Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | May 09, 2022 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-40501 | |
Entity Registrant Name | iSpecimen Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 27-0480143 | |
Entity Address, Address Line One | 450 Bedford Street, | |
Entity Address, City or Town | Lexington, | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 02420 | |
City Area Code | 781 | |
Local Phone Number | 301-6700 | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | ISPC | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Emerging Growth Company | true | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 8,817,983 | |
Entity Central Index Key | 0001558569 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash | $ 26,099,178 | $ 27,738,979 |
Accounts receivable - unbilled | 1,258,515 | 1,739,020 |
Accounts receivable, net of allowance for doubtful accounts of $184,837 and $269,170 at March 31, 2022 and December 31, 2021, respectively | 2,356,688 | 3,002,442 |
Prepaid expenses and other current assets | 295,750 | 327,035 |
Tax credit receivable, current portion | 140,873 | 140,873 |
Total current assets | 30,151,004 | 32,948,349 |
Property and equipment, net | 28,069 | 32,781 |
Internally developed software, net | 2,783,810 | 2,710,867 |
Operating lease right-of-use asset | 296,832 | |
Security deposits | 27,601 | 27,601 |
Total assets | 33,287,316 | 35,719,598 |
Current liabilities: | ||
Accounts payable | 281,494 | 832,678 |
Accrued expenses | 1,039,974 | 1,009,803 |
Accrued interest | 8,167 | 8,167 |
Operating lease current obligation | 150,007 | |
Deferred revenue | 567,321 | 654,746 |
Total current liabilities | 2,046,963 | 2,505,394 |
Operating lease long-term obligation | 147,375 | |
Term loan, net of discount | 3,425,664 | 3,422,616 |
Total liabilities | 5,620,002 | 5,928,010 |
Commitments and contingencies (See Note 6) | ||
Stockholders' equity | ||
Common stock, $0.0001 par value, 200,000,000 shares authorized, 8,845,283 issued, and 8,814,283 outstanding at March 31, 2022 and 8,764,479 issued and 8,733,479 outstanding at December 31, 2021 | 881 | 873 |
Additional paid-in capital | 68,069,749 | 67,810,289 |
Treasury stock, 31,000 shares at March 31, 2022 and December 31, 2021, at cost | (172) | (172) |
Accumulated deficit | (40,403,144) | (38,019,402) |
Total stockholders' equity | 27,667,314 | 29,791,588 |
Total liabilities and stockholders' equity | $ 33,287,316 | $ 35,719,598 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Condensed Balance Sheets | ||
Allowance for doubtful accounts | $ 184,837 | $ 269,170 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 200,000,000 | 200,000,000 |
Common stock, issued (in shares) | 8,845,283 | 8,764,479 |
Common stock, outstanding (in shares) | 8,814,283 | 8,733,479 |
Treasury Stock, Shares | 31,000 | 31,000 |
Condensed Statements of Operati
Condensed Statements of Operations - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Condensed Statements of Operations | ||
Revenue | $ 2,518,660 | $ 2,963,807 |
Operating expenses: | ||
Cost of revenue | 1,165,917 | 1,623,651 |
Technology | 527,522 | 409,951 |
Sales and marketing | 747,432 | 529,387 |
Supply development | 182,070 | 111,576 |
Fulfillment | 443,794 | 269,096 |
General and administrative | 1,810,313 | 962,790 |
Total operating expenses | 4,877,048 | 3,906,451 |
Loss from operations | (2,358,388) | (942,644) |
Other income (expense), net | ||
Interest expense | (38,048) | (853,147) |
Interest income | 12,654 | 47 |
Other expense, net | 40 | (3,732) |
Loss on extinguishment of bridge notes and bridge notes, related parties | (2,750,171) | |
Gain on extinguishment of note payable | 788,156 | |
Change in fair value of derivative liability on convertible notes | (154,000) | |
Change in fair value of derivative liability on bridge notes and bridge notes, related parties | (48,000) | |
Other expense, net | (25,354) | (3,020,847) |
Net loss | $ (2,383,742) | $ (3,963,491) |
Net loss per share | ||
Basic (in dollars per share) | $ (0.27) | $ (4.23) |
Diluted (in dollars per share) | $ (0.27) | $ (4.23) |
Weighted average shares of common stock outstanding | ||
Basic (in shares) | 8,765,437 | 936,213 |
Diluted (in shares) | 8,765,437 | 936,213 |
Condensed Statements of Changes
Condensed Statements of Changes in Stockholders' Equity - 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 (in shares) at Dec. 31, 2020 | 572,465 | 100,365 | 618,182 | |||||
Balance at the beginning at Dec. 31, 2020 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | |||||
Balances at the end (in shares) at Mar. 31, 2021 | 572,465 | 100,365 | 618,182 | |||||
Balances at the end at Mar. 31, 2021 | $ 7,999,997 | $ 561,041 | $ 2,612,038 | |||||
Balance at the beginning (in shares) at Dec. 31, 2020 | 936,213 | 31,000 | ||||||
Balance at the beginning at Dec. 31, 2020 | $ 94 | $ (172) | $ 1,779,698 | $ (29,057,587) | $ (27,277,967) | |||
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 (in shares) at Mar. 31, 2021 | 936,213 | 31,000 | ||||||
Balance at the end at Mar. 31, 2021 | $ 94 | $ (172) | 1,801,734 | (33,021,078) | (31,219,422) | |||
Balance at the beginning (in shares) at Dec. 31, 2021 | 8,733,479 | 31,000 | ||||||
Balance at the beginning at Dec. 31, 2021 | $ 873 | $ (172) | 67,810,289 | (38,019,402) | 29,791,588 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Share-based compensation expense | 3,125 | 184,191 | 184,191 | |||||
Issuance of common stock through exercise of stock options | $ 8 | 75,269 | $ 75,277 | |||||
Issuance of common stock through exercise of stock options (in shares) | 77,679 | 77,679 | ||||||
Net loss | (2,383,742) | $ (2,383,742) | ||||||
Balance at the end (in shares) at Mar. 31, 2022 | 8,814,283 | 31,000 | ||||||
Balance at the end at Mar. 31, 2022 | $ 881 | $ (172) | $ 68,069,749 | $ (40,403,144) | $ 27,667,314 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (2,383,742) | $ (3,963,491) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Share-based compensation | 184,191 | 22,036 |
Amortization of internally developed software | 266,219 | 235,229 |
Depreciation of property and equipment | 4,712 | 11,130 |
Bad debt expense | 165,097 | 20,652 |
Amortization of debt issuance costs on note payable | 3,048 | |
Loss on extinguishment on bridge notes | 2,750,171 | |
Gain on extinguishment on note payable | (788,156) | |
Amortization of discount on bridge notes | 289,867 | |
Change in fair value of derivative liabilities | 202,000 | |
Amortization of discount and debt issuance costs on convertible notes | 1,088 | |
Change in operating assets and liabilities: | ||
Accounts receivable - unbilled | 480,505 | (426,973) |
Accounts receivable | 480,657 | 925,544 |
Due from factor | (495,735) | |
Prepaid expenses and other current assets | 31,285 | (10,155) |
Operating lease right-of-use asset | 36,291 | |
Accounts payable | (551,184) | 299,130 |
Accrued expenses | 30,171 | 308,410 |
Accrued interest | 562,193 | |
Operating lease liability | (35,741) | |
Deferred revenue | (87,425) | (69,189) |
Net cash used in operating activities | (1,375,916) | (126,249) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Capitalization of internally developed software | (339,162) | (214,534) |
Net cash used in investing activities | (339,162) | (214,534) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from exercise of stock options | 75,277 | |
Net cash provided by financing activities | 75,277 | |
Net decreases in cash | (1,639,801) | (340,783) |
