Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 16, 2023 | Jun. 30, 2022 | |
Document and Entity Information [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 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 Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
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 | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 9,016,558 | ||
Entity Central Index Key | 0001558569 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Entity Public Float | $ 13,041,157 | ||
Auditor Name | Wolf & Company, P.C. | ||
Auditor Location | Boston, Massachusetts | ||
Auditor Firm ID | 392 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash | $ 15,308,710 | $ 27,738,979 |
Accounts receivable - unbilled | 2,327,789 | 1,739,020 |
Accounts receivable, net of allowance for doubtful accounts of $230,999 and $269,170 at December 31, 2022 and 2021, respectively | 1,597,915 | 3,002,442 |
Prepaid expenses and other current assets | 300,434 | 327,035 |
Tax credit receivable, current portion | 140,873 | 140,873 |
Total current assets | 19,675,721 | 32,948,349 |
Property and equipment, net | 225,852 | 32,781 |
Internally developed software, net | 4,503,787 | 2,710,867 |
Operating lease right-of-use asset | 184,692 | |
Security deposits | 27,601 | 27,601 |
Total assets | 24,617,653 | 35,719,598 |
Current liabilities: | ||
Accounts payable | 2,459,063 | 832,678 |
Accrued expenses | 1,531,238 | 1,009,803 |
Accrued interest | 8,167 | |
Operating lease - current obligation | 158,451 | |
Deferred revenue | 132,335 | 654,746 |
Total current liabilities | 4,281,087 | 2,505,394 |
Operating lease long - term obligation | 27,396 | |
Term loan | 3,422,616 | |
Total liabilities | 4,308,483 | 5,928,010 |
Stockholders' equity | ||
Common stock, $0.0001 par value, 200,000,000 shares authorized, 8,956,808 issued and 8,925,808 outstanding at December 31, 2022, and 8,764,479 issued and 8,733,479 outstanding at December 31, 2021 | 892 | 873 |
Additional paid-in capital | 68,573,774 | 67,810,289 |
Treasury stock, 31,000 shares at December 31, 2022 and 2021, at cost | (172) | (172) |
Accumulated deficit | (48,265,324) | (38,019,402) |
Total stockholders' equity | 20,309,170 | 29,791,588 |
Total liabilities and stockholders' equity | $ 24,617,653 | $ 35,719,598 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Condensed Balance Sheets | ||
Allowance for doubtful accounts | $ 230,999 | $ 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) | 8,956,808 | 8,764,479 |
Common stock, outstanding (in shares) | 8,925,808 | 8,733,479 |
Treasury stock (in shares) | 31,000 | 31,000 |
Condensed Statements of Operati
Condensed Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Condensed Statements of Operations | ||
Revenue | $ 10,402,303 | $ 11,135,303 |
Operating expenses: | ||
Cost of revenue | 4,756,965 | 5,249,013 |
Technology | 2,656,287 | 1,837,882 |
Sales and marketing | 3,445,344 | 2,422,743 |
Supply development | 801,125 | 573,913 |
Fulfillment | 1,995,937 | 1,363,522 |
General and administrative | 6,932,727 | 5,613,476 |
Total operating expenses | 20,588,385 | 17,060,549 |
Loss from operations | (10,186,082) | (5,925,246) |
Other expense, net | ||
Interest expense | (238,963) | (2,102,681) |
Change in fair value of derivative liability on convertible notes | (271,000) | |
Change in fair value of derivative liability on bridge notes and bridge notes, related parties | 1,582,700 | |
Loss on extinguishment of bridge notes and bridge notes, related parties | (2,740,425) | |
Loss on extinguishment of convertible notes and convertible notes, related parties | (260,185) | |
Gain on extinguishment on note payable | (788,156) | |
Other income, net | 9,778 | |
Other expense, net | (44,531) | |
Interest income | 169,345 | 11,397 |
Total other expense, net | (59,840) | (3,036,569) |
Net loss | $ (10,245,922) | $ (8,961,815) |
Net loss per share | ||
Basic (in dollars per share) | $ (1.16) | $ (2.09) |
Diluted (in dollars per share) | $ (1.16) | $ (2.09) |
Weighted average shares of common stock outstanding | ||
Basic (in shares) | 8,844,307 | 4,287,424 |
Diluted (in shares) | 8,844,307 | 4,287,424 |
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 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Treasury stock (in shares) | 31,000 | |||||||
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 | |||||
Convertible preferred Stock | ||||||||
Conversion of redeemable convertible preferred stock into common stock upon initial public offering | $ (7,999,997) | $ (561,041) | $ (2,612,038) | |||||
Conversion of redeemable convertible preferred stock into common stock upon initial public offering (in shares) | (572,465) | (100,365) | (618,182) | |||||
Balance at the beginning (in shares) at Dec. 31, 2020 | 936,213 | |||||||
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] | ||||||||
Conversion of redeemable convertible preferred stock into common stock upon initial public offering | $ 129 | 11,172,947 | 11,173,076 | |||||
Conversion of redeemable convertible preferred stock into common stock upon initial public offering (in shares) | 1,291,012 | |||||||
Conversion of principal and accrued interest of convertible notes and bridge notes into common stock upon initial public offering | $ 205 | 16,392,139 | 16,392,344 | |||||
Conversion of principal and accrued interest of convertible notes and bridge notes into common stock upon initial public offering (in shares) | 2,049,043 | |||||||
Issuance of common stock in connection with public offering | $ 225 | 17,999,775 | 18,000,000 | |||||
Issuance of common stock in connection with public offering (in shares) | 2,250,000 | |||||||
Offering costs in connection with public offering | (2,339,816) | (2,339,816) | ||||||
Issuance of common stock in connection with public offering over-allotment option exercise | $ 34 | 2,497,467 | 2,497,501 | |||||
Issuance of common stock in connection with public offering over-allotment option exercise (in shares) | 337,500 | |||||||
Issuance of common stock in connection with private placement | $ 175 | 20,999,813 | 20,999,988 | |||||
Issuance of common stock in connection with private placement (in shares) | 1,749,999 | |||||||
Transaction costs in connection with private placement | (1,434,999) | (1,434,999) | ||||||
Issuance of common stock in exchange for services | 12,500 | $ 12,500 | ||||||
Issuance of common stock in exchange for services (in shares) | 2,000 | 2,000 | ||||||
Issuance of common stock through exercise of stock options | $ 5 | 58,643 | $ 58,648 | |||||
Issuance of common stock through exercise of stock options (in shares) | 55,694 | |||||||
Issuance of common stock through exercise of warrants | $ 2 | 990 | 992 | |||||
Issuance of common stock through exercise of warrants (in shares) | 17,889 | |||||||
Share-based compensation expense | $ 4 | 622,060 | 622,064 | |||||
Share based compensation expense (shares) | 44,129 | |||||||
Issuance of warrants in connection with debt | 49,072 | 49,072 | ||||||
Net loss | (8,961,815) | (8,961,815) | ||||||
Balance at the end (in shares) at Dec. 31, 2021 | 8,733,479 | |||||||
Balance at the end at Dec. 31, 2021 | $ 873 | $ (172) | 67,810,289 | (38,019,402) | $ 29,791,588 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Treasury stock (in shares) | 31,000 | 31,000 | ||||||
Issuance of common stock in exchange for services | 6,250 | $ 6,250 | ||||||
Issuance of common stock in exchange for services (in shares) | 1,000 | |||||||
Issuance of common stock through exercise of stock options | $ 8 | 78,633 | 78,641 | |||||
Issuance of common stock through exercise of stock options (in shares) | 81,043 | |||||||
Share-based compensation expense | 642,077 | 642,077 | ||||||
Vesting of restricted stock units | $ 11 | 36,525 | 36,536 | |||||
Vesting of restricted stock units (in shares) | 110,286 | |||||||
Net loss | (10,245,922) | (10,245,922) | ||||||
Balance at the end (in shares) at Dec. 31, 2022 | 8,925,808 | |||||||
Balance at the end at Dec. 31, 2022 | $ 892 | $ (172) | $ 68,573,774 | $ (48,265,324) | $ 20,309,170 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Treasury stock (in shares) | 31,000 | 31,000 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (10,245,922) | $ (8,961,815) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Share-based compensation | 678,613 | 622,064 |
Proceeds from issuance of common stock in exchange for services | 6,250 | 12,500 |
Amortization of internally developed software | 1,182,766 | 958,639 |
Depreciation of property and equipment | 22,433 | 45,358 |
Bad debt expense | 106,581 | 161,074 |
Amortization of debt issuance costs on term loan | 77,384 | 4,605 |
Amortization of discount and debt issuance costs on convertible notes | 1,088 | |
Amortization of discount on bridge notes | 869,600 | |
Change in fair value of derivative liabilities | (1,311,700) | |
Loss on extinguishment on bridge notes | 2,740,425 | |
Loss on extinguishment of convertible notes | 260,185 | |
Gain on extinguishment on note payable | (788,156) | |
Change in operating assets and liabilities: | ||
Accounts receivable - unbilled | (588,769) | (1,086,259) |
Accounts receivable | 1,297,946 | (1,637,124) |
Prepaid expenses and other current assets | 26,601 | 90,894 |
Operating lease right-of-use asset | 148,431 | |
Tax credit receivable | 38,503 | |
Accounts payable | 1,626,385 | (959,754) |
Accrued expenses | 521,435 | 198,893 |
Accrued interest | (8,167) | (1,708,922) |
Operating lease liability | (147,276) | |
Deferred revenue | (522,411) | (218,508) |
Net cash used in operating activities | (5,817,720) | (10,668,410) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (215,504) | (2,550) |
Capitalization of internally developed software | (2,975,686) | (1,035,367) |
Net cash used in investing activities | (3,191,190) | (1,037,917) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of bridge notes payable | 500,000 | |
Proceeds from issuance of term loan | 3,500,000 | |
Proceeds from exercise of stock options | 78,641 | 58,648 |
Proceeds from issuance of common stock in connection with initial public offering | 18,000,000 | |
Payment of offering costs in connection with the issuance of common stock in connection with initial public offering | (2,339,816) | |
Proceeds from issuance of common stock in connection with private placement | 20,999,988 | |
Payment of transaction costs in connection with the issuance of common stock in connection with private placement | (1,434,999) | |
Proceeds from exercise of warrants | 992 | |
Proceeds from issuance of over-allotment shares of common stock, net of transaction costs of $202,499 | 2,497,501 | |
Payment of principal to bridge note holders | (3,000,000) | |
Payment of debt issuance costs in connection with note payable | (32,917) | |
Payment of term loan | (3,500,000) | |
Net cash (used in) provided by financing activities | (3,421,359) | 38,749,397 |
Net change in cash | (12,430,269) | 27,043,070 |
Cash at beginning of period | 27,738,979 | 695,909 |
Cash at end of period | 15,308,710 | 27,738,979 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 161,579 | 2,824,032 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Conversion of redeemable convertible preferred stock into common stock | 11,173,076 | |
Conversion of convertible notes and accrued interest into common stock | 6,748,729 | |
Conversion of bridge notes and accrued interest into common stock | 4,717,646 | |
Issuance of common stock warrants as offering costs in connection with public offering of common stock | 374,400 | |
Issuance of common stock warrants in connection with term loan | 49,072 | |
Issuance of common stock warrants in connection with private placement | $ 10,624,759 | |
Non-cash amounts of lease liabilities arising from obtaining right-of use-assets | $ 333,123 |
Condensed Statements of Cash _2
Condensed Statements of Cash Flows (Parenthetical) $ in Thousands | 12 Months Ended |
Dec. 31, 2021 USD ($) | |
Condensed Statements of Cash Flows | |
Transaction costs | $ 202,499 |
NATURE OF BUSINESS AND BASIS OF
NATURE OF BUSINESS AND BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2022 | |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | 1. iSpecimen Inc. (“iSpecimen” or the “Company”) was incorporated in 2009 under the laws of the state of Delaware. The Company has developed and launched a proprietary online marketplace platform that connects medical researchers who need access to subjects, samples, and data, with hospitals, laboratories, and other organizations who have access to them. iSpecimen is a technology-driven company founded to address a critical challenge: how to connect life science researchers who need human biofluids, tissues, and living cells (“biospecimens”) for their research, with biospecimens available (but not easily accessible) in healthcare provider organizations worldwide. The iSpecimen Marketplace platform was designed to solve this problem and transform the biospecimen procurement process to accelerate medical discovery. The Company is headquartered in Lexington, Massachusetts and its principal market is North America. The Company operates as one operating and reporting Basis of Presentation The Company’s financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). On March 30, 2021, the Company effected a 1-for-5.545 Initial Public Offering On June 21, 2021, the Company consummated its initial public offering ("IPO") in which the Company issued and sold 2,250,000 shares of its common stock at a public offering price of $8.00 per share, for aggregate gross proceeds of $18 million. The net proceeds from the IPO were $15.7 million after deducting underwriting discounts of $1.7 million and other offering costs of $0.6 million. The shares of common stock commenced trading on the Nasdaq Stock Market LLC on June 17, 2021 under the ticker symbol “ISPC.” Upon closing of the IPO, all of the then-outstanding shares of redeemable convertible preferred stock automatically converted into common stock at a ratio of 1:1, resulting in the issuance of 1,291,012 shares of common stock. Subsequent to the closing of the IPO, there were no shares of convertible preferred stock outstanding. Upon closing of the IPO, the Company converted all $5.5 million of its outstanding principal and all unpaid and accrued interest of approximately $1.3 million of the then outstanding Convertible Notes into 1,206,614 shares of common stock at a conversion price of $5.60 per share. The Company incurred an approximately $0.3 million loss on conversion of the Convertible Notes during the year ended December 31, 2021. As of December 31, 2021, there were no Convertible Notes or Bridge Notes outstanding. Additionally, upon closing of the IPO, the Company converted $4 million of its outstanding principal and accrued and unpaid interest of approximately $0.7 million of the then outstanding Bridge Notes, as amended, into 842,429 shares of common stock at a conversion price of $5.60 per share. During the year ended December 31, 2021, the Company paid off the remaining principal balance of $3.0 million on the Bridge Notes and accrued interest of $64,110. As of December 31, 2021, there were no Bridge Notes outstanding. On July 1, 2021, the Company sold an additional 337,500 shares of its common stock, pursuant to the underwriters' full exercise of the overallotment option, at a public offering price of $8.00 per share, for aggregate gross proceeds of $2.7 million. In aggregate, the Company received approximately $18.2 million in net cash proceeds from the IPO after deducting for all underwriting discounts of $1.9 million and other offering costs of $0.6 million. Private Placement On December 1, 2021, the Company closed on a private placement (“PIPE”) for the sale of 1,749,999 shares of common stock of iSpecimen together with warrants to purchase 1,312,500 shares of common stock ("Warrants"), which resulted in gross proceeds to iSpecimen of approximately $21 million , before deducting offering costs of approximately $1,435,000 . Each share of common stock and accompanying three-quarters of one Warrant were sold at a combined offering price of $12.00 . The detachable Warrants have a five and one-half year term and an exercise price of $13.00 per share. Liquidity and Going Concern The Company has recognized recurring losses. At