Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2023 | Jul. 31, 2023 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-40501 | |
Entity Registrant Name | iSpecimen Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 27-0480143 | |
Entity Address, Address Line One | 450 Bedford Street, | |
Entity Address, City or Town | Lexington, | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 02420 | |
City Area Code | 781 | |
Local Phone Number | 301-6700 | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | ISPC | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Emerging Growth Company | true | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 9,065,483 | |
Entity Central Index Key | 0001558569 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 2,004,500 | $ 15,308,710 |
Available-for-sale securities | 6,209,491 | |
Accounts receivable - unbilled | 1,098,356 | 2,327,789 |
Accounts receivable, net of allowance for doubtful accounts of $492,609 and $230,999 at June 30, 2023 and December 31, 2022, respectively | 1,458,845 | 1,597,915 |
Prepaid expenses and other current assets | 187,769 | 300,434 |
Tax credit receivable, current portion | 12,332 | 140,873 |
Total current assets | 10,971,293 | 19,675,721 |
Property and equipment, net | 163,871 | 225,852 |
Internally developed software, net | 6,300,465 | 4,503,787 |
Operating lease right-of-use asset | 107,115 | 184,692 |
Security deposits | 27,601 | 27,601 |
Total assets | 17,570,345 | 24,617,653 |
Current liabilities: | ||
Accounts payable | 1,779,920 | 2,459,063 |
Accrued expenses | 882,274 | 1,531,238 |
Operating lease - current obligation | 107,975 | 158,451 |
Deferred revenue | 89,601 | 132,335 |
Total current liabilities | 2,859,770 | 4,281,087 |
Operating lease long - term obligation | 27,396 | |
Total liabilities | 2,859,770 | 4,308,483 |
Commitments and contingencies (See Note 7) | ||
Stockholders' equity | ||
Common stock, $0.0001 par value, 200,000,000 shares authorized, 9,094,274 issued, and 9,063,274 outstanding at June 30, 2023 and 8,956,808 issued and 8,925,808 outstanding at December 31, 2022 | 906 | 892 |
Additional paid-in capital | 68,889,903 | 68,573,774 |
Treasury stock, 31,000 shares at June 30, 2023 and December 31, 2022, at cost | (172) | (172) |
Accumulated other comprehensive income | 688 | |
Accumulated deficit | (54,180,750) | (48,265,324) |
Total stockholders' equity | 14,710,575 | 20,309,170 |
Total liabilities and stockholders' equity | $ 17,570,345 | $ 24,617,653 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Condensed Balance Sheets | ||
Allowance for doubtful accounts | $ 492,609 | $ 230,999 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 200,000,000 | 200,000,000 |
Common stock, issued (in shares) | 9,094,274 | 8,956,808 |
Common stock, outstanding (in shares) | 9,063,274 | 8,925,808 |
Treasury stock (in shares) | 31,000 | 31,000 |
Condensed Statements of Operati
Condensed Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Condensed Statements of Operations | ||||
Revenue | $ 1,625,140 | $ 2,338,688 | $ 4,575,339 | $ 4,857,348 |
Operating expenses: | ||||
Cost of revenue | 853,633 | 999,743 | 2,000,545 | 2,165,659 |
Technology | 843,099 | 635,650 | 1,677,506 | 1,163,173 |
Sales and marketing | 977,748 | 950,563 | 2,025,346 | 1,697,994 |
Supply development | 291,360 | 242,380 | 614,862 | 424,450 |
Fulfillment | 462,672 | 519,994 | 891,692 | 963,788 |
General and administrative | 1,758,451 | 1,575,365 | 3,469,633 | 3,385,679 |
Total operating expenses | 5,186,963 | 4,923,695 | 10,679,584 | 9,800,743 |
Loss from operations | (3,561,823) | (2,585,007) | (6,104,245) | (4,943,395) |
Other income (expense), net | ||||
Interest expense | (3,535) | (42,273) | (7,070) | (80,321) |
Interest income | 110,882 | 13,881 | 225,144 | 26,535 |
Other income | 6,590 | 6,630 | ||
Other (expense) | (29,138) | (29,255) | ||
Other income (expense), net | 78,209 | (21,802) | 188,819 | (47,156) |
Net loss | (3,483,614) | (2,606,809) | (5,915,426) | (4,990,551) |
Unrealized gains on available-for-sale securities | (18,155) | 688 | ||
Total other comprehensive income | (18,155) | 688 | ||
Comprehensive loss | $ (3,501,769) | $ (2,606,809) | $ (5,914,738) | $ (4,990,551) |
Net loss per share | ||||
Basic (in dollars per share) | $ (0.39) | $ (0.30) | $ (0.66) | $ (0.57) |
Diluted (in dollars per share) | $ (0.39) | $ (0.30) | $ (0.66) | $ (0.57) |
Weighted average shares of common stock outstanding | ||||
Basic (in shares) | 9,033,868 | 8,821,698 | 9,011,644 | 8,793,723 |
Diluted (in shares) | 9,033,868 | 8,821,698 | 9,011,644 | 8,793,723 |
Condensed Statements of Changes
Condensed Statements of Changes in Stockholders' Equity - USD ($) | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Treasury stock (in shares) | 31,000 | |||||