Cash at beginning of period | 27,738,979 | 695,909 |
Cash at end of period | 26,099,178 | 355,126 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 35,000 | |
Supplemental disclosure of non-cash investing and financing activities: | ||
Non-cash amounts of lease liabilities arising from obtaining right of use assets | $ 333,123 | |
Derivative liability for embedded conversion features on convertible notes issued | $ 3,614,000 |
NATURE OF BUSINESS AND BASIS OF
NATURE OF BUSINESS AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2022 | |
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 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 Basis of Presentation The accompanying unaudited 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 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 unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the year ended December 31, 2021. Liquidity and Going Concern The Company has recognized recurring losses and as of March 31, 2022, the Company had working capital of $28,104,041, an accumulated deficit of $40,403,144, cash of $26,099,178 and accounts payable and accrued expenses of $1,321,468. Management believes that the Company's existing cash, which include the net proceeds from the Company’s initial public offering in June 2021 (the “IPO”) , the Term Loan (defined below), and the PIPE (defined below) will allow the Company to continue its operations for at least the next 12 months from the date these unaudited condensed financial statements are issued and therefore the conditions raising substantial doubt raised in prior periods have been alleviated. As a result of recurring losses, the continued viability of the Company beyond May 2023 may be dependent on its ability to continue to raise additional capital to finance its operations. Impact of the COVID-19 Pandemic on 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 three months ended March 31, 2022 and 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. Cost saving measures included the elimination of non-essential travels 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. Impact of Russia’s Invasion of Ukraine on the Company’s Operations The Company’s business was negatively impacted during the first quarter of 2022 by Russia’s invasion of Ukraine. At the start of the conflict, the Company had approximately $1 million of purchase orders that were slated to be fulfilled by the Company’s supply network in Ukraine and Russia. This supply network shut down quickly at the start of the conflict. Ukrainian suppliers were disabled due to conflict conditions and evacuations and Russian suppliers were disabled by sanctions. While the Company mobilized to shift these purchase orders to other suppliers in the network, the process of getting specimen collections from other supply sites took time, which caused a delay in the fulfillment of such purchase orders. The Company believes that it has successfully resourced the purchased orders from different suppliers. The short and long-term implications of Russia’s invasion of Ukraine are difficult to predict at this time. The imposition of sanctions and counter sanctions may have an adverse effect on the economic markets generally and could impact the Company’s business and the businesses of the Company’s supply partners, especially those in Ukraine and Russia. Because of the highly uncertain and dynamic nature of these events, it is not currently possible to estimate the impact of Russian’s invasion of Ukraine on the Company’s business and the companies from which the Company obtains supplies and distributes specimens. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. The Company’s significant accounting policies and recent accounting standards are summarized in Note 2 of the Company’s annual report on Form 10-K for the year ended December 31, 2021. There were no significant changes to these accounting policies during the three months ended March 31, 2022. Use of Estimates The preparation of the Company’s unaudited 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 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. 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 — Valuations based on quoted prices for identical assets and liabilities in active markets. ● 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. ● Level 3 — Valuations based on unobservable inputs reflecting the Company’s 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 March 31, 2022 and December 31, 2021 because of their short-term nature. 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) the Company satisfies the performance obligations. 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. The following table summarizes the Company’s revenue for the three months ended March 31: 2022 2021 Specimens – contracts with customers $ 2,372,386 $ 2,947,295 Shipping and other 146,274 16,512 Revenue $ 2,518,660 $ 2,963,807 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 March 31, 2022 and December 31, 2021, the Company had an allowance for doubtful accounts of $184,837 and $269,170, 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. 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 costs 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 three months ended March 31, 2022 and 2021. 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. Subsequent to the IPO, the fair value of the Company's common stock was equal to the closing price on the specified grant date. Prior to the IPO, 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 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 per share at March 31, 2021. Restricted Stock Units The Company recognizes share-based compensation expense from restricted stock units (the “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 7. 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 as of March 31: 2022 2021 Shares issuable upon conversion of preferred stock — 1,291,012 Shares issuable upon vesting of RSUs 291,167 — Shares issuable upon exercise of stock options 176,142 265,102 Shares issuable upon exercise of PIPE Warrant (defined below) to purchase common stock 1,312,500 — Shares issuable upon exercise of Lender Warrant (defined below) to purchase common stock 12,500 23,309 Shares issuable upon exercise of Underwriter Warrants (defined below) to purchase common stock 90,000 — Recently Adopted Accounting Standards In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which modifies ASC 740 to reduce complexity while maintaining or improving the usefulness of the information provided to users of financial statements. ASU 2019-12 is effective for the Company for interim and annual reporting periods beginning after December 15, 2021. The Company adopted this new standard as of January 1, 2022, but it did not have a material impact on the Company’s financial statements. In February 2016, the FASB established Topic 842, Leases, by issuing ASU No. 2016-02 (“ASU 2016-02”), which requires lessees to recognize leases on balance sheet and disclose key information about leasing arrangements. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. In June 2020, the FASB issued ASU No. 2020-05 (“ASU 2020-05”) which pushed back the effective date of the adoption of ASC 842 one year for private and not-for-profit entities that did not issue or serve as conduit bond obligors and had not yet adopted the standard. The new effective date was for fiscal year periods beginning after December 15, 2021. The Company adopted ASU 2016-02 effective January 1, 2022 using the Comparatives Under 840 transition method whereby the Company will continue to present prior period financial statements and disclosures under ASC 840. In addition, the Company elected the transition package of three practical expedients permitted within the standard, among other practical expedients which allowed the Company to carry forward prior conclusions about lease identification and classification which allows not separating lease and non-lease components and allows not recording leases with an initial term of twelve months or less on the balance sheet across all existing asset classes. Adoption of the new standard resulted in the balance sheet recognition of additional assets of $333,000 and lease liabilities of approximately $333,000. For additional information regarding the Company’s lease arrangements, see Note 6 in the notes to unaudited condensed financial statements. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 3 Months Ended |
