimate of expected volatility is primarily based on the historical volatility of a group of similar companies that are publicly traded. For these analyses, companies with comparable characteristics are selected, including enterprise value and position within the industry, and with historical share price information sufficient to meet the expected life of the share-based awards. The Company computes the historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of its share-based awards. The risk-free interest rate is determined by reference to U.S. Treasury zero-coupon issues with remaining maturities similar to the expected term of the options. The Company has not paid, and does not anticipate paying, cash dividends on shares of its common stock. In order to determine the fair value of the Company’s common stock, the Company considered, among other things, contemporaneous valuations of the Company’s common stock, the Company’s business, financial condition and results of operations, including related industry trends affecting its operations; the likelihood of achieving a liquidity event, such as an initial public offering, or IPO, or sale, given prevailing market conditions; the lack of marketability of the Company’s common stock; the market performance of comparable publicly traded companies; and U.S. and global economic and capital market conditions. The fair value of the Company’s common stock was estimated to be $3.83 and $1.61 at December 31, 2020 and 2019, respectively. The Company conducted multiple valuations throughout the year ended December 31, 2020 and the estimate of the fair value of the Company’s common stock ranged from $0.39 and $3.83 as a result of the changes in the factors described above. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Income Taxes The Company provides for income taxes using the asset and liability method. The Company provides deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the Company’s financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. A valuation allowance is provided to reduce the deferred tax assets to the amount that will more likely than not be realized. The Company does not have any material uncertain tax positions for which reserves would be required. The Company will recognize interest and penalties related to uncertain tax positions, if any, in income tax expense. Deferred Offering Costs Deferred offering costs are included in prepaid and other current assets and consists of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly related to the planned initial public offering and that will be charged to additional paid-in capital upon the completion of the planned initial public offering. Should the planned initial public offering prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, will be charged to operations. For the year-ended December 31, 2020, the Company capitalized approximately $265,000 of deferred offering costs related to the planned initial public offering. Net Loss Per Share Basic net loss per share is calculated by dividing net loss applicable to common stockholders by the weighted- average number of shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting the weighted-average number of shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net loss per share calculation, the potential impact of shares to be issued upon conversion of Series A, Series A-1 and Series B preferred stock, stock options, and warrants to purchase common stock are considered to be common stock equivalents, but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share applicable to common stockholders were the same for all periods presented. The table below provides total shares outstanding, as of December 31: 2020 2019 Shares issuable upon conversion of preferred stock 1,291,012 1,291,012 Shares issuable upon exercise of stock options 251,847 224,884 Shares issuable upon exercise of warrants to purchase common stock 23,309 23,309 |
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Sep. 30, 2021 | |
FACTORING OF ACCOUNTS RECEIVABLE | |
FACTORING OF ACCOUNTS RECEIVABLE | 3. FACTORING OF ACCOUNTS RECEIVABLE On January 1, 2021 the Company entered into a factoring agreement (the “Factoring Agreement”) with Versant Funding LLC (“Versant”), in which the Company agreed to sell a minimum of $1.2 million of its accounts receivable without recourse, and which the Company granted Versant a security interest in substantially all of the Company’s assets, in accordance with the terms of the Factoring Agreement. On June 30, 2021, the Company terminated the Factoring Agreement paying Versant $139,374 in settlement of its balance payable to Versant pursuant to the Factoring Agreement. Upon termination of the Factoring Agreement, all future payments of accounts receivable shall be made directly to the Company. During the three months ended September 30, 2021, the Company received notice from Versant regarding an additional amount owed in relation to past factored receivables, resulting in a $214,497 payment to Versant. During the nine months ended September 30, 2021, net receivables sold under the Factoring Agreement was approximately $3.4 million. Without recourse indicates that the Company assigns and transfers its rights, title, and interest in and to the accounts receivable to Versant, meaning that the Company will not be liable to repay all or any portion of the advance amount if any portion of the accounts receivable is not paid by our customer(s). Information on accounts receivable identified for factoring are provided and verified by Versant prior to being accepted for factoring. Pursuant to the Factoring Agreement, the factoring fees range from 2.5% to 15% of the purchase price of the accounts receivable based on the age of the accounts receivable when collected. The Company is also charged for certain reimbursable administrative fees incurred on its behalf for the management of the program. In connection with the Factoring Agreement, the Company entered into a security agreement, granting to Versant a security interest in substantially all of the Company’s assets to secure our obligations under the Factoring Agreement. The sales of accounts receivable in accordance with the factoring arrangements are recognized as a reduction of accounts receivable, net in the balance sheet. Factoring fees paid under these arrangements totaled approximately $214,497 for the three months ended September 30, 2021, and $471,396 for the nine months ended September 30,2021 which were recorded in general and administrative expenses in the condensed statements of operations. |
PROPERTY AND EQUIPMENT, NET_2
PROPERTY AND EQUIPMENT, NET | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
PROPERTY AND EQUIPMENT, NET | ||
PROPERTY AND EQUIPMENT, NET | 4. PROPERTY AND EQUIPMENT, NET Property and equipment, net consisted of the following at the dates indicated: September 30, December 31, 2021 2020 (unaudited) Website $ 107,926 $ 105,376 Computer equipment and purchased software 84,589 84,589 Equipment 35,449 35,449 Furniture and fixtures 87,184 87,184 Leasehold improvements 24,935 24,935 Total property and equipment 340,083 337,533 Accumulated depreciation (295,334) (261,944) Total property and equipment, net $ 44,749 $ 75,589 Depreciation expense for property and equipment was $11,130 and $4,883 for the three months ended September 30, 2021 and 2020, respectively, and $33,390 and $33,563 for the nine months ended September 30, 2021 and 2020, respectively. | 3. Property and equipment, net consisted of the following at December 31: 2020 2019 Website $ 105,376 $ 105,376 Computer equipment and purchased software 84,589 84,481 Equipment 35,449 35,134 Furniture and fixtures 87,184 87,184 Leasehold improvements 24,935 24,935 Total property and equipment 337,533 337,110 Accumulated depreciation (261,944) (217,189) Total property and equipment, net $ 75,589 $ 119,921 Depreciation expense for property and equipment was $44,758 and $57,360 for the years ended December 31, 2020 and 2019, respectively. |
INTERNALLY DEVELOPED SOFTWARE_3
INTERNALLY DEVELOPED SOFTWARE, NET | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
INTERNALLY DEVELOPED SOFTWARE, NET | ||
INTERNALLY DEVELOPED SOFTWARE, NET | 5. INTERNALLY DEVELOPED SOFTWARE, NET During the nine months ended September 30, 2021 and 2020, the Company capitalized $731,172 and $864,921, respectively, of internally developed software costs in connection with the development and continued enhancement of the technology platform and web interfaces. Capitalized costs primarily consist of payroll and payroll-related costs for the Company’s employees. The Company recognized $242,860 and $179,168 of amortization expense associated with capitalized internally developed software costs during the three months ended September 30, 2021 and 2020, respectively. The Company recognized $714,444 and $599,425 of amortization expense associated with capitalized internally developed software costs during the nine months ended September 30, 2021 and 2020, respectively. | 4. During 2020 and 2019, the Company capitalized $1,102,186 and $1,447,062, respectively, of internally developed software costs in connection with the development and continued enhancement of the technology platform and web interfaces. Capitalized costs primarily consist of payroll and payroll-related costs for the Company’s employees. The Company recognized $774,929 and $577,605 of amortization expense associated with capitalized internally developed software costs during the years ended December 31, 2020 and 2019, respectively. |
DEBT_2
DEBT | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
DEBT | ||
DEBT | 6. DEBT Note Payable In May 2020, the Company applied for and received $783,008 in unsecured loan funding from the Paycheck Protection Program (the “PPP Loan”), established pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and administered by the U.S. Small Business Administration (“SBA”). Under the terms of the promissory note (the “PPP Note”) and the PPP Loan, interest accrued on the outstanding principal at the rate of 1% per annum. Interest expense under the PPP Loan amounted to $0 and $1,961 for the three months ended September 30, 2021 and 2020, respectively. Interest expense under the PPP Loan amounted to $279 and $2,518 for the nine months ended September 30, 2021 and 2020, respectively. The Company received full forgiveness of all outstanding principal of, and accrued and unpaid interest on the PPP Loan as of January 13, 2021. The forgiveness of the PPP Loan qualified for debt extinguishment and as a result, the outstanding principal and accrued and unpaid interest on the PPP Loan was recorded as a net gain on extinguishment of the PPP Loan totaling $788,156 for the nine months ended September 30, 2021 and the debt was eliminated from the Company’s balance sheet. 6. DEBT (continued) Related Party Convertible Notes Payable During 2017 and 2018, the Company issued Related Party Convertible Promissory Notes (the “Convertible Notes”) to related parties totaling $5,500,000. The Convertible Notes bear interest at a rate of six percent (6%) per annum, without compounding. The Convertible Notes are convertible into shares of the Company’s preferred stock, upon the following: (i) a new permanent equity financing yielding gross proceeds of in excess of $10,000,000, including conversion of the outstanding principal of the Convertible Notes (a “Qualified Equity Financing”), (ii) achievement of positive free cash flow from operations on a quarterly basis for the two consecutive quarters ending 90 days prior to the maturity date, (iii) an acquisition, or (iv) upon election of the holders of the majority of the aggregate principal outstanding (the “Majority Lenders”). Preferred stock issued on conversion shall be shares of the Company’s stock that have substantially the same rights and preferences as the Company’s Series B Preferred Stock or that which is issued in such Qualified Equity Financing, depending on the applicable conversion event. During 2021, there have been no changes to the conversion prices which are detailed in the Company’s audited financial statements for the years ended December 31, 2020 and 2019. The conversion rate shall be equal to the issue price of the IPO Stock less a thirty percent ( 30 )% discount. The maturity date on the Convertible Notes is the earliest occurrence of (i) the closing of a Qualified Equity Financing, (ii) the date upon which prepayment by the Company occurs with the consent of the Majority Lenders, (iii) the date upon which the Convertible Notes are otherwise converted into equity securities, or (iv) March 31, 2020. In March 2020, the Majority Lenders elected to extend the maturity date through September 30, 2020. On October 1, 2020, the maturity date was further extended to March 31, 2021. On March 8, 2021, the maturity date was further extended to June 30, 2021. The Company has determined that the terms related to the Qualified Equity Financing conversion and acquisition conversion features (collectively, the “Embedded Conversion Features”) were determined to not be clearly and closely related to the Convertible Note host instrument and meet the definition of a derivative. Therefore, the Embedded Conversion Features were bifurcated from the Convertible Notes and separately measured at fair value. The derivative liability has been subsequently marked-to-market each reporting period with changes in fair value recognized in the statement of operations (see Note 7). Interest expense on the Convertible Notes totaled $0 and $83,178 for the three months ended September 30, 2021 and 2020, respectively. Interest expense on the Convertible Notes totaled $156,411 and $247,726 for the nine months ended September 30, 2021 and 2020, respectively. Unamortized debt issuance costs on the Convertible Notes totaled $0 and $9,189 at September 30, 2021 and December 31, 2020, respectively. Debt discounts on the Convertible Notes totaled $0 and $0 as of September 30, 2021 and December 31, 2020, respectively. During the nine months ended September 30, 2021 and 2020, amortization of debt discounts amounted to $1,088 and $141,628, respectively. Conversion of Convertible Notes Payable In connection with the consummation of the IPO, the Company converted all $5,491,663 of its outstanding principal and all unpaid and accrued interest of $1,257,066 of the Convertible Notes into 1,206,614 shares of common stock on June 21, 2021 at a conversion price of $5.60 per share. As of September 30, 2021, there were no Convertible Notes outstanding. The Company incurred an approximate $260,000 loss on conversion of the Convertible Notes during the nine months ended September 30, 2021. Bridge Financing During 2020, 2019, and 2018, the Company issued certain Secured Promissory Notes (the “Bridge Notes”) to new investors and existing stockholders in an amount of $6,500,000 in order to finance the Company’s interim working capital needs. Of this amount, $1,905,000 was issued to related parties (“Related Party Bridge Notes”). The Bridge Notes, including the Related Party Bridge Notes, have identical terms. 6. DEBT (continued) On April 16, 2021 and May 20, 2021, the Company issued additional Related Party Bridge Notes to related parties in the aggregate amount of $500,000 in order to finance the Company's working capital needs. The terms of the notes are identical to the Amended Bridge Notes (see further details below). The Bridge Notes bear interest at a rate of twenty-four percent (24%) per annum, without compounding. The Bridge Notes and all accrued interest are due and payable on the earliest occurrence of (i) a Qualified Equity Financing, (ii) the sale of the Company, (iii) prepayment by the Company, or (iv) December 31, 2019, which was subsequently extended to June 30, 2020. In June 2020, the Bridge Notes were amended to further extend the maturity date through September 30, 2020. On October 1, 2020, the Company amended the Bridge Notes to extend the maturity date to March 31, 2021 and to increase the interest rate from 24% to 30% after October 1, 2020. On March 15, 2021, the Company entered into an Amendment to the Bridge Notes and the maturity date was further extended to April 30, 2021. The Bridge Notes will be repayable upon demand of the Majority Lenders of the Bridge Notes at any time on or after the maturity date. The Bridge Notes are senior in right of payment and priority to any Convertible Debt and subordinated to any Senior Debt. The investors that hold the Bridge Notes are granted a security interest in substantially all assets of the Company (“Collateral”). On March 15, 2021, the Company entered into a Fifth Amendment (the “Amendment”) to the Note Subscription Agreements and Secured Promissory Notes. The Bridge Notes are hereafter referred to as the “Amended Bridge Notes”. The terms of the Amendment are as follows: Maturity Date The Amended Bridge Notes shall bear interest, on a non-compounding basis, at a rate of thirty percent (30%) per annum from and after October 1, 2020, due on maturity on the earlier of (i) the closing of an initial public offering yielding gross proceeds in excess of $18,000,000, exclusive of any existing Convertible Notes (a “Qualified IPO”), (ii) the sale of the Company, (iii) prepayment by the Company, or (iv) April 30, 2021. The Majority Lenders may, with the approval of the Company, elect to extend the maturity date one or more times, at their discretion. On April 28, 2021, the maturity date was further extended to May 31, 2021. On May 12, 2021, the maturity date was further extended to June 30, 2021. Elective Conversion Upon a Qualified IPO The holders of the Amended Bridge Notes may voluntarily elect, at any time prior the maturity date and up to March 19, 2021, to convert 50% or more of the outstanding unpaid principal plus any amount of outstanding unpaid interest at the time of the Qualified IPO, into the same class or series of securities of the Company to be offered and issued in the Qualified IPO (the “IPO Stock”). The conversion rate shall be equal to the issue price of the IPO Stock less a thirty percent (30%) discount (“the Elective Conversion Stock”). The elective conversion amount shall be deducted from the amount of principal and interest outstanding in order to arrive at an adjusted principal and interest repayment amount. The sum of the amounts being converted on the Amended Bridge Notes shall first convert the outstanding principal and then the outstanding interest second. Repayment of Adjusted Outstanding Interest and Principal Upon a Qualified IPO If a Qualified IPO is consummated prior to the maturity date, and the holders have not voluntarily converted, the Company shall make a cash payment to the holders of the Amended Bridge Notes equal to the greater of either the total adjusted outstanding interest or one and one-half times ( 1.50 6. DEBT (continued) Repayments shall first be applied to the adjusted outstanding interest due in cash to the holders of the Amended Bridge Notes . The residual value shall be next applied to the adjusted outstanding principal (the “Principal Repayment Proceeds”). The remaining cash repayment shall be calculated by multiplying the Principal Repayment Proceeds by a fraction, the numerator of which is equal to the adjusted principal repayment amount of such note holder, and the denominator of which is