Balance at the beginning at Dec. 31, 2021 | $ 873 | $ (172) | $ 67,810,289 | $ (38,019,402) | $ 29,791,588 | |
Balance in beginning (in shares) at Dec. 31, 2021 | 8,733,479 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock through exercise of stock options | $ 8 | 75,269 | 75,277 | |||
Issuance of common stock through exercise of stock options (in shares) | 77,679 | |||||
Stock-based compensation expense | 183,410 | 183,410 | ||||
Vesting of restricted stock units | 781 | 781 | ||||
Vesting of restricted stock units (in shares) | 3,125 | |||||
Net loss | (2,383,742) | (2,383,742) | ||||
Balance at end (in shares) at Mar. 31, 2022 | 8,814,283 | |||||
Balance at the end at Mar. 31, 2022 | $ 881 | (172) | 68,069,749 | (40,403,144) | 27,667,314 | |
Balance at the beginning at Dec. 31, 2021 | $ 873 | (172) | 67,810,289 | (38,019,402) | 29,791,588 | |
Balance in beginning (in shares) at Dec. 31, 2021 | 8,733,479 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (4,990,551) | |||||
Balance at end (in shares) at Jun. 30, 2022 | 8,873,711 | |||||
Balance at the end at Jun. 30, 2022 | $ 887 | $ (172) | 68,307,168 | (43,009,953) | 25,297,930 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Treasury stock (in shares) | 31,000 | |||||
Balance at the beginning at Mar. 31, 2022 | $ 881 | $ (172) | 68,069,749 | (40,403,144) | 27,667,314 | |
Balance in beginning (in shares) at Mar. 31, 2022 | 8,814,283 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
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 | 1,827 | 1,827 | ||||
Issuance of common stock through exercise of stock options (in shares) | 1,827 | |||||
Stock-based compensation expense | 202,318 | 202,318 | ||||
Vesting of restricted stock units | $ 6 | 27,024 | 27,030 | |||
Vesting of restricted stock units (in shares) | 56,601 | |||||
Net loss | (2,606,809) | (2,606,809) | ||||
Balance at end (in shares) at Jun. 30, 2022 | 8,873,711 | |||||
Balance at the end at Jun. 30, 2022 | $ 887 | $ (172) | 68,307,168 | (43,009,953) | $ 25,297,930 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Treasury stock (in shares) | 31,000 | |||||
Treasury stock (in shares) | 31,000 | 31,000 | ||||
Balance at the beginning at Dec. 31, 2022 | $ 892 | $ (172) | 68,573,774 | (48,265,324) | $ 20,309,170 | |
Balance in beginning (in shares) at Dec. 31, 2022 | 8,925,808 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock through exercise of stock options | $ 7 | 67,729 | 67,736 | |||
Issuance of common stock through exercise of stock options (in shares) | 67,736 | |||||
Stock-based compensation expense | 54,608 | 54,608 | ||||
Vesting of restricted stock units | $ 3 | 65,946 | 65,949 | |||
Vesting of restricted stock units (in shares) | 28,776 | |||||
Gross unrealized gains | $ 18,843 | 18,843 | ||||
Net loss | (2,431,812) | (2,431,812) | ||||
Balance at end (in shares) at Mar. 31, 2023 | 9,022,320 | |||||
Balance at the end at Mar. 31, 2023 | $ 902 | (172) | 68,762,057 | 18,843 | (50,697,136) | 18,084,494 |
Balance at the beginning at Dec. 31, 2022 | $ 892 | (172) | 68,573,774 | (48,265,324) | 20,309,170 | |
Balance in beginning (in shares) at Dec. 31, 2022 | 8,925,808 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock through exercise of stock options | $ 70,889 | |||||
Issuance of common stock through exercise of stock options (in shares) | 70,889 | |||||
Other comprehensive income | $ 688 | |||||
Gross unrealized gains | 26,230 | |||||
Net loss | (5,915,426) | |||||
Balance at end (in shares) at Jun. 30, 2023 | 9,063,274 | |||||
Balance at the end at Jun. 30, 2023 | $ 906 | $ (172) | 68,889,903 | 688 | (54,180,750) | 14,710,575 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Treasury stock (in shares) | 31,000 | |||||
Balance at the beginning at Mar. 31, 2023 | $ 902 | $ (172) | 68,762,057 | 18,843 | (50,697,136) | 18,084,494 |
Balance in beginning (in shares) at Mar. 31, 2023 | 9,022,320 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock in exchange for services (in shares) | 3,153 | |||||
Issuance of common stock through exercise of stock options | 3,153 | 3,153 | ||||
Stock-based compensation expense | 29,829 | 29,829 | ||||
Other comprehensive income | (18,155) | (18,155) | ||||
Vesting of restricted stock units | $ 4 | 94,864 | 94,868 | |||
Vesting of restricted stock units (in shares) | 37,801 | |||||
Net loss | (3,483,614) | (3,483,614) | ||||
Balance at end (in shares) at Jun. 30, 2023 | 9,063,274 | |||||
Balance at the end at Jun. 30, 2023 | $ 906 | $ (172) | $ 68,889,903 | $ 688 | $ (54,180,750) | $ 14,710,575 |
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 ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (5,915,426) | $ (4,990,551) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation | 245,254 | 413,539 |
Amortization of internally developed software | 934,829 | 533,112 |