Mar. 31, 2022 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | 3. Property and equipment, net consisted of the following at the dates indicated: March 31, December 31, 2022 2021 (unaudited) Website $ 107,927 $ 107,927 Computer equipment and purchased software 84,588 84,588 Equipment 35,449 35,449 Furniture and fixtures 87,184 87,184 Leasehold improvements 24,935 24,935 Total property and equipment 340,083 340,083 Accumulated depreciation (312,014) (307,302) Total property and equipment, net $ 28,069 $ 32,781 Depreciation expense for property and equipment was $4,712 and $11,130 for the three months ended March 31, 2022 and 2021, respectively. |
INTERNALLY DEVELOPED SOFTWARE,
INTERNALLY DEVELOPED SOFTWARE, NET | 3 Months Ended |
Mar. 31, 2022 | |
INTERNALLY DEVELOPED SOFTWARE, NET | |
INTERNALLY DEVELOPED SOFTWARE, NET | 4. During the three months ended March 31, 2022 and 2021, the Company capitalized $339,162 and $214,534, 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 software costs, payroll and payroll-related costs for the Company’s employees. The Company recognized $266,219 and $235,229 of amortization expense associated with capitalized internally developed software costs during the three months ended March 31, 2022 and 2021, respectively. |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2022 | |
DEBT | |
DEBT | 5. DEBT Term Loan On August 13, 2021 (the "Closing Date"), the Company entered into a Loan and Security Agreement (“Term Loan”) with Western Alliance Bank (the "Lender") in the amount of $3,500,000 for working capital needs. The Company has the option to request an additional advance in the amount of $1,500,000 , which the Company had not yet borrowed as of March 31, 2022. The additional advance of $1,500,000 is available to the Company during the draw 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 March 31, 2022, the interest rate on the Term Loan was 4.00% which was equal to 0.75% above the Prime Rate of 3.25% . Interest is due and payable on the tenth (10th) calendar day of each month during the term of the Term Loan. The Term Loan principal is payable in thirty ( 30 ) equal monthly installments, plus accrued interest, beginning on March 10, 2023, and continuing on the same day of each month through August 10, 2025 (the "Term Loan Maturity Date"), at which time all amounts shall be immediately due and payable. 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. As of March 31, 2022, the Company was not in compliance with one of the Term Loan covenants. See Note 10. The outstanding principal balance on the Term Loan was $3,500,000 as of March 31, 2022, and interest expense for the three months ended March 31, 2022 was $35,000. Debt issuance costs totaled $81,989, comprised of a warrant to purchase 12,500 shares of common stock issued to the Lender with a fair value of $49,072 (the "Lender Warrant"), fees of $23,066 paid to the Lender and legal costs of $9,851. Amortization of the debt issuance costs related to the Term Loan, included in interest expense on the statement of operations, totaled $3,048 for the period ending March 31, 2022. Unamortized debt issuance costs on the Term Loan totaled $74,336 and $77,384 as of March 31, 2022, and December 31, 2021, respectively. As of March 31, 2022, future minimum payments due related to the Term Loan were as follows: 2022 (excluding 3 months ended March 31, 2022) $ — 2023 1,166,667 2024 1,400,000 2025 933,333 Total 3,500,000 Less debt issuance cost (74,336) Term Loan, net $ 3,425,664 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 6. Leases The Company has one operating lease of office space in Lexington, Massachusetts that will expire on February 28, 2024. Leases with an initial term of twelve months or less are not recorded on the balance sheet date, and the Company does not separate lease and non-lease components of contracts. There are no material residual guarantees associated with any of the Company’s leases, and there are no significant restrictions or covenants included in the Company’s lease agreements. The Company’s lease agreement does not provide an implicit borrowing rate. Therefore, the Company used a benchmark approach to derive an appropriate imputed discount rate. The Company benchmarked itself against other companies of similar credit ratings and comparable quality and derived an imputed rate, which was used to discount its real estate lease liabilities. The Company used estimated incremental borrowing rates for its active real estate lease. The calculated incremental borrowing rate was 5.96% , which was calculated based on remaining lease term of 1.92 years as of January 1, 2022. There was no sublease rental income for the three months ended March 31, 2022, and the Company is not the lessor in any lease arrangement, and there were no related-party lease agreements. Undiscounted Cash Flows Future lease payments included in the measurement of lease liabilities on the balance sheet are as follows: 2022 (excluding three months ended March 31, 2022) $ 122,631 2023 165,254 2024 27,601 Total future minimum lease payments 315,486 Less effect of discounting (18,104) Present value of future minimum lease payments $ 297,382 Rent expense for the three months ended March 31, 2022 and 2021 amounted to $44,957 and $40,178, respectively. Cash Flows Supplemental cash flow information related to operating lease for the three months ended March 31, 2022 was as follows: Non-cash operating lease expense (operating cash flow) $ 36,291 Change in operating lease liabilities (operating cash flow) $ (35,741) Supplemental non-cash amounts of operating lease liabilities arising from obtaining right-of-use assets $ 333,123 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 March 31, 2022, there was no material litigation against the Company. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2022 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | 7. 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. Common Stock During the three months ended March 31, 2022, the Company issued 77,679 shares of common stock for cash exercises of options of $75,277. Warrants Underwriter Warrants In connection with the Company's underwriting agreement with ThinkEquity, a division of Fordham Financial Management, Inc. and the representative of the Company’s IPO underwriters , 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 became 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 in period ended December 31, 2021. As of March 31, 2022, the Underwriter Warrant had not been exercised, and had a weighted average exercise price of $0.64 per share and a remaining weighted average time to expiration of 4.21 years. Lender Warrant In connection with the Term Loan entered into on August 13, 2021, the Company issued a Lender Warrant to Lender to purchase 12,500 shares of common stock of the Company. 