December 31, 2022, the Company had a net working capital of $15,394,634, an accumulated deficit of $48,265,324, cash of $15,308,710 and accounts payable and accrued expenses of $3,990,301. Management believes that the Company's existing cash, which include the net proceeds from the IPO, the Term Loan, and the PIPE will allow the Company to continue its operations for at least the next 12 months from the date these financial statements are issued and therefore the conditions raising substantial doubt raised in prior periods has been alleviated. As a result of recurring losses, the continued viability of the Company beyond March 2024 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 response to the COVID-19 pandemic the Company put in place additional health and safety protocols. We continue to monitor and revise these protocols as appropriate to address the evolving nature of the pandemic. While we have seen a return to business as usual in our industry, the Company continues to monitor the future impact of the COVID-19 pandemic on the Company, which includes factors such as length of time of the pandemic; the responses of federal, state and local government; the impact of future variants that may emerge; vaccination rates among the population; the efficacy of the COVID-19 vaccines; the longer-term impact of the pandemic on the economy and consumer behavior; and the effect on the Company’s employees, vendors and suppliers. We will continue to monitor and evaluate the ongoing COVID-19 pandemic and will work to respond appropriately to the impact of COVID-19 on our business, as well as customers’ and suppliers’ businesses. Impact of the Russian-Ukrainian War The Company’s business was negatively impacted during the first half of 2022 by the ongoing war between Russia and Ukraine. At the start of the war, 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 was shut down at the start of the war. Ukrainian suppliers were disabled due to war conditions and evacuations and some of the Company’s 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. Alternate suppliers do not have the same favorable unit economics or specimen collection rates As of December 31, 2022, the Company’s supply sites in Russia that had not been under sanctions are now accessible and the Company’s supply sites in Ukraine are mostly reopened. However, due to the uncertainty caused by the ongoing war, Ukrainian and Russian suppliers may again become inaccessible to the Company. Therefore, as long as the uncertainty continues, the Company’s policy is to ensure at a purchase order level, that an order is not solely sourced from the two countries. The short and long-term implications of the war are difficult to predict at this time. The imposition of more 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 the war on the Company’s business and the companies from which the Company obtains supplies and distributes specimens. Inflation and Recession The Company’s financial performance is subject to global economic conditions and their impact on levels of spending by its customer research organizations, particularly discretionary spending for procurement of specimens used for research. Economic recessions may have adverse consequences across industries, including the health and bio-specimen industries, which may adversely affect the Company’s business and financial condition. As a result of the ongoing cost-of-living crisis, tightening financial conditions, Russia’s invasion of Ukraine, and the lingering COVID-19 pandemic, there is substantial uncertainty about the strength of the global economy which have increased uncertainty about the pace of potential recovery. In addition, changes in general market, economic and political conditions in domestic and foreign economies or financial markets, including fluctuation in stock markets resulting from, among other things, trends in the economy, recession and inflation, as are being currently experienced, may result in a reduction of researchers’ demand for specimens due to the research organization’s inability to obtain funding through grants. The Company believes that its business will continue to be resilient through a continued economic downturn or recession, or slowing or stalled recovery therefrom, and that the Company has the liquidity to address its financial obligations and alleviate possible adverse effects on its business, financial condition, results of operations or prospects. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company utilizes certain estimates in the determination of the fair value of its internally developed software, deferred tax valuation allowances, share-based compensation, and accrued expenses amongst others. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results could differ from such estimates. Off-Balance Sheet Risk and Concentrations of Credit Risk The Company has no significant off-balance sheet risks, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Cash accounts are maintained at financial institutions that potentially subject the Company to concentrations of credit risk. At December 31, 2022 and 2021, substantially all of the Company’s cash was deposited in accounts at one financial institution. The Company maintains its cash deposits, which at times may exceed the federally insured limits, with a reputable financial institution and, accordingly, the Company believes such funds are subject to minimal credit risk. Concentration of credit risk with respect to accounts receivable is typically related to customers who account for a significant portion of revenue. During 2022, two customers represented 14% and 12% of the Company’s revenues. As of December 31, 2022, one customer represented approximately 15% of accounts receivable and two customers represented approximately 13% and 11% of accounts receivable-unbilled. During 2021, no customers represented greater than 10% of the Company’s revenues. As of December 31, 2021, one customer represented approximately 11% of accounts receivable and two customers represented approximately 23% and 17% of accounts receivable-unbilled. During the years ended December 31, 2022 and 2021, revenue attributable to customers located in foreign countries was approximately 11% and 7% of revenue, respectively. As of December 31, 2022 and 2021, accounts receivable attributable to customers located in foreign countries was approximately 10% and 6% of accounts receivable, respectively. As of December 31, 2022 and 2021, accounts receivable-unbilled attributable to customers located in foreign countries was approximately 18% and 11% of accounts receivable-unbilled, respectively. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: ➢ Level 1 — 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 our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. For certain financial instruments, including cash, accounts receivable, and accounts payable, the carrying amounts approximate their fair values as of December 31, 2022 and 2021 because of their short-term nature. Recently Adopted Accounting Standards From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company. 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. ASU 2019-12 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. The a doption of the new standard resulted in the balance sheet recognition of additional assets of approximately $333,000 and lease liabilities of approximately $333,000 . In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses Measurement of Credit Losses on Financial Instruments Accounting Standards Issued, Not Yet Adopted In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity Revenue Recognition and Accounts Receivable The Company recognizes revenue using the five-step approach as follows: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) 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’s 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’s 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 which is 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 it 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 bears 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 the Company. 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 years ended December 31: Year ended December 31, 2022 2021 Specimens – contracts with customers $ 9,956,582 $ 10,944,255 Shipping and other 445,721 191,048 Revenue $ 10,402,303 $ 11,135,303 The Company carries its accounts receivable at the invoiced amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable to determine if an allowance for doubtful accounts is necessary, based on economic conditions and each customer’s payment history. Receivables are written off when deemed uncollectible, with any future recoveries recorded as income when received. As of December 31, 2022, and 2021, the Company had an allowance for doubtful accounts of $230,999 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. Property and Equipment, net Property and equipment are stated at cost, net of accumulated depreciation and amortization. When an item is sold or retired, the costs and related accumulated depreciation or amortization are eliminated, and the resulting gain or loss, if any, is credited or charged to income in the statement of operations. The Company provides for depreciation and amortization using the straight-line method over the estimated useful lives of the respective assets. A summary of estimated useful lives is as follows: Asset category Estimated Useful Life Website 3 years Computer equipment and purchased software 5 years Equipment 5 years Furniture and fixtures 5 years Leasehold improvements Shorter of useful life of asset or lease term Major improvements are capitalized while replacement, maintenance and repairs which do not improve or extend the lives of the respective assets are expensed as incurred. Internally Developed Software, net The Company capitalizes certain internal and external costs incurred during the application development stage of internal-use software projects until the software is ready for its intended use. Amortization of the asset commences when the software is complete and placed into service and is recorded in operating expenses. The Company amortizes completed internal-use software over its estimated useful life of five years on a straight-line basis. Costs incurred during the planning, training and post-implementation stages of the software development life cycle are classified as technology and are expensed to operations as incurred. Impairment of Long-Lived Assets Management reviews long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable. An impairment loss is recognized when expected cash flows are less than the asset’s carrying value. Long-lived assets consist of property and equipment and internal-use software. No impairment charges were recorded for the years ended December 31, 2022 and 2021. Debt Issuance Costs Debt issuance costs are recorded net against the related debt and amortized to interest expense over the life of the related debt. During the years ended December 31, 2022 and 2021, amortized debt issuance costs of $77,384 and $875,293 respectively, were recorded as a component of interest expense. Cost of Revenue Cost of revenue primarily consists of the purchase price to acquire specimens from hospitals and laboratories; inbound and outbound shipping costs; supply costs related to samples; payment processing and related transaction costs; and costs paid to the supply sites to support sample collections. Shipping costs upon receipt of products from suppliers are recognized in cost of revenue. For the year ended December 31, 2022, the Company acquired approximately 12% of specimens from one vendor. For the year ended December 31, 2021, the Company acquired approximately 11%, 11%, 10% and 10% of specimens from four vendors. Technology Technology costs include payroll and related expenses for employees involved in the development and implementation of iSpecimen’s technology; software license and system maintenance fees; outsourced data center costs; data management costs; depreciation and amortization; and other expenses necessary to support technology initiatives. Collectively, these costs reflect the investments the Company makes in order to offer a wide variety of products and services to customers. Technology and data costs are generally expensed as incurred. A portion of technology costs are related to research and development. Costs incurred for research and development are expensed as incurred, except for software development costs that are eligible for capitalization. Research and development costs primarily include salaries and related expenses, in addition to the cost of external service providers. For the years ended December 31, 2022, and 2021, research and development costs totaled $1,473,520 and $879,243, respectively. Sales and Marketing Sales and marketing costs primarily consist of payroll and related expenses for personnel engaged in marketing and selling activities, including salaries and sales commissions; travel expenses; public relations and social media costs; ispecimen.com website development and maintenance costs; search engine optimization fees; advertising costs; direct marketing costs; trade shows and events fees; marketing and customer relationship management software; and other marketing-related costs. Advertising expenses consist primarily of marketing, public relations, and promotional materials. Advertising costs are expensed as incurred and totaled $188,026 and $229,223 for the years ended December 31, 2022 and 2021, respectively. Supply Development The Company has agreements with supply partners that allow the Company to procure specimens from them and distribute these samples to customers. Supply development costs primarily include payroll and related expenses for personnel engaged in the development and management of this supply network; related travel expenses; regulatory compliance costs to support the network; and other supply development and management costs. Fulfillment Fulfillment costs primarily consist of those costs incurred in operating and staffing operations and customer service teams, including costs attributable to assess the feasibility of specimen requests; creating and managing orders; picking non-capitalizable, packaging, and preparing customer orders for shipment; responding to inquiries from customers; and laboratory equipment and supplies. General and Administrative General and administrative expenses primarily consist of costs for corporate functions, including payroll and related expenses for human resources, legal, finance, and executive teams; associated software licenses; facilities and equipment expenses, such as depreciation and amortization expense and rent, outside legal expenses, insurance costs, and other general and administrative costs. Share-Based Compensation The Company records share-based compensation for options granted to employees, non-employees, and to members of the board of directors for their services on the board of directors based on the grant date fair value of awards issued, and the expense is recorded on a straight-line basis over the requisite service period. Forfeitures are recognized when they occur. The Company uses the Black-Scholes-Merton option pricing model to determine the fair value of stock options. The use of the Black-Scholes-Merton option-pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock. The Company has concluded that its historical share option exercise experience does not provide a reasonable basis upon which to estimate expected term. Therefore, the expected term was determined according to the simplified method, which is the average of the vesting tranche dates and the contractual term. Due to the lack of company specific historical and implied volatility data, the estimate of expected volatility is primarily based on the historical volatility of a group of similar companies that are publicly traded. For these analyses, companies with comparable characteristics are selected, including enterprise value and position within the industry, and with historical share price information sufficient to meet the expected life of the share-based awards. The Company computes the historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of its share-based awards. The risk-free interest rate is determined by reference to U.S. Treasury zero-coupon issues with remaining maturities similar to the expected term of the options. The Company has not paid, and does not anticipate paying, cash dividends on shares of its common stock. 