equal to the total adjusted outstanding principal to all note holders. In no event shall any cash payment be made to any note holder exceed the sum of the adjusted interest repayment amount plus the adjusted principal repayment amount for such note holder. Automatic Conversion or Debt Extension Any remaining unpaid principal, calculated by subtracting the Principal Repayment Proceeds from the total adjusted outstanding principal (the “Automatic Principal Conversion Amount”), shall then automatically convert into IPO Stock at a rate equal to the issue price of the IPO Stock less a ten percent (10%) discount (that is, at a rate of ninety percent (90%) of the issue price of the IPO Stock; such discounted IPO Stock; the “Automatic Conversion Stock”). If the Company is unable to repay at least twenty-five percent (25%) of the total adjusted outstanding principal of the Amended Bridge Notes (“the “Principal Repayment Floor”), then no Automatic Conversion Stock shall be issued and the total adjusted outstanding principal on the Amended Bridge Notes shall remain on the books of the Company under their existing Bridge Notes which shall automatically be amended to (i) have their interest rates adjusted to a rate of fifteen percent (15%) per annum and (ii) have their maturity date set to a date that is eighteen (18) months from the date of the Qualified IPO. Amended Bridge Notes Embedded Conversion Features The Company has determined that the terms related to the elective and automatic conversion features (collectively, the “Amended Bridge Notes Embedded Conversion Features”) were determined to not be clearly and closely related to the Amended Bridge Notes host instrument and meet the definition of a derivative. Therefore, the Amended Bridge Notes Embedded Conversion Features were bifurcated from the Amended Bridge Notes and separately measured at fair value. The derivative liability has been subsequently marked-to- market each reporting period with changes in fair value recognized in the statement of operations. The Amended Bridge Notes Embedded Conversion Features were initially recorded as a component of the loss on debt extinguishment with an offset to the derivative liability at fair value. No related discount will be recorded on the Amended Bridge Notes, and the derivative liability will not be amortized using the effective interest rate over the term of the Amended Bridge Notes. Debt Extinguishment The Company evaluated the terms of the March 15, 2021 Amendment. This evaluation included analyzing whether there are significant and consequential changes to the economic substance of the Bridge Notes. If the change is deemed insignificant then the change is considered a debt modification, whereas if the change is substantial the change is reflected as a debt extinguishment. A modification or an exchange that adds or eliminates a substantive conversion option as of the conversion date would always be considered substantial and require extinguishment accounting. The addition of the elective and mandatory conversion options, as described above, would be considered substantive based on the likelihood of the option being exercised in the near future in connection with a Qualified IPO event. Accordingly, the Company accounted for the amendment of the Notes as an extinguishment of the original Bridge Notes. As a result, the Company recorded a loss on extinguishment of $2,740,425. The extinguishment loss also included a write-off of unamortized debt issuance costs of approximately $5,700. Additionally, the Company recorded a discount on the Amended Bridge Notes of approximately $869,600, which was amortized through interest expense over the life of the Amended Bridge Notes (i.e., March 15, 2021 through April 30, 2021). 6. DEBT (continued) Interest expense on the Bridge Notes, including $5,876 and $48,371 of related party interest expense, totaled $54,247 and $382,521 for the three months ended September 30, 2021 and 2020, respectively. Interest expense on the Bridge Notes, including $320,469 and $694,189 of related party interest expense, totaled $1,014,657 and $1,123,890 for the nine months ended September 30, 2021 and 2020, respectively. Unamortized debt issuance costs on the Bridge Notes totaled $0 and $7,222 as of September 30, 2021 and 2020, respectively. Amortization of the debt discount on the Amended Bridge Notes totaled approximately $0 and $0 for the three months ended September 30, 2021 and 2020, respectively. Amortization of the debt discount on the Amended Bridge Notes totaled approximately $869,600 and $136,185 for the nine months ended September 30, 2021 and 2020, respectively. Conversion of Bridge Notes Upon the completion of the IPO, the Company converted $4,000,000 of its outstanding principal and accrued interest of $717,646 of the Bridge Notes, as amended, into 842,429 shares of common stock at a conversion price of $5.60 per share. The Company recognized a gain on the conversion of $9,746. The conversion of the Amended Bridge Notes and Convertible Notes upon the consummation of the IPO resulted in an increase in total stockholder’s equity of $16,392,344. The components of this non-cash transaction are as follows for the nine months ended September 30, 2021: Write off of derivative liability relating to the Convertible Notes $ 2,644,000 Extinguishment of Convertible Notes principal 5,486,199 Accrued and unpaid interest on the Convertible Notes 1,257,066 Accumulated amortization on debt issuance costs 33,035 Loss on extinguishment of Convertible Notes 260,185 Write off of debt issuance costs (27,573) Write off of derivative liability relating to the Bridge Notes 2,031,300 Extinguishment of Bridge Notes principal 4,000,000 Accrued and unpaid interest on the Bridge Notes 717,646 Gain on extinguishment of Bridge Notes (9,514) Total conversion of Convertible Notes and Bridge Notes into common stock $ 16,392,344 During the three months ended September 30, 2021, the Company paid off remaining principal of $3,000,000 and accrued interest of $64,110. As of September 30, 2021, there were no Bridge Notes outstanding. Term Loan On August 13, 2021 (the "Closing Date"), the Company entered into a Loan and Security Agreement with Western Alliance Bank (the “Lender”) in the amount of $3,500,000 for working capital needs (the “Term Loan”). The Company has the option to request an additional advance in the amount of $1,500,000, which the Company has not yet borrowed as of September 30, 2021. The additional advance of $1,500,000 is available to the Company during the "Draw Period," which is defined in the Term Loan as the "period commencing on the Closing Date and ending the earlier to occur of (a) February 13, 2023, and (b) an Event of Default." The Term Loan bears interest at a rate equal to three-quarters of one percent (0.75%) above the Prime Rate. As of September 30, 2021, the interest rate on the Term Loan is 4.00% which is equal to 0.75% above the Prime Rate of 3.25%. Interest is due and payable on the tenth ( 10 30 6. DEBT (continued) The Company shall have the option to prepay all, but not less than all, of the outstanding loan balance, provided the Company a) delivers written notice to the financial institution of their election to prepay such Term Loan at least ten (10) days prior to such prepayment and b) pay, on the date of such prepayment, (1) all outstanding principal with respect to the Term Loan, plus accrued but unpaid interest, plus (2) all fees (including any late fee), and other sums, including bank expenses, if any, that shall have become due and payable. The Lender which holds the Term Loan is granted a security interest in substantially all assets of the Company (“Collateral”). The Term Loan contains certain covenants that the Company considers usual and customary for an agreement of this type for comparable commercial borrowers, and as of September 30, 2021 we were in compliance with all Term Loan covenants. Interest expense on the Term Loan totaled $18,399 and $0 for the three and nine months ended September 30, 2021 and 2020, respectively. Debt issuance costs totaled $74,897, comprised of a warrant to purchase 12,500 shares of common stock issued to the Lender with a fair value of $49,072, Unamortized debt issuance costs on the Term Loan totaled $71,620 and $0 at September 30, 2021 and December 31, 2020, respectively. | 5. Note Payable In May 2020, the Company applied for and received $783,008 in unsecured loan funding from the Paycheck Protection Program (the “PPP Loan”), established pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and administered by the U.S. Small Business Administration (“SBA”). Under the terms of the promissory note (the “PPP Note”) and the PPP Loan, interest accrues on the outstanding principal at the rate of 1% per annum. Interest expense under the PPP Loan amounted to $5,127 for the year ended December 31, 2020. The PPP Loan is a forgivable loan and subsequent to year end, the Company received full forgiveness of all principal and interest in January 2021. 5. Related Party Convertible Notes Payable During 2017 and 2018, the Company issued Related Party Convertible Promissory Notes (the “Convertible Notes”) to related parties totaling $5,500,000. The Convertible Notes bear interest at a rate of six percent (6%) per annum, without compounding. The Convertible Notes are convertible into shares of the Company’s preferred stock, upon the following: (i) a new permanent equity financing yielding gross proceeds of in excess of $10,000,000, including conversion of the outstanding principal of the Convertible Notes (a “Qualified Equity Financing”), (ii) achievement of positive free cash flow from operations on a quarterly basis for the two consecutive quarters ending 90 days prior to the maturity date, (iii) an acquisition, or (iv) upon election of the holders of the majority of the aggregate principal outstanding (the “Majority Lenders”). An “acquisition” shall mean the sale of all or substantially all of the capital stock or assets of the Company in a business combination or other acquisition; a merger, consolidation or reorganization of Conversion Prices The conversion price of the Convertible Notes may vary based on the type and timing of the triggering event which causes conversion of the Convertible Notes. If the Qualified Equity Financing occurs within 12 months from the issuance date of the Convertible Note, the conversion price will be the lesser of (A) if (i) the holder is a Majority Lender, the issue price of the preferred stock less a twenty percent ( 20% ) discount to the issue price of such preferred stock (that is, at a rate of eighty percent ( 80% ) of the issue price of the preferred stock), or (ii) the holder is not a Majority Lender, the issue price of the preferred stock less a ten percent ( 10% ) discount to the issue price of such preferred stock (that is, at a rate of ninety percent ( 90% ) of the issue price of the preferred stock), or (B) such price per share commensurate with a pre-money valuation of the Company, as defined in the note subscription agreement, calculated on a fully-diluted basis. If the Qualified Equity Financing occurs later than 12 months from the issuance date of the Convertible Note, the conversion price ranges from the lesser of (A) if (i) the holder is a Majority Lender, the issue price of the preferred stock less a thirty percent (30%) discount to the issue price of such preferred stock (that is, at a rate of seventy percent (70%) of the issue price of the preferred stock),or (ii) the holder is not a Majority Lender, the issue price of the preferred stock less a twenty percent (20%) discount to the issue price of such preferred stock (that is, at a rate of eighty percent (80%) of the issue price of the preferred stock),or (B) such price per share commensurate with a pre-money valuation of the Company, as defined in the note subscription agreement, calculated on a fully-diluted basis. In the event that the Company is sold, the Convertible Notes shall either be repaid in full or converted into common stock at the option of the Majority Lenders. The conversion price shall be the quotient of the aggregate principal and accrued interest outstanding on the Convertible Notes divided by a price per share determined in accordance with the same two scenarios noted above in the event of a Qualified Equity Financing. Should the Company achieve positive free cash flows pursuant to the note subscription agreement or the Majority Lenders elect to convert the Convertible Notes prior to or at maturity, the conversion price per share shall be commensurate with a pre-money valuation of the Company, as defined in the note subscription agreement, calculated on a fully-diluted basis. 5. Embedded Conversion Features The Company has determined that the terms related to the Qualified Equity Financing conversion and acquisition conversion features (collectively, the “Embedded Conversion Features”) were determined to not be clearly and closely related to the Convertible Note host instrument and meet the definition of a derivative. Therefore, the Embedded Conversion Features were bifurcated from the Convertible Notes and separately measured at fair value. The derivative liability has been subsequently marked-to-market each reporting period with changes in fair value recognized in the statement of operations. The Embedded Conversion Features were initially recorded as a debt discount with an offset to the derivative liability at fair value. The debt discount is amortized using the effective interest rate over the original term of the Convertible Notes. Maturity Date The maturity date on the Convertible Notes is the earliest occurrence of (i) the closing of a Qualified Equity Financing, (ii) the date upon which prepayment by the Company occurs with the consent of the Majority Lenders, (iii) the date upon which the Convertible Notes are otherwise converted into equity securities, or (iv) June 30, 2019. In August 2018, the maturity date was extended to March 31, 2020. If, upon the maturity date, the Convertible Notes have not been converted into preferred stock, then the Majority Lenders may elect to (i) demand repayment of the outstanding principal and accrued interest, (ii) convert the Notes into two times the Participating Preferred Stock (as defined in the note subscription agreement) and Conversion Preferred Stock (as defined in the note subscription agreement), or (iv) extend the maturity date by up to an additional 18 months. In March 2020, the Majority Lenders elected to extend the maturity date through September 30, 2020. On October 1, 2020, the maturity date was further extended to March 31, 2021. On March 8, 2021, the maturity date was further extended to June 30, 2021. The Company may not prepay the Convertible Notes without the written consent of the Majority Lender. The Convertible Notes are subordinated in right of payment and priority to any Senior Debt. “Senior Debt” refers to all present and future indebtedness for money borrowed of the Company from institutional lenders, commercial credit companies, commercial banks, credit unions, government agencies, venture debt firms, and other commercial lenders. Interest expense on the Convertible Notes totaled $330,904 and $330,000 for the years ended December 31, 2020 and 2019, respectively. Unamortized debt issuance costs on the Convertible Notes totaled $9,189 and $13,539 at December 31, 2020 and December 31, 2019, respectively. Debt discounts on the Convertible Notes totaled $0 and $136,185 for the years ended December 31, 2020 and 2019, respectively. During the years ended December 31, 2020 and 2019, amortization of debt discounts amounted to $136,185 and $544,741, respectively. Bridge Financing During 2020, 2019, and 2018, the Company issued Secured Promissory Notes (the “Bridge Notes”) to new investors and existing stockholders in an amount of $6,500,000 in order to finance the Company’s interim working capital needs. Of this amount, $1,905,000 is held by related parties. The Bridge Notes bear interest at a rate of twenty-four percent (24%) per annum, without compounding. The Bridge Notes and all accrued interest are due and payable on the earliest occurrence of (i) a Qualified Equity Financing, (ii) the sale of the Company, (iii) prepayment by the Company, or (iv) December 31, 2019, which was subsequently extended to June 30, 2020. In June 2020, the Bridge Notes were amended to further extend the maturity date through September 30, 2020. On October 1, 2020, the Company amended the Bridge Notes to extend the maturity date to March 31, 2021 and to increase the interest rate from 24% to 30% after October 1, 2020. On March 15, 2021, the maturity date was further extended to April 30, 2021. The Bridge Notes will be repayable upon demand of the Majority Lenders of the Bridge Notes at any time on or after the maturity date. The Bridge Notes are senior in right of payment and priority to any Convertible Debt and subordinated to any Senior Debt. The investors that hold the Bridge Notes are granted a security interest in substantially all assets of the Company (“Collateral”). 5. Interest expense on the Bridge Notes totaled $1,168,738 and $549,248 for the years ended December 31, 2020 and 2019, respectively. Unamortized debt issuance costs on the Bridge Notes totaled $5,771 and $8,673 for the years ended December 31, 2020 and 2019, respectively. Related Party Bridge Notes During 2018, 2019 and 2020 the Company issued Secured Promissory Notes (“Related Party Bridge Notes”) to various related parties including executives and their immediate family members. As of December 31, 2020 and 2019, Related Party Bridge Notes amounted to $1,905,000 and $1,655,000, respectively. The Related Party Bridge Notes bear interest at a rate of twenty-four percent (24%) per annum, without compounding. The principal and all accrued interest are due and payable on the earliest occurrence of (i) a Qualified Equity Financing, (ii) the sale of the Company, prepayment by the Company, or (iii) December 31, 2019, which has been extended to June 30, 2020. In June 2020, the Company extended the maturity date through September 30, 2020. On October 1, 2020, the Company amended the Bridge Notes to extend the maturity date to March 31, 2021 and to increase the interest rate from 24% to 30% after October 1, 2020. On March 15, 2021, the maturity date was further extended to April 30, 2021. The interest expense associated with the Related Party Bridge Notes was $446,660 and $292,938 for the years ended December 31, 2020 and 2019, respectively. |
FAIR VALUE OF DERIVATIVE LIAB_5
FAIR VALUE OF DERIVATIVE LIABILITIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
FAIR VALUE OF DERIVATIVE LIABILITIES | ||