Depreciation of property and equipment | 75,726 | 9,132 |
Bad debt expense | 261,610 | 269,645 |
Amortization of debt issuance costs on note payable | 6,116 | |
Amortization of discount on available-for-sale securities | (97,874) | |
Change in operating assets and liabilities: | ||
Accounts receivable - unbilled | 1,229,433 | 474,742 |
Accounts receivable | (122,540) | 1,072,721 |
Prepaid expenses and other current assets | 112,665 | (47,832) |
Operating lease right-of-use asset | 77,577 | 73,120 |
Tax credit receivable | 128,541 | |
Accounts payable | (679,143) | (399,652) |
Accrued expenses | (648,964) | (375,547) |
Accrued interest | (389) | |
Operating lease liability | (77,872) | (72,367) |
Deferred revenue | (42,734) | (319,766) |
Net cash used in operating activities | (4,518,918) | (3,353,977) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Capitalization of internally developed software | (2,731,507) | (777,181) |
Purchase of property and equipment | (13,745) | |
Purchase of available-for-sale securities | (7,642,929) | |
Proceeds from sales and maturities of available-for-sale securities | 1,532,000 | |
Net cash used in investing activities | (8,856,181) | (777,181) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from exercise of stock options | 70,889 | 77,104 |
Proceeds from issuance of common stock in exchange for services | 6,250 | |
Net cash (used in) provided by financing activities | 70,889 | 83,354 |
Net change in cash | (13,304,210) | (4,047,804) |
Cash at beginning of period | 15,308,710 | 27,738,979 |
Cash at end of period | 2,004,500 | 23,691,175 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | $ 7,070 | 74,205 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Non-cash amounts of lease liabilities arising from obtaining right-of use-assets | $ 333,123 |
NATURE OF BUSINESS AND BASIS OF
NATURE OF BUSINESS AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2023 | |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | 1. NATURE OF BUSINESS AND BASIS OF PRESENTATION Business iSpecimen Inc. (“iSpecimen” or the “Company”) was incorporated in 2009 under the laws of the state of Delaware. The Company has developed and launched a proprietary online marketplace platform that connects medical researchers who need access to subjects, samples, and data, with hospitals, laboratories, and other organizations who have access to them. iSpecimen is a technology-driven company founded to address a critical challenge: how to connect life science researchers who need human biofluids, tissues, and living cells (“biospecimens”) for their research, with biospecimens available (but not easily accessible) in healthcare provider organizations worldwide. The Company’s proprietary platform, the iSpecimen Marketplace platform, is designed to solve this problem and transform the biospecimen procurement process to accelerate medical discovery. The Company is headquartered in Lexington, Massachusetts and its principal market is North America. The Company operates as one operating Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) as determined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for interim financial information, and, pursuant to the rules and regulations of Article 10 of Regulation S-X of the Securities Act of 1933, as amended (the “Securities Act”), published by the Securities and Exchange Commission (“SEC”) for interim financial statements. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results of operations for the periods presented. They may not include all of the information and footnotes required by GAAP for complete financial statements. Therefore, these unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto contained in Amendment No. 1 to the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2022. Liquidity and Going Concern The Company has recognized recurring losses and as of June 30, 2023, the Company had working capital of $8,111,523 and accumulated deficit of $54,180,750. The Company also had accounts payable and accrued expenses of $2,662,194 as of June 30, 2023. Additionally, as of June 30, 2023, the Company had cash and cash equivalents of $2,004,500 and available-for-sale securities of $6,209,491, which can be quickly liquidated. Management believes that the Company's existing cash and cash equivalents, and its available-for-sale securities provide the Company with sufficient liquidity to continue its operations for at least the next 12 months from the date these unaudited condensed financial statements are issued. As a result of recurring losses, the continued viability of the Company beyond August 2024 may be dependent on its ability to continue to raise additional capital to finance its operations. Impact of the Current Economy The Company’s financial performance is subject to global economic conditions and their impact on the 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. The Company increased its allowance for doubtful accounts in accounts receivables by $261,610 during the six months ended June 30 , 2023 due to a few boutique life sciences customers that have filed for bankruptcy. The Company has enhanced procedures related to its credit check process for new and existing customers in fiscal year 2023 to mitigate the risk to future collectability of receivables. 