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 IPO, or sale, given prevailing market conditions; the lack of marketability of the Company’s common stock; the market performance of comparable publicly traded companies; and U.S. and global economic and capital market conditions. Restricted Stock Units (RSUs) The Company recognizes share-based compensation expense from restricted stock units (RSUs) ratably over the specified vesting period. The fair value of RSUs is determined to be the closing share price of the Company's common stock on the grant date. Income Taxes The Company provides for income taxes using the asset and liability method. The Company provides deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the Company’s financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. A valuation allowance is provided to reduce the deferred tax assets to the amount that will more likely than not be realized. The Company does not have any material uncertain tax positions for which reserves would be required. The Company will recognize interest and penalties related to uncertain tax positions, if any, in income tax expense. Common Stock Warrants The Company accounts for common stock warrants as either equity instruments or liabilities, depending on the specific terms of the warrant agreement. The warrants shall be classified as a liability if 1) the underlying shares are classified as liabilities or 2) the entity can be required under any circumstances to settle the warrant by transferring cash or other assets. The measurement of equity-classified nonemployee share-based payments is generally fixed on the grant date and are considered compensatory. For additional discussion on warrants, see Note 9. Net Loss Per Share Basic net loss per share is calculated by dividing net loss applicable to common stockholders by the weighted-average number of shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting the weighted-average number of shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. Therefore, basic and diluted net loss per share applicable to common stockholders were the same for all periods presented. The table below provides total shares outstanding, as of December 31: 2022 2021 Shares issuable upon vesting of RSUs 267,505 282,417 Shares issuable upon exercise of stock options 297,559 255,147 Shares issuable upon exercise of PIPE Warrant to purchase common stock 1,312,500 1,312,500 Shares issuable upon exercise of Lender Warrant to purchase common stock 12,500 12,500 Shares issuable upon exercise of Underwriter Warrants to purchase common stock 90,000 90,000 |
FACTORING OF ACCOUNTS RECEIVABL
FACTORING OF ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2022 | |
FACTORING OF ACCOUNTS RECEIVABLE | |
FACTORING OF ACCOUNTS RECEIVABLE | 3. On January 1, 2021, the Company entered into a factoring agreement (the “Factoring Agreement”) with Versant Funding LLC (“Versant”), in which the Company agreed to sell a minimum of $1.2 million of its accounts receivable without recourse, and which the Company granted Versant a security interest in substantially all of the Company's assets, in accordance with the terms of the Factoring Agreement. On June 30, 2021, the Company terminated the Factoring Agreement paying Versant $139,374 in settlement of its balance payable to Versant pursuant to the Factoring Agreement. Upon termination of the Factoring Agreement, all future payments of accounts receivable shall be made directly to the Company. In July 2021, the Company received notice from Versant regarding an additional amount owed in relation to past factored receivables, resulting in an additional $214,497 payment to Versant. During the year ended December 31, 2021, net receivables sold under the Factoring Agreement was approximately $3.4 million. Without recourse indicates that the Company assigns and transfers its rights, title, and interest in and to the accounts receivable to Versant, meaning that the Company will not be liable to repay all or any portion of the advance amount if any portion of the accounts receivable is not paid by our customer(s). Information on accounts receivable identified for factoring are provided and verified by Versant prior to being accepted for factoring. Pursuant to the Factoring Agreement, the factoring fees range from 2.5% to 15% of the purchase price of the accounts receivable based on the age of the accounts receivable when collected. The Company is also charged for certain reimbursable administrative fees incurred on its behalf for the management of the program. The sales of accounts receivable in accordance with the factoring arrangements were recognized as a reduction of accounts receivable, net in the balance sheet as of December 31, 2021. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | 4. Property and equipment, net consisted of the following at December 31: 2022 2021 Website $ 285,377 $ 105,380 Computer equipment and purchased software 84,589 84,588 Equipment 35,449 35,449 Furniture and fixtures 87,184 87,184 Leasehold improvements 60,441 24,935 Total property and equipment 553,040 337,536 Accumulated depreciation (327,188) (304,755) Total property and equipment, net $ 225,852 $ 32,781 Depreciation expense for property and equipment was $22,433 and $45,358 for the years ended December 31, 2022 and 2021, respectively. |
INTERNALLY DEVELOPED SOFTWARE,
INTERNALLY DEVELOPED SOFTWARE, NET | 12 Months Ended |
Dec. 31, 2022 | |
INTERNALLY DEVELOPED SOFTWARE, NET | |
INTERNALLY DEVELOPED SOFTWARE, NET | 5. During 2022 and 2021, the Company capitalized $2,975,686 and $1,035,367, respectively, of internally developed software costs in connection with the development and continued enhancement of the technology platform and web interfaces. Capitalized costs primarily consist of payroll and payroll-related costs for the Company’s employees. The Company recognized $1,182,766 and $958,639 of amortization expense associated with capitalized internally developed software costs during the years ended December 31, 2022 and 2021, respectively. Accumulated amortization associated with capitalized internally developed software costs as of December 31, 2022 and 2021 was $5,016,670 and $3,833,904, respectively. |
SEVERANCE
SEVERANCE | 12 Months Ended |
Dec. 31, 2022 | |
SEVERANCE | |
SEVERANCE | 6. SEVERANCE Dr. Christopher Ianelli On September 19, 2022, the Company received a notice of departure from Dr. Christopher Ianelli to vacate his position of Chief Executive Officer and President of the Company, effective as of October 24, 2022, as a result of the non-renewal of his Executive Employment Agreement dated June 21, 2021. Dr. Ianelli continues to serve on the Company’s board of directors until the 2024 Annual Meeting of Stockholders, or until the election and qualification of Dr. Ianelli’s successor in office, subject to his earlier death, resignation, or removal. The Company entered into a Separation Agreement with Dr. Ianelli, dated October 24, 2022 (the “Ianelli Separation Agreement”). Pursuant to the Ianelli Separation Agreement the Company shall pay severance equal to 12 months of base salary in effect as of the Separation Date in the amount of $350,000. The severance payments shall be paid in equal installments commencing on the Company’s first regular payroll date after the Effective Date of the separation agreement and ending on the 12-month anniversary of the Effective Date. The Company recognized a severance expense and corresponding liability in the amount of $376,400 for Dr. Ianelli’s severance payment plus applicable and COBRA benefits in the year ended December 31, 2022. The severance expense is recorded within general and administrative The Company considered the salary and benefits paid to Dr. Ianelli through his departure date of October 24, 2022 as normal payroll expenses incurred in that current period. The Company recorded a share-based compensation expense of approximately $40,000 on October 24, 2022 for the partial acceleration of RSUs that were vested on October 24, 2022, in accordance with the original terms of Dr. Ianelli’s Restricted Stock Unit agreement. Jill Mullan On September 20, 2022, the Company received a notice of departure from Jill Mullan to vacate the position of Chief Operating Officer of the Company, effective as of October 24, 2022. At the time the notice of departure was received from Ms. Mullan, she had received an executive employment agreement for renewal of her employment with the Company. Ms. Mullan continues to serve on the Company’s board of directors until the 2023 Annual Meeting of Stockholders, or until the election and qualification of Ms. Mullan’s successor in office, subject to her earlier death, resignation, or removal. The Company and Ms. Mullan executed a separation agreement on October 28, 2022 with an effective date of October 24, 2022 (the “Mullan Separation Agreement”). The Company recognized $325,000 in severance expense for Ms. Mullan on November 4, 2022, the date on which her separation agreement revocation period expired. The severance expense is recorded within general and administrative expense on the statement of operations and the corresponding liability is recorded in accrued liabilities on the balance sheet. The Company considered the salary and benefits paid to Ms. Mullan through her departure date of October 24, 2022 as normal payroll expenses incurred in that current period. The Company recorded an expense of approximately $40,000 on October 24, 2022 for the partial acceleration of RSUs that were vested on October 24, 2022. |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2022 | |
DEBT | |
DEBT | 7. Note Payable In May 2020, the Company applied for and received $783,008 in unsecured loan funding from the Paycheck Protection Program (the “PPP Loan”), established pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and administered by the U.S. Small Business Administration (“SBA”). Under the terms of the promissory note (the “PPP Note”) and the PPP Loan, interest accrues on the outstanding principal at the rate of 1% per annum. Interest expense under the PPP Loan amounted to $279 the years ended December 31, 2021. The Company received full forgiveness of all outstanding principal of, and accrued and unpaid interest on the PPP Loan as of January 13, 2021. The forgiveness of the PPP Loan qualified for debt extinguishment and as a result, the outstanding principal and accrued and unpaid interest on the PPP Loan was recorded as a net gain on extinguishment of the PPP Loan totaling $788,156 for the year ended December 31, 2021 and the debt was eliminated from the Company's balance sheet. Related Party Convertible Notes Payable During 2017 and 2018, the Company issued Related Party Convertible Promissory Notes (the “Convertible Notes”) to related parties totaling $5,500,000. The Convertible Notes bear interest at a rate of six percent (6%) per annum, without compounding. The Convertible Notes are convertible into shares of the Company’s preferred stock, upon the following: (i) a new permanent equity financing yielding gross proceeds of in excess of $10,000,000, including conversion of the outstanding principal of the Convertible Notes (a “Qualified Equity Financing”), (ii) achievement of positive free flow from operations on a quarterly basis for the two consecutive quarters ending 90 days prior to the maturity date, (iii) an acquisition, or (iv) upon election of the holders of the majority of the aggregate principal outstanding (the “Majority Lenders”) The maturity date on the Convertible Notes is the earliest occurrence of (i) the closing of a Qualified Equity Financing, (ii) the date upon which prepayment by the Company occurs with the consent of the Majority Lenders, (iii) the date upon which the Convertible Notes are otherwise converted into equity securities, or (iv) March 31, 2020. In March 2020, the Majority Lenders elected to extend the maturity date through September 30, 2020. On October 1, 2020, the maturity date was further extended to March 31, 2021. On March 8, 2021, the maturity date was further extended to June 30, 2021. The terms related to the Qualified Equity Financing conversion and acquisition conversion features (collectively, the “Embedded Conversion Features”) were determined by the Company not to have been clearly and closely related to the Convertible Note host instrument and meet the definition of a derivative. Therefore, the Embedded Conversion Features were bifurcated from the Convertible Notes and separately measured at fair value. The derivative liability was subsequently marked-to-market each reporting period with changes in fair value recognized in the statement of operations. Interest expense on the Convertible Notes totaled $156,411 for the year ended December 31, 2021 and debt issuance costs on the Convertible Notes was fully amortized as of December 31, 2021. During the year ended December 31, 2021, amortization of debt discounts amounted to $1,088 and as of December 31, 2021, the debt discount was fully amortized. Conversion of Convertible Notes Payable In connection with the consummation of the IPO, the Company converted all $5,491,663 of its outstanding principal and all unpaid and accrued interest of $1,257,066 of the Convertible Notes into 1,206,614 shares of common stock on June 21, 2021 at a conversion price of $5.60 per share. As of December 31, 2021, there were no Convertible Notes outstanding. The Company incurred an approximate $260,000 loss on conversion of the Convertible Notes during the year ended December 31, 2021. Bridge Financing From 2018 through 2021, the Company issued Secured Promissory Notes (the “Bridge Notes”) to new investors and existing stockholders in an amount of $7,000,000 to finance the Company’s interim working capital needs. Of this amount, $1,905,000 was issued to related parties (“Related Party Bridge Notes”). The Bridge Notes, including the Related Party Bridge Notes, had identical terms. The Bridge Notes beared interest at a rate of twenty-four percent (24%) per annum, without compounding. The Bridge Notes and all accrued interest were due and payable on the earliest occurrence of (i) a Qualified Equity Financing, (ii) the sale of the Company, (iii) prepayment by the Company, or (iv) December 31, 2019, which was subsequently extended to June 30, 2020. In June 2020, the Bridge Notes were amended to further extend the maturity date through September 30, 2020. On October 1, 2020, the Company amended the Bridge Notes to extend the maturity date to March 31, 2021 and to increase the interest rate from 24% to 30% after October 1, 2020. On March 15, 2021, the Company entered into an Amendment to the Bridge Notes and the maturity date was further extended to April 30, 2021. The Bridge Notes were repayable upon demand of the Majority Lenders of the Bridge Notes at any time on or after the maturity date. The Bridge Notes were senior in right of payment and priority to any Convertible Debt and subordinated to any Senior Debt. The investors that held the Bridge Notes were granted a security interest in substantially all assets of the Company (“Collateral”). On March 15, 2021, the Company entered into a Fifth Amendment (the "Amendment") to the Note Subscription Agreements and Secured Promissory Notes. The Bridge Notes are hereafter referred to as the "Amended Bridge Notes". The terms of the Amendment were as follows: Maturity Date The Amended Bridge Notes shall beared interest, on a non-compounding basis, at a rate of thirty percent (30%) per annum from and after October 1, 2020, due on maturity on the earlier of (i) the closing of an initial public offering yielding gross proceeds in excess of $18,000,000, exclusive of any existing Convertible Notes (a “Qualified IPO”), (ii) the sale of the Company, (iii) prepayment by the Company, or (iv) April 30, 2021. The Majority Lenders may, with the approval of the Company, elect to extend the maturity date one or more times, at their discretion. On April 28, 2021, the maturity date was