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 was equity-classified. As of March 31, 2022, the Lender Warrant had not been exercised, and had a weighted average exercise price of $12.06 per share and a remaining weighted average time to expiration of 9.38 years. PIPE Warrants On December 1, 2021, the Company completed a private placement (the “PIPE”) in which the Company issued warrants (the “PIPE Warrants”) to purchase up to an aggregate of 1,312,500 shares of common stock. These PIPE Warrants have an exercise price of $13.00 per share and are immediately exercisable upon issuance and will expire on the five- and one-half-year anniversary of the issuance date. As of March 31, 2022, the PIPE Warrants had not been exercised, and had a weighted average exercise price of $12.06 per share and a remaining weighted average time to expiration of 4.87 year. The following assumptions were used to estimate the fair value of warrants granted using the Black-Scholes-Merton option pricing model during the three months ended March 31: 2022 2021 Assumptions: Risk-free interest rate — 0.90% - 1.30% Expected term (in years) — 5.00 - 10.00 Expected volatility — 59% - 69% Expected dividend yield — — A summary of warrant activity during the three months ended March 31, 2022 was as follows: Weighted Average Weighted Remaining Warrants Average Contractual Term Outstanding Exercise Price in Years Balance at December 31, 2021 1,415,000 $ 9.76 5.34 Granted — — — Exercised — — — Cancelled/forfeited — — — Balance at March 31, 2022 1,415,000 $ 9.76 5.22 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2022 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | 8. Stock Options As of March 31, 2022, there were 112,206 and 217,414 shares of common stock available for future grants under the Company’s 2013 Stock Incentive Plan and 2021 Plan (defined below) (collectively, the “Plans”), 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 three months ended March 31: 2022 2021 Assumptions: Risk-free interest rate — 0.47% – 0.64% Expected term (in years) — 5.81 – 5.85 Expected volatility — 49.88% –49.98% Expected dividend yield — — A summary of stock option activity under the Plans is as follows: Weighted Average Weighted Remaining Options Average Contractual Term Aggregate Outstanding Exercise Price in Years Intrinsic Value Balance at December 31, 2021 255,147 $ 2.32 7.75 $ 1,550,409 Granted — — — — Exercised (77,679) 1.04 — 336,632 Cancelled/forfeited (1,326) 1.00 — Balance at March 31, 2022 176,142 $ 1.18 8.01 $ 500,420 Options exercisable at March 31, 2022 135,786 $ 1.25 7.09 $ 559,850 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 $336,632 during the three months ended March 31, 2022. There were no options exercised during the three months ended March 31, 2021. The weighted average grant date fair value of stock options issued in the three months ended March 31, 2022 and 2021 was $0 and $1.77, respectively. The Company recorded stock options compensation expense as follows for the three months ended March 31: 2022 2021 Operating expenses: General and administrative $ 26,337 $ 9,104 Sales and marketing 1,075 1,950 Fulfillment 825 1,469 Supply development 306 288 Technology 1,012 9,225 Total stock options expense $ 29,555 $ 22,036 A total of $212,195 of unamortized compensation expense at March 31, 2022 will be recognized over the remaining requisite service period of 2.1 years. During the three months ended March 31, 2022, the Company received proceeds of $75,277 from the exercise of stock options. 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 the Company’s 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, RSUs 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 March 31, 2022, 11,000 equity awards were issued under the 2021 Plan. Restricted Stock Units Total recognition of RSUs expense to employees was as follows for the three months ended March 31: 2022 Operating expenses: General and administrative $ 7,932 Sales and marketing 14,167 Fulfillment 13,631 Supply development 7,196 Technology 13,400 Total RSU expense $ 56,326 These RSUs are subject to one-year cliff vesting, with 25% of the RSUs vesting on the first anniversary of issuance. The remaining RSUs vest quarterly over a three-year period. As of March 31, 2022, unrecognized stock-based compensation expense related to the unvested employee RSUs was $835,347 , which the Company expects to recognize on a straight-line basis over a weighted average period of approximately 3.40 years. During the three months ended March 31, 2021, there were no RSUs issued. During July 2021, the Company granted 189,396 RSUs to members of the executive team. Stock compensation expense of $78,955 was recorded in general and administrative expense for the three months ended March 31, 2022. These RSUs are subject to a four-year vesting period, with 20% of the RSUs vesting immediately upon issuance. The remaining RSUs vest annually over a four-year period. As of March 31, 2022, unrecognized stock-based compensation expense related to the unvested RSUs was $727,261 which the Company expects to recognize on a straight-line basis over a weighted average period of approximately 3.23 years. During July 2021, the Company granted 12,500 RSUs to its directors. Stock compensation expense of $19,356 was recorded in general and administrative expense for the three months ended March 31, 2022. These RSUs vest quarterly over a one-year period. As of March 31, 2022, unrecognized stock-based compensation expense related to these unvested RSUs was $26,023 which the Company expects to recognize on a straight-line basis over a weighted average period of approximately 0.25 years . Weighted RSUs Average Grant Outstanding Date Fair Value Unvested Balance at December 31, 2021 285,542 $ 6.77 Granted 11,000 4.06 Vested (3,125) 6.28 Forfeited (2,250) 1.27 Unvested Balance at March 31, 2022 291,167 $ 6.68 Performance Stock Units During July 2021, the Company issued 47,349 performance stock units (“PSUs”) to four members of the executive team pursuant to each executive's employment agreement executed in connection with the IPO. The PSUs 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 year vesting period. In year one of the four-year vesting period, the Company was not able to predict the likelihood of achieving the targets pursuant to the metrics in each of the executives' employment agreements, and therefore no stock compensation expense was recognized for the three months ended March 31, 2022 . |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2022 | |
INCOME TAXES | |