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 and inflation, as are being currently experienced, may result in a reduction in researchers’ demand for specimens due to the research organization’s inability to obtain funding. To further address the current market conditions, the Company has taken steps, which include but are not limited to, reevaluating its pricing in order to be more competitive, creating campaigns to highlight and fast-track high demand items, and enhancing internal team communications to accelerate the sales cycle. 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. 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 June 30, 2023, the Company’s supply sites in Russia that had not been under sanctions were accessible and the Company’s supply sites in Ukraine were mostly reopened. However, logistics and transportation of specimens out of the country of Ukraine remains challenging and not as economically feasible as they were prior to the beginning of the war. 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 as of the filing date of this report. 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. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. The Company’s significant accounting policies and recent accounting standards are summarized in Note 2 of Amendment No. 1 to the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2022. There were no significant changes to these accounting policies during the six months ended June 30, 2023. Use of Estimates The preparation of the Company’s unaudited condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company utilizes certain estimates in the determination of the fair value of its common stock and warrants, deferred tax valuation allowances, revenue recognition, stock-based compensation, allowance for doubtful accounts, 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. Investments The Company’s investments are considered to be available-for-sale as defined under ASC 320, Investments- Debt Securities, The Company continually monitors the difference between its cost basis and the estimated fair value of its investments. The Company’s accounting policy for impairment recognition requires other-than-temporary impairment charges to be recorded when it determines that it is more likely than not that it will be unable to collect all amounts due according to the contractual terms of the fixed maturity security or that the anticipated recovery in fair value of the equity security will not occur in a reasonable amount of time. Impairment charges on investments are recorded based on the fair value of the investments at the measurement date or based on the value calculated using a discounted cash flow model. Credit-related impairments on fixed maturity securities that the Company does not plan to sell, and for which it is not more likely than not to be required to sell, are recognized in net income. Any non-credit related impairment is recognized as a component of other comprehensive income. Factors considered in evaluating whether a decline in value is other-than-temporary include: the length of time and the extent to which fair value has been less than cost; the financial condition and near-term prospects of the issuer; its intention to hold the investment; and the likelihood that it will be required to sell the investment. 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 measurements, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: ● Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets. ● Level 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. ● Level 3 — Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. For certain financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable, the carrying amounts approximate their fair values as of June 30, 2023 and December 31, 2022, respectively, because of their short-term nature. Available-for-sale securities are recorded at fair value and as level 1 investments. 