further extended to May 31, 2021. On May 12, 2021, the maturity date was further extended to June 30, 2021. Elective Conversion Upon a Qualified IPO The holders of the Amended Bridge Notes may voluntarily elect, at any time prior the maturity date and up to March 19, 2021, to convert 50% or more of the outstanding unpaid principal plus any amount of outstanding unpaid interest at the time of the Qualified IPO, into the same class or series of securities of the Company to be offered and issued in the Qualified IPO (the “IPO Stock”). The conversion rate shall be equal to the issue price of the IPO Stock less a thirty percent (30%) discount (“the Elective Conversion Stock”). The elective conversion amount shall be deducted from the amount of principal and interest outstanding in order to arrive at an adjusted principal and interest repayment amount. The sum of the amounts being converted on the Amended Bridge Notes shall first convert the outstanding principal and then the outstanding interest second. Repayment of Adjusted Outstanding Interest and Principal Upon a Qualified IPO If a Qualified IPO is consummated prior to the maturity date, and the holders have not voluntarily converted, the Company shall make a cash payment to the holders of the Amended Bridge Notes equal to the greater of either the total adjusted outstanding interest or one and one-half times (1.50X) the Third-Party Loan Proceeds (“Note Repayment Proceeds”). Third-Party Loan Proceeds were defined as the net cash proceeds received by the Company from an institutional lender, commercial bank, or other similar lender consummated on or about the time of the Qualified IPO (or contingent upon the closing of the Qualified IPO). Repayments shall first be applied to the adjusted outstanding interest due in cash to the holders of the Amended Bridge Notes. The residual value shall be next applied to the adjusted outstanding principal (the “Principal Repayment Proceeds”). The remaining cash repayment shall be calculated by multiplying the Principal Repayment Proceeds by a fraction, the numerator of which is equal to the adjusted principal repayment amount of such note holder, and the denominator of which is equal to the total adjusted outstanding principal to all note holders. In no event shall any cash payment be made to any note holder exceed the sum of the adjusted interest repayment amount plus the adjusted principal repayment amount for such note holder. Automatic Conversion or Debt Extension Any remaining unpaid principal, calculated by subtracting the Principal Repayment Proceeds from the total adjusted outstanding principal (the “Automatic Principal Conversion Amount”), shall then automatically convert into IPO Stock at a rate equal to the issue price of the IPO Stock less a ten percent (10%) discount (that is, at a rate of ninety percent (90%) of the issue price of the IPO Stock; such discounted IPO Stock; the “Automatic Conversion Stock”). If the Company is unable to repay at least twenty-five percent (25%) of the total adjusted outstanding principal of the Amended Bridge Notes (“the “Principal Repayment Floor”), then no Automatic Conversion Stock shall be issued and the total adjusted outstanding principal on the Amended Bridge Notes shall remain on the books of the Company under their existing Bridge Notes which shall automatically be amended to (i) have their interest rates adjusted to a rate of fifteen percent (15%) per annum and (ii) have their maturity date set to a date that is eighteen (18) months from the date of the Qualified IPO. Amended Bridge Notes Embedded Conversion Features The Company has determined that the terms related to the elective and automatic conversion features (collectively, the “Amended Bridge Notes Embedded Conversion Features”) were determined to not be clearly and closely related to the Amended Bridge Notes host instrument and meet the definition of a derivative. Therefore, the Amended Bridge Notes Embedded Conversion Features were bifurcated from the Amended Bridge Notes and separately measured at fair value. The derivative liability was subsequently marked-to-market each reporting period with changes in fair value recognized in the statement of operations. The Amended Bridge Notes Embedded Conversion Features were initially recorded as a component of the loss on debt extinguishment with an offset to the derivative liability at fair value. No related discount was recorded on the Amended Bridge Notes, and the derivative liability was not amortized using the effective interest rate over the term of the Amended Bridge Notes. Debt Extinguishment The Company evaluated the terms of the March 15, 2021 Amendment. This evaluation included analyzing whether there were significant and consequential changes to the economic substance of the Bridge Notes. If the change is deemed insignificant then the change is considered a debt modification, whereas if the change is substantial the change is reflected as a debt extinguishment. A modification or an exchange that adds or eliminates a substantive conversion option as of the conversion date would always be considered substantial and require extinguishment accounting. The addition of the elective and mandatory conversion options, as described above, would be considered substantive based on the likelihood of the option being exercised in the near future in connection with a Qualified IPO event. Accordingly, the Company accounted for the amendment of the Notes as an extinguishment of the original Bridge Notes. As a result, the Company recorded a loss on extinguishment of $2,740,425 in the year ended December 31, 2021. The extinguishment loss also included a write-off of unamortized debt issuance costs of approximately $5,700. Additionally, the Company recorded a discount on the Amended Bridge Notes of approximately $869,600 in the year ended December 31, 2021 , which was amortized through interest expense over the life of the Amended Bridge Notes (i.e., March 15, 2021 through April 30, 2021). Interest expense on the Bridge Notes, including $320,469 of related party interest expense, totaled $1,014,657 in the year ended December 31, 2021. The debt issuance costs on the Amended Bridge Notes was fully amortized as of December 31, 2021. Amortization of the debt discount on the Amended Bridge Notes totaled approximately $869,600 for the year ended December 31, 2021. Conversion of Bridge Notes Upon the completion of the IPO, the Company converted $4,000,000 of its outstanding principal and accrued interest of $717,646 of the Bridge Notes, as amended, into 842,429 shares of common stock at a conversion price of $5.60 per share. The Company recognized a gain on the conversion of $9,746. The conversion of the Amended Bridge Notes and Convertible Notes upon the consummation of the IPO resulted in an increase in total stockholder's equity of $16,392,344 in the year ended December 31, 2021. The components of this non-cash transaction are as follows for the year ended December 31, 2021: Write off of derivative liability relating to the Convertible Notes $ 2,644,000 Extinguishment of Convertible Notes principal 5,486,199 Accrued and unpaid interest on the Convertible Notes 1,257,066 Accumulated amortization on debt issuance costs 33,035 Loss on extinguishment of Convertible Notes 260,185 Write off of debt issuance costs (27,573) Write off of derivative liability relating to the Bridge Notes 2,031,300 Extinguishment of Bridge Notes principal 4,000,000 Accrued and unpaid interest on the Bridge Notes 717,646 Gain on extinguishment of Bridge Notes (9,514) Total conversion of Convertible Notes and Bridge Notes into common stock $ 16,392,344 During the third quarter of 2021, the Company paid off remaining principal of $3,000,000 and accrued interest of $64,110. As of December 31, 2021, there were no Bridge Notes outstanding. Term Loan On August 13, 2021 (the "Closing Date"), the Company entered into a 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 has not yet borrowed as of December 31, 2022. The additional advance of $1,500,000 is available to the Company during the "Draw Period," which is defined in the Term Loan as the "period commencing on the Closing Date and ending the earlier to occur of (a) February 13, 2023, and (b) an Event of Default." The Term Loan bears interest at a rate equal to three-quarters of one percent (0.75%) above the Prime Rate. 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 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”). On November 3, 2022, the Company paid off the outstanding principal balance of $3,500,000 and accrued interest of approximately $16,000 on the Term Loan. As of the pay-off date, the interest rate on the Term Loan is 7.00% which is equal to 0.75% above the Prime Rate of 6.25%. Interest expense on the Term Loan totaled $154,509 and $47,444 for the years ended December 31, 2022 and 2021, respectively. 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 paid of $23,066 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 $77,384 and $5,175 for the years ended December 31, 2022 and 2021, respectively. Unamortized debt issuance costs on the Term Loan totaled $0 and $77,384 at December 31, 2022 and 2021, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 8. 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 year ended December 31, 2022, and the Company is not the lessor in any lease arrangement, and there were no related-party lease agreements. Lease Costs The table below presents certain information related to the lease costs for the Company’s operating lease for year ended December 31, 2022: Operating lease expense $ 164,314 Short-term lease expense 12,022 Total lease cost $ 176,336 Lease Position as of December 31, 2022 Right of use lease assets and lease liabilities for our operating lease were recorded in the balance sheet as follows: Assets Operating lease right-of-use assets $ 184,692 Total lease assets $ 184,692 Liabilities Current liabilities: Operating lease liability – current portion $ 158,451 Noncurrent liabilities: Operating lease liability – net of current portion 27,396 Total lease liability $ 185,847 Lease Terms and Discount Rate The table below presents certain information related to the weighted average remaining lease term and the weighted average discount rate for the Company’s operating leases as of December 31, 2022: Weighted average remaining lease term (in years) – operating leases 1.17 Weighted average discount rate – operating leases 5.96% Undiscounted Cash Flows Future lease payments included in the measurement of lease liabilities on the balance sheet are as follows: 2023 $ 165,254 2024 27,601 Total future minimum lease payments 192,855 Less effect of discounting (7,008) Present value of future minimum lease payments $ 185,847 Rent expense for the years ended December 31, 2022 and 2021 amounted to $176,336 and $167,167, respectively. Cash Flows Supplemental cash flow information related to operating lease for the year ended December 31, 2022 was as follows: Non-cash operating lease expense (operating cash flow) $ 148,431 Change in operating lease liabilities (operating cash flow) $ (147,276) 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 December 31, 2022, there was no material litigation against the Company. |
STOCKHOLDERS' EQUITY (DEFICIT)
STOCKHOLDERS' EQUITY (DEFICIT) | 12 Months Ended |
Dec. 31, 2022 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | 9. Pursuant to the Company's fourth amended and restated certificate of incorporation dated June 17, 2021, the Company's authorized capital is 250,000,000 shares, of which (1) 200,000,000 shares are common stock, par value $0.0001 per share and (2) 50,000,000 are preferred stock, par value $0.0001 per share, which may, at the sole discretion of the Company's board of directors be issued in one or more series. Redeemable Convertible Preferred Stock Upon the consummation of the IPO, 1,291,012 shares of outstanding preferred stock automatically converted into 1,291,012 shares of common stock. As of December 31, 2021, there were no shares of preferred stock outstanding. Common Stock During the year ended December 31, 2021, the Company issued 2,250,000 shares of common stock in connection with the IPO. Additionally, during the year ended December 31, 2021, the Company issued 1,206,614 shares of common stock in connection with the conversion of all the Convertible Notes and accrued interest and 842,429 shares of common stock in connection with the conversion of $4.7 million of the outstanding principal and accrued interest on the Bridge Notes. On July 1, 2021, the Company issued and sold 337,500 additional shares of common stock, pursuant to the underwriters' exercise of its overallotment option, at a public offering price of $8.00 per share, for aggregate gross proceeds of $2.7 million. The net proceeds from the overallotment were $2.5 million after deducting underwriting discounts of $0.2 million. Inclusive of the underwriters' option to purchase additional shares, the Company received approximately $18.2 million in net proceeds from the IPO, after deducting underwriting discounts of $1.9 million and other offering costs of $0.6 million. On December 1, 2021, the Company completed a PIPE in which the Company issued and sold 1,749,999 shares of common stock and the warrants to purchase up to an aggregate of 1,312,500 shares of common stock, at a combined purchase price of $12.00 per share for aggregate gross proceeds of approximately $21 million. The net proceeds from the PIPE were $19.6 million after deducting placement agent commissions of $1.26 million and other offering costs . During the year ended December 31, 2021, the Company issued 2,000 shares of common stock in exchange for investor relations services. The shares of common stock had a fair value of $6.25 per share for a total aggregate value of $12,500. During the year ended December 31, 2022, the Company issued 81,043 shares of common stock for cash exercises of options totaling $78,641. During the year ended December 31, 2022, the Company issued 1,000 shares of common stock in exchange for investor relations services. The shares of common stock had a fair value of $6.25 per share for a total aggregate value of $6,250. Warrants During the year ended December 31, 2021, warrant holders exercised 17,889 warrants to purchase common stock, resulting in the issuance of 17,889 shares of common stock for total proceeds of $992. As of December 31, 2021, 5,420 warrants expired, and were not exercised. 