FAIR VALUE OF DERIVATIVE LIABILITIES | 7. FAIR VALUE OF DERIVATIVE LIABILITIES Financial liabilities measured at fair value on a recurring basis are summarized below and disclosed on the Company’s balance sheets as of the following dates indicated: Fair Value at September 30, 2021 Total Level 1 Level 2 Level 3 Liabilities: Derivative liability on convertible notes payable, related parties $ — $ — $ — $ — Derivative liability on bridge notes payable and bridge notes payable, related parties — — — $ — Total liabilities $ — $ — $ — $ — Fair value at December 31, 2020 Total Level 1 Level 2 Level 3 Liabilities: Derivative liability on convertible notes payable, related parties $ 2,373,000 $ — $ — $ 2,373,000 Total liabilities $ 2,373,000 $ — $ — $ 2,373,000 The table below provides a summary of the changes in fair value of the derivative liabilities measured on a recurring basis using significant unobservable inputs (Level 3) during the nine months ended September 30: 2021 2020 Balance, beginning of period $ 2,373,000 $ 2,214,000 Derivative liability on bridge notes payable and bridge notes payable, related parties 3,614,000 — (Gain) loss included in earnings (1,311,700) 76,000 Write off of derivative liabilities in connection with debt conversion (4,675,300) — Balance, end of period (unaudited) $ — $ 2,290,000 7. FAIR VALUE OF DERIVATIVE LIABILITIES (continued) Derivative Liability on Convertible Notes Payable, Related Parties The Embedded Conversion Features are separately measured at fair value, with changes in fair value recognized in current operations. The Company used a scenario-based analysis to estimate the fair value of the Embedded Conversion Features at issuance of the Convertible Notes. The scenario-based analysis estimates the fair value of the Convertible Notes based on the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to the noteholders, including various IPO, settlement, equity financing, corporate transaction and dissolution scenarios. Estimating fair values of Embedded Conversion Features requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. Because the Embedded Conversion Features are initially and subsequently carried at fair values, the Company’s income will reflect the volatility in these estimate and assumption changes. The original values of the Embedded Conversion Features were recorded as a derivative liability with the offset as a debt discount to the Convertible Notes which was amortized over the original term of the Convertible Notes. The derivative liability on the Related Party Convertible Notes was written-off on June 21, 2021, upon the conversion of the Convertible Notes to common stock in connection with the consummation of the IPO. Immediately prior to the IPO, the derivative liability was marked to fair value resulting in a loss of $117,000 for the three months ended June 30, 2021. Derivative Liability on Bridge Notes Payable and Bridge Notes Payable, Related Parties The Embedded Conversion Features are separately measured at fair value, with changes in fair value recognized in current operations. The Company used a scenario-based analysis to estimate the fair value of the Embedded Conversion Features at issuance of the Amended Bridge Notes. The scenario-based analysis estimates the fair value of the Amended Bridge Notes based on the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to the noteholders, including various IPO, and settlement scenarios. Estimating fair values of Embedded Conversion Features requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. Because the Embedded Conversion Features are initially and subsequently carried at fair values, the Company’s income will reflect the volatility in these estimate and assumption changes. The Amended Bridge Notes Embedded Conversion Features were initially recorded as a component of the loss on debt extinguishment with an offset to the derivative liability at fair value. No related discount will be recorded on the Amended Bridge Notes, and the derivative liability will not be amortized using the effective interest rate over the term of the Amended Bridge Notes. The derivative liability balance on the Amended Bridge Notes payable of $2,031,300 was written off on June 21, 2021, upon the conversion of the Amended Bridge Notes to common stock in connection with the consummation of the IPO, as the Amended Bridge Notes did not contain any further conversion features subsequent to the IPO. Immediately prior to the IPO, the derivative liability was marked to fair value. A portion of the Bridge Note holders did not elect to convert at the IPO, as a result, the Company recorded a gain of $ 1,630,700 for the three months ended June 30, 2021. | 6. Financial liabilities measured at fair value on a recurring basis are summarized below and disclosed on the Company’s balance sheets as of the following dates indicated: Fair value at December 31, 2020 Total Level 1 Level 2 Level 3 Liabilities: Derivative liability $ 2,373,000 $ — $ — $ 2,373,000 Total liabilities $ 2,373,000 $ — $ — $ 2,373,000 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 The table below provides a summary of the changes in fair value of the derivative liability measured on a recurring basis using significant unobservable inputs (Level 3) during the year ended December 31: 2020 2019 Balance, beginning of period $ 2,214,000 $ 2,765,000 Loss (gain) included in earnings 159,000 (551,000) Balance, end of period $ 2,373,000 $ 2,214,000 6. The Embedded Conversion Features are separately measured at fair value, with changes in fair value recognized in current operations. The Company used a scenario-based analysis to estimate the fair value of the Embedded Conversion Features at issuance of the Convertible Notes and as of December 31, 2020 and 2019. The scenario-based analysis estimates the fair value of the convertible promissory notes based on the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to the noteholders, including various IPO, settlement, equity financing, corporate transaction and dissolution scenarios. Estimating fair values of Embedded Conversion Features requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. Because the Embedded Conversion Features are initially and subsequently carried at fair values, the Company’s income will reflect the volatility in these estimate and assumption changes. The original values of the Embedded Conversion Features were recorded as a derivative liability with the offset as a debt discount to the Convertible Notes which was amortized over the original term of the Convertible Notes. |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
COMMITMENTS AND CONTINGENCIES | ||
COMMITMENTS AND CONTINGENCIES | 8. COMMITMENTS AND CONTINGENCIES Leases The Company leases its office space in Lexington, Massachusetts under a non-cancelable operating lease that was entered into in September 2012 and most recently amended on April 10, 2017. The lease requires monthly rental payments, presented by year in the table below, which escalate during the lease term and expires on February 28, 2024. The difference between straight-line rent expense and rent paid is immaterial as of September 30, 2021. Year Ending December 31, Operating Leases 2021 (remaining) $ 40,353 2022 163,158 2023 165,254 2024 27,601 Total $ 396,366 Rent expense for the three months ended September 30, 2021 and 2020 amounted to $46,261 and $13,276, respectively. Rent expense for the nine months ended September 30, 2021 and 2020 amounted to $113,341, and $82,794, respectively. Legal Proceedings From time to time the Company is involved in litigation, claims, and other proceedings arising in the ordinary course of business. Such litigation and other proceedings may include, but are not limited to, actions relating to employment law and misclassification, intellectual property, commercial or contractual claims, or other consumer protection statutes. Litigation and other disputes are inherently unpredictable and subject to substantial uncertainties and unfavorable resolutions could occur. As of September 30, 2021, there was no material litigation against the Company. | 7. Leases The Company leases its office space in Lexington, Massachusetts under a non-cancelable operating lease that was entered into in September 2012 and most recently amended on April 10, 2017. The lease requires monthly rental payments, presented by year in the table below, which escalate during the lease term and expires on February 28, 2024. The difference between straight-line rent expense and rent paid is immaterial. Operating Years Ended December 31, Leases 2021 $ 161,062 2022 163,158 2023 165,254 2024 27,601 Total $ 517,075 Rent expense for the years ended December 31, 2020 and 2019 amounted to $136,281 and $172,621, respectively. Legal Proceedings From time to time the Company is involved in litigation, claims, and other proceedings arising in the ordinary course of business. Such litigation and other proceedings may include, but are not limited to, actions relating to employment law and misclassification, intellectual property, commercial or contractual claims, or other consumer protection statutes. Litigation and other disputes are inherently unpredictable and subject to substantial uncertainties and unfavorable resolutions could occur. As of December 31, 2020, there was no material litigation against the Company. |
CONVERTIBLE PREFERRED STOCK A_6
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT | ||
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT | 9. CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT Immediately following the closing of the IPO, pursuant to the Company’s fourth amended and restated certificate of incorporation, the Company’s authorized capital is 250,000,000 shares, of which (1) 200,000,000 shares are common stock, par value $0.0001 per share and (2) 50,000,000 are preferred stock, par value $0.0001 per share, which may, at the sole discretion of the Company’s board of directors be issued in one or more series. Redeemable Convertible Preferred Stock Upon the consummation of the IPO, 1,291,012 shares of outstanding preferred stock automatically converted into 1,291,012 shares of common stock. As of September 30, 2021, there were no shares of preferred stock outstanding. Common Stock The Company issued 2,250,000 shares of common stock in connection with the IPO during the nine months ended September 30, 2021. Additionally, the Company issued 1,206,614 shares of common stock in connection with the conversion of all the Convertible Notes and accrued interest and 842,429 shares of common stock in connection with the conversion of $4.7 million of the outstanding principal and accrued interest on the Bridge Notes. On July 1, 2021, the Company issued and sold 337,500 additional shares of common stock, pursuant to the underwriters' exercise of its overallotment option, at a public offering price of $8.00 per share, for aggregate gross proceeds of $2.7 million. The net proceeds from the overallotment were $2.5 million after deducting underwriting discounts of $0.2 million. Inclusive of the underwriters' option to purchase additional shares, the Company received approximately $18.2 million in net proceeds from the IPO, after deducting underwriting discounts of $1.9 million and other offering costs of $0.6 million. 9. CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT (continued) On August 1, 2021, the Company issued 2,000 shares of common stock in exchange for investor relations services. The shares of common stock had a fair value of $6.25 per share for a total aggregate value of $12,500. Underwriter Warrants In connection with the Company’s underwriting agreement with ThinkEquity, the Company entered into a warrant agreement to purchase up to 90,000 shares of common stock, par value $0.0001 (the “Underwriter Warrant”). The Underwriter Warrant is exercisable at a per share exercise price of $10.00, and is exercisable at any time and from time to time, in whole or in part, during the four- and one-half year period commencing 180 days from the effective date of the registration statement. The Warrant becomes exercisable on or after December 16, 2021 (six months from the effective date of the offering) and expires on June 15, 2026. Upon issuance of these warrants, as partial compensation for its services as an underwriter, the fair value of approximately $0.4 million was recorded as equity issuance costs. Warrants During the three and nine months ended September 30, 2021, the warrant holders exercised 17,889 warrants to purchase common stock, resulting in the issuance of 17,889 shares of common stock for total proceeds of $992. As of September 30, 2021, 5,420 warrants expired, and were not exercised. Lender Warrant In connection with the Term Loan entered into on August 13, 2021, the Company issued a Lender Warrant to purchase 12,500 shares of common stock to the Lender. The Lender Warrant is exercisable at a per share exercise price of $8.00, and is exercisable at any time on or after August 13, 2021 through August 12, 2031. The Company determined that the Lender Warrant is equity-classified. As of September 30, 2021, The Lender Warrant had not been exercised, and has a weighted average exercise price of $8.00 and a remaining weighted average time to expiration of 9.87 years The following assumptions were used to estimate the fair value of warrants granted using the Black-Scholes-Merton option pricing model during the nine months ended September 30: 2021 2020 Assumptions: Risk-free interest rate 0.90% - 1.30 % — % Expected term (in years) 5.00 - 10.00 — Expected volatility 61% - 69 % — % Expected dividend yield — % — % A summary of warrant activity during the is as follows: Weighted Average Remaining Options Weighted Average Contractual Term Outstanding Exercise Price in Years Balance at December 31, 2020 23,309 $ 0.06 0.75 Granted 102,500 $ 9.76 5.34 Exercised (17,889) $ 0.06 — Expired (5,420) $ 0.06 — Balance at September 30, 2021 102,500 $ 9.76 5.34 | 8. The Company is authorized to issue 16,000,000 shares of common stock with a par value of $0.0001 per share and 8,000,000 shares of convertible preferred stock with a par value of $0.0001 per share, of which 3,427,871 shares are designated Series A convertible preferred stock (“Series A”), 556,550 shares are designated Series A-1 convertible preferred stock (“Series A-1”) and 3,200,000 shares are designated Series B convertible preferred stock (“Series B”). The Company has 815,579 shares of preferred stock that are undesignated. The Series A, Series A-1, and Series B are presented in temporary or “mezzanine” equity as the convertible preferred stock give the holders (by majority vote) the option if there is a sale, merger or change of control to redeem shares for cash. The convertible preferred stock is recorded at fair value as of the date of issuance. No subsequent adjustment of the initial measurement amounts for these contingently redeemable Series A, Series A-1, and Series B is necessary unless the redemption of the convertible preferred shares becomes probable. Accordingly, the amount presented as temporary equity for the contingently redeemable Series A, Series A-1, and Series B outstanding is its issuance-date fair value. The rights and preferences of the Series B, Series A-1, Series A convertible preferred stock collectively, preferred stock, are as follows: Preferred Stock Dividends Cumulative Dividends Commencing on the date of original issuance, dividends shall accrue, whether or not declared by the Board, on each share of the preferred stock on a cumulative, non-compounding basis at the annual rate of 6% of the original issue price (the “Original Issue Price”). The Original Issue Price for Series A, Series A-1, and Series B is equal to $4.22529, $5.58985, and $13.97445 per share, respectively. The cumulative aggregate amounts of arrearages in preferred dividends as of December 31, 2020 for Series A, Series A-1, and Series B preferred stock were $1,323,766, $219,129, and $2,604,243, respectively. The per-share amounts of arrearages in cumulative preferred dividends as of December 31, 2020 for Series A, Series A-1, and Series B preferred stock were $2.14, $2.18, and $4.55, respectively. Cumulative dividends shall be payable only in the event of a liquidation, dissolution, or winding-up of the Company. Upon voluntary conversion of the preferred stock or a Qualified Public Offering, as defined, no accrued but unpaid cumulative dividends shall be payable. Dividends on preferred stock will be in preference to dividends paid on any other equity securities. Participating Dividends In the event the Board declares a cash dividend payable on the then outstanding shares of common stock, the holders of preferred stock shall be entitled to the amount of dividends as would be declared payable on the largest number of shares of common stock into which the shares of preferred stock held could be then converted. There have been no dividends declared to date. Liquidation Preferences In the event of any liquidation event, as defined, either voluntary or involuntary, the holders of the Series B preferred stock are entitled to receive, prior and in preference to holders of Series A preferred stock, Series A-1 preferred stock, and common stock. The “Series B Liquidation Preference” is defined as a per share amount equal to the Original Issue Price of the Series B preferred stock, plus any declared but unpaid cumulative dividends. In lieu of receiving the Series B Liquidation Preference amount, the holders of the Series B preferred stock may elect to convert to common stock at any time prior to liquidation, dissolution or winding up. 8. If the assets of the Company are insufficient to pay the full aforesaid preferential amounts to the holders of the Series B preferred stock, then the entire proceeds legally available for distribution shall be distributed ratably among the holders of the Series B preferred stock in proportion to the full preferential amount that each such holder is otherwise entitled to receive. In the event of any liquidation event, as defined, either voluntary or involuntary, the holders of the Series A preferred stock and Series A-1 preferred stock are entitled to receive, prior and in preference to holders of common stock. The Series A Liquidation Preference and Series A-1 Liquidation Preference are each defined as a per share amount equal to the Original Issue Price of the Series A preferred stock and the Original Issue Price of the Series A-1 preferred stock, respectively, plus any respective declared but unpaid cumulative dividends. In lieu of receiving the Series A Liquidation Preference amount and Series A-1 Liquidation Preference amount, the holders of the Series A preferred stock and Series A-1 preferred stock may elect to convert to common stock at any time prior to liquidation, dissolution or winding up. If the assets of the Company are insufficient to pay the full aforesaid preferential amounts to the holders of Series A preferred stock and Series A-1 preferred stock, then the entire proceeds legally available for distribution to Series A preferred stock and Series A-1 preferred stock shall be distributed ratably among the holders of Series A preferred stock and Series A-1 preferred stock in proportion to the full preferential amount that each such holder is otherwise entitled to receive. Conversion The preferred stock may be converted at any time, at the option of the holder, into shares of common stock. The conversion rate for preferred stock is equal to the Original Issuance Price divided by the Conversion Value. The Conversion Value shall initially be equal to the Original Issuance Price, subject to adjustments including anti-dilution protection. In the event that the Company issue or sell shares of common stock or equivalents, without consideration or at a price per share less than the applicable preferred stock conversion value then the applicable preferred stock conversion value shall be lowered. Each share of the preferred stock shall automatically convert into common stock at the then applicable conversion rate, upon (i) the closing of a firmly underwritten public offering of common stock with total gross proceeds of at least $25,000,000, or (ii) at the written consent of the majority holders of the Series A preferred stock and Series A-1 preferred stock, voting together as a single series, or (iii) at the written consent of the majority holders of the Series B preferred stock. Additionally, the holders of the Series A preferred stock and Series A-1 preferred stock cannot compel conversion of the Series B preferred stock, and the holders of the Series B preferred stock cannot compel conversion of the Series A preferred stock and Series A-1 preferred stock. Voting The holders of preferred stock shall be entitled to vote with respect to all matters voted on by the stockholders of the Company. Each holder of preferred stock shall be entitled to that number of votes on the largest number of shares of common stock into which the shares of preferred stock held could be then converted. The holders of the Series A preferred stock and Series A-1 preferred stock, voting together, have the right to elect one director. The holders of the Series B preferred stock have the right to elect one director. Common Stock The rights and preferences of the common stock are as follows: Voting The holders of common stock shall be entitled to one vote for each share held with respect to all matters voted on by the stockholders of the Company. The holders of common stock shall be entitled to elect one director. 8. Dividends Subject to the preferential rights of the preferred stock, the holders of common stock are entitled to receive dividends, when and if declared by the Board. Liquidation Rights In certain events, including the liquidation, dissolution or winding-up of the Company, immediately after the holders of preferred stock have been paid in full preference, the remaining assets of the Company shall be distributed ratably among the holders of common stock. |