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 agree 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 takes physical possession of the specimens, sets 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 generally 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 occurs, the Company gives the customer credit for the returns. The Company has not recorded a returns allowance. The following table summarizes the Company’s revenue for the three and six months ended June 30: Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Specimens – contracts with customers $ 1,522,108 $ 2,207,820 $ 4,234,485 $ 4,580,206 Shipping and other 103,032 130,868 340,854 277,142 Revenue $ 1,625,140 $ 2,338,688 $ 4,575,339 $ 4,857,348 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 June 30, 2023 and December 31, 2022, the Company had an allowance for doubtful accounts of $492,609 and $230,999, respectively. The Company applies the practical expedient to account for shipping and handling activities as fulfillment cost rather than as a separate performance obligation. Shipping and handling costs incurred are included in cost of revenue. Internally Developed Software, Net The Company capitalizes certain internal and external costs incurred during the application development stage of internal-use software projects until the software is ready for its intended use. Amortization of the asset commences when the software is complete and placed into service and is recorded in operating expenses. The Company amortizes completed internal-use software over its estimated useful life of five years on a straight-line basis. Costs incurred during the planning, training and post-implementation stages of the software development life cycle are classified as technology costs and are expensed to operations as incurred. Impairment of Long-Lived Assets Management reviews long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable. An impairment loss is recognized when expected cash flows are less than the asset’s carrying value. Long-lived assets consist of property and equipment and internal-use software. No impairment charges were recorded for the six months ended June 30, 2023 and 2022. Stock-Based Compensation The Company records stock-based compensation for options granted to employees, non-employees, and to members of the board of directors for their services to the Company 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 stock-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 stock-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. The fair value of the Company's common stock is equal to the closing price on the specified grant date. Restricted Stock Units The Company recognizes stock-based compensation expense from restricted stock units (the “RSUs”) ratably over the specified vesting period. The fair value of RSUs is determined to be the closing share price of the Company's common stock on the grant date. Common Stock Warrants The Company accounts for common stock warrants as either equity instruments or liabilities, depending on the specific terms of the warrant agreement. The warrants shall be classified as a liability if 1) the underlying shares are classified as liabilities or 2) the entity can be required under any circumstances to settle the warrant by transferring cash or other assets. The measurement of equity-classified nonemployee stock-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 the net loss applicable to stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting the weighted-average number of shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net loss per share calculation, the potential impact of common stock to be issued upon conversion of stock options and warrants to purchase common stock are considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share applicable to stockholders were the same for all periods presented. The table below provides potentially dilutive common stock equivalents excluded from diluted net loss per share as of June 30: 2023 2022 Shares issuable upon vesting of RSUs 168,641 367,118 Shares issuable upon exercise of stock options 345,987 171,154 Shares issuable upon exercise of PIPE Warrant (defined below) to purchase common stock 1,312,500 1,312,500 Shares issuable upon exercise of Lender Warrant (defined below) to purchase common stock 12,500 12,500 Shares issuable upon exercise of Underwriter Warrant (defined below) to purchase common stock 90,000 90,000 Recently Adopted Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses Measurement of Credit Losses on Financial Instruments |
AVAILABLE-FOR-SALE SECURITIES
AVAILABLE-FOR-SALE SECURITIES | 6 Months Ended |
Jun. 30, 2023 | |
Available for Sale Securities | |
AVAILABLE-FOR-SALE SECURITIES | 3. AVAILABLE-FOR-SALE SECURITIES The Company purchased U.S. treasury bills in the six months ended June 30, 2023 and has classified them as available-for-sale securities. The amortized cost, gross unrealized gains and losses, and fair value for available-for-sale securities as of June 30, 2023 are as follows: Gross Gross Amortized unrealized unrealized cost gains losses Fair