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 December 31, 2021. As of December 31, 2022, the Underwriter Warrant had not been exercised, and had a weighted average exercise price of $10 per share and a remaining weighted average time to expiration of 3.46 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 December 31, 2022, the Lender Warrant had not been exercised, and had a weighted average exercise price of $8 per share and a remaining weighted average time to expiration of 8.62 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 December 31, 2022, the PIPE Warrants had not been exercised, and had a weighted average exercise price of $13 per share and a remaining weighted average time to expiration o 4.50 The following assumptions were used to estimate the fair value of warrants granted using the Black-Scholes-Merton option pricing model during the years ended December 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 total warrant activity during the years ended December 31, 2022 and 2021 is as follows: Weighted Average Weighted Remaining Warrants Average Contractual Term Outstanding Exercise Price in Years Balance at December 31, 2020 23,309 $ 0.06 0.75 Granted 1,415,000 12.77 5.34 Exercised (17,889) 0.06 — Cancelled/forfeited (5,420) 0.06 — Balance at December 31, 2021 1,415,000 $ 9.76 5.34 Granted — — — Exercised — — — Cancelled/forfeited — — — Balance at December 31, 2022 1,415,000 $ 12.77 4.47 |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2022 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | 10. SHARE-BASED COMPENSATION 2021 Stock Incentive Plan On June 16, 2021, the Company adopted the iSpecimen Inc. 2021 Stock Incentive Plan (“the 2021 Plan”). The 2021 Plan was adopted to enhance our ability to attract, retain and motivate employees, officers, directors, consultants and advisors by providing such persons with equity ownership opportunities and performance-based incentives. The 2021 Plan authorizes options, restricted stock, restricted stock units and other stock-based awards. The Company's Board of Directors, or any committee to which the Board of Directors delegates such authority, has the sole discretion in administering, interpreting, amending or accelerating the 2021 Plan. Awards may be made under the 2021 Plan for up to 608,000 shares of the Company's common stock, and the 2021 Plan was made effective with the completion of the IPO. During the year ended December 31, 2022, 187,569 and 122,485 equity awards were issued from the Company’s 2013 Stock Incentive Plan and 2021 Stock Incentive Plan, respectively. As of December 31, 2022, there were 87 and 122,015 shares of common stock available for future grants under the Company's 2013 Stock Incentive Plan and 2021 Stock Incentive Plan, respectively. Stock Options The following assumptions were used to estimate the fair value of stock options granted using the Black-Scholes-Merton option pricing model during the years ended December 31: 2022 2021 Assumptions: Risk-free interest rate 0.43% – 0.48% 0.47% – 0.66 Expected term (in years) 1.09 – 3.64 5.81 – 5.89 Expected volatility 59.97% 49.83% –49.98 Expected dividend yield — — A summary of stock option activity under the 2013 Stock Incentive Plan and 2021 Stock Incentive Plans is as follows: Weighted Average Weighted Remaining Options Average Contractual Term Aggregate Outstanding Exercise Price in Years Intrinsic Value Balance at December 31, 2020 251,847 $ 1.00 8.06 $ 89,100 Granted 70,164 5.74 432,520 Exercised (55,694) 1.00 379,276 Cancelled/forfeited (11,170) 1.00 Balance at December 31, 2021 255,147 $ 2.32 7.75 $ 1,550,409 Granted 131,668 1.60 35,725 Exercised (81,043) 1.00 216,626 Cancelled/forfeited (8,213) 1.18 Balance at December 31, 2022 297,559 $ 2.69 6.96 $ 63,237 Options exercisable at December 31, 2022 124,817 $ 2.73 3.50 $ 33,090 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 $216,626 and $379,276 during the year ended December 31, 2022 and 2021, respectively. The weighted-average grant date fair value of stock options issued in the years ended December 31, 2022 and 2021 was $0.76 and $3.94, respectively. The Company recorded stock compensation expense as follows for years ended December 31, 2022 and 2021: Operating expenses: 2022 2021 Technology $ 8,900 $ 4,101 Sales and marketing 3,915 6,562 Supply development 982 1,289 Fulfillment 2,442 3,868 General and administrative 63,265 93,012 Total stock options expense $ 79,504 $ 108,832 As of December 31, 2022 and 2021, a total of $233,004 and $432,520 of unamortized compensation expense is being recognized over the remaining requisite service period of 2.3 years and 2.4 years, respectively. During 2022 and 2021, the Company received proceeds of $78,641 and $58,648 from the exercise of stock options, respectively. Restricted Stock Units A summary of RSUs activity under the 2013 Stock Incentive Plan and 2021 Stock Incentive Plans is as follows: Weighted RSUs Average Grant Outstanding Date Fair Value Unvested Balance at December 31, 2020 — $ — Granted 329,246 6.71 Vested (44,126) 6.33 Forfeited (5,400) 6.34 Unvested Balance at December 31, 2021 279,720 $ 6.78 Granted 178,386 4.15 Vested (110,286) 6.41 Forfeited (80,315) 5.90 Unvested Balance at December 31, 2022 267,505 $ 5.43 Total RSUs expense recognized in 2022 was as follows: 2022 2021 Operating expenses: Technology $ 122,863 $ 18,290 Sales and marketing 89,765 25,686 Supply development 33,677 13,304 Fulfillment 81,508 21,824 General and administrative 271,296 434,128 Total RSU expense $ 599,109 $ 513,232 Employees The Company granted 175,261 and 127,350 RSUs to employees during the years ended December 31, 2022 and 2021, respectively. During the years ended December 31, 2022 and 2021, stock compensation expense was $306,775 and $85,557, respectively. These RSUs are subject to a one-year cliff vesting, with 25% of the RSUs vesting on the first anniversary of issuance. For the remaining vesting period, RSUs vest quarterly over a three-year period. As of December 31, 2022 and 2021, unrecognized stock-based compensation expense related to the unvested employee RSUs was $992,437 and $845,933, respectively. Executives The Company granted 0 and 189,396 RSUs to members of the executive team during the years ended December 31, 2022 and 2021, respectively. During the years ended December 31, 2022 and 2021, stock compensation expense was $249,186 and $394,555, respectively. These RSUs are subject to a four-year vesting period, with 20% of the units vesting immediately upon issuance. For the remaining vesting period, RSUs vest annually over a four-year period. As of December 31, 2022 and 2021, unrecognized stock-based compensation expense related to the unvested RSUs was $27,070 and $806,216, respectively. Directors The Company granted 3,125 and 12,500 restricted stock units to board directors during the years ended December 31, 2022 and 2021, respectively. During the years ended December 31, 2022 and 2021, stock compensation expense was $43,147 and $33,120, respectively. These restricted stock units vest quarterly over a one-year period. As of December 31, 2022, the stock-based compensation expense related to these unvested restricted stock units has been fully recognized. As of December 31, 2022 and 2021, the total unrecognized stock-based compensation expense related to unvested RSUs is expected to be recognized on a straight-line basis over a weighted average period of approximately 2.87 years and 2.6 years, respectively. Performance Stock Units During July 2021, the Company issued 47,349 performance stock units to four members of the executive team pursuant to each executive's employment agreement executed in connection with the IPO. The performance stock units are subject to certain performance conditions 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 year ended December 31, 2022. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
INCOME TAXES | 11. There was no provision for income taxes for the years ended December 31, 2022 and 2021 due to the Company’s operating losses and a full valuation allowance on deferred tax assets. The Company completed research and development studies covering all tax years currently under the applicable statute of limitations. The benefits of the study are reflected in the 2022 and 2021 financial statements as a tax credit receivable in the amount of approximately $141,000. A tax method change was adopted for the year ended December 31, 2022, requiring amortization of research and experimentation expenses under Section 174. Management has reviewed its impact and has determined that any effect of the Company’s financials would be immaterial. Significant components of the Company’s deferred tax assets and liabilities as of December 31 are as follows: 2022 2021 Deferred tax assets: Operating loss carryforwards $ 10,164,000 $ 7,775,000 Research and development tax credit 1,095,000 850,000 Other 542,000 325,000 Total deferred tax assets 11,801,000 8,950,000 Deferred tax liability: Other (50,400) — Intangibles (357,600) (300,000) Total deferred tax liabilities (408,000) (300,000) Net deferred tax assets before valuation allowance 11,393,000 8,650,000 Valuation allowance (11,393,000) (8,650,000) Net deferred tax asset $ — $ — The Company has provided a valuation allowance against the deferred tax assets as it has incurred significant losses since its inception. Management currently believes that it is more likely than not that the deferred tax assets will not be realized in the future. The change in the valuation allowance during 2022 was an increase of $2,743,000. At December 31, 2022, the Company had federal net operating loss (“NOL”) carryforwards of approximately $40,800,000 of which approximately $13,000,000 expire at various periods through 2037 and approximately $27,800,000 can be carried forward indefinitely. The Company also had state NOL carryforwards of approximately $25,000,000 that expire at various periods through 2042. At December 31, 2022, the Company had federal and state tax credits of approximately $1,094,000 available for future periods that expire at various periods through 2042. Due to changes in ownership provisions of the Internal Revenue Code, the availability of the Company's NOL carryforwards may be subject to annual limitations under Section 382 of the Internal Revenue Code against taxable income in the future period, which could substantially limit the eventual utilization of such carryforwards. The Company applies the standards on uncertainty in income taxes. The Company did not have any significant unrecognized tax benefits during the year ended December 31, 2022. The Company’s U.S. federal operating losses have occurred since its inception and as such, tax years subject to potential tax examination could apply from that date because the utilization of net operating losses from prior years opens the relevant year to audit by the IRS and/or state taxing authorities. The Company’s income tax provision was computed using the federal statutory rate and average state statutory rates, net of related federal benefit. The following represents a reconciliation of the statutory income tax rates to the effective rates at December 31: 2022 2021 Reconciliation to statutory rates Expected federal income taxes benefit at statutory rates (21.0) % (21.0) % Expected state tax benefit at statutory rates, net of federal benefit (6.3) (8.0) Change in valuation allowance 27.3 25.7 Forgiveness of PPP Loan — 3.3 Income tax expense (benefit) — % — % |
EMPLOYEE BENEFITS PLAN
EMPLOYEE BENEFITS PLAN | 12 Months Ended |
Dec. 31, 2022 | |
EMPLOYEE BENEFITS PLAN | |
EMPLOYEE BENEFITS PLAN | 12. The Company has established a defined contribution savings plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”). The 401(k) Plan is available to all eligible employees. The 401(k) Plan allows participants to defer a portion of their annual compensation subject to certain Internal Revenue Service limitations. The Company may make matching contributions and additional profit-sharing contributions at its discretion. The Company has not made any matching contributions to the 401(k) Plan during the years ended December 31, 2022 and 2021. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 13. SUBSEQUENT EVENTS On January 9, 2023, the Board appointed Ms. Curley as Chief Executive Officer of the Company. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Use of Estimates | Use of Estimates The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company utilizes certain estimates in the determination of the fair value of its internally developed software, deferred tax valuation allowances, 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 our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. For certain financial instruments, including cash, accounts receivable, and accounts payable, the carrying amounts approximate their fair values as of December 31, 2022 and 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’s 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’s 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 which is 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 it 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 bears 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 the Company. 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 years ended December 31: Year ended December 31, 2022 2021 Specimens – contracts with customers $ 9,956,582 $ 10,944,255 Shipping and other 445,721 191,048 Revenue $ 10,402,303 $ 11,135,303 The Company carries its accounts receivable at the invoiced amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable to determine if an allowance for doubtful accounts is necessary, based on economic conditions and each customer’s payment history. Receivables are written off when deemed uncollectible, with any future recoveries recorded as income when received. As of December 31, 2022, and 2021, the Company had an allowance for doubtful accounts of $230,999 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 and are expensed to operations as incurred. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Management reviews long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable. An impairment loss is recognized when expected cash flows are less than the asset’s carrying value. Long-lived assets consist of property and equipment and internal-use software. No impairment charges were recorded for the years ended December 31, 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 IPO, or sale, given prevailing market conditions; the lack of marketability of the Company’s common stock; the market performance of comparable publicly traded companies; and U.S. and global economic and capital market conditions. Restricted Stock Units (RSUs) The Company recognizes share-based compensation expense from restricted stock units (RSUs) ratably over the specified vesting period. The fair value of RSUs is determined to be the closing share price of the Company's common stock on the grant date. |
Common Stock Warrants | Common Stock Warrants The Company accounts for common stock warrants as either equity instruments or liabilities, depending on the specific terms of the warrant agreement. The warrants shall be classified as a liability if 1) the underlying shares are classified as liabilities or 2) the entity can be required under any circumstances to settle the warrant by transferring cash or other assets. The measurement of equity-classified nonemployee share-based payments is generally fixed on the grant date and are considered compensatory. For additional discussion on warrants, see Note 9. |
Net Loss Per Share | Net Loss Per Share Basic net loss per share is calculated by dividing net loss applicable to common stockholders by the weighted-average number of shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting the weighted-average number of shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. Therefore, basic and diluted net loss per share applicable to common stockholders were the same for all periods presented. The table below provides total shares outstanding, as of December 31: 2022 2021 Shares issuable upon vesting of RSUs 267,505 282,417 Shares issuable upon exercise of stock options 297,559 255,147 Shares issuable upon exercise of PIPE Warrant to purchase common stock 1,312,500 1,312,500 Shares issuable upon exercise of Lender Warrant to purchase common stock 12,500 12,500 Shares issuable upon exercise of Underwriter Warrants to purchase common stock 90,000 90,000 |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company. 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. ASU 2019-12 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. The a doption of the new standard resulted in the balance sheet recognition of additional assets of approximately $333,000 and lease liabilities of approximately $333,000 . In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses Measurement of Credit Losses on Financial Instruments Accounting Standards Issued, Not Yet Adopted In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity |
Off-Balance Sheet Risk and Concentrations of Credit Risk | Off-Balance Sheet Risk and Concentrations of Credit Risk The Company has no significant off-balance sheet risks, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Cash accounts are maintained at financial institutions that potentially subject the Company to concentrations of credit risk. At December 31, 2022 and 2021, substantially all of the Company’s cash was deposited in accounts at one financial institution. The Company maintains its cash deposits, which at times may exceed the federally insured limits, with a reputable financial institution and, accordingly, the Company believes such funds are subject to minimal credit risk. Concentration of credit risk with respect to accounts receivable is typically related to customers who account for a significant portion of revenue. During 2022, two customers represented 14% and 12% of the Company’s revenues. As of December 31, 2022, one customer represented approximately 15% of accounts receivable and two customers represented approximately 13% and 11% of accounts receivable-unbilled. During 2021, no customers represented greater than 10% of the Company’s revenues. As of December 31, 2021, one customer represented approximately 11% of accounts receivable and two customers represented approximately 23% and 17% of accounts receivable-unbilled. During the years ended December 31, 2022 and 2021, revenue attributable to customers located in foreign countries was approximately 11% and 7% of revenue, respectively. As of December 31, 2022 and 2021, accounts receivable attributable to customers located in foreign countries was approximately 10% and 6% of accounts receivable, respectively. As of December 31, 2022 and 2021, accounts receivable-unbilled attributable to customers located in foreign countries was approximately 18% and 11% of accounts receivable-unbilled, respectively. |