SHARE-BASED COMPENSATION_2
SHARE-BASED COMPENSATION | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
SHARE-BASED COMPENSATION | ||
SHARE-BASED COMPENSATION | 10. SHARE-BASED COMPENSATION Stock Options As of September 30, 2021, there were 99,493 and 188,455 shares available for future grants under the Company’s 2013 Stock Incentive Plan and 2021 Stock Incentive Plan, respectively. The following assumptions were used to estimate the fair value of stock options granted using the Black- Scholes-Merton option pricing model during the nine months ended September 30: 2021 2020 Assumptions: Risk-free interest rate 0.47% – 0.66 % 1.35% – 1.41 % Expected term (in years) 5.81 – 5.89 5.57 – 6.14 Expected volatility 49.83% – 49.98 % 43.11% – 43.91 % Expected dividend yield — % — % A summary of stock option activity under the Plans is as follows: Weighted Average Remaining Options Weighted Average Contractual Term Aggregate Outstanding Exercise Price in Years Intrinsic Value Balance at December 31, 2020 251,847 $ 1.00 8.06 $ 89,100 Granted 70,164 $ 5.74 9.64 140,436 Exercised (44,222) $ 1.00 — — Cancelled/forfeited (8,019) $ 1.00 — — Balance at September 30, 2021 269,770 $ 2.27 8.03 $ 1,103,834 Options exercisable at September 30, 2021 207,481 $ 1.00 7.54 $ 867,665 The aggregate intrinsic value in the table above represents the difference between the Company’s stock price as of the balance sheet date and the exercise price of each in-the-money option on the last day of the period. The total intrinsic value of stock options exercised was approximately $23,019 and $213,813 an during the three and nine months ended September 30, 2021, respectively. The weighted-average grant date fair value of stock options issued in the nine months ended September 30, 2021 and 2020 was $3.94 and $0.72, respectively. The Company recorded $399,821 and $29,287 of compensation expense for the three months ended September 30, 2021 and 2020, respectively. The Company recorded $450,231 and $80,598 of compensation expense for nine months ended September 30, 2021 and 2020, respectively. A total of $261,676 of unamortized compensation expense at September 30, 2021, will be recognized over the remaining requisite service period of 0.9 years. During the nine months period ending September 30, 2021 and 2020, the Company received proceeds of $44,390 and $0 from the exercise of stock options, respectively. 2021 Stock Incentive Plan On June 16, 2021, the Company adopted the iSpecimen Inc. 2021 Stock Incentive Plan (“the 2021 Plan”). The 2021 Plan was adopted to enhance our ability to attract, retain and motivate employees, officers, directors, consultants and advisors by providing such persons with equity ownership opportunities and performance-based incentives. The 2021 Plan authorizes options, restricted stock, restricted stock units and other stock-based awards. The Company’s Board of Directors, or any committee to which the Board of Directors delegates such authority, has the sole discretion in administering, interpreting, amending or accelerating the 2021 Plan. Awards may be made under the 2021 Plan for up to 608,000 shares of the Company’s common stock, and the 2021 Plan was made effective with the completion of the IPO. During the three months ended September 30, 2021, 419,545 equity awards were issued from the 2021 Plan. 10. SHARE-BASED COMPENSATION (continued) Restricted Stock Units During the three months ended September 30, 2021, the Company granted 120,250 restricted stock units to employees, resulting in expense of $48,957 recorded in general and administrative expense. These restricted stock units are subject to one-year cliff vesting, with 25% of the restricted stock units vesting on the first anniversary of issuance. The remaining During July 2021, the Company granted 189,396 restricted stock units to members of the executive team, resulting in expense of $293,588 recorded in general and administrative expense. These restricted stock units are subject to a four-year vesting period, with 20% of the units vesting immediately upon issuance. The remaining During July 2021, the Company granted 12,500 restricted stock units to board directors, resulting in expense of $13,083 recorded in general and administrative expense. These restricted stock units vest quarterly over a one-year period. As of September 30, 2021, unrecognized stock-based compensation expense related to the unvested restricted stock units was $65,417 which the Company expects to recognize on a straight-line basis over a weighted average period of approximately 0.83 years. Weighted Average Shares Grant Date Fair Value Unvested balance at January 1, 2020 — $ — Granted 322,146 6.40 Vested (37,879) (6.34) Unvested balance at December 31, 2020 284,267 $ 6.41 Performance Stock Units During July 2021, the Company issued 47,349 performance stock units to four members of the executive team pursuant to each executive's employment agreement executed in connection with the IPO. The performance stock units are subject to certain performance obligations relating to certain revenue and cost of revenue metrics to be determined at the beginning of each fiscal year within the four | 9. Stock Options In April 2013, the Company established the 2013 Stock Incentive Plan (the “2013 Plan”). Pursuant to the 2013 Plan, the Company’s Board of Directors (or committees and/or executive officers delegated by the Board of Directors) may grant incentive and nonqualified stock options, restricted stock and other share-based awards to the Company’s employees, officers, directors, consultants, and advisors. In November 2015, the 2013 Plan was amended to increase the number of shares that may be authorized for issuance to 309,029 shares. As of December 31, 2020, there were 111,589 shares available for future grants. The Company also maintains a 2010 Stock Incentive Plan (the “2010 Plan”). A total of 270,513 shares of common stock were authorized to be issued pursuant to the 2010 Plan, 156,603 shares have been issued, and there are no shares available for issuance, under the 2010 Plan. The following assumptions were used to estimate the fair value of stock options granted using the Black- Scholes-Merton option pricing model at December 31: 2020 2019 Assumptions: Risk-free interest rate 0.30% - 1.41% 1.59% - 2.58% Expected term (in years) 5.32 - 5.00 - 6.14 Expected volatility 43.11% - 50.14% 41.00% - 43.92% Expected dividend yield —% —% A summary of stock option activity under the Plans is as follows: Weighted Average Remaining Options Weighted Average Contractual Term Outstanding Exercise Price in Years Balance at January 1, 2019 90,799 $ 2.57 8.78 Granted 162,016 $ 1.13 Exercised (562) $ 6.52 Cancelled/forfeited (27,369) $ 6.09 Balance at December 31, 2019 224,884 $ 1.08 8.78 Granted 43,259 $ 1.00 Exercised — $ 1.00 Cancelled/forfeited (16,296) $ 4.20 Balance at December 31, 2020 251,847 $ 1.00 8.06 Options exercisable at December 31, 2020 180,716 $ 1.00 7.85 9. The weighted-average grant date fair value of stock options issued in 2020 and 2019 was $0.55 and $2.33, respectively. The Company recorded $92,866 and $360,379 of compensation expense in 2020 and 2019, respectively. A total of $109,629 of unamortized compensation expense at December 31, 2020, will be recognized over the remaining requisite service period of 2.48 years. During 2020 and 2019, the Company received proceeds of $0 and $3,674 from the exercise of stock options, respectively. On September 4, 2020, the Board of Directors of the Company approved the repricing of 253,349 then outstanding stock options to an exercise price of $1.00, accordingly the summary of stock option activity above has been updated to reflect the exercise price of $1.00 for all outstanding options. No other changes to the original stock option grant terms were made. The incremental compensation cost was measured as the fair value of the stock options immediately before and immediately after the modification. The Company determined the total incremental compensation cost from the modification to be $9,900 of which $7,078 related to fully vested options and was expensed as stock based compensation expense, and $2,822 related to unvested options and will be recognized over the remaining service period. |
INCOME TAXES_2
INCOME TAXES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
INCOME TAXES | ||
INCOME TAXES | 11. INCOME TAXES As of September 30, 2021, the Company had federal net operating loss carryforwards of approximately $28,400,000 of which approximately $13,000,000 expire at various periods through 2037 and approximately $15,400,000 can be carried forward indefinitely. As of September 30, 2021, the Company had state net operating loss carryforwards of approximately $21,300,000 that expire at various periods through 2041. At September 30, 2021, the Company had federal and state tax credits of approximately $800,000 available for future periods that expire at various periods through 2041. The Company has recorded a full valuation allowance against net deferred income tax assets due to a history of losses generated since inception. | 11. There was no provision for income taxes for the years ended December 31, 2020 and 2019 due to the Company’s operating losses and a full valuation allowance on deferred tax assets. The Company completed research and development studies covering all tax years currently under the applicable statute of limitations. The benefits of the study are reflected in the 2020 and 2019 financial statements as a tax credit receivable in the amount of $179,000 and $284,000, respectively. Significant components of the Company’s deferred tax assets and liabilities as of December 31 are as follows: 2020 2019 Deferred tax assets: Operating loss carryforwards $ 6,600,000 $ 5,600,000 Other 700,000 1,000,000 Total deferred tax assets 7,300,000 6,600,000 Deferred tax liability: Intangibles (250,000) (150,000) Total deferred tax liabilities (250,000) (150,000) Net deferred tax assets before valuation allowance 7,050,000 6,450,000 Valuation allowance (7,050,000) (6,450,000) Net deferred tax asset $ — $ — The Company has provided a valuation allowance against the deferred tax assets as it has incurred significant losses since its inception. Management currently believes that it is more likely than not that the deferred tax assets will not be realized in the future. The change in the valuation allowance during 2020 was an increase of $600,000. 11. At December 31, 2020, the Company had federal net operating loss (“NOL”) carryforwards of approximately $24,200,000 of which approximately $13,000,000 expire at various periods through 2037 and approximately $11,200,000 can be carried forward indefinitely. The Company also had state NOL carryforwards of approximately $18,900,000 that expire at various periods through 2040. At December 31, 2019 the Company had federal and state tax credits of approximately $700,000 available for future periods that expire at various periods through 2040. Due to changes in ownership provisions of the Internal Revenue Code, the availability of the Company’s NOL carryforwards may be subject to annual limitations under Section 382 of the Internal Revenue Code against taxable income in the future period, which could substantially limit the eventual utilization of such carryforwards. The Company applies the standards on uncertainty in income taxes. The Company did not have any significant unrecognized tax benefits during the year ended December 31, 2020. The Company’s U.S. federal operating losses have occurred since its inception and as such, tax years subject to potential tax examination could apply from that date because the utilization of net operating losses from prior years opens the relevant year to audit by the IRS and/or state taxing authorities. The Company’s income tax provision was computed using the federal statutory rate and average state statutory rates, net of related federal benefit. The following represents a reconciliation of the statutory income tax rates to the effective rates at December 31: 2020 2019 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) — % — % |
SUBSEQUENT EVENTS_2
SUBSEQUENT EVENTS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
SUBSEQUENT EVENTS | ||
SUBSEQUENT EVENTS | 12. SUBSEQUENT EVENTS Pursuant to the 2021 Plan, the Company granted 12,000 restricted stock units to employees during October 2021. Each restricted stock unit represents the right to receive one share of the Company’s common stock, subject to the terms and conditions set forth in the restricted stock unit award agreement and the 2021 Plan. The restricted stock units vest as follows: 25% from the one year anniversary of the vesting start date, and then the remainder of the shares will time-vest quarterly beginning fifteen months after the vesting start date and then every three months thereafter, through the fourth yearly anniversary of the vesting start date. | 13. Factoring Agreement On January 1, 2021 the Company entered into a Factoring Agreement (the “Agreement”) with Versant Funding LLC (“Versant”), in which the Company has agreed to sell a minimum of $1.2 million of its accounts receivable without recourse, and which we have granted Versant a security interest in substantially all of our assets, in accordance with the terms of the Agreement. Through March 26, 2021, the Company has factored, without recourse, approximately $2.3 million of its accounts receivable to Versant. Note Payable Loan Forgiveness On January 13, 2021, the PPP Loan was fully forgiven by the SBA. Related Party Convertible Notes Payable On March 8, 2021, the maturity date was further extended to June 30, 2021, for the Convertible Notes. 13. Bridge Notes and Related Party Bridge Notes On March 15, 2021, the Company entered into a Fifth Amendment to the Note Subscription Agreements and Secured Promissory Notes (referred to herein as the Bridge Notes and Related Party Bridge Notes in Note 6) (the “Amendment”). The terms of the Amendment are as follows: Maturity Date The Bridge Notes and Related Party Bridge Notes shall bear interest, on a non-compounding basis, at a rate of twenty four percent (24%) per annum prior to October 1, 2020 and at a rate of thirty percent (30%) per annum from and after October 1, 2020, due on maturity on the earlier of (i) the closing of an initial public offering yielding gross proceeds in excess of $18,000,000, exclusive of any existing Convertible Notes (a “Qualified IPO”), (ii) the sale of the Company, (iii) prepayment by the Company, or (iv) April 30, 2021. The Majority Lenders (defined in Note 6) may, with the approval of the Company, elect to extend the maturity date one or more times, at their discretion. Elective Conversion Upon a Qualified IPO The holders of the Bridge Notes and Related Party Bridge Notes may voluntarily elect, at any time prior the maturity date and up to March 19, 2021, to convert 50% or more of the outstanding unpaid principal plus any amount of outstanding unpaid interest at the time of the Qualified IPO, into the same class or series of securities of the Company to be offered and issued in the Qualified IPO (the “IPO Stock”). The conversion rate shall be equal to the issue price of the IPO Stock less a thirty percent (30%) discount (“the Elective Conversion Stock”). The elective conversion amount shall be deducted from the amount of principal and interest outstanding in order to arrive at an adjusted principal and interest repayment amount. The sum of the amounts being converted on the Bridge Notes and Related Party Bridge Notes shall first convert the outstanding principal and then the outstanding interest second. As of March 19, 2021, Bridge Notes and Related Party Bridge Note holders have elected to voluntarily convert approximately $3.8 million of outstanding principal and accrued interest to common stock at the time of the Qualified IPO. Repayment of Adjusted Outstanding Interest and Principal Upon a Qualified IPO If a Qualified IPO is consummated prior to the maturity date, and the holders have not voluntarily converted, the Company shall make a cash payment to the holders of the Bridge Notes and Related Party Bridge Notes equal to the greater of either the total adjusted outstanding interest or one and one-half times (1.50X) the Third-Party Loan Proceeds (“Note Repayment Proceeds”). Third-Party Loan Proceeds are defined as the net cash proceeds received by the Company from an institutional lender, commercial bank, or other similar lender consummated on or about the time of the Qualified IPO (or contingent upon the closing of the Qualified IPO). Repayments shall first be applied to the adjusted outstanding interest due in cash to the holders of the Bridge Notes and Related Party Bridge Notes. The residual value shall be next applied to the adjusted outstanding principal (the “Principal Repayment Proceeds”). The remaining cash repayment shall be calculated by multiplying the Principal Repayment Proceeds by a fraction, the numerator of which is equal to the adjusted principal repayment amount of such note holder, and the denominator of which is equal to the total adjusted outstanding principal to all note holders. In no event shall any cash payment be made to any note holder exceed the sum of the adjusted interest repayment amount plus the adjusted principal repayment amount for such note holder. 13. Automatic Conversion or Debt Extension Any remaining unpaid principal, calculated by subtracting the Principal Repayment Proceeds from the total adjusted outstanding principal ( the “Automatic Principal Conversion Amount”), shall then automatically convert into IPO Stock at a rate equal to the issue price of the IPO Stock less a ten percent (10%) discount (that is, at a rate of ninety percent (90%) of the issue price of the IPO Stock; such discounted IPO Stock; the “Automatic Conversion Stock”). If the Company is unable to repay at least twenty-five percent (25%) of the total adjusted outstanding principal of the Bridge Notes and Related Party Bridge Notes (“the “Principal Repayment Floor”), then no Automatic Conversion Stock shall be issued and the total adjusted outstanding principal on the Bridge Notes and Related Party Bridge Notes shall remain on the books of the Company under their existing Bridge Notes and Related Party Bridge Notes which shall automatically be amended to (i) have their interest rates adjusted to a rate of fifteen percent ( 15% ) per annum and (ii) have their maturity date set to a date that is eighteen (18) months from the date of the Qualified IPO. Reverse Stock Split On March 16, 2021, the Company approved a 1-for-5.545 reverse stock split (“reverse stock split”) of the Company’s common stock and preferred stock. On March 29, 2021, through a shareholder resolution, the shareholders of the Company approved the reverse stock split. All fractional shares as a result of the reverse stock split were rounded down and no fractional shares were issued in connection with the reverse stock split. The par value, authorized share amount, and other terms of the common stock and preferred stock were not affected by the reverse stock split. All share and per share amounts, including stock options, warrants, and restricted stock awards have been retroactively adjusted in these financial statements for all periods presented to reflect the reverse stock split. Further, exercise prices of stock options and warrants have been retroactively adjusted in these financial statements for all periods presented to reflect the reverse stock split. 2021 Stock Incentive Plan On June 16, 2021, the Company adopted the iSpecimen Inc. 2021 Stock Incentive Plan (“2021 Plan”). The 2021 Plan was adopted to enhance our ability to attract, retain and motivate employees, officers, directors, consultants and advisors by providing such persons with equity ownership opportunities and performance- based incentives. The 2021 Plan authorizes options, restricted stock, restricted stock units and other stock- based awards. Our Board of Directors, or any committee to which the Board of Directors delegates such authority, has the sole discretion in administering, interpreting, amending or accelerating the 2021 Plan. Awards may be made under the 2021 Plan for up to 608,000 shares of our common stock. |