INCOME TAXES | 9. As of March 31, 2022 and December 31, 2021, the Company had federal net operating loss carryforwards of approximately $32,500,000 and $30,300,000, respectively, of which approximately $13,000,000 expires at various periods through 2037 and approximately $19,500,000 and $17,300,000, respectively, can be carried forward indefinitely. As of March 31, 2022 and December 31, 2021, the Company had state net operating loss carryforwards of approximately $23,400,000 and $22,400,000, respectively, that expire at various periods through 2042, respectively. At March 31, 2022 and December 31, 2021, the Company had federal and state tax credits of approximately $900,000 and $850,000, respectively, available for future periods that expire at various periods through 2042. The Company has recorded a full valuation allowance against net deferred income tax assets due to a history of losses generated since inception. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 10. SUBSEQUENT EVENTS Restricted Stock Units Pursuant to the 2021 Plan, the Company granted 107,326 RSUs to employees in April 2022. Each RSU represents the right to receive one share of the Company’s common stock, subject to the terms and conditions set forth in the RSU award agreement and the 2021 Plan. The RSUs 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. Waiver of Violation of Debt Covenant In connection with the Term Loan, on April 25, 2022, the Company became aware that an event of default by the Company had occurred by reason of the Company’s violation of a financial covenant for the three months ended March 31, 2022 (the “Event of Default”), as set forth in the Company’s Term Loan with the Lender (see Note 5). On April 29, 2022, the Company and the Lender entered into a waiver (the “Waiver”), pursuant to which the Lender agreed to waive the Event of Default and the Company agreed to release the Lender from all its claims from the beginning of the time through and including the date of the Waiver, whether they relate to the Term Loan, the covenants or any other claims that the Company ever had or currently has against the Lender . |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Use of Estimates | Use of Estimates The preparation of the Company’s unaudited 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 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. |
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: ● Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets. ● 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. ● Level 3 — Valuations based on unobservable inputs reflecting the Company’s 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 March 31, 2022 and December 31, 2021 because of their short-term nature. |
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) the Company satisfies the performance obligations. 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. The following table summarizes the Company’s revenue for the three months ended March 31: 2022 2021 Specimens – contracts with customers $ 2,372,386 $ 2,947,295 Shipping and other 146,274 16,512 Revenue $ 2,518,660 $ 2,963,807 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 March 31, 2022 and December 31, 2021, the Company had an allowance for doubtful accounts of $184,837 and $269,170, 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. |
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 costs 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 three months ended March 31, 2022 and 2021. |
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. Subsequent to the IPO, the fair value of the Company's common stock was equal to the closing price on the specified grant date. Prior to the IPO, 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 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 per share at March 31, 2021. Restricted Stock Units The Company recognizes share-based compensation expense from restricted stock units (the “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 7. |
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 as of March 31: 2022 2021 Shares issuable upon conversion of preferred stock — 1,291,012 Shares issuable upon vesting of RSUs 291,167 — Shares issuable upon exercise of stock options 176,142 265,102 Shares issuable upon exercise of PIPE Warrant (defined below) to purchase common stock 1,312,500 — Shares issuable upon exercise of Lender Warrant (defined below) to purchase common stock 12,500 23,309 Shares issuable upon exercise of Underwriter Warrants (defined below) to purchase common stock 90,000 — |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which modifies ASC 740 to reduce complexity while maintaining or improving the usefulness of the information provided to users of financial statements. ASU 2019-12 is effective for the Company for interim and annual reporting periods beginning after December 15, 2021. The Company adopted this new standard as of January 1, 2022, but it did not have a material impact on the Company’s financial statements. In February 2016, the FASB established Topic 842, Leases, by issuing ASU No. 2016-02 (“ASU 2016-02”), which requires lessees to recognize leases on balance sheet and disclose key information about leasing arrangements. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. In June 2020, the FASB issued ASU No. 2020-05 (“ASU 2020-05”) which pushed back the effective date of the adoption of ASC 842 one year for private and not-for-profit entities that did not issue or serve as conduit bond obligors and had not yet adopted the standard. The new effective date was for fiscal year periods beginning after December 15, 2021. The Company adopted ASU 2016-02 effective January 1, 2022 using the Comparatives Under 840 transition method whereby the Company will continue to present prior period financial statements and disclosures under ASC 840. In addition, the Company elected the transition package of three practical expedients permitted within the standard, among other practical expedients which allowed the Company to carry forward prior conclusions about lease identification and classification which allows not separating lease and non-lease components and allows not recording leases with an initial term of twelve months or less on the balance sheet across all existing asset classes. Adoption of the new standard resulted in the balance sheet recognition of additional assets of $333,000 and lease liabilities of approximately $333,000. For additional information regarding the Company’s lease arrangements, see Note 6 in the notes to unaudited condensed financial statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of entity's revenue | 2022 2021 Specimens – contracts with customers $ 2,372,386 $ 2,947,295 Shipping and other 146,274 16,512 Revenue $ 2,518,660 $ 2,963,807 |
Summary of total shares outstanding | 2022 2021 Shares issuable upon conversion of preferred stock — 1,291,012 Shares issuable upon vesting of RSUs 291,167 — Shares issuable upon exercise of stock options 176,142 265,102 Shares issuable upon exercise of PIPE Warrant (defined below) to purchase common stock 1,312,500 — Shares issuable upon exercise of Lender Warrant (defined below) to purchase common stock 12,500 23,309 Shares issuable upon exercise of Underwriter Warrants (defined below) to purchase common stock 90,000 — |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
PROPERTY AND EQUIPMENT, NET | |
Summary of property and equipment, net | March 31, December 31, 2022 2021 (unaudited) Website $ 107,927 $ 107,927 Computer equipment and purchased software 84,588 84,588 Equipment 35,449 35,449 Furniture and fixtures 87,184 87,184 Leasehold improvements 24,935 24,935 Total property and equipment 340,083 340,083 Accumulated depreciation (312,014) (307,302) Total property and equipment, net $ 28,069 $ 32,781 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
DEBT | |