Property and Equipment, net | Property and Equipment, net Property and equipment are stated at cost, net of accumulated depreciation and amortization. When an item is sold or retired, the costs and related accumulated depreciation or amortization are eliminated, and the resulting gain or loss, if any, is credited or charged to income in the statement of operations. The Company provides for depreciation and amortization using the straight-line method over the estimated useful lives of the respective assets. A summary of estimated useful lives is as follows: Asset category Estimated Useful Life Website 3 years Computer equipment and purchased software 5 years Equipment 5 years Furniture and fixtures 5 years Leasehold improvements Shorter of useful life of asset or lease term Major improvements are capitalized while replacement, maintenance and repairs which do not improve or extend the lives of the respective assets are expensed as incurred. |
Debt Issuance Costs | Debt Issuance Costs Debt issuance costs are recorded net against the related debt and amortized to interest expense over the life of the related debt. During the years ended December 31, 2022 and 2021, amortized debt issuance costs of $77,384 and $875,293 respectively, were recorded as a component of interest expense. |
Cost of Revenue | Cost of Revenue Cost of revenue primarily consists of the purchase price to acquire specimens from hospitals and laboratories; inbound and outbound shipping costs; supply costs related to samples; payment processing and related transaction costs; and costs paid to the supply sites to support sample collections. Shipping costs upon receipt of products from suppliers are recognized in cost of revenue. For the year ended December 31, 2022, the Company acquired approximately 12% of specimens from one vendor. For the year ended December 31, 2021, the Company acquired approximately 11%, 11%, 10% and 10% of specimens from four vendors. |
Technology | Technology Technology costs include payroll and related expenses for employees involved in the development and implementation of iSpecimen’s technology; software license and system maintenance fees; outsourced data center costs; data management costs; depreciation and amortization; and other expenses necessary to support technology initiatives. Collectively, these costs reflect the investments the Company makes in order to offer a wide variety of products and services to customers. Technology and data costs are generally expensed as incurred. A portion of technology costs are related to research and development. Costs incurred for research and development are expensed as incurred, except for software development costs that are eligible for capitalization. Research and development costs primarily include salaries and related expenses, in addition to the cost of external service providers. For the years ended December 31, 2022, and 2021, research and development costs totaled $1,473,520 and $879,243, respectively. |
Sales and Marketing | Sales and Marketing Sales and marketing costs primarily consist of payroll and related expenses for personnel engaged in marketing and selling activities, including salaries and sales commissions; travel expenses; public relations and social media costs; ispecimen.com website development and maintenance costs; search engine optimization fees; advertising costs; direct marketing costs; trade shows and events fees; marketing and customer relationship management software; and other marketing-related costs. Advertising expenses consist primarily of marketing, public relations, and promotional materials. Advertising costs are expensed as incurred and totaled $188,026 and $229,223 for the years ended December 31, 2022 and 2021, respectively. |
Supply Development | Supply Development The Company has agreements with supply partners that allow the Company to procure specimens from them and distribute these samples to customers. Supply development costs primarily include payroll and related expenses for personnel engaged in the development and management of this supply network; related travel expenses; regulatory compliance costs to support the network; and other supply development and management costs. |
Fulfillment | Fulfillment Fulfillment costs primarily consist of those costs incurred in operating and staffing operations and customer service teams, including costs attributable to assess the feasibility of specimen requests; creating and managing orders; picking non-capitalizable, packaging, and preparing customer orders for shipment; responding to inquiries from customers; and laboratory equipment and supplies. |
General and Administrative | General and Administrative General and administrative expenses primarily consist of costs for corporate functions, including payroll and related expenses for human resources, legal, finance, and executive teams; associated software licenses; facilities and equipment expenses, such as depreciation and amortization expense and rent, outside legal expenses, insurance costs, and other general and administrative costs. |
Income taxes | Income Taxes The Company provides for income taxes using the asset and liability method. The Company provides deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the Company’s financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. A valuation allowance is provided to reduce the deferred tax assets to the amount that will more likely than not be realized. The Company does not have any material uncertain tax positions for which reserves would be required. The Company will recognize interest and penalties related to uncertain tax positions, if any, in income tax expense. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of entity's revenue | Year ended December 31, 2022 2021 Specimens – contracts with customers $ 9,956,582 $ 10,944,255 Shipping and other 445,721 191,048 Revenue $ 10,402,303 $ 11,135,303 |
Schedule of estimated useful lives | Asset category Estimated Useful Life Website 3 years Computer equipment and purchased software 5 years Equipment 5 years Furniture and fixtures 5 years Leasehold improvements Shorter of useful life of asset or lease term |
Summary of total shares outstanding | 2022 2021 Shares issuable upon vesting of RSUs 267,505 282,417 Shares issuable upon exercise of stock options 297,559 255,147 Shares issuable upon exercise of PIPE Warrant to purchase common stock 1,312,500 1,312,500 Shares issuable upon exercise of Lender Warrant to purchase common stock 12,500 12,500 Shares issuable upon exercise of Underwriter Warrants to purchase common stock 90,000 90,000 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT, NET | |
Summary of property and equipment, net | 2022 2021 Website $ 285,377 $ 105,380 Computer equipment and purchased software 84,589 84,588 Equipment 35,449 35,449 Furniture and fixtures 87,184 87,184 Leasehold improvements 60,441 24,935 Total property and equipment 553,040 337,536 Accumulated depreciation (327,188) (304,755) Total property and equipment, net $ 225,852 $ 32,781 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of lease costs related to Company's operating lease | Operating lease expense $ 164,314 Short-term lease expense 12,022 Total lease cost $ 176,336 |
Schedule of Lease position in Balance Sheet | Lease Position as of December 31, 2022 Right of use lease assets and lease liabilities for our operating lease were recorded in the balance sheet as follows: Assets Operating lease right-of-use assets $ 184,692 Total lease assets $ 184,692 Liabilities Current liabilities: Operating lease liability – current portion $ 158,451 Noncurrent liabilities: Operating lease liability – net of current portion 27,396 Total lease liability $ 185,847 |
Schedule of Lease terms and discount rate | Weighted average remaining lease term (in years) – operating leases 1.17 Weighted average discount rate – operating leases 5.96% |
Schedule of Future lease payment - Undiscounted Cash Flows | 2023 $ 165,254 2024 27,601 Total future minimum lease payments 192,855 Less effect of discounting (7,008) Present value of future minimum lease payments $ 185,847 |
Schedule of Cash Flows information | Non-cash operating lease expense (operating cash flow) $ 148,431 Change in operating lease liabilities (operating cash flow) $ (147,276) Supplemental non-cash amounts of operating lease liabilities arising from obtaining right-of-use assets $ 333,123 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Class of Warrant or Right [Line Items] | |
Schedule of warrant activity | Weighted Average Weighted Remaining Warrants Average Contractual Term Outstanding Exercise Price in Years Balance at December 31, 2020 23,309 $ 0.06 0.75 Granted 1,415,000 12.77 5.34 Exercised (17,889) 0.06 — Cancelled/forfeited (5,420) 0.06 — Balance at December 31, 2021 1,415,000 $ 9.76 5.34 Granted — — — Exercised — — — Cancelled/forfeited — — — Balance at December 31, 2022 1,415,000 $ 12.77 4.47 |
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) | 12 Months Ended |
Dec. 31, 2022 | |
SHARE-BASED COMPENSATION | |
Schedule of share based compensation restricted stock units award activity | Weighted RSUs Average Grant Outstanding Date Fair Value Unvested Balance at December 31, 2020 — $ — Granted 329,246 6.71 Vested (44,126) 6.33 Forfeited (5,400) 6.34 Unvested Balance at December 31, 2021 279,720 $ 6.78 Granted 178,386 4.15 Vested (110,286) 6.41 Forfeited (80,315) 5.90 Unvested Balance at December 31, 2022 267,505 $ 5.43 |
Restricted Stock Units | |
SHARE-BASED COMPENSATION | |
Schedule of summary of compensation expense | 2022 2021 Operating expenses: Technology $ 122,863 $ 18,290 Sales and marketing 89,765 25,686 Supply development 33,677 13,304 Fulfillment 81,508 21,824 General and administrative 271,296 434,128 Total RSU expense $ 599,109 $ 513,232 |
Stock Options | |
SHARE-BASED COMPENSATION | |
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 0.43% – 0.48% 0.47% – 0.66 Expected term (in years) 1.09 – 3.64 5.81 – 5.89 Expected volatility 59.97% 49.83% –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, 2020 251,847 $ 1.00 8.06 $ 89,100 Granted 70,164 5.74 432,520 Exercised (55,694) 1.00 379,276 Cancelled/forfeited (11,170) 1.00 Balance at December 31, 2021 255,147 $ 2.32 7.75 $ 1,550,409 Granted 131,668 1.60 35,725 Exercised (81,043) 1.00 216,626 Cancelled/forfeited (8,213) 1.18 Balance at December 31, 2022 297,559 $ 2.69 6.96 $ 63,237 Options exercisable at December 31, 2022 124,817 $ 2.73 3.50 $ 33,090 |
Schedule of summary of compensation expense | Operating expenses: 2022 2021 Technology $ 8,900 $ 4,101 Sales and marketing 3,915 6,562 Supply development 982 1,289 Fulfillment 2,442 3,868 General and administrative 63,265 93,012 Total stock options expense $ 79,504 $ 108,832 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
Summary of significant components of the Company's deferred tax assets and liabilities | 2022 2021 Deferred tax assets: Operating loss carryforwards $ 10,164,000 $ 7,775,000 Research and development tax credit 1,095,000 850,000 Other 542,000 325,000 Total deferred tax assets 11,801,000 8,950,000 Deferred tax liability: Other (50,400) — Intangibles (357,600) (300,000) Total deferred tax liabilities (408,000) (300,000) Net deferred tax assets before valuation allowance 11,393,000 8,650,000 Valuation allowance (11,393,000) (8,650,000) Net deferred tax asset $ — $ — |
Summary of reconciliation of the statutory income tax rates to the effective rates | 2022 2021 Reconciliation to statutory rates Expected federal income taxes benefit at statutory rates (21.0) % (21.0) % Expected state tax benefit at statutory rates, net of federal benefit (6.3) (8.0) Change in valuation allowance 27.3 25.7 Forgiveness of PPP Loan — 3.3 Income tax expense (benefit) — % — % |
NATURE OF BUSINESS AND BASIS _2
NATURE OF BUSINESS AND BASIS OF PRESENTATION (Details) | 12 Months Ended | |
Mar. 30, 2021 | Dec. 31, 2022 segment | |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | ||
Reporting units | 1 | |
Operating segments | 1 | |
Reverse stock split | 0.18 |
NATURE OF BUSINESS AND BASIS _3
NATURE OF BUSINESS AND BASIS OF PRESENTATION - Additional information (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Dec. 01, 2021 | Jul. 01, 2021 | Jun. 21, 2021 | Sep. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Subsidiary, Sale of Stock [Line Items] | ||||||
Issuance of common stock in connection with public offering | $ 18,000,000 | |||||
Share price | $ 6.25 | |||||
Net proceeds from offering | $ 18,200,000 | $ 18,000,000 | ||||
Other offering costs | 2,339,816 | |||||
Outstanding principal of convertible notes, converted | $ 5,500,000 | $ 4,000,000 | 4,000,000 | |||
Accrued interest | $ 717,646 | |||||
Number of shares issued upon conversion | 842,429 | 842,429 | ||||
Conversion price | $ 5.60 | |||||
Working capital | $ 15,394,634 | |||||
Accumulated deficit | 48,265,324 | $ 38,019,402 | ||||
Cash | 15,308,710 | $ 27,738,979 | ||||
Accounts payable and accrued expenses | 3,990,301 | |||||
Purchase orders negatively impacted due to Russia's invasion of Ukraine | 1,000,000 | |||||
Convertible Notes | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Outstanding principal of convertible notes, converted | 5,491,663 | |||||
Accrued interest | $ 1,257,066 | |||||
Number of shares issued upon conversion | 1,206,614 | 1,206,614 | ||||
Conversion price | $ 5.60 | |||||
Loss on conversion of notes | 300,000 | $ 260,000 | ||||
Convertible Notes outstanding | 0 | |||||
Bridge Notes | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Accrued interest | $ 64,110 | |||||
Conversion price | $ 5.60 | |||||
Convertible Notes outstanding | $ 0 | |||||
Initial Public Offering | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Issuance of common stock in connection with public offering | $ 18,000,000 | |||||
Issuance of common stock in connection with public offering (in shares) | 2,250,000 | 2,250,000 | ||||
Share price | $ 8 | |||||
Net proceeds from offering | $ 15,700,000 | |||||
Underwriting Discounts | 1,900,000 | 1,700,000 | ||||
Other offering costs | 600,000 | $ 600,000 | ||||
Conversion of redeemable convertible preferred stock into common stock upon initial public offering (in shares) | 1,291,012 | |||||
Temporary equity, shares outstanding (in shares) | 0 | |||||
Accrued interest | $ 1,300,000 | |||||
Conversion price | $ 5.60 | |||||
Initial Public Offering | Bridge Notes | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Accrued interest | 64,110 | |||||
Overallotment | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Issuance of common stock in connection with public offering | $ 2,700,000 | |||||
Issuance of common stock in connection with public offering (in shares) | 337,500 | |||||
Share price | $ 8 | |||||
Underwriting Discounts | $ 1,900,000 | |||||
Accrued interest | $ 700,000 | |||||
Private Placement | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Issuance of common stock in connection with public offering | $ 21,000,000 | |||||
Issuance of common stock in connection with public offering (in shares) | 1,749,999 | |||||
Share price | $ 12 | |||||
Net proceeds from offering | $ 21,000,000 | |||||
Other offering costs | $ 1,435,000 | |||||
Conversion of redeemable convertible preferred stock into common stock upon initial public offering (in shares) | 1,312,500 | |||||
Conversion price | $ 13 | |||||