SUMMARY OF SIGNIFICANT ACCOU_18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Use of Estimates | Use of Estimates The preparation of the Company’s unaudited interim condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company utilizes certain estimates in the determination of the fair value of its warrants, deferred tax valuation allowances, revenue recognition, share-based compensation, derivative liabilities for embedded conversion features, and accrued expenses amongst others. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results could differ from such estimates. | Use of Estimates The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company utilizes certain estimates in the determination of the fair value of its common stock and warrants, deferred tax valuation allowances, revenue recognition, share-based compensation, and accrued expenses amongst others. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results could differ from such estimates. |
Off-Balance Sheet Risk and Concentrations of Credit Risk | Off-Balance Sheet Risk and Concentrations of Credit Risk The Company has no significant off-balance sheet risks, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Cash accounts are maintained at financial institutions that potentially subject the Company to concentrations of credit risk. At September 30, 2021 and December 31, 2020, substantially all of the Company’s cash was deposited in accounts at one financial institution. The Company maintains its cash deposits, which at times may exceed the federally insured limits, with a reputable financial institution and, accordingly, the Company believes such funds are subject to minimal credit risk. Concentration of credit risk with respect to accounts receivable is typically related to customers who account for a significant portion of revenue. During the three months ended September 30, 2021, one customer represented approximately 16% of the Company’s revenues. During the three months ended September 30, 2020, two customers represented approximately 10% and 32% of the Company’s revenues. During the nine months ended September 30, 2021, one customer represented approximately 10% of the Company’s revenues. During the nine months ended September 30, 2020, two customers represented approximately 21% and 15% of the Company’s revenues. As of September 30, 2021, three customers each represented accounts As of September 30, 2021, three customers represented 23%, 17%, and 13%, respectively, of the Company’s unbilled accounts receivable balance. As of September 30, 2020, there were no customers with unbilled accounts receivable balances in excess of 10% of the total. During the three months ended September 30, 2021 and 2020, revenue attributable to customers located in foreign countries represented approximately 4% and 6% of revenue, respectively. During the nine months ended September 30, 2021 and 2020, revenue attributable to customers located in foreign countries represented approximately 5% and 6% of revenue, respectively. As of September 30, 2021 and 2020, accounts receivable attributable to customers located in foreign countries represented approximately 4% and 8% of accounts receivable, respectively. As of September 30, 2021 and 2020, accounts receivable-unbilled attributable to customers located in foreign countries represented approximately 5% and 12% of accounts receivable-unbilled, respectively. | Off-Balance Sheet Risk and Concentrations of Credit Risk The Company has no significant off-balance sheet risks, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Cash accounts are maintained at financial institutions that potentially subject the Company to concentrations of credit risk. At December 31, 2020 and 2019, substantially all of the Company’s cash was deposited in accounts at one financial institution. The Company maintains its cash deposits, which at times may exceed the federally insured limits, with a reputable financial institution and, accordingly, the Company believes such funds are subject to minimal credit risk. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Concentration of credit risk with respect to accounts receivable is typically related to customers who account for a significant portion of revenue. During 2020, two customers represented approximately 11% and 10% of the Company’s 2020 revenues and comprised 0% and 0% of accounts receivable and 0% and 5% of accounts receivable-unbilled at December 31, 2020. During 2019, three customers represented approximately 20%, 11%, and 10% of the Company’s 2019 revenues and comprised 4%, 44%, and 1% of accounts receivable, and 0%, 0%, and 0% of accounts receivable-unbilled at December 31, 2019. During the years ended December 31, 2020 and 2019, revenue attributable to customers located in foreign countries is approximately 6% and 23% of revenue, respectively. During the years ended December 31, 2020 and 2019, accounts receivable attributable to customers located in foreign countries is approximately 11% and 5% of accounts receivable, respectively. During the years ended December 31, 2020 and 2019, accounts receivable-unbilled attributable to customers located in foreign countries is approximately 0% and 17% of accounts receivable-unbilled, respectively. |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: Ø Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets. Ø Level 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Ø Level 3 — Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. For certain financial instruments, including cash, accounts receivable, and accounts payable, the carrying amounts approximate their fair values as of September 30, 2021 and December 31, 2020 because of their short-term nature. The liability in connection with conversion features included within certain of the Company’s Convertible Notes and Bridge Notes was classified as a derivative liability for embedded conversion features on the balance sheets and were considered to be a Level 3 liability. | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: ➢ Level 1 — ➢ Level 2 — ➢ Level 3 — For certain financial instruments, including cash, accounts receivable, and accounts payable, the carrying amounts approximate their fair values as of December 31, 2020 and 2019 because of their short-term nature. The liability in connection with conversion features included within certain of the Company’s convertible notes payable is classified as a derivative liability for embedded conversion features on the balance sheets and is considered to be a Level 3 liability. |
Deferred Initial Public Offering Costs | Deferred Initial Public Offering Costs The Company capitalizes certain legal, professional, accounting and other third-party fees that are directly associated with in-process equity issuances as deferred initial public offering costs until such equity issuances are consummated. After consummation of the equity issuance, these costs are recorded as a reduction in the capitalized amount associated with the equity issuance. Should the equity issuance be abandoned, the deferred initial public offering costs would be expensed immediately as a charge to operating expenses in the consolidated statement of operations. On June 21, 2021, the Company consummated its IPO; accordingly, the Company recognized deferred initial public offering costs of approximately $0.6 million as a reduction from gross proceeds associated with the IPO through additional paid-in capital in the accompanying condensed consolidated balance sheet. The Company recorded approximately $2.3 million of offering costs in additional paid-in capital in connection with the IPO. Accordingly, there were no deferred offering costs as of September 30, 2021. The Company had approximately $265,000 of deferred offering costs related to the IPO which were recorded in other current assets on the balance sheet as of December 31, 2020. | |
Derivative Liability for Embedded Conversion Features | Derivative Liability for Embedded Conversion Features The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivatives to be accounted for separately. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other bifurcated embedded derivative instruments in the convertible instrument, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The result of this accounting treatment is that the fair value of the embedded derivative is recorded as a liability and marked-to-market each balance sheet date, with the change in fair value recorded in the statements of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. | Derivative Liability for Embedded Conversion Features The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates its convertible notes to determine if those contracts or embedded components of those contracts qualify as derivatives to be accounted for separately. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other bifurcated embedded derivative instruments in the convertible instrument, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The result of this accounting treatment is that the fair value of the embedded derivative is recorded as a liability and marked-to-market each balance sheet date, with the change in fair value recorded in the statements of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. |
Revenue Recognition and Accounts Receivable | Revenue Recognition and Accounts Receivable The Company recognizes revenue using the five step approach as follows: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) we satisfy the performance obligations. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The Company generates revenue by procuring various specimens from hospitals, laboratories, and other supply sites, for the Company’s medical research customers using the Company’s proprietary software, the iSpecimen Marketplace, to identify, locate, and ultimately validate the required specimens to the Company’s customers’ requested specifications. The Company’s performance obligation is to procure a specimen meeting the customer specification(s) from a supplier, on a “best efforts” basis, for the Company’s customer at the agreed price per specimen as indicated in the customer contract with the Company. The Company does not currently charge suppliers or customers for the use of the Company’s proprietary software. Each customer will execute a material and data use agreement with the Company or agrees to online purchase terms, each of which includes terms such as specimen and data use, shipment terms, payment and cancellation terms. These are then supplemented by purchase orders that specify specimen requirements including detailed inclusion/exclusion criteria, quantities to be collected, and pricing. Collectively, these customer agreements represent the Company’s contracts with its customer. Generally, contracts have fixed unit pricing. For certain specimen orders, a refundable customer deposit may be required prior to order fulfillment depending on project set-up requirements, presented as deferred revenue. The Company expects to recognize the deferred revenue within the next twelve months. Specimen collections occur at supply sites within the Company’s network. “Collection” is when the specimen has been removed, or “collected” from the patient or donor. A specimen is often collected specifically for a particular Company order. Once collected, the specimen is assigned by the supplier to the Company and control of the specimen passes to the Company. “Accession” is the process whereby a collected specimen and associated data are registered and assigned in the iSpecimen Marketplace to a particular customer order, which can occur while a specimen is at the supplier site or while at the Company site and is when control of the specimen passes to the customer. Suppliers may ship specimens to the Company or directly to the customer, if specimens must be delivered within a short time period (less than 24 hours after collection) or shipping to the Company is not practical. The Company has evaluated principal versus agent considerations as part of the Company’s revenue recognition policy. The Company has concluded that it acts as principal in the arrangement as it manages the procurement process from beginning to end and determines which suppliers will be used to fulfill an order, usually take physical possession of the specimens, set prices for the specimens, and bear the responsibility for customer credit risk. The Company recognizes revenue over time, as the Company has created an asset with no alternative use to the Company which has an enforceable right to payment for performance completed to date. At contract inception, the Company reviews a contract, and related order upon receipt, to determine if the specimen ordered has an alternative use by us. Generally, specimens ordered do not have an alternative future use to the Company and the performance obligation is satisfied when the related specimens are accessioned. The Company uses an output method to recognize revenue for specimens with no alternative future use. The output is measured based on the number of specimens accessioned. In the rare circumstances where specimens do have an alternative future use, the Company's performance obligation is satisfied at the time of shipment. Customers are typically invoiced upon shipment. Depending on the quantity of specimens ordered, it may take several accounting periods to completely fulfill a purchase order. In other words, there can be multiple invoices issued for a single purchase order, reflecting the specimens being accessioned over time. However, specimens are generally shipped as soon as possible after they have been accessioned. Once a specimen that has no alternative future use, and for which the Company has an enforceable right to payment, has been accessioned, the Company records the offset to revenue in accounts receivable — unbilled. Once the specimen has been shipped and invoiced, a reclassification is made from accounts receivable — unbilled to accounts receivable. Customers are generally given fourteen days from the receipt of specimens to inspect the specimens to ensure compliance with specifications set forth in the purchase order documentation. Customers are entitled to either receive replacement specimens or receive reimbursement of payments made for such specimens. The Company has a nominal history of returns for nonacceptance of specimens delivered. When this has occurred, the Company has given the customer a credit for the returns. The Company has not recorded a returns allowance. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The following table summarizes the Company’s revenue for the following periods: Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Specimens – contracts with customers $ 2,671,655 $ 2,223,057 $ 8,448,164 $ 5,408,012 Shipping and other 46,879 27,090 138,053 58,363 Revenue $ 2,718,534 $ 2,250,147 $ 8,586,217 $ 5,466,375 The Company carries its accounts receivable at the invoiced amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable to determine if an allowance for doubtful accounts is necessary, based on economic conditions and each customer’s payment history. Receivables are written off when deemed uncollectible, with any future recoveries recorded as income when received. As of September 30, 2021 and December 31, 2020, the Company had an allowance for doubtful accounts of $141,952 and $108,096, respectively. The Company applies the practical expedient to account for shipping and handling activities as fulfillment cost rather than as a separate performance obligation. Shipping and handling costs incurred are included in cost of revenue. | Revenue Recognition and Accounts Receivable The Company recognizes revenue using the five step approach as follows: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) we satisfy the performance obligations. The Company generates revenue by procuring various specimens from hospitals, laboratories, and other supply sites, for our medical research customers using our proprietary software, the iSpecimen Marketplace, to identify, locate, and ultimately validate the required specimens to our customers’ requested specifications. The Company’s performance obligation is to procure a specimen meeting the customer specification(s) from a supplier, on a “best efforts” basis, for our customer at the agreed price per specimen as indicated in the customer contract with the Company. The Company does not currently charge suppliers or customers for the use of our proprietary software. Each customer will execute a material and data use agreement with the Company or agrees to online purchase terms, each of which includes terms such as specimen and data use, shipment terms, payment and cancellation terms. These are then supplemented by purchase orders that specify specimen requirements including detailed inclusion/exclusion criteria, quantities to be collected, and pricing. Collectively, these customer agreements represent the Company’s contracts with its customer. Generally, contracts have fixed unit pricing. For certain specimen orders, a refundable customer deposit may be required prior to order fulfillment depending on project set-up requirements, presented as deferred revenue. The Company expects to recognize the deferred revenue within the next twelve months. Specimen collections occur at supply sites within our network. “Collection” is when the specimen has been removed, or “collected” from the patient or donor. A specimen is often collected specifically for a particular Company order. Once collected, the specimen is assigned by the supplier to the Company and control of the specimen passes to the Company. “Accession” is the process whereby a collected specimen and associated data are registered and assigned in the iSpecimen Marketplace to a particular customer order, can occur while a specimen is at the supplier site or while at the Company site and is when control of the specimen passes to the customer. Suppliers may ship specimens to the Company or directly to the customer, if specimens must be delivered within a short time period (less than 24 hours after collection) or shipping to the Company is not practical. The Company has evaluated principal versus agent considerations as part of our revenue recognition policy. The Company has concluded that we act as principal in the arrangement as we manage the procurement process from beginning to end and determine which suppliers will be used to fulfill an order, usually take physical possession of the specimens, set prices for the specimens, and bear the responsibility for customer credit risk. The Company recognizes revenue over time, as we have created an asset with no alternative use to the Company and has an enforceable right to payment for performance completed to date. At contract inception, the Company reviews a contract and related order upon receipt to determine if the specimen ordered has an alternative use by us. In the rare circumstances where specimens do have an alternative future use, our performance obligation is satisfied at the time of shipment. Generally, specimens ordered do not have an alternative future use to the Company and the performance obligation is satisfied when the related specimens are accessioned. The Company uses an output method to recognize revenue for specimens with no alternative future use. The output is measured based on the number of specimens accessioned. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Customers are typically invoiced upon shipment. Depending on the quantity of specimens ordered, it may take several accounting periods to completely fulfill a purchase order. In other words, there can be multiple invoices issued for a single purchase order, reflecting the specimens being accessioned over time. However, specimens are generally shipped as soon as possible after they have been accessioned. Once a specimen that has no alternative future use, and for which we have an enforceable right to payment, has been accessioned, we record the offset to revenue in accounts receivable - unbilled. Once the specimen has been shipped and invoiced, a reclassification is made from accounts receivable - unbilled to accounts receivable. Customers are generally given fourteen days from the receipt of specimens to inspect the specimens to ensure compliance with specifications set forth in the purchase order documentation. Customers are entitled to either receive replacement specimens or receive reimbursement of payments made for such specimens. We have a nominal history of returns for nonacceptance of specimens delivered. When this has occurred, we have given the customer a credit for the returns. We have not recorded a returns allowance. The following table summarizes the Company’s revenue for the years ended December 31: 2020 2019 Specimens – contracts with customers $ 8,086,324 $ 4,215,002 Shipping and other 97,782 83,348 Revenue $ 8,184,106 $ 4,298,350 The Company carries its accounts receivable at the invoiced amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable to determine if an allowance for doubtful accounts is necessary, based on economic conditions and each customer’s payment history. Receivables are written off when deemed uncollectible, with any future recoveries recorded as income when received. As of December 31, 2020, and 2019, the Company had an allowance for doubtful accounts of $108,096 and $0, respectively. The Company applies the practical expedient to account for shipping and handling activities as fulfillment cost rather than as a separate performance obligation. Shipping and handling costs incurred are included in cost of revenue. |
Restricted Stock Units (RSUs) | Restricted Stock Units (RSUs) The Company recognizes share-based compensation expense from restricted stock units (RSUs) ratably over the specified vesting period. The fair value of RSUs is determined to be the closing share price of the Company's common stock on the grant date. | |
Common Stock Warrants | Common Stock Warrants The Company accounts for common stock warrants as either equity instruments or liabilities, depending on the specific terms of the warrant agreement. The warrants shall be classified as a liability if 1) the underlying shares are classified as liabilities or 2) the entity can be required under any circumstances to settle the warrant by transferring cash or other assets. The measurement of equity-classified nonemployee share-based payments is generally fixed on the grant date and are considered compensatory. For additional discussion on warrants, see Note 9. | |
Net Loss Per Share | Net Loss Per Share Basic net loss per share is calculated by dividing net loss applicable to common stockholders by the weighted- average number of shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting the weighted-average number of shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net loss per share calculation, the potential impact of shares to be issued upon conversion of Series A, Series A-1 and Series B preferred stock, stock options, and warrants to purchase common stock are considered to be common stock equivalents, but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share applicable to common stockholders were the same for all periods presented. The table below provides common stock equivalents excluded from diluted net loss per share for the following periods: Nine months ended September 30, 2021 2020 Shares issuable upon conversion of preferred stock — 1,291,012 Shares issuable upon vesting of RSUs 284,267 — Shares issuable upon exercise of stock options 269,770 253,575 Shares issuable upon exercise of Lender Warrant to purchase common stock 12,500 23,309 Shares issuable upon exercise of Underwriter Warrants to purchase common stock 90,000 — | Net Loss Per Share Basic net loss per share is calculated by dividing net loss applicable to common stockholders by the weighted- average number of shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting the weighted-average number of shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net loss per share calculation, the potential impact of shares to be issued upon conversion of Series A, Series A-1 and Series B preferred stock, stock options, and warrants to purchase common stock are considered to be common stock equivalents, but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share applicable to common stockholders were the same for all periods presented. The table below provides total shares outstanding, as of December 31: 2020 2019 Shares issuable upon conversion of preferred stock 1,291,012 1,291,012 Shares issuable upon exercise of stock options 251,847 224,884 Shares issuable upon exercise of warrants to purchase common stock 23,309 23,309 |
Recent Accounting Standards | Recent Accounting Standards From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. The Company has elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. | Recent Accounting Standards From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company. Accounting Standards Issued, Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses Measurement of Credit Losses on Financial Instruments In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity |
SUMMARY OF SIGNIFICANT ACCOU_19
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Summary of entity's revenue | Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Specimens – contracts with customers $ 2,671,655 $ 2,223,057 $ 8,448,164 $ 5,408,012 Shipping and other 46,879 27,090 138,053 58,363 Revenue $ 2,718,534 $ 2,250,147 $ 8,586,217 $ 5,466,375 | The following table summarizes the Company’s revenue for the years ended December 31: 2020 2019 Specimens – contracts with customers $ 8,086,324 $ 4,215,002 Shipping and other 97,782 83,348 Revenue $ 8,184,106 $ 4,298,350 |
Summary of total shares outstanding | 2020 2019 Shares issuable upon conversion of preferred stock 1,291,012 1,291,012 Shares issuable upon exercise of stock options 251,847 224,884 Shares issuable upon exercise of warrants to purchase common stock 23,309 23,309 | |
Schedule of common stock equivalents excluded from diluted net loss per share | Nine months ended September 30, 2021 2020 Shares issuable upon conversion of preferred stock — 1,291,012 Shares issuable upon vesting of RSUs 284,267 — Shares issuable upon exercise of stock options 269,770 253,575 Shares issuable upon exercise of Lender Warrant to purchase common stock 12,500 23,309 Shares issuable upon exercise of Underwriter Warrants to purchase common stock 90,000 — |
PROPERTY AND EQUIPMENT, NET (_2
PROPERTY AND EQUIPMENT, NET (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
PROPERTY AND EQUIPMENT, NET | ||
Summary of property and equipment, net | September 30, December 31, 2021 2020 (unaudited) Website $ 107,926 $ 105,376 Computer equipment and purchased software 84,589 84,589 Equipment 35,449 35,449 Furniture and fixtures 87,184 87,184 Leasehold improvements 24,935 24,935 Total property and equipment 340,083 337,533 Accumulated depreciation (295,334) (261,944) Total property and equipment, net $ 44,749 $ 75,589 | 2020 2019 Website $ 105,376 $ 105,376 Computer equipment and purchased software 84,589 84,481 Equipment 35,449 35,134 Furniture and fixtures 87,184 87,184 Leasehold improvements 24,935 24,935 Total property and equipment 337,533 337,110 Accumulated depreciation (261,944) (217,189) Total property and equipment, net $ 75,589 $ 119,921 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
DEBT | |
Schedule of components of convertible notes and bridge notes of non-cash transaction | Write off of derivative liability relating to the Convertible Notes $ 2,644,000 Extinguishment of Convertible Notes principal 5,486,199 Accrued and unpaid interest on the Convertible Notes 1,257,066 Accumulated amortization on debt issuance costs 33,035 Loss on extinguishment of Convertible Notes 260,185 Write off of debt issuance costs (27,573) Write off of derivative liability relating to the Bridge Notes 2,031,300 Extinguishment of Bridge Notes principal 4,000,000 Accrued and unpaid interest on the Bridge Notes 717,646 Gain on extinguishment of Bridge Notes (9,514) Total conversion of Convertible Notes and Bridge Notes into common stock $ 16,392,344 |
FAIR VALUE OF DERIVATIVE LIAB_6
FAIR VALUE OF DERIVATIVE LIABILITIES (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
FAIR VALUE OF DERIVATIVE LIABILITIES | ||
Summary of financial liabilities measured at fair value on a recurring basis | Fair Value at September 30, 2021 Total Level 1 Level 2 Level 3 Liabilities: Derivative liability on convertible notes payable, related parties $ — $ — $ — $ — Derivative liability on bridge notes payable and bridge notes payable, related parties — — — $ — Total liabilities $ — $ — $ — $ — Fair value at December 31, 2020 Total Level 1 Level 2 Level 3 Liabilities: Derivative liability on convertible notes payable, related parties $ 2,373,000 $ — $ — $ 2,373,000 Total liabilities $ 2,373,000 $ — $ — $ 2,373,000 | Fair value at December 31, 2020 Total Level 1 Level 2 Level 3 Liabilities: Derivative liability $ 2,373,000 $ — $ — $ 2,373,000 Total liabilities $ 2,373,000 $ — $ — $ 2,373,000 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 |
Summary of the changes in fair value of the derivative liabilities measured on a recurring basis using significant unobservable inputs (Level 3) | 2021 2020 Balance, beginning of period $ 2,373,000 $ 2,214,000 Derivative liability on bridge notes payable and bridge notes payable, related parties 3,614,000 — (Gain) loss included in earnings (1,311,700) 76,000 Write off of derivative liabilities in connection with debt conversion (4,675,300) — Balance, end of period (unaudited) $ — $ 2,290,000 | The table below provides a summary of the changes in fair value of the derivative liability measured on a recurring basis using significant unobservable inputs (Level 3) during the year ended December 31: 2020 2019 Balance, beginning of period $ 2,214,000 $ 2,765,000 Loss (gain) included in earnings 159,000 (551,000) Balance, end of period $ 2,373,000 $ 2,214,000 |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
Summary of monthly rental payments, presented by year | Year Ending December 31, Operating Leases 2021 (remaining) $ 40,353 2022 163,158 2023 165,254 2024 27,601 Total $ 396,366 |
CONVERTIBLE PREFERRED STOCK A_7
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT | |
Schedule of fair value of warrants granted using the black scholes merton option pricing model | The following assumptions were used to estimate the fair value of warrants granted using the Black-Scholes-Merton option pricing model during the nine months ended September 30: 2021 2020 Assumptions: Risk-free interest rate 0.90% - 1.30 % — % Expected term (in years) 5.00 - 10.00 — Expected volatility 61% - 69 % — % Expected dividend yield — % — % |
Schedule of Warrant activity | Weighted Average Remaining Options Weighted Average Contractual Term Outstanding Exercise Price in Years Balance at December 31, 2020 23,309 $ 0.06 0.75 Granted 102,500 $ 9.76 5.34 Exercised (17,889) $ 0.06 — Expired (5,420) $ 0.06 — Balance at September 30, 2021 102,500 $ 9.76 5.34 |
SHARE-BASED COMPENSATION (Tab_2
SHARE-BASED COMPENSATION (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
SHARE-BASED COMPENSATION | ||
Summary of assumptions used to estimate the fair value of stock options granted using the Black-Scholes-Merton option pricing model | 2021 2020 Assumptions: Risk-free interest rate 0.47% – 0.66 % 1.35% – 1.41 % Expected term (in years) 5.81 – 5.89 5.57 – 6.14 Expected volatility 49.83% – 49.98 % 43.11% – 43.91 % Expected dividend yield — % — % | The following assumptions were used to estimate the fair value of stock options granted using the Black- Scholes-Merton option pricing model at December 31: 2020 2019 Assumptions: Risk-free interest rate 0.30% - 1.41% 1.59% - 2.58% Expected term (in years) 5.32 - 5.00 - 6.14 Expected volatility 43.11% - 50.14% 41.00% - 43.92% Expected dividend yield —% —% |
Summary of summary of stock option activity | Weighted Average Remaining Options Weighted Average Contractual Term Aggregate Outstanding Exercise Price in Years Intrinsic Value Balance at December 31, 2020 251,847 $ 1.00 8.06 $ 89,100 Granted 70,164 $ 5.74 9.64 140,436 Exercised (44,222) $ 1.00 — — Cancelled/forfeited (8,019) $ 1.00 — — Balance at September 30, 2021 269,770 $ 2.27 8.03 $ 1,103,834 Options exercisable at September 30, 2021 207,481 $ 1.00 7.54 $ 867,665 | A summary of stock option activity under the Plans is as follows: Weighted Average Remaining Options Weighted Average Contractual Term Outstanding Exercise Price in Years Balance at January 1, 2019 90,799 $ 2.57 8.78 Granted 162,016 $ 1.13 Exercised (562) $ 6.52 Cancelled/forfeited (27,369) $ 6.09 Balance at December 31, 2019 224,884 $ 1.08 8.78 Granted 43,259 $ 1.00 Exercised — $ 1.00 Cancelled/forfeited (16,296) $ 4.20 Balance at December 31, 2020 251,847 $ 1.00 8.06 Options exercisable at December 31, 2020 180,716 $ 1.00 7.85 9. |
Summary of unvested balance of restricted stock units | Weighted Average Shares Grant Date Fair Value Unvested balance at January 1, 2020 — $ — Granted 322,146 6.40 Vested (37,879) (6.34) Unvested balance at December 31, 2020 284,267 $ 6.41 |
NATURE OF BUSINESS AND BASIS _2
NATURE OF BUSINESS AND BASIS OF PRESENTATION (Details) | Aug. 13, 2021USD ($) | Jul. 01, 2021USD ($)$ / sharesshares | Jun. 21, 2021USD ($)$ / sharesshares | Mar. 30, 2021 | Mar. 16, 2021 | Sep. 30, 2021USD ($)$ / shares | Jun. 30, 2021USD ($) | Sep. 30, 2021USD ($)$ / sharesshares | Dec. 31, 2020USD ($)item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Aug. 01, 2021$ / shares | Mar. 15, 2021 | Dec. 31, 2019USD ($) |
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Number of Reporting Units | 1 | 1 | ||||||||||||
Reverse stock split ratio | 0.18 | |||||||||||||
Offering price | $ / shares | $ 6.25 | |||||||||||||
Issuance of common stock in connection with public offering | $ 18,000,000 | |||||||||||||
Other offering costs | $ 2,339,816 | |||||||||||||
Number of convertible preferred shares outstanding | shares | 0 | |||||||||||||
Outstanding principal of convertible notes, converted | $ 5,500,000 | $ 4,000,000 | ||||||||||||
Accrued interest | $ 1,300,000 | $ 64,110 | ||||||||||||
Number of shares issued upon conversion | shares | 1,206,614 | 842,429 | ||||||||||||
Conversion price | $ / shares | $ 5.60 | $ 5.60 | $ 5.60 | |||||||||||
Convertible Notes outstanding | $ 0 | $ 0 | ||||||||||||
Payment of remaining principal balance | 3,000,000 | 3,000,000 | ||||||||||||
Working capital deficit | 12,796,062 | 12,796,062 | $ 18,663,321 | |||||||||||
Accumulated deficit | (35,969,015) | (35,969,015) | (29,057,587) | $ (24,405,503) | ||||||||||
Cash | 9,790,732 | 9,790,732 | 695,909 | $ 53,893 | ||||||||||
Accounts payable and accrued expenses | 1,376,560 | 1,376,560 | $ 2,603,342 | |||||||||||
Remaining Balance Of Bridge Notes | $ 3,000,000 | |||||||||||||
Proceeds from loans | $ 3,500,000 | |||||||||||||
Bridge Note Outstanding | $ 0 | |||||||||||||
Initial Public Offering | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Number of shares issued and sold | shares | 2,250,000 | 2,250,000 | ||||||||||||
Offering price | $ / shares | $ 8 | |||||||||||||
Issuance of common stock in connection with public offering | $ 18,000,000 | |||||||||||||
Net proceeds | $ 18,200,000 | 15,700,000 | ||||||||||||
Other offering costs | $ 600,000 | |||||||||||||
Conversion of redeemable convertible preferred stock into common stock upon initial public offering (in shares) | shares | 1,291,012 | |||||||||||||
Number of shares issued upon conversion | shares | 1,206,614 | |||||||||||||
Underwriting Discounts | $ 1,900,000 | $ 1,700,000 | ||||||||||||
Overallotment | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Number of shares issued and sold | shares | 337,500 | |||||||||||||