Schedule of future minimum payments | 2022 (excluding 3 months ended March 31, 2022) $ — 2023 1,166,667 2024 1,400,000 2025 933,333 Total 3,500,000 Less debt issuance cost (74,336) Term Loan, net $ 3,425,664 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of Future lease payment - Undiscounted Cash Flows | 2022 (excluding three months ended March 31, 2022) $ 122,631 2023 165,254 2024 27,601 Total future minimum lease payments 315,486 Less effect of discounting (18,104) Present value of future minimum lease payments $ 297,382 |
Schedule of Cash Flows informations | Non-cash operating lease expense (operating cash flow) $ 36,291 Change in operating lease liabilities (operating cash flow) $ (35,741) Supplemental non-cash amounts of operating lease liabilities arising from obtaining right-of-use assets $ 333,123 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Class of Warrant or Right [Line Items] | |
Summary of assumptions used to estimate the fair value of stock options granted using the Black-Scholes-Merton option pricing model | 2022 2021 Assumptions: Risk-free interest rate — 0.47% – 0.64% Expected term (in years) — 5.81 – 5.85 Expected volatility — 49.88% –49.98% Expected dividend yield — — |
Schedule of warrant activity | Weighted Average Weighted Remaining Warrants Average Contractual Term Outstanding Exercise Price in Years Balance at December 31, 2021 1,415,000 $ 9.76 5.34 Granted — — — Exercised — — — Cancelled/forfeited — — — Balance at March 31, 2022 1,415,000 $ 9.76 5.22 |
Warrants | |
Class of Warrant or Right [Line Items] | |
Summary of assumptions used to estimate the fair value of stock options granted using the Black-Scholes-Merton option pricing model | 2022 2021 Assumptions: Risk-free interest rate — 0.90% - 1.30% Expected term (in years) — 5.00 - 10.00 Expected volatility — 59% - 69% Expected dividend yield — — |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Summary of assumptions used to estimate the fair value of stock options granted using the Black-Scholes-Merton option pricing model | 2022 2021 Assumptions: Risk-free interest rate — 0.47% – 0.64% Expected term (in years) — 5.81 – 5.85 Expected volatility — 49.88% –49.98% Expected dividend yield — — |
Schedule of summary of stock option activity | Weighted Average Weighted Remaining Options Average Contractual Term Aggregate Outstanding Exercise Price in Years Intrinsic Value Balance at December 31, 2021 255,147 $ 2.32 7.75 $ 1,550,409 Granted — — — — Exercised (77,679) 1.04 — 336,632 Cancelled/forfeited (1,326) 1.00 — Balance at March 31, 2022 176,142 $ 1.18 8.01 $ 500,420 Options exercisable at March 31, 2022 135,786 $ 1.25 7.09 $ 559,850 |
Schedule of share based compensation restricted stock units award activity | Weighted RSUs Average Grant Outstanding Date Fair Value Unvested Balance at December 31, 2021 285,542 $ 6.77 Granted 11,000 4.06 Vested (3,125) 6.28 Forfeited (2,250) 1.27 Unvested Balance at March 31, 2022 291,167 $ 6.68 |
Restricted Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of summary of compensation expense | 2022 Operating expenses: General and administrative $ 7,932 Sales and marketing 14,167 Fulfillment 13,631 Supply development 7,196 Technology 13,400 Total RSU expense $ 56,326 |
Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of summary of compensation expense | 2022 2021 Operating expenses: General and administrative $ 26,337 $ 9,104 Sales and marketing 1,075 1,950 Fulfillment 825 1,469 Supply development 306 288 Technology 1,012 9,225 Total stock options expense $ 29,555 $ 22,036 |
NATURE OF BUSINESS AND BASIS _2
NATURE OF BUSINESS AND BASIS OF PRESENTATION (Details) | 3 Months Ended |
Mar. 31, 2022segment | |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | |
Reporting units | 1 |
Operating segments | 1 |
NATURE OF BUSINESS AND BASIS _3
NATURE OF BUSINESS AND BASIS OF PRESENTATION - Public Offering (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | ||
Accrued interest | $ 8,167 | $ 8,167 |
Working Capital Deficit | 28,104,041 | |
Accumulated deficit | 40,403,144 | 38,019,402 |
Cash | 26,099,178 | $ 27,738,979 |
Accounts payable and accrued expenses | 1,321,468 | |
Purchase orders negatively impacted due to Russia's invasion of Ukraine | $ 1,000,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition and Accounts Receivable (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | |||
Right of return (in days) | 14 days | ||
Revenue | $ 2,518,660 | $ 2,963,807 | |
Accounts receivable | |||
Allowance for doubtful accounts | 184,837 | $ 269,170 | |
Specimens | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 2,372,386 | 2,947,295 | |
Shipping and other | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 146,274 | $ 16,512 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Internally Developed Software, net (Details) | 3 Months Ended |
Mar. 31, 2022 | |
Internal-use software | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life (in years) | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Impairment charges | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Share Based Compensation (Details) | Mar. 31, 2021$ / shares |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Common stock, fair value (per share) | $ 3.83 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Shares issuable upon conversion of preferred stock (Details) - shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Subsidiary, Sale of Stock [Line Items] | ||
Shares issuable upon conversion of preferred stock | 1,291,012 | |
Shares Issuable Upon Vesting Of RSUs | 291,167 | |
Shares issuable upon exercise of stock options | 176,142 | 265,102 |
Shares issuable upon exercise of warrants | 1,312,500 | |
Lender | ||
Subsidiary, Sale of Stock [Line Items] | ||
Shares issuable upon exercise of Warrant to purchase common stock | 12,500 | 23,309 |
Underwriter Warrants | ||
Subsidiary, Sale of Stock [Line Items] | ||
Shares issuable upon exercise of Warrant to purchase common stock | 90,000 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounting Standard Recently Adopted (Details) | Mar. 31, 2022USD ($) |
Operating lease right-of-use asset | $ 296,832 |
Operating lease long-term obligation | 147,375 |
Accounting Standards Update 2016-02 [Member] | |
Operating lease right-of-use asset | 333,000 |
Operating lease long-term obligation | $ 333,000 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
PP&E, Net, by Type | |||
Total property and equipment | $ 340,083 | $ 340,083 | |
Accumulated depreciation | (312,014) | (307,302) | |
Total property and equipment, net | 28,069 | 32,781 | |
Depreciation of property and equipment | 4,712 | $ 11,130 | |
Website | |||
PP&E, Net, by Type | |||
Total property and equipment | 107,927 | 107,927 | |
Computer equipment and purchased software | |||
PP&E, Net, by Type | |||
Total property and equipment | 84,588 | 84,588 | |
Equipment | |||
PP&E, Net, by Type | |||
Total property and equipment | 35,449 | 35,449 | |
Furniture and fixtures | |||
PP&E, Net, by Type | |||
Total property and equipment | 87,184 | 87,184 | |
Leasehold improvements | |||
PP&E, Net, by Type | |||
Total property and equipment | $ 24,935 | $ 24,935 |
INTERNALLY DEVELOPED SOFTWARE_2
INTERNALLY DEVELOPED SOFTWARE, NET (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
INTERNALLY DEVELOPED SOFTWARE, NET | ||
Internally developed software capitalized | $ 339,162 | $ 214,534 |
Amortization expense | $ 266,219 | $ 235,229 |
DEBT - Term Loan (Details)
DEBT - Term Loan (Details) - USD ($) | Mar. 10, 2023 | Aug. 13, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 |