Warrants exercisable term | 5 years 6 months | 4 years 5 months |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - customer | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue | Customer concentration | ||
Concentration Risk [Line Items] | ||
Number of Customers | 2 | 0 |
Revenue | Customer concentration | Customer One | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 14% | 10% |
Revenue | Customer concentration | Customer Two | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 12% | |
Revenue | Geographic concentration | Foreign customers | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 11% | 7% |
Account receivable | Customer concentration | ||
Concentration Risk [Line Items] | ||
Number of Customers | 1 | 1 |
Account receivable | Customer concentration | Customer One | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 15% | 11% |
Account receivable | Geographic concentration | Foreign customers | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 10% | 6% |
Accounts receivable-unbilled | Customer concentration | ||
Concentration Risk [Line Items] | ||
Number of Customers | 2 | 2 |
Accounts receivable-unbilled | Customer concentration | Customer One | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 13% | 23% |
Accounts receivable-unbilled | Customer concentration | Customer Two | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 11% | 17% |
Accounts receivable-unbilled | Geographic concentration | Foreign customers | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 18% | 11% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounting Standard Recently Adopted (Details) | Dec. 31, 2022 USD ($) |
Operating lease right-of-use asset | $ 184,692 |
Operating lease long - term obligation | 27,396 |
Accounting Standards Update 2016-02 [Member] | |
Operating lease right-of-use asset | 333,000 |
Operating lease long - term obligation | $ 333,000 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition and Accounts Receivable (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 10,402,303 | $ 11,135,303 |
Accounts receivable | ||
Allowance for doubtful accounts | 230,999 | 269,170 |
Specimens | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 9,956,582 | 10,944,255 |
Shipping and other | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 445,721 | $ 191,048 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment, net (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Website | |
Property, Plant and Equipment [Line Items] | |
Useful life (in years) | 3 years |
Computer equipment and purchased software | |
Property, Plant and Equipment [Line Items] | |
Useful life (in years) | 5 years |
Equipment | |
Property, Plant and Equipment [Line Items] | |
Useful life (in years) | 5 years |
Furniture and fixtures | |
Property, Plant and Equipment [Line Items] | |
Useful life (in years) | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Internally Developed Software, net (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Internal-use software | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life (in years) | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cost of Revenue (Details) - Cost of Revenue - Vendor concentration | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Concentration Risk [Line Items] | ||
Number of vendors | 4 | 1 |
Vendor One | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 11% | 12% |
Vendor Two | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 11% | |
Vendor Three | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 10% | |
Vendor Four | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 10% |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional information (Details) - USD ($) | 12 Months Ended | 24 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Impairment charges | $ 0 | ||
Amortized debt issuance costs | $ 77,384 | $ 875,293 | |
Research and development costs | 1,473,520 | 879,243 | |
Advertising Expense | $ 188,026 | $ 229,223 |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Shares issuable upon conversion of preferred stock (Details) - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Subsidiary, Sale of Stock [Line Items] | ||
Shares issuable upon vesting of RSU's | 267,505 | 282,417 |
Shares issuable upon exercise of stock options | 297,559 | 255,147 |
Private Placement | ||
Subsidiary, Sale of Stock [Line Items] | ||
Shares issuable upon exercise of Warrant to purchase common stock | 1,312,500 | 1,312,500 |
Lender | ||
Subsidiary, Sale of Stock [Line Items] | ||
Shares issuable upon exercise of Warrant to purchase common stock | 12,500 | 12,500 |
Underwriter Warrants | ||
Subsidiary, Sale of Stock [Line Items] | ||
Shares issuable upon exercise of Warrant to purchase common stock | 90,000 | 90,000 |
FACTORING OF ACCOUNTS RECEIVA_2
FACTORING OF ACCOUNTS RECEIVABLE (Details) - USD ($) | 12 Months Ended | ||||
Jun. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Jul. 31, 2021 | Jan. 01, 2021 | |
FACTORING OF ACCOUNTS RECEIVABLE | |||||
Minimum accounts receivable without recourse, the entity has agreed to sell | $ 1,200,000 | ||||
Total receivables sold under the Factoring Agreement | $ 3,400,000 | ||||
Payments made for termination of factoring agreement | $ 139,374 | ||||
Additional amount of Factoring Accounts Receivable | $ 214,497 | ||||
Minimum | |||||
FACTORING OF ACCOUNTS RECEIVABLE | |||||
Factoring fees (as a percent) | 2.50% | ||||
Maximum | |||||
FACTORING OF ACCOUNTS RECEIVABLE | |||||
Factoring fees (as a percent) | 15% |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
PP&E, Net, by Type | ||
Total property and equipment | $ 553,040 | $ 337,536 |
Accumulated depreciation | (327,188) | (304,755) |
Total property and equipment, net | 225,852 | 32,781 |
Depreciation of property and equipment | 22,433 | 45,358 |
Website | ||
PP&E, Net, by Type | ||
Total property and equipment | 285,377 | 105,380 |
Computer equipment and purchased software | ||
PP&E, Net, by Type | ||
Total property and equipment | 84,589 | 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 | $ 60,441 | $ 24,935 |
INTERNALLY DEVELOPED SOFTWARE_2
INTERNALLY DEVELOPED SOFTWARE, NET (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INTERNALLY DEVELOPED SOFTWARE, NET | ||
Internally developed software capitalized | $ 2,975,686 | $ 1,035,367 |
Amortization expense | 1,182,766 | 958,639 |
Accumulated amortization | $ 5,016,670 | $ 3,833,904 |
SEVERANCE (Details)
SEVERANCE (Details) - USD ($) | 12 Months Ended | |
Oct. 24, 2022 | Dec. 31, 2022 | |
Severance | ||
Restructuring, Incurred Cost, Statement of Income or Comprehensive Income [Extensible Enumeration] | General and Administrative Expense | |
Chief Executive Officer and President | ||
Severance | ||
Amount of severance expense and corresponding liability recognized | $ 376,400 | |
Amount of share-based compensation expense recorded | $ 40,000 | |
Severance Costs | 350,000 | |
Chief Operating Officer | ||
Severance | ||
Amount of share-based compensation expense recorded | 40,000 | |
Severance Costs | $ 325,000 |
DEBT (Details)
DEBT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | May 20, 2020 | |
DEBT | ||
Gain on extinguishment of note payable | $ 788,156 | |
Paycheck Protection Program, Cares Act | ||
DEBT | ||
Debt, face amount | $ 783,008 | |
Interest expense | 279 | |
Gain on extinguishment of note payable | $ 788,156 |
DEBT - Related Party Convertibl
DEBT - Related Party Convertible Notes Payable (Details) | 12 Months Ended | 24 Months Ended | ||
Jun. 21, 2021 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2018 USD ($) item | |
DEBT | ||||
Outstanding principal of convertible notes, converted | $ 5,500,000 | $ 4,000,000 | $ 4,000,000 | |
Amortization of debt discounts | 869,600 | |||
Convertible Notes | ||||
DEBT | ||||
Outstanding principal of convertible notes, converted | $ 5,491,663 | |||
Convertible Notes To Related Parties | ||||
DEBT | ||||
Outstanding principal of convertible notes, converted | $ 5,500,000 | |||
Interest rate (as a percent) | 6% | |||
Minimum gross proceeds from equity financing required for conversion of debt | $ 10,000,000 | |||
Number of consecutive quarters for achievement of positive free cash flow from operations required for conversion of debt | item | 2 | |||
Term prior to maturity date for achievement of positive free cash flow from operations required for conversion of debt | 90 days | |||
Conversion rates | 30% | |||
Interest expense | 156,411 | |||
Amortization of debt discounts | $ 1,088 |
DEBT - Conversion of Convertibl
DEBT - Conversion of Convertible Notes Payable (Details) - USD ($) | 12 Months Ended | ||
Jun. 21, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
DEBT | |||
Outstanding principal of convertible notes, converted | $ 5,500,000 | $ 4,000,000 | $ 4,000,000 |
Accrued interest | $ 717,646 | ||
Number of shares issued upon conversion | 842,429 | 842,429 | |
Conversion price | $ 5.60 | ||
Convertible Notes | |||
DEBT | |||
Outstanding principal of convertible notes, converted | 5,491,663 | ||
Accrued interest | $ 1,257,066 | ||
Number of shares issued upon conversion | 1,206,614 | 1,206,614 | |
Conversion price | $ 5.60 | ||
Convertible Notes outstanding | $ 0 | ||
Loss on conversion of notes | $ 300,000 | $ 260,000 |
DEBT - Bridge Financing (Detail
DEBT - Bridge Financing (Details) - USD ($) | 12 Months Ended | |||
Sep. 30, 2020 | Dec. 31, 2021 | Oct. 01, 2020 | Dec. 31, 2018 | |
DEBT | ||||
Discount rate on issue price of stock in elective conversion stock | 30% | |||
Bridge Notes | ||||
DEBT | ||||
Face amount of debt | $ 7,000,000 | |||
Interest rate | 24% | 15% | 30% | |
Interest expense | $ 24 | $ 1,014,657 | ||
Related party interest expense | 320,469 | |||
Minimum Gross Proceeds From Equity Financing Required For Conversion Of Debt | $ 18,000,000 | |||
Percentage of outstanding unpaid principal, holders may elect to convert | 50% | |||
Number of times of third party loan proceeds | 1.50 | |||
Related Party Bridge Notes | ||||
DEBT | ||||
Face amount of debt | $ 1,905,000 | |||
Maximum | Bridge Notes | ||||
DEBT | ||||
Interest rate | 30% |
DEBT - Bridge Financing - Autom
DEBT - Bridge Financing - Automatic Conversion or Debt Extension (Details) - Bridge Notes | 12 Months Ended | ||
Dec. 31, 2021 | Oct. 01, 2020 | Sep. 30, 2020 | |
Debt Instrument [Line Items] | |||
Discount rate on issue price of stock in automatic conversion stock | 10% | ||
Rate on issue price of stock in automatic conversion stock | 90% | ||
Minimum percentage of repayments of total adjusted outstanding principal for automatic conversion | 25% | ||
Interest rate | 15% | 30% | 24% |
Maturity term | 18 months |
DEBT - Bridge Financing - Debt
DEBT - Bridge Financing - Debt Extinguishment (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Jun. 21, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | |||||
Gain on extinguishment of note payable | $ 788,156 | ||||
Amortization of the debt discount | 869,600 | ||||
Outstanding principal of convertible notes, converted | $ 5,500,000 | $ 4,000,000 | 4,000,000 | ||
Accrued interest | $ 717,646 | ||||
Number of shares issued upon conversion | 842,429 | 842,429 | |||
Conversion price | $ 5.60 | ||||
Gain On Conversion | $ 9,746 | ||||
Conversion of principal and accrued interest of convertible notes and bridge notes into common stock upon initial public offering | 16,392,344 | ||||
Bridge Notes | |||||
Debt Instrument [Line Items] | |||||
Gain on extinguishment of note payable | 2,740,425 | ||||
Write-off of debt issuance cost | 5,700 | ||||
Debt discounts | 869,600 | ||||
Related party interest expense | 320,469 | ||||
Interest expense | $ 24 | 1,014,657 | |||
Accrued interest | $ 64,110 | ||||
Conversion price | $ 5.60 | ||||
Conversion of principal and accrued interest of convertible notes and bridge notes into common stock upon initial public offering | $ 16,392,344 |
DEBT - Bridge Financing - Compo
DEBT - Bridge Financing - Components of non-cash transaction (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Jun. 21, 2021 | Sep. 30, 2021 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | |||
Total conversion of Convertible Notes and Bridge Notes into common stock | $ 16,392,344 | ||
Payments on debt | 3,000,000 | ||
Accrued interest | 717,646 | ||
Convertible Notes | |||
Debt Instrument [Line Items] | |||
Write off of derivative liability relating to Notes | 2,644,000 | ||
Extinguishment of Notes principal | 5,486,199 | ||
Accrued and unpaid interest | 1,257,066 | ||
Accumulated amortization on debt issuance costs | 33,035 | ||
(Gain) loss on extinguishment of Notes | 260,185 | ||
Write off of debt issuance cost | (27,573) | ||
Accrued interest | $ 1,257,066 | ||
Bridge Notes | |||
Debt Instrument [Line Items] | |||
Write off of derivative liability relating to Notes | 2,031,300 | ||
Extinguishment of Notes principal | 4,000,000 | ||
Accrued and unpaid interest | 717,646 | ||
(Gain) loss on extinguishment of Notes | (9,514) | ||
Write off of debt issuance cost | (5,700) | ||
Total conversion of Convertible Notes and Bridge Notes into common stock | 16,392,344 | ||
Payment of remaining principal balance | $ 3,000,000 | ||
Accrued interest | $ 64,110 | ||
Bridge notes outstanding | $ 0 |
DEBT - Term Loan (Details)
DEBT - Term Loan (Details) - USD ($) | 12 Months Ended | ||||
Mar. 10, 2023 | Nov. 03, 2022 | Aug. 13, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Debt Instrument [Line Items] | |||||
Accrued interest | $ 161,579 | $ 2,824,032 | |||
Interest expense | 238,963 | 2,102,681 | |||
Issuance of common stock warrants in connection with term loan | 49,072 | ||||
Payment of debt issuance costs in connection with note payable | 32,917 | ||||
Amortized debt issuance costs | $ 77,384 | 875,293 | |||
Prime Rate | |||||
Debt Instrument [Line Items] | |||||
Basis spread rate | 0.75% | ||||
Interest rate on the loan | 6.25% | ||||
Lender | |||||
Debt Instrument [Line Items] | |||||
Debt issuance fees | $ 23,066 | ||||
Warrants to purchase common stock issued | 12,500 | ||||
Debt issuance costs | $ 81,989 | ||||
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 | 7% | ||||
Calendar day to pay interest | 10 days | ||||
Calendar day to pay principal | 30 days | ||||
Principal balance | $ 3,500,000 | ||||
Accrued interest | $ 16,000 | ||||
Interest expense | $ 154,509 | 47,444 | |||
Amortized debt issuance costs | 77,384 | 5,175 | |||
Unamortized debt issuance costs | $ 0 | $ 77,384 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Lease costs related to operating lease (Details) | 12 Months Ended | |
Dec. 31, 2022 USD ($) lease | Jan. 01, 2022 | |
COMMITMENTS AND CONTINGENCIES | ||
Number of operating lease | lease | 1 | |
Incremental borrowing rate | 5.96% | |
Remaining lease term | 1 year 2 months 1 day | 1 year 11 months 1 day |
Operating lease expense | $ 164,314 | |
Short-term lease expense | 12,022 | |
Total Lease cost | $ 176,336 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Lease positions in Balance Sheets (Details) | Dec. 31, 2022 USD ($) |
Assets and Liabilities, Lessee [Abstract] | |
Lease right-of-use assets | $ 184,692 |
Total lease assets | 184,692 |
Lease liability - current portion | 158,451 |
Lease liability - net of current portion | 27,396 |
Present value of future minimum lease payments | $ 185,847 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES - Lease Terms and Discount Rate (Details) | Dec. 31, 2022 | Jan. 01, 2022 |
COMMITMENTS AND CONTINGENCIES | ||
Weighted average remaining lease term (in years) - operating leases | 1 year 2 months 1 day | 1 year 11 months 1 day |
Weighted average discount rate - operating leases | 5.96% |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES - Future lease payments (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating Leases | ||
2023 | $ 165,254 | |
2024 | 27,601 | |
Total future minimum lease payments | 192,855 | |
Less effect of discounting | (7,008) | |
Present value of future minimum lease payments | 185,847 | |
Rent expense | $ 176,336 | $ 167,167 |
COMMITMENTS AND CONTINGENCIES_5
COMMITMENTS AND CONTINGENCIES - Cash Flows - Operating lease (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
COMMITMENTS AND CONTINGENCIES | |
Non-cash lease expense (operating cash flow) | $ 148,431 |
Change in lease liabilities (operating cash flow) | (147,276) |