Offering price | $ / shares | $ 8 | |||||||||||||
Issuance of common stock in connection with public offering | $ 2,700,000 | |||||||||||||
Net proceeds | 18,200,000 | |||||||||||||
Other offering costs | $ 600,000 | |||||||||||||
Accrued interest | $ 700,000 | |||||||||||||
Subsequent event | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Reverse stock split ratio | 5.545 | |||||||||||||
Interest rate | 15.00% | |||||||||||||
Convertible Notes to related parties | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Outstanding principal of convertible notes, converted | 5,491,663 | $ 5,500,000 | $ 5,500,000 | |||||||||||
Accrued interest | $ 1,257,066 | |||||||||||||
Number of shares issued upon conversion | shares | 1,206,614 | |||||||||||||
Conversion price | $ / shares | $ 5.60 | |||||||||||||
Convertible Notes outstanding | 0 | 0 | ||||||||||||
Loss on conversion of notes | $ 260,000 | $ 300,000 | ||||||||||||
Interest rate | 6.00% | 6.00% |
SUMMARY OF SIGNIFICANT ACCOU_20
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - customer | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Concentration Risk [Line Items] | ||||||||
Number of Customers | 1 | 2 | 1 | 2 | 3 | |||
Concentration risk (as a percent) | 2.00% | |||||||
Customer One | ||||||||
Concentration Risk [Line Items] | ||||||||
Number of Customers | 1 | |||||||
Customer Three | ||||||||
Concentration Risk [Line Items] | ||||||||
Number of Customers | 3 | |||||||
Revenue | Customer concentration | Customer One | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 16.00% | 10.00% | 10.00% | 21.00% | 11.00% | 20.00% | ||
Revenue | Customer concentration | Customer Two | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 32.00% | 15.00% | 10.00% | 11.00% | ||||
Revenue | Customer concentration | Customer Three | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 10.00% | |||||||
Revenue | Geographic concentration | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 4.00% | 6.00% | 5.00% | 6.00% | ||||
Revenue | Geographic concentration | Customer One | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 6.00% | |||||||
Revenue | Geographic concentration | Customer Two | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 23.00% | |||||||
Account receivable | Credit concentration | Customer One | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 12.00% | 13.00% | 0.00% | 4.00% | ||||
Account receivable | Credit concentration | Customer Two | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 12.00% | 0.00% | 44.00% | |||||
Account receivable | Credit concentration | Customer Three | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 12.00% | 1.00% | ||||||
Account receivable | Geographic concentration | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 4.00% | 8.00% | ||||||
Account receivable | Geographic concentration | Customer One | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 11.00% | |||||||
Account receivable | Geographic concentration | Customer Two | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 5.00% | |||||||
Accounts receivable-unbilled | ||||||||
Concentration Risk [Line Items] | ||||||||
Number of Customers | 0 | |||||||
Percentage of unbilled excess accounts receivable | 10.00% | |||||||
Accounts receivable-unbilled | Customer Three | ||||||||
Concentration Risk [Line Items] | ||||||||
Number of Customers | 3 | |||||||
Accounts receivable-unbilled | Customer concentration | Customer One | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 0.00% | |||||||
Accounts receivable-unbilled | Customer concentration | Customer Two | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 0.00% | |||||||
Accounts receivable-unbilled | Customer concentration | Customer Three | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 0.00% | |||||||
Accounts receivable-unbilled | Credit concentration | Customer One | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 23.00% | 0.00% | ||||||
Accounts receivable-unbilled | Credit concentration | Customer Two | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 17.00% | 5.00% | ||||||
Accounts receivable-unbilled | Credit concentration | Customer Three | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 13.00% | |||||||
Accounts receivable-unbilled | Geographic concentration | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 5.00% | 12.00% | ||||||
Accounts receivable-unbilled | Geographic concentration | Customer One | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 0.00% | |||||||
Accounts receivable-unbilled | Geographic concentration | Customer Two | ||||||||
Concentration Risk [Line Items] | ||||||||
Concentration risk (as a percent) | 17.00% |
SUMMARY OF SIGNIFICANT ACCOU_21
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - ADDITIONAL INFORMATION (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Number of days from the receipt of specimens to inspect the specimens to ensure compliance | 14 days | 14 days |
SUMMARY OF SIGNIFICANT ACCOU_22
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition and Accounts Receivable (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||||||
Revenue | $ 2,718,534 | $ 2,250,147 | $ 8,586,217 | $ 5,466,375 | $ 8,184,106 | $ 4,298,350 |
Specimens | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | 2,671,655 | 2,223,057 | 8,448,164 | 5,408,012 | 8,086,324 | 4,215,002 |
Shipping and other | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Revenue | $ 46,879 | $ 27,090 | $ 138,053 | $ 58,363 | $ 97,782 | $ 83,348 |
SUMMARY OF SIGNIFICANT ACCOU_23
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Allowance for doubtful accounts (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Allowance for doubtful accounts | $ 141,952 | $ 108,096 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOU_24
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Deferred initial public offering costs (Details) - USD ($) | Jun. 21, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Total offering costs | $ 2,300,000 | ||
Deferred offering costs | $ 600,000 | $ 0 | $ 265,000 |
SUMMARY OF SIGNIFICANT ACCOU_25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Shares issuable upon conversion of preferred stock (Details) - shares | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||
Shares issuable upon conversion of preferred stock | 0 | 1,291,012 | 1,291,012 | 1,291,012 | |
Shares issuable upon vesting of RSUs | 284,267 | 0 | |||
Shares issuable upon exercise of stock options | 269,770 | 253,575 | 251,847 | 224,884 | 90,799 |
Shares issuable upon exercise of Lender Warrant to purchase common stock | 12,500 | 23,309 | 23,309 | 23,309 | |
Shares issuable upon exercise of Underwriter Warrants to purchase common stock | 90,000 | 0 |
FACTORING OF ACCOUNTS RECEIVA_2
FACTORING OF ACCOUNTS RECEIVABLE (Details) - Versant - USD ($) | Jun. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2021 | Jan. 01, 2021 |
FACTORING OF ACCOUNTS RECEIVABLE | ||||
Minimum accounts receivable without recourse, the entity has agreed to sell | $ 1,200,000 | |||
Total receivables sold under the Factoring Agreement | $ 3,400,000 | $ 3,400,000 | ||
Payments made for termination of factoring agreement | $ 139,374 | |||
Additional amount of Factoring Accounts Receivable | 214,497 | 214,497 | ||
Factoring fees paid | $ 214,497 | $ 471,396 | ||
Minimum | ||||
FACTORING OF ACCOUNTS RECEIVABLE | ||||
Factoring fees (as a percent) | 2.50% | |||
Maximum | ||||
FACTORING OF ACCOUNTS RECEIVABLE | ||||
Factoring fees (as a percent) | 15.00% |
PROPERTY AND EQUIPMENT, NET (_3
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment, Net, by Type [Abstract] | ||||||
Property and equipment, gross | $ 340,083 | $ 340,083 | $ 337,533 | $ 337,110 | ||
Accumulated depreciation | (295,334) | (295,334) | (261,944) | (217,189) | ||
Total property and equipment, net | 44,749 | 44,749 | 75,589 | 119,921 | ||
Depreciation expense | 11,130 | $ 4,883 | 33,390 | $ 33,563 | 44,758 | 57,360 |
Website | ||||||
Property, Plant and Equipment, Net, by Type [Abstract] | ||||||
Property and equipment, gross | 107,926 | 107,926 | 105,376 | 105,376 | ||
Computer equipment and purchased software | ||||||
Property, Plant and Equipment, Net, by Type [Abstract] | ||||||
Property and equipment, gross | 84,589 | 84,589 | 84,589 | 84,481 | ||
Equipment | ||||||
Property, Plant and Equipment, Net, by Type [Abstract] | ||||||
Property and equipment, gross | 35,449 | 35,449 | 35,449 | 35,134 | ||
Furniture and fixtures | ||||||
Property, Plant and Equipment, Net, by Type [Abstract] | ||||||
Property and equipment, gross | 87,184 | 87,184 | 87,184 | 87,184 | ||
Leasehold improvements | ||||||
Property, Plant and Equipment, Net, by Type [Abstract] | ||||||
Property and equipment, gross | $ 24,935 | $ 24,935 | $ 24,935 | $ 24,935 |
INTERNALLY DEVELOPED SOFTWARE_4
INTERNALLY DEVELOPED SOFTWARE, NET (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
INTERNALLY DEVELOPED SOFTWARE, NET | ||||||
Internally developed software capitalized | $ 731,172 | $ 864,921 | $ 1,102,186 | $ 1,447,062 | ||
Amortization expense | $ 242,860 | $ 179,168 | $ 714,444 | $ 599,425 | $ 774,929 | $ 577,605 |
DEBT (Details)_2
DEBT (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
May 31, 2021 | May 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
DEBT | |||||||
Proceeds from issuance of note payable | $ 3,500,000 | $ 783,008 | $ 783,008 | ||||
Gain on extinguishment of note payable | $ 788,156 | ||||||
PPP Loan | |||||||
DEBT | |||||||
Proceeds from issuance of note payable | $ 783,008 | $ 783,008 | |||||
Rate of interest accrued on outstanding principal | 1.00% | 1.00% | 1.00% | ||||
Interest expense | $ 0 | $ 1,961 | $ 279 | 2,518 | $ 5,127 | ||
Gain on extinguishment of note payable | $ 788,156 |
DEBT - Related Party Converti_2
DEBT - Related Party Convertible Notes Payable (Details) - Convertible Notes to related parties | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019 | Dec. 31, 2018USD ($)item | Dec. 31, 2017USD ($)item | |
DEBT | ||||||||
Bearing interest rate | 6.00% | 6.00% | ||||||
Minimum gross proceeds from equity financing required for conversion of debt | $ 10,000,000 | $ 10,000,000 | ||||||
Number of consecutive quarters for achievement of positive free cash flow from operations required for conversion of debt | item | 2 | 2 | ||||||
Term prior to maturity date for achievement of positive free cash flow from operations required for conversion of debt | 90 days | 90 days | ||||||
Interest expense | $ 0 | $ 83,178 | $ 156,411 | $ 247,726 | ||||
Unamortized debt issuance costs | 0 | 0 | $ 9,189 | |||||
Debt discounts | $ 0 | 0 | $ 0 | |||||
Amortization of debt discounts | $ 1,088 | $ 141,628 | ||||||
Conversion rate | 30.00% | 30.00% |
DEBT - Conversion of Converti_2
DEBT - Conversion of Convertible Notes Payable (Details) - USD ($) | Jun. 21, 2021 | Sep. 30, 2021 | Sep. 30, 2021 | Dec. 31, 2018 | Dec. 31, 2017 |
DEBT | |||||
Outstanding principal of convertible notes, converted | $ 5,500,000 | $ 4,000,000 | |||
Accrued interest | $ 1,300,000 | $ 64,110 | |||
Number of shares issued upon conversion | 1,206,614 | 842,429 | |||
Conversion price | $ 5.60 | $ 5.60 | $ 5.60 | ||
Convertible Notes outstanding | $ 0 | $ 0 | |||
Convertible Notes to related parties | |||||
DEBT | |||||
Outstanding principal of convertible notes, converted | $ 5,491,663 | $ 5,500,000 | $ 5,500,000 | ||
Accrued interest | $ 1,257,066 | ||||
Number of shares issued upon conversion | 1,206,614 | ||||
Conversion price | $ 5.60 | ||||
Convertible Notes outstanding | 0 | 0 | |||
Loss on conversion of notes | $ 260,000 | $ 300,000 |
DEBT - Bridge Financing (Deta_2
DEBT - Bridge Financing (Details) | 9 Months Ended | ||||||
Sep. 30, 2021USD ($) | May 20, 2021USD ($) | Apr. 16, 2021USD ($) | Dec. 31, 2020USD ($) | Oct. 01, 2020 | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Bridge Notes | |||||||
DEBT | |||||||
Face amount of debt | $ 6,500,000 | $ 6,500,000 | $ 6,500,000 | ||||
Interest rate | 15.00% | 30.00% | |||||
Minimum gross proceeds from equity financing required for conversion of debt | $ 18,000,000 | ||||||
Percentage of outstanding unpaid principal, holders may elect to convert | 50.00% | ||||||
Discount rate on issue price of stock in elective conversion stock | 30.00% | ||||||
Number of times of third party loan proceeds | 1.50 | ||||||
Related Party Bridge Notes | |||||||
DEBT | |||||||
Face amount of debt | $ 500,000 | $ 500,000 | $ 1,905,000 | $ 1,905,000 | $ 1,905,000 | ||
Minimum | Bridge Notes | |||||||
DEBT | |||||||
Interest rate | 24.00% | ||||||
Minimum | Related Party Bridge Notes | |||||||
DEBT | |||||||
Interest rate | 24.00% | ||||||
Maximum | Bridge Notes | |||||||
DEBT | |||||||
Interest rate | 30.00% | ||||||
Maximum | Related Party Bridge Notes | |||||||
DEBT | |||||||
Interest rate | 30.00% |
DEBT - Bridge Financing - Autom
DEBT - Bridge Financing - Automatic Conversion or Debt Extension (Details) - Bridge Notes | 9 Months Ended | |
Sep. 30, 2021 | Oct. 01, 2020 | |
DEBT | ||
Discount rate on issue price of stock in automatic conversion stock | 10.00% | |
Rate on issue price of stock in automatic conversion stock | 90.00% | |
Minimum percentage of repayments of total adjusted outstanding principal for automatic conversion | 25.00% | |
Interest rate | 15.00% | 30.00% |
Maturity term | 18 months |
DEBT - Bridge Financing - Debt
DEBT - Bridge Financing - Debt Extinguishment (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
DEBT | ||||||
Gain (loss) on extinguishment of debt | $ 788,156 | |||||
Write-off of unamortized debt issuance costs | 27,573 | |||||
Bridge Notes | ||||||
DEBT | ||||||
Gain (loss) on extinguishment of debt | (2,740,425) | |||||
Write-off of unamortized debt issuance costs | 5,700 | |||||
Discount which will be amortized through interest expense | $ 869,600 | 869,600 | ||||
Interest expense | 54,247 | $ 382,521 | 1,014,657 | $ 1,123,890 | $ 1,168,738 | $ 549,248 |
Related party interest expense | 5,876 | 48,371 | 320,469 | 694,189 | ||
Unamortized debt issuance costs | 0 | 7,222 | 0 | 7,222 | $ 5,771 | $ 8,673 |
Amortization of the debt discount | $ 0 | $ 0 | $ 869,600 | $ 136,185 |
DEBT - Bridge Financing - Initi
DEBT - Bridge Financing - Initial Public Offering (Details) - USD ($) | Jun. 21, 2021 | Sep. 30, 2021 | Sep. 30, 2021 | Oct. 01, 2020 |
DEBT | ||||
Outstanding principal of convertible notes, converted | $ 5,500,000 | $ 4,000,000 | ||
Accrued interest of convertible notes, converted | $ 1,300,000 | $ 64,110 | ||
Number of shares issued upon conversion | 1,206,614 | 842,429 | ||
Conversion price | $ 5.60 | $ 5.60 | $ 5.60 | |
Payment of remaining principal balance | $ 3,000,000 | $ 3,000,000 | ||
Bridge Notes | ||||
DEBT | ||||
Outstanding principal of convertible notes, converted | 4,000,000,000,000 | |||
Accrued interest of convertible notes, converted | $ 717,646 | |||
Number of shares issued upon conversion | 842,429 | |||
Conversion price | $ 5.60 | $ 5.60 | ||
Gain on conversion | $ 9,746 | |||
Interest rate | 15.00% | 15.00% | 30.00% | |
Maturity term | 18 months | |||
Payment of remaining principal balance | $ 3,000,000,000,000 | |||
Accrued interest | $ 717,646 | |||
Bridge notes outstanding | $ 0 | $ 0 |
DEBT - Bridge Financing - Compo
DEBT - Bridge Financing - Components of non-cash transaction (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |
Jun. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | |
Debt Instrument [Line Items] | |||
Accumulated amortization on debt issuance costs | $ 33,035 | ||
Write off of debt issuance cost | (27,573) | ||
Total conversion of Convertible Notes and Bridge Notes into common stock | $ 16,392,344 | 16,392,344 | $ 16,392,344 |
Convertible Notes | |||
Debt Instrument [Line Items] | |||
Write off of derivative liability relating to the Convertible Notes | 2,644,000 | ||
Extinguishment of Convertible Notes principal | 5,486,199 | ||
Accrued and unpaid interest on the Convertible Notes | 1,257,066 | ||
Loss on extinguishment of Convertible Notes | 260,185 | ||
Bridge Notes | |||
Debt Instrument [Line Items] | |||
Write off of derivative liability relating to the Convertible Notes | 2,031,300 | ||
Extinguishment of Convertible Notes principal | 4,000,000 | ||
Accrued and unpaid interest on the Convertible Notes | 717,646 | ||
Loss on extinguishment of Convertible Notes | (9,514) | ||
Write off of debt issuance cost | $ (5,700) |
DEBT - Term Loan (Details)
DEBT - Term Loan (Details) - USD ($) | Mar. 10, 2023 | Aug. 13, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||||||||
Proceeds from term loan | $ 3,500,000 | $ 783,008 | $ 783,008 | |||||
Interest expense | $ 75,922 | $ 469,477 | $ 2,062,548 | $ 1,517,697 | $ 2,096,795 | $ 1,724,450 | ||
Warrant to purchase common stock shares issued | 12,500 | 23,309 | 23,309 | 23,309 | ||||
Issuance of common stock warrants in connection with Term Loan | $ 49,072 | |||||||
Fees paid | $ 25,825 | |||||||
Amortization of the debt issuance costs related to the Term Loan, included in interest expense | $ 9,185 | $ 7,252 | ||||||
Prime rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate on the loan | 3.25% | 3.25% | ||||||
Basis spread rate | 0.75% | |||||||
Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Unused borrowing amount | $ 1,500,000 | $ 1,500,000 | ||||||
Interest rate on the loan | 4.00% | 4.00% | ||||||
Calendar day to pay interest | 10 days | |||||||
Calendar day to pay principal | 30 months | |||||||
Interest expense | $ 18,399 | 0 | $ 18,399 | $ 0 | ||||
Amortization of the debt issuance costs related to the Term Loan, included in interest expense | 3,277 | $ 0 | 3,277 | $ 0 | ||||
Unamortized debt issuance costs | $ 71,620 | $ 71,620 | $ 0 | |||||
Equal to | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate on the loan | 0.75% | 0.75% | ||||||
Lender | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt issuance costs | $ 74,897 | $ 74,897 | ||||||
Warrant to purchase common stock shares issued | 12,500 | |||||||
Issuance of common stock warrants in connection with Term Loan | $ 49,072 | |||||||
Fees paid | $ 25,825 | |||||||
Lender | Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from term loan | $ 3,500,000 |
FAIR VALUE OF DERIVATIVE LIAB_7
FAIR VALUE OF DERIVATIVE LIABILITIES - Derivative liabilities (Details) - Recurring - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Liabilities: | |||
Derivative liability | $ 0 | $ 2,373,000 | $ 2,214,000 |
Convertible notes payable, related parties | |||
Liabilities: | |||
Derivative liability | 0 | 2,373,000 | |
Bridge Notes | |||
Liabilities: | |||
Derivative liability | 0 | ||
Level 1 | |||
Liabilities: | |||
Derivative liability | 0 | ||
Level 1 | Convertible notes payable, related parties | |||
Liabilities: | |||
Derivative liability | 0 | 0 | |
Level 1 | Bridge Notes | |||
Liabilities: | |||
Derivative liability | 0 | ||
Level 2 | |||
Liabilities: | |||
Derivative liability | 0 | ||
Level 2 | Convertible notes payable, related parties | |||
Liabilities: | |||
Derivative liability | 0 | 0 | |
Level 2 | Bridge Notes | |||
Liabilities: | |||
Derivative liability | 0 | ||
Level 3 | |||
Liabilities: | |||
Derivative liability | 0 | 2,373,000 | $ 2,214,000 |
Level 3 | Convertible notes payable, related parties | |||
Liabilities: | |||
Derivative liability | 0 | $ 2,373,000 | |
Level 3 | Bridge Notes | |||
Liabilities: | |||
Derivative liability | $ 0 |