Debt Instrument [Line Items] | |||||
Long-term debt, net | $ 3,425,664 | ||||
Outstanding principal loan amount | 3,500,000 | ||||
Interest expense | 38,048 | $ 853,147 | |||
Debt issuance costs | $ 74,336 | ||||
Prime Rate | |||||
Debt Instrument [Line Items] | |||||
Basis spread rate | 0.75% | ||||
Interest rate on the loan | 3.25% | ||||
Lender | |||||
Debt Instrument [Line Items] | |||||
Debt issuance costs | $ 81,989 | ||||
Warrants to purchase common stock issued | 12,500 | ||||
Issuance of common stock warrants in connection with Term Loan | $ 49,072 | ||||
Payment of debt issuance costs in connection with note payable | 23,066 | ||||
Legal costs | 9,851 | ||||
Term Loan | |||||
Debt Instrument [Line Items] | |||||
Proceeds from term loan | $ 3,500,000 | ||||
Unused borrowing amount | $ 1,500,000 | ||||
Interest rate on the loan | 4.00% | ||||
Calendar day to pay principal | 30 days | ||||
Outstanding principal loan amount | $ 3,500,000 | ||||
Interest expense | 35,000 | ||||
Amortized debt issuance costs | 3,048 | ||||
Unamortized debt issuance costs | $ 74,336 | $ 77,384 |
DEBT - Future Minimum Payments
DEBT - Future Minimum Payments (Details) | Mar. 31, 2022USD ($) |
Debt Instrument [Line Items] | |
2023 | $ 1,166,667 |
2024 | 1,400,000 |
2025 | 933,333 |
Total | 3,500,000 |
Less debt issuance cost | (74,336) |
Long-term debt, net | 3,425,664 |
Term Loan | |
Debt Instrument [Line Items] | |
Total | $ 3,500,000 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Lease costs related to operating lease (Details) | 3 Months Ended | |
Mar. 31, 2022USD ($)item | Jan. 01, 2022 | |
Lessee, Lease, Description [Line Items] | ||
Remaining lease term | 1 year 11 months 1 day | |
Office Space in Lexington, Massachusetts [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Number of operating lease | 1 | |
Incremental borrowing rate | 5.96% | |
Sublease rental income | $ | $ 0 | |
Number of related party lease agreements | 0 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Future lease payments (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Operating Leases | ||
2022 (excluding three months ended March 2022) | $ 122,631 | |
2023 | 165,254 | |
2024 | 27,601 | |
Total future minimum lease payments | 315,486 | |
Less effect of discounting | (18,104) | |
Present value of future minimum lease payments | 297,382 | |
Rent expense | $ 44,957 | $ 40,178 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES - Cash Flows - Operating lease (Details) | 3 Months Ended |
Mar. 31, 2022USD ($) | |
COMMITMENTS AND CONTINGENCIES | |
Non-cash lease expense (operating cash flow) | $ 36,291 |
Change in lease liabilities (operating cash flow) | (35,741) |
Supplemental non-cash amounts of lease liabilities arising from obtaining right of use assets | $ 333,123 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - $ / shares | Mar. 31, 2022 | Dec. 31, 2021 |
STOCKHOLDERS' EQUITY | ||
Number of shares authorized | 250,000,000 | |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 50,000,000 | |
Preferred stock, par value | $ 0.0001 |
STOCKHOLDERS' EQUITY - Common S
STOCKHOLDERS' EQUITY - Common Stock - (Details) | 3 Months Ended |
Mar. 31, 2022USD ($)shares | |
STOCKHOLDERS' EQUITY | |
Issuance of common stock through exercise of stock options (in shares) | shares | 77,679 |
Issuance of common stock through exercise of stock options | $ | $ 75,277 |
STOCKHOLDERS' EQUITY - Underwri
STOCKHOLDERS' EQUITY - Underwriter Warrants (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2023 | Dec. 31, 2021 | |
Class of Warrant or Right [Line Items] | |||
Common stock, par value | $ 0.0001 | $ 0.0001 | |
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 | $ 0.64 | $ 10 | |
Warrants exercisable term | 4 years 2 months 15 days | ||
Commencing term from effective date of registration statement | 180 days | ||
Equity issuance costs | $ 0.4 |
STOCKHOLDERS' EQUITY - Warrants
STOCKHOLDERS' EQUITY - Warrants (Details) - $ / shares | Mar. 31, 2022 | Dec. 01, 2021 | Aug. 13, 2021 |
Private Placement | |||
Class of Warrant or Right [Line Items] | |||
Warrants exercisable term | 4 years 10 months 13 days | ||
Warrants to purchase shares of common stock | 1,312,500 | ||
Exercise price of warrant | $ 12.06 | $ 13 | |
Warrants other than Underwriter Warrants | |||
Class of Warrant or Right [Line Items] | |||
Warrants exercisable term | 9 years 4 months 17 days | ||
Warrants to purchase shares of common stock | 12,500 | ||
Exercise price of warrant | $ 12.06 | $ 8 |
STOCKHOLDERS' EQUITY - Estimate
STOCKHOLDERS' EQUITY - Estimate the fair value of warrants granted (Details) | 3 Months Ended |
Mar. 31, 2021 | |
Assumptions used to estimate the fair value of stock options granted | |
Risk-free interest rate, minimum | 0.47% |
Risk-free interest rate, maximum | 0.64% |
Expected volatility, minimum | 49.88% |
Expected volatility, maximum | 49.98% |
Minimum | |
Assumptions used to estimate the fair value of stock options granted | |
Expected term (in years) | 5 years 9 months 21 days |
Maximum | |
Assumptions used to estimate the fair value of stock options granted | |
Expected term (in years) | 5 years 10 months 6 days |
Warrants | |
Assumptions used to estimate the fair value of stock options granted | |
Risk-free interest rate, minimum | 0.90% |
Risk-free interest rate, maximum | 1.30% |
Expected volatility, minimum | 59.00% |
Expected volatility, maximum | 69.00% |
Warrants | Minimum | |
Assumptions used to estimate the fair value of stock options granted | |
Expected term (in years) | 5 years |
Warrants | Maximum | |
Assumptions used to estimate the fair value of stock options granted | |
Expected term (in years) | 10 years |
STOCKHOLDERS' EQUITY - Warrant
STOCKHOLDERS' EQUITY - Warrant activity (Details) - $ / shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Options Outstanding. | |||
Balance at the beginning | |||
Exercised | (77,679) | ||
Balance at the end | 176,142 | 265,102 | |
Warrants | |||
Options Outstanding. | |||
Balance at the beginning | 1,415,000 | ||
Balance at the end | 1,415,000 | 1,415,000 | |
Weighted Average Exercise Price | |||
Balance at the beginning (in dollars per share) | $ 9.76 | ||
Balance at the end (in dollars per share) | $ 9.76 | $ 9.76 | |
Weighted Average Remaining Contractual Term (in years) | |||
Weighted Average Remaining Contractual Term (in years) | 5 years 2 months 19 days | 5 years 4 months 2 days |
SHARE-BASED COMPENSATION - Esti
SHARE-BASED COMPENSATION - Estimate the fair value of stock options (Details) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Assumptions used to estimate the fair value of stock options granted | ||
Risk-free interest rate, minimum | 0.47% | |
Risk-free interest rate, maximum | 0.64% | |
Expected volatility, minimum | 49.88% | |
Expected volatility, maximum | 49.98% | |
Expected dividend yield | 0.00% | 0.00% |
Minimum | ||
Assumptions used to estimate the fair value of stock options granted | ||
Expected term (in years) | 5 years 9 months 21 days | |
Maximum | ||
Assumptions used to estimate the fair value of stock options granted | ||
Expected term (in years) | 5 years 10 months 6 days |
SHARE-BASED COMPENSATION - Stoc
SHARE-BASED COMPENSATION - Stock option activity (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Options Outstanding | |||
Balance at the beginning | |||
Exercised | (77,679) | ||
Balance at the end | 176,142 | 265,102 | |
2013 and 2021 Stock Incentive Plan | |||
Options Outstanding | |||