Supplemental non-cash amounts of lease liabilities arising from obtaining right of use assets | $ 333,123 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - $ / shares | Jun. 17, 2021 | Dec. 31, 2022 | Dec. 31, 2021 |
Number of shares authorized | 250,000,000 | ||
Common stock, shares authorized | 200,000,000 | 200,000,000 | 200,000,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 50,000,000 | ||
Preferred stock, par value | $ 0.0001 | ||
Common Stock | |||
Conversion of redeemable convertible preferred stock into common stock upon initial public offering (in shares) | 1,291,012 | ||
Preferred Stock | |||
Outstanding preferred stock | 0 |
STOCKHOLDERS' EQUITY - Common S
STOCKHOLDERS' EQUITY - Common Stock - (Details) - USD ($) | 12 Months Ended | ||||
Dec. 01, 2021 | Jul. 01, 2021 | Jun. 21, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Class of Stock [Line Items] | |||||
Net proceeds from issuance of shares | $ 2,497,501 | ||||
Number of shares issued upon conversion | 842,429 | 842,429 | |||
Share price | $ 6.25 | ||||
Issuance of common stock through exercise of stock options | $ 78,641 | $ 58,648 | |||
Issuance of common stock in exchange for services | 6,250 | $ 12,500 | |||
Issuance of common stock in exchange for services (in shares) | 2,000 | ||||
Overallotment | |||||
Class of Stock [Line Items] | |||||
Issuance of common stock in connection with public offering (in shares) | 337,500 | ||||
Net proceeds from issuance of shares | $ 2,500,000 | ||||
Underwriting Discounts | 1,900,000 | ||||
Underwriting discounts | $ 200,000 | ||||
Share price | $ 8 | ||||
Initial Public Offering | |||||
Class of Stock [Line Items] | |||||
Issuance of common stock in connection with public offering (in shares) | 2,250,000 | 2,250,000 | |||
Underwriting Discounts | $ 1,900,000 | $ 1,700,000 | |||
Share price | $ 8 | ||||
Private Placement | |||||
Class of Stock [Line Items] | |||||
Issuance of common stock in connection with public offering (in shares) | 1,749,999 | ||||
Net proceeds from issuance of shares | $ 19,600,000 | ||||
Placement agent commissions | $ 1,260,000 | ||||
Share price | $ 12 | ||||
Bridge Notes | Initial Public Offering | |||||
Class of Stock [Line Items] | |||||
Outstanding principal and accrued interest converted | $ 4,700,000 | ||||
Convertible Notes. | Initial Public Offering | |||||
Class of Stock [Line Items] | |||||
Number of shares issued upon conversion | 842,429 | ||||
Common Stock | |||||
Class of Stock [Line Items] | |||||
Share price | $ 6.25 | ||||
Issuance of common stock through exercise of stock options (in shares) | 81,043 | ||||
Issuance of common stock through exercise of stock options | $ 78,641 | ||||
Issuance of common stock in exchange for services | $ 6,250 | ||||
Issuance of common stock in exchange for services (in shares) | 1,000 |
STOCKHOLDERS' EQUITY - Underwri
STOCKHOLDERS' EQUITY - Underwriter Warrants (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Jun. 17, 2021 | |
Class of Warrant or Right [Line Items] | |||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Unamortized compensation expense recognized over the remaining requisite service period | 2 years 3 months 18 days | 2 years 4 months 24 days | |
Underwriter Warrants | |||
Class of Warrant or Right [Line Items] | |||
Warrants to purchase shares of common stock | 90,000 | ||
Common stock, par value | $ 0.0001 | ||
Exercise price of warrant | $ 10 | ||
Unamortized compensation expense recognized over the remaining requisite service period | 3 years 4 months 6 days | ||
Warrants exercisable term | 46 months | ||
Commencing term from effective date of registration statement | 180 days | ||
Warrants Not Settleable in Cash, Fair Value Disclosure | $ 0.4 |
STOCKHOLDERS' EQUITY - Warrants
STOCKHOLDERS' EQUITY - Warrants (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 01, 2021 | Aug. 13, 2021 | |
Class of Warrant or Right [Line Items] | ||||
Issuance of common stock through exercise of warrants | $ 992 | |||
Private Placement | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants exercisable term | 4 years 5 months | 5 years 6 months | ||
Warrants to purchase shares of common stock | 1,312,500 | |||
Exercise price of warrant | $ 13 | $ 13 | ||
Warrant to purchase common stock shares issued | 1,312,500 | 1,312,500 | ||
Warrants other than Underwriter Warrants | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants exercisable term | 8 years 6 months 2 days | |||
Warrants to purchase shares of common stock | 17,889 | 12,500 | ||
Exercise price of warrant | $ 8 | $ 8 | ||
Issuance of common stock through exercise of warrants (in shares) | 17,889 | |||
Issuance of common stock through exercise of warrants | $ 992 |
STOCKHOLDERS' EQUITY - Estimate
STOCKHOLDERS' EQUITY - Estimate the fair value of warrants granted (Details) - Warrants | 12 Months Ended |
Dec. 31, 2021 | |
Minimum | |
Assumptions used to estimate the fair value of stock options granted | |
Risk-free interest rate, minimum | 0.90% |
Expected term (in years) | 5 years |
Expected volatility, minimum | 59% |
Maximum | |
Assumptions used to estimate the fair value of stock options granted | |
Risk-free interest rate, maximum | 1.30% |
Expected term (in years) | 10 years |
Expected volatility, maximum | 69% |
STOCKHOLDERS' EQUITY - Warrant
STOCKHOLDERS' EQUITY - Warrant activity (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Options Outstanding. | |||
Balance at the beginning | 255,147 | ||
Balance at the end | 297,559 | 255,147 | |
Weighted Average Remaining Contractual Term (in years) | |||
Weighted Average Remaining Contractual Term (in years) | 8 years 21 days | ||
Warrants | |||
Options Outstanding. | |||
Balance at the beginning | 1,415,000 | 23,309 | |
Granted | 1,415,000 | ||
Exercised | (17,889) | ||
Cancelled/forfeited | (5,420) | ||
Balance at the end | 1,415,000 | 1,415,000 | 23,309 |
Weighted Average Exercise Price | |||
Balance at the beginning (in dollars per share) | $ 9.76 | $ 0.06 | |
Granted (in dollars per share) | 12.77 | ||
Exercised (in dollars per share) | 0.06 | ||
Cancelled/forfeited (in dollars per share) | 0.06 | ||
Balance at the end (in dollars per share) | $ 12.77 | $ 9.76 | $ 0.06 |
Weighted Average Remaining Contractual Term (in years) | |||
Weighted Average Remaining Contractual Term (in years) | 4 years 5 months 19 days | 5 years 4 months 2 days | 9 months |
Granted (in years) | 5 years 4 months 2 days |
SHARE-BASED COMPENSATION - 2021
SHARE-BASED COMPENSATION - 2021 Stock Incentive Plan - shares (Details) - shares | 12 Months Ended | |
Dec. 31, 2022 | Jun. 16, 2021 | |
2013 Stock Incentive Plan | ||
SHARE-BASED COMPENSATION | ||
Share based compensation, shares issued | 187,569 | |
Common Stock, Capital Shares Reserved for Future Issuance | 122,015 | |
2021 Stock Incentive Plan | ||
SHARE-BASED COMPENSATION | ||
Options authorized | 608,000 | |
Share based compensation, shares issued | 122,485 | |
Common Stock, Capital Shares Reserved for Future Issuance | 87 |
SHARE-BASED COMPENSATION - Esti
SHARE-BASED COMPENSATION - Estimate the fair value of stock options (Details) - Stock Options | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Assumptions used to estimate the fair value of stock options granted | ||
Expected volatility, minimum | 59.97% | |
Minimum | ||
Assumptions used to estimate the fair value of stock options granted | ||
Risk-free interest rate, minimum | 0.43% | 0.47% |
Expected term (in years) | 1 year 1 month 2 days | 5 years 9 months 21 days |
Expected volatility, minimum | 49.83% | |
Maximum | ||
Assumptions used to estimate the fair value of stock options granted | ||
Risk-free interest rate, maximum | 0.48% | 0.66% |
Expected term (in years) | 3 years 7 months 20 days | 5 years 10 months 20 days |
Expected volatility, maximum | 49.98% |
SHARE-BASED COMPENSATION - Stoc
SHARE-BASED COMPENSATION - Stock option activity (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Options Outstanding | |||
Balance at the beginning | 255,147 | ||
Balance at the end | 297,559 | 255,147 | |
Weighted Average Remaining Contractual Term (in years) | |||
Weighted Average Remaining Contractual Term (in years) | 8 years 21 days | ||
2013 and 2021 Stock Incentive Plan | |||
Options Outstanding | |||
Balance at the beginning | 255,147 | 251,847 | |
Granted | 131,668 | 70,164 | |
Exercised | (81,043) | (55,694) | |
Cancelled/forfeited | (8,213) | (11,170) | |
Balance at the end | 297,559 | 255,147 | 251,847 |
Options exercisable at the end | 124,817 | ||
Weighted Average Exercise Price | |||
Balance at the beginning (in dollars per share) | $ 2.32 | $ 1 | |
Granted (in dollars per share) | 1.60 | 5.74 | |
Exercised (in dollars per share) | 1 | 1 | |
Cancelled/forfeited (in dollars per share) | 1.18 | 1 | |
Balance at the end (in dollars per share) | 2.69 | $ 2.32 | $ 1 |
Options exercisable at the end (in dollars per share) | $ 2.73 | ||
Weighted Average Remaining Contractual Term (in years) | |||
Weighted Average Remaining Contractual Term (in years) | 6 years 11 months 15 days | 7 years 9 months | |
Options exercisable at the end (in years) | 3 years 6 months | ||
Aggregate Intrinsic Value | |||
Balance at the beginning (in dollars) | $ 1,550,409 | $ 89,100 | |
Granted (in dollars) | 35,725 | 432,520 | |
Exercised (in dollars) | 216,626 | 379,276 | |
Balance at the end (in dollars) | 63,237 | $ 1,550,409 | $ 89,100 |
Options exercisable at the end (in dollars) | $ 33,090 |
SHARE-BASED COMPENSATION - Comp
SHARE-BASED COMPENSATION - Compensation Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Stock Options | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | $ 79,504 | $ 108,832 |
Stock Options | Technology | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 8,900 | 4,101 |
Stock Options | Sales and marketing | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 3,915 | 6,562 |
Stock Options | Supply development | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 982 | 1,289 |
Stock Options | Fulfillment | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 2,442 | 3,868 |
Stock Options | General and administrative | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 63,265 | 93,012 |
Restricted Stock Units | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 599,109 | 513,232 |
Restricted Stock Units | Technology | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 122,863 | 18,290 |
Restricted Stock Units | Sales and marketing | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 89,765 | 25,686 |
Restricted Stock Units | Supply development | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 33,677 | 13,304 |
Restricted Stock Units | Fulfillment | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 81,508 | 21,824 |
Restricted Stock Units | General and administrative | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | $ 271,296 | $ 434,128 |
SHARE-BASED COMPENSATION - Rest
SHARE-BASED COMPENSATION - Restricted Stock Units (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Options outstanding | ||
Unvested Balance at December 31, 2021 | 279,720 | |
Granted | 178,386 | 329,246 |
Vested | $ (110,286) | $ (44,126) |
Forfeited | (80,315) | (5,400) |
Unvested Balance at December 31, 2022 | 267,505 | 279,720 |
Weighted Average Grant Date Fair Value | ||
Unvested Balance at December 31, 2021 | $ 6.78 | |
Granted | 4.15 | $ 6.71 |
Vested | 6.41 | 6.33 |
Forfeited | 5.90 | 6.34 |
Unvested Balance at December 31, 2022 | $ 5.43 | $ 6.78 |
SHARE-BASED COMPENSATION - Re_2
SHARE-BASED COMPENSATION - Restricted Stock Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 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 3 months 18 days | 2 years 4 months 24 days |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 178,386 | 329,246 |
Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation expense | $ 599,109 | $ 513,232 |
Restricted Stock Units | General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation expense | 271,296 | 434,128 |
Restricted Stock Units | Executive Officer and immediate family | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation expense | $ 249,186,000 | 394,555,000 |
Awards vesting rights percentage | 20% | |
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ 27,070,000 | $ 806,216,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 0 | 189,396 |
Restricted Stock Units | Director [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 1 year | |
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ 43,147,000 | $ 33,120,000 |
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 2 years 10 months 13 days | 2 years 7 months 6 days |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 3,125 | 12,500 |
Restricted Stock Units | Share-based Payment Arrangement, Tranche One [Member] | Executive Officer and immediate family | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 4 years | |
Restricted Stock Units | Share-based Payment Arrangement, Tranche Two [Member] | Executive Officer and immediate family | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 4 years | |
Share-based Payment Arrangement, Employee [Member] | Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation expense | $ 306,775,000 | $ 85,557,000 |
Awards vesting rights percentage | 25% | |
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ 992,437,000 | $ 845,933,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 175,261 | 127,350 |
Share-based Payment Arrangement, Employee [Member] | 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 | |
Share-based Payment Arrangement, Employee [Member] | 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 |
SHARE-BASED COMPENSATION - Addi
SHARE-BASED COMPENSATION - Additional information (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Jul. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total intrinsic value of stock options exercised | $ 216,626 | $ 379,276 | |
Weighted-average grant date fair value | $ 0.76 | $ 3.94 | |
Unamortized compensation expense | $ 233,004 | $ 432,520 | |
Unamortized compensation expense recognized over the remaining requisite service period | 2 years 3 months 18 days | 2 years 4 months 24 days | |
Proceeds from exercise of stock options | $ 78,641 | $ 58,648 | |
Performance Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period | 4 years | ||
Compensation expense | $ 0 | ||
Number of shares issued | 47,349 | ||
2013 Stock Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares issued | 187,569 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating Loss Carryforwards [Line Items] | ||
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | $ 2,743,000 | |
Provision for income taxes | 0 | $ 0 |
Tax Credit Carryforward, Amount | 141,000 | $ 141,000 |
Federal | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | 40,800,000 | |
Net operating loss carryforwards, subject to expiration | 13,000,000 | |
Net operating loss carryforwards, carried forward indefinitely | 27,800,000 | |
Tax Credit Carryforward, Amount | 1,094,000 | |
State | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | $ 25,000,000 |
INCOME TAXES - Significant comp
INCOME TAXES - Significant components of the Company's deferred tax assets and liabilities (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Operating loss carryforwards | $ 10,164,000 | $ 7,775,000 |
Research and development tax credit | 1,095,000 | 850,000 |
Other | 542,000 | 325,000 |
Total deferred tax assets | 11,801,000 | 8,950,000 |
Deferred tax liability: | ||
Other | (50,400) | |
Intangibles | (357,600) | (300,000) |
Total deferred tax liabilities | (408,000) | (300,000) |
Net deferred tax assets before valuation allowance | 11,393,000 | 8,650,000 |
Valuation allowance | $ (11,393,000) | $ (8,650,000) |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of the statutory income tax rates (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Reconciliation to statutory rates | ||
Expected federal income taxes benefit at statutory rates | (21.00%) | (21.00%) |
Expected state tax benefit at statutory rates, net of federal benefit | (6.30%) | (8.00%) |
Change in valuation allowance | 27.30% | 25.70% |
Forgiveness of PPP Loan | 3.30% |
EMPLOYEE BENEFITS PLAN (Details
EMPLOYEE BENEFITS PLAN (Details) - USD ($) | 12 Months Ended | 24 Months Ended |
Dec. 31, 2021 | Dec. 31, 2022 | |
EMPLOYEE BENEFITS PLAN | ||
Employer matching contribution | $ 0 | $ 0 |