FAIR VALUE OF DERIVATIVE LIAB_8
FAIR VALUE OF DERIVATIVE LIABILITIES - Changes in fair value of the derivative liabilities measured on a recurring basis (Details) - Derivative Financial Instruments, Liabilities [Member] - Level 3 - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Balance, beginning of period | $ 2,373,000 | $ 2,214,000 | $ 2,214,000 | $ 2,765,000 |
Derivative liability on bridge notes payable and bridge notes payable, related parties | 3,614,000 | 0 | ||
(Gain) loss included in earnings | (1,311,700) | 76,000 | 159,000 | (551,000) |
Write off of derivative liabilities in connection with debt conversion | (4,675,300) | 0 | ||
Balance, end of period | $ 0 | $ 2,290,000 | $ 2,373,000 | $ 2,214,000 |
FAIR VALUE OF DERIVATIVE LIAB_9
FAIR VALUE OF DERIVATIVE LIABILITIES - Additional Information (Details) - Initial Public Offering - USD ($) | Jun. 21, 2021 | Jun. 30, 2021 |
Convertible notes payable, related parties | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Gain (loss) on derivative liability of fair value | $ 117,000 | |
Bridge Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Gain (loss) on derivative liability of fair value | $ 1,630,700 | |
Write off of derivative liability relating to the Convertible Notes | $ 2,031,300 |
COMMITMENTS AND CONTINGENCIES_5
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Operating Leases | ||||
2021 (remaining) | $ 40,353 | $ 40,353 | ||
2022 | 163,158 | 163,158 | ||
2023 | 165,254 | 165,254 | ||
2024 | 27,601 | 27,601 | ||
Total | 396,366 | 396,366 | ||
Rent expense | $ 46,261 | $ 13,276 | $ 113,341 | $ 82,794 |
CONVERTIBLE PREFERRED STOCK A_8
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT (Details) - $ / shares | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT | |||
Number of shares authorized | 250,000,000 | ||
Common stock, shares authorized | 200,000,000 | 16,000,000 | 16,000,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 50,000,000 | ||
Preferred stock, par value | $ 0.0001 |
CONVERTIBLE PREFERRED STOCK A_9
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT - Redeemable Convertible Preferred Stock - (Details) - shares | Sep. 30, 2021 | Jun. 21, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Class of Stock [Line Items] | |||||
Convertible preferred stock, shares issued upon conversion | 0 | 1,291,012 | 1,291,012 | 1,291,012 | |
Initial Public Offering | |||||
Class of Stock [Line Items] | |||||
Outstanding preferred stock | 0 | 1,291,012 | |||
Convertible preferred stock, shares issued upon conversion | 1,291,012 |
CONVERTIBLE PREFERRED STOCK _10
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT - Common Stock - (Details) - USD ($) | Aug. 01, 2021 | Jul. 01, 2021 | Jun. 21, 2021 | Sep. 30, 2021 | Sep. 30, 2021 |
Class of Stock [Line Items] | |||||
Aggregate gross proceeds | $ 18,000,000 | ||||
Number of shares issued upon conversion | 1,206,614 | 842,429 | |||
Shares issued in exchange for investor relation services (in shares) | 2,000 | ||||
Share price | $ 6.25 | ||||
Shares issued in exchange for investor relation services | $ 12,500 | $ 12,500 | |||
Other offering costs | $ 2,339,816 | ||||
Bridge Notes | |||||
Class of Stock [Line Items] | |||||
Number of shares issued upon conversion | 842,429 | ||||
Initial Public Offering | |||||
Class of Stock [Line Items] | |||||
Number of shares issued and sold | 2,250,000 | 2,250,000 | |||
Underwriting discounts | $ 1,900,000 | ||||
Number of shares issued upon conversion | 1,206,614 | ||||
Other offering costs | 600,000 | ||||
Net proceeds | $ 18,200,000 | $ 15,700,000 | |||
Share price | $ 8 | ||||
Other offering costs | $ 600,000 | ||||
Initial Public Offering | Convertible Notes | |||||
Class of Stock [Line Items] | |||||
Number of shares issued upon conversion | 842,429 | ||||
Initial Public Offering | Bridge Notes | |||||
Class of Stock [Line Items] | |||||
Outstanding principal and accrued interest converted | $ 4,700,000 | ||||
Overallotment | |||||
Class of Stock [Line Items] | |||||
Number of shares issued and sold | 337,500 | ||||
Net proceeds from issuance of shares | $ 2,500,000 | ||||
Aggregate gross proceeds | 2,700,000 | ||||
Underwriting discounts | 200,000 | ||||
Net proceeds | $ 18,200,000 | ||||
Share price | $ 8 | ||||
Other offering costs | $ 600,000 |
CONVERTIBLE PREFERRED STOCK _11
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT - Underwriter Warrants (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Class of Warrant or Right [Line Items] | |||
Warrants to purchase shares of common stock | 23,309 | ||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Exercise price of warrant | $ 0.06 | ||
Warrants exercisable term | 9 years 10 months 13 days | 9 months | |
Equity issuance costs | $ 2,339,816 | ||
Underwriter Warrants | |||
Class of Warrant or Right [Line Items] | |||
Warrants to purchase shares of common stock | 90,000 | ||
Common stock, par value | $ 0.0001 | ||
Exercise price of warrant | $ 10 | ||
Warrants exercisable term | 4 years 6 months | ||
Commencing term from effective date of registration statement | 180 days | ||
Equity issuance costs | $ 400,000 |
CONVERTIBLE PREFERRED STOCK _12
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT - Warrants (Details) - USD ($) | Aug. 13, 2021 | Sep. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Class of Warrant or Right [Line Items] | ||||||
Warrants to purchase shares of common stock | 23,309 | |||||
Exercise price of warrant | $ 0.06 | |||||
Weighted average time to expiration | 9 years 10 months 13 days | 9 years 10 months 13 days | 9 months | |||
Issuance of common stock through exercise of warrants (in shares) | 0 | 0 | ||||
Issuance of common stock through exercise of warrants | $ 992 | |||||
Warrant to purchase common stock shares issued | 12,500 | 23,309 | 23,309 | 23,309 | ||
Warrants other than Underwriter Warrants | ||||||
Class of Warrant or Right [Line Items] | ||||||
Warrants to purchase shares of common stock | 17,889 | 17,889 | ||||
Exercise price of warrant | $ 8 | $ 8 | ||||
Issuance of common stock through exercise of warrants (in shares) | 17,889 | |||||
Issuance of common stock through exercise of warrants | $ 992 | |||||
Number of warrants expired and unexercised | 5,420 | |||||
Warrant to purchase common stock shares issued | 12,500 |
CONVERTIBLE PREFERRED STOCK _13
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT - Estimate the fair value of warrants granted (Details) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Assumptions used to estimate the fair value of warrants granted | ||||
Risk-free interest rate, minimum | 0.47% | 1.35% | ||
Risk-free interest rate, maximum | 0.66% | 1.41% | ||
Expected volatility, minimum | 49.83% | 43.11% | ||
Expected volatility, maximum | 49.98% | 43.91% | ||
Expected dividend yield | 0.00% | 0.00% | ||
Warrant [Member] | ||||
Assumptions used to estimate the fair value of warrants granted | ||||
Risk-free interest rate, minimum | 0.90% | |||
Risk-free interest rate, maximum | 1.30% | |||
Expected term (in years) | 0 years | |||
Expected volatility, minimum | 61.00% | |||
Expected volatility, maximum | 69.00% | |||
Minimum | ||||
Assumptions used to estimate the fair value of warrants granted | ||||
Risk-free interest rate, minimum | 0.30% | 1.59% | ||
Expected term (in years) | 5 years 9 months 21 days | 5 years 6 months 25 days | 5 years 3 months 25 days | 5 years |
Expected volatility, minimum | 43.11% | 41.00% | ||
Minimum | Warrant [Member] | ||||
Assumptions used to estimate the fair value of warrants granted | ||||
Expected term (in years) | 5 days | |||
Maximum | ||||
Assumptions used to estimate the fair value of warrants granted | ||||
Risk-free interest rate, maximum | 1.41% | 2.58% | ||
Expected term (in years) | 5 years 10 months 20 days | 6 years 1 month 20 days | 6 years 1 month 20 days | 6 years 1 month 20 days |
Expected volatility, maximum | 50.14% | 43.92% | ||
Maximum | Warrant [Member] | ||||
Assumptions used to estimate the fair value of warrants granted | ||||
Expected term (in years) | 10 years |
CONVERTIBLE PREFERRED STOCK _14
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT - Warrant activity (Details) - $ / shares | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Options Outstanding | ||||
Balance at the beginning | 251,847 | 224,884 | 90,799 | |
Granted | 43,259 | 162,016 | ||
Exercised | (562) | |||
Expired | (16,296) | (27,369) | ||
Balance at the end | 269,770 | 251,847 | 224,884 | 90,799 |
Options exercisable at the end | 180,716 | |||
Weighted Average Exercise Price | ||||
Balance at the beginning (in dollars per share) | $ 1 | $ 1.08 | $ 2.57 | |
Granted (in dollars per share) | 1 | 1.13 | ||
Exercised (in dollars per share) | 1 | 6.52 | ||
Expired (in dollars per share) | 4.20 | 6.09 | ||
Balance at the end (in dollars per share) | 1 | $ 1.08 | $ 2.57 | |
Options exercisable at the end (in dollars per share) | $ 1 | |||
Weighted Average Remaining Contractual Term (in years) | ||||
Weighted Average Remaining Contractual Term (in years) | 8 years 21 days | 8 years 9 months 10 days | 8 years 9 months 10 days | |
Options exercisable at the end (in years) | 7 years 10 months 6 days | |||
Warrant [Member] | ||||
Options Outstanding | ||||
Balance at the beginning | 23,309 | |||
Granted | 102,500 | |||
Exercised | (17,889) | |||
Expired | (5,420) | |||
Balance at the end | 102,500 | 23,309 | ||
Weighted Average Exercise Price | ||||
Balance at the beginning (in dollars per share) | $ 0.06 | |||
Granted (in dollars per share) | 9.76 | |||
Exercised (in dollars per share) | 0.06 | |||
Expired (in dollars per share) | 0.06 | |||
Balance at the end (in dollars per share) | $ 9.76 | $ 0.06 | ||
Weighted Average Remaining Contractual Term (in years) | ||||
Weighted Average Remaining Contractual Term (in years) | 5 years 4 months 2 days | 9 months | ||
Granted (in years) | 5 years 4 months 2 days |
SHARE-BASED COMPENSATION (Det_2
SHARE-BASED COMPENSATION (Details) | Sep. 30, 2021shares |
2013 Stock Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common Stock, Capital Shares Reserved for Future Issuance | 99,493 |
2021 Stock Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common Stock, Capital Shares Reserved for Future Issuance | 188,455 |
SHARE-BASED COMPENSATION - Es_2
SHARE-BASED COMPENSATION - Estimate the fair value of stock options (Details) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Assumptions used to estimate the fair value of stock options granted | ||||
Risk-free interest rate, minimum | 0.47% | 1.35% | ||
Risk-free interest rate, maximum | 0.66% | 1.41% | ||
Expected volatility, minimum | 49.83% | 43.11% | ||
Expected volatility, maximum | 49.98% | 43.91% | ||
Expected dividend yield | 0.00% | 0.00% | ||
Minimum | ||||
Assumptions used to estimate the fair value of stock options granted | ||||
Risk-free interest rate, minimum | 0.30% | 1.59% | ||
Expected term (in years) | 5 years 9 months 21 days | 5 years 6 months 25 days | 5 years 3 months 25 days | 5 years |
Expected volatility, minimum | 43.11% | 41.00% | ||
Maximum | ||||
Assumptions used to estimate the fair value of stock options granted | ||||
Risk-free interest rate, maximum | 1.41% | 2.58% | ||
Expected term (in years) | 5 years 10 months 20 days | 6 years 1 month 20 days | 6 years 1 month 20 days | 6 years 1 month 20 days |
Expected volatility, maximum | 50.14% | 43.92% |
SHARE-BASED COMPENSATION - St_2
SHARE-BASED COMPENSATION - Stock option activity (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Options Outstanding | ||||
Balance at the beginning | 251,847 | 224,884 | 90,799 | |
Granted | 43,259 | 162,016 | ||
Exercised | (562) | |||
Cancelled/forfeited | (16,296) | (27,369) | ||
Balance at the end | 269,770 | 251,847 | 224,884 | 90,799 |
Options exercisable at the end | 180,716 | |||
Weighted Average Exercise Price | ||||
Balance at the beginning (in dollars per share) | $ 1 | $ 1.08 | $ 2.57 | |
Granted (in dollars per share) | 1 | 1.13 | ||
Exercised (in dollars per share) | 1 | 6.52 | ||
Cancelled/forfeited (in dollars per share) | 4.20 | 6.09 | ||
Balance at the end (in dollars per share) | 1 | $ 1.08 | $ 2.57 | |
Options exercisable at the end (in dollars per share) | $ 1 | |||
Weighted Average Remaining Contractual Term (in years) | ||||
Weighted Average Remaining Contractual Term (in years) | 8 years 21 days | 8 years 9 months 10 days | 8 years 9 months 10 days | |
Options exercisable at the end (in years) | 7 years 10 months 6 days | |||
2013 Stock Incentive Plan | ||||
Options Outstanding | ||||
Balance at the beginning | 251,847 | |||
Granted | 70,164 | |||
Exercised | (44,222) | |||
Cancelled/forfeited | (8,019) | |||
Balance at the end | 269,770 | 251,847 | ||
Options exercisable at the end | 207,481 | |||
Weighted Average Exercise Price | ||||
Balance at the beginning (in dollars per share) | $ 1 | |||
Granted (in dollars per share) | 5.74 | |||
Exercised (in dollars per share) | 1 | |||
Cancelled/forfeited (in dollars per share) | 1 | |||
Balance at the end (in dollars per share) | 2.27 | $ 1 | ||
Options exercisable at the end (in dollars per share) | $ 1 | |||
Weighted Average Remaining Contractual Term (in years) | ||||
Weighted Average Remaining Contractual Term (in years) | 8 years 10 days | 8 years 21 days | ||
Granted (in years) | 9 years 7 months 20 days | |||
Options exercisable at the end (in years) | 7 years 6 months 14 days | |||
Share Based Compensation Arrangement By Share Based Payment Award Options Aggregate Intrinsic Value | ||||
Aggregate Intrinsic Value (in dollars) | $ 1,103,834 | $ 89,100 | ||
Aggregate Granted Intrinsic Value (in dollars) | 140,436 | |||
Options exercisable at the end (in dollars) | $ 867,665 |
SHARE-BASED COMPENSATION - Ou_2
SHARE-BASED COMPENSATION - Outstanding principal and all unpaid and accrued interest (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
SHARE-BASED COMPENSATION | ||||||
Total intrinsic value of stock options exercised | $ 23,019 | $ 213,813 | ||||
Weighted-average grant date fair value | $ 3.94 | $ 0.72 | $ 0.55 | $ 2.33 | ||
Compensation expense | 399,821 | $ 29,287 | $ 450,231 | $ 80,598 | $ 92,866 | $ 360,379 |
Unamortized compensation expense | $ 261,676 | $ 261,676 | $ 109,629 | |||
Unamortized compensation expense recognized over the remaining requisite service period | 10 months 24 days | 2 years 5 months 23 days | ||||
Proceeds from exercise of stock options | $ 44,394 | $ 0 | $ 0 | $ 3,674 |
SHARE-BASED COMPENSATION - Rest
SHARE-BASED COMPENSATION - Restricted Stock Units (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Jul. 31, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Compensation expense | $ 399,821 | $ 29,287 | $ 450,231 | $ 80,598 | $ 92,866 | $ 360,379 | |
Weighted average period | 10 months 24 days | 2 years 5 months 23 days | |||||
Restricted Stock Units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Granted | 322,146 | ||||||
Employees | Restricted Stock Units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Granted | 120,250 | ||||||
Unrecognized stock-based compensation expense | $ 734,521 | $ 734,521 | |||||
Weighted average period | 3 years 9 months 3 days | ||||||
Employees | Restricted Stock Units | Vesting on first anniversary of issuance | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 1 year | ||||||
Percentage of vesting | 25.00% | ||||||
Employees | Restricted Stock Units | Vesting quarterly | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 3 years | ||||||
Percentage of vesting | 75.00% | ||||||
Employees | Restricted Stock Units | General and administrative expense | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Compensation expense | $ 48,957 | ||||||
Members of executive team | Restricted Stock Units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Granted | 189,396 | ||||||
Unrecognized stock-based compensation expense | 907,182 | $ 907,182 | |||||
Weighted average period | 3 years 9 months 7 days | ||||||
Members of executive team | Restricted Stock Units | Vesting immediately upon issuance | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 4 years | ||||||
Percentage of vesting | 20.00% | ||||||
Members of executive team | Restricted Stock Units | Vesting annually | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 4 years | ||||||
Percentage of vesting | 80.00% | ||||||
Members of executive team | Restricted Stock Units | General and administrative expense | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Compensation expense | $ 293,588 | ||||||
Board directors | Restricted Stock Units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Granted | 12,500 | ||||||
Unrecognized stock-based compensation expense | $ 65,417 | $ 65,417 | |||||
Weighted average period | 9 months 29 days | ||||||
Board directors | Restricted Stock Units | Vesting quarterly | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 1 year | ||||||
Board directors | Restricted Stock Units | General and administrative expense | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Compensation expense | $ 13,083 |
SHARE-BASED COMPENSATION - Unve
SHARE-BASED COMPENSATION - Unvested Balance of Restricted Stock Units (Details) - Restricted Stock Units | 12 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Shares | |
Unvested balance - beginning | shares | 0 |
Granted | shares | 322,146 |
Vested | shares | (37,879) |
Unvested balance - ending | shares | 284,267 |
Weighted Average Grant Date Fair Value | |
Unvested balance - beginning | $ / shares | $ 0 |
Granted | $ / shares | 6.40 |
Vested | $ / shares | (6.34) |
Unvested balance - ending | $ / shares | $ 6.41 |
SHARE-BASED COMPENSATION - Ad_2
SHARE-BASED COMPENSATION - Additional Information (Details) - USD ($) | Jul. 21, 2021 | Jul. 31, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based Payment Arrangement, Expense | $ 399,821 | $ 29,287 | $ 450,231 | $ 80,598 | $ 92,866 | $ 360,379 | ||
Performance Shares [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of shares issued | 47,349 | |||||||
Vesting period | 4 years | |||||||
Share-based Payment Arrangement, Expense | $ 0 | $ 0 | ||||||
2021 Stock Incentive Plan | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of shares authorized | 608,000 | 608,000 | ||||||
Number of shares issued | 419,545 |
INCOME TAXES (Details)_2
INCOME TAXES (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Federal | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | $ 28,400,000 | $ 24,200,000 |
Net operating loss carryforwards, subject to expiration | 13,000,000 | 13,000,000 |
Net operating loss carryforwards, carried forward indefinitely | 15,400,000 | 11,200,000 |
State | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | $ 21,300,000 | $ 18,900,000 |
INCOME TAXES - Federal and stat
INCOME TAXES - Federal and state tax credits (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
INCOME TAXES | |||
Federal and state tax credits | $ 800,000 | $ 179,000 | $ 284,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - shares | 1 Months Ended | 12 Months Ended | |
Oct. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Subsequent Event [Line Items] | |||
Shares granted | 43,259 | 162,016 | |
Subsequent event | 2021 Stock Incentive Plan | |||
Subsequent Event [Line Items] | |||
Percentage of vesting | 25.00% | ||
Subsequent event | 2021 Stock Incentive Plan | Restricted Stock Units | |||
Subsequent Event [Line Items] | |||
Shares granted | 12,000 |