Balance at the beginning | 255,147 | ||
Exercised | (77,679) | ||
Cancelled/forfeited | (1,326) | ||
Balance at the end | 176,142 | 255,147 | |
Options exercisable at the end | 135,786 | ||
Weighted Average Exercise Price | |||
Balance at the beginning (in dollars per share) | $ 2.32 | ||
Exercised (in dollars per share) | 1.04 | $ 0 | |
Cancelled/forfeited (in dollars per share) | 1 | ||
Balance at the end (in dollars per share) | 1.18 | $ 2.32 | |
Options exercisable at the end (in dollars per share) | $ 1.25 | ||
Weighted Average Remaining Contractual Term (in years) | |||
Weighted Average Remaining Contractual Term (in years) | 8 years 3 days | 7 years 9 months | |
Options exercisable at the end (in years) | 7 years 1 month 2 days | ||
Share Based Compensation Arrangement By Share Based Payment Award Options Aggregate Intrinsic Value | |||
Balance at the beginning (in dollars) | $ 1,550,409 | ||
Exercised (in dollars) | 336,632 | ||
Balance at the end (in dollars) | 500,420 | $ 1,550,409 | |
Options exercisable at the end (in dollars) | $ 559,850 |
SHARE-BASED COMPENSATION - Outs
SHARE-BASED COMPENSATION - Outstanding principal and all unpaid and accrued interest (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted-average grant date fair value | $ 0 | $ 1.77 |
Unamortized compensation expense | $ 212,195 | |
Unamortized compensation expense recognized over the remaining requisite service period | 2 years 1 month 6 days | |
Proceeds from exercise of stock options | $ 75,277 | |
Performance Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation expense | 0 | |
Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation expense | $ 56,326 | |
Unamortized compensation expense recognized over the remaining requisite service period | 3 years 4 months 24 days | |
Executive Officer and immediate family | Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unamortized compensation expense recognized over the remaining requisite service period | 3 years 2 months 23 days | |
Director [Member] | Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation expense | $ 19,356 | |
Unamortized compensation expense recognized over the remaining requisite service period | 3 months |
SHARE-BASED COMPENSATION - 2021
SHARE-BASED COMPENSATION - 2021 Stock Incentive Plan - shares (Details) | 3 Months Ended |
Mar. 31, 2022shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options authorized | 608,000 |
Sharebased compensation, shares issued | 11,000 |
Performance Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Sharebased compensation, shares issued | 47,349 |
2013 Stock Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common Stock, Capital Shares Reserved for Future Issuance | 112,206 |
2021 Stock Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Common Stock, Capital Shares Reserved for Future Issuance | 217,414 |
SHARE-BASED COMPENSATION - Addi
SHARE-BASED COMPENSATION - Additional Information (Details) - Performance Stock Units - USD ($) | 1 Months Ended | 3 Months Ended |
Jul. 31, 2021 | Mar. 31, 2022 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Compensation expense | $ 0 | |
Vesting period | 4 years |
SHARE-BASED COMPENSATION - Comp
SHARE-BASED COMPENSATION - Compensation Expense (Details) - Stock Options - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | $ 29,555 | $ 22,036 |
General and administrative | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 26,337 | 9,104 |
Sales and marketing | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 1,075 | 1,950 |
Fulfillment | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 825 | 1,469 |
Supply development | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 306 | 288 |
Technology | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | $ 1,012 | $ 9,225 |
SHARE-BASED COMPENSATION - Rest
SHARE-BASED COMPENSATION - Restricted Stock (Details) - USD ($) | 1 Months Ended | 3 Months Ended | |
Jul. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 2 years 1 month 6 days | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 189,396 | 11,000 | |
Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense | $ 56,326 | ||
Awards vesting rights percentage | 25.00% | ||
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ 835,347 | ||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 3 years 4 months 24 days | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 0 | ||
Restricted Stock Units | Executive Officer and immediate family | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 4 years | ||
Awards vesting rights percentage | 20.00% | ||
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ 727,261 | ||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 3 years 2 months 23 days | ||
Restricted Stock Units | Director [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense | $ 19,356 | ||
Vesting period | 1 year | ||
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ 26,023 | ||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 3 months | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 12,500 | ||
Restricted Stock Units | Share-based Payment Arrangement, Tranche One [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 1 year | ||
Restricted Stock Units | Share-based Payment Arrangement, Tranche Two [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
General and administrative | Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense | $ 7,932 | ||
General and administrative | Restricted Stock Units | Executive Officer and immediate family | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense | 78,955 | ||
Fulfillment | Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense | 13,631 | ||
Sales and marketing | Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense | 14,167 | ||
Supply development | Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense | 7,196 | ||
Technology | Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense | $ 13,400 |
SHARE-BASED COMPENSATION - Unve
SHARE-BASED COMPENSATION - Unvested Restricted Stock (Details) - USD ($) | 1 Months Ended | 3 Months Ended |
Jul. 31, 2021 | Mar. 31, 2022 | |
Options outstanding | ||
Unvested Balance at December 31, 2021 | 285,542 | |
Granted | 189,396 | 11,000 |
Vested | $ (3,125) | |
Forfeited | (2,250) | |
Unvested Balance at March 31, 2022 | 291,167 | |
Weighted Average Grant Date Fair Value | ||
Unvested Balance at December 31, 2021 | $ 6.77 | |
Granted | 4.06 | |
Vested | 6.28 | |
Forfeited | 1.27 | |
Unvested Balance at March 31, 2022 | $ 6.68 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Operating Loss Carryforwards [Line Items] | ||
Tax Credit Carryforward, Amount | $ 900,000 | $ 850,000 |
Federal | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | 32,500,000 | 30,300,000 |
Net operating loss carryforwards, subject to expiration | 13,000,000 | |
Net operating loss carryforwards, carried forward indefinitely | 19,500,000 | 17,300,000 |
State | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | $ 23,400,000 | $ 22,400,000 |
SUBSEQUENT EVENTS - (Details)
SUBSEQUENT EVENTS - (Details) - shares | 1 Months Ended | 3 Months Ended |
Apr. 30, 2022 | Mar. 31, 2022 | |
Restricted Stock Units | ||
Subsequent Event [Line Items] | ||
Awards vesting rights percentage | 25.00% | |
2021 Stock Incentive Plan | Subsequent event | ||
Subsequent Event [Line Items] | ||
Awards vesting rights percentage | 25.00% | |
2021 Stock Incentive Plan | Subsequent event | Restricted Stock Units | ||
Subsequent Event [Line Items] | ||
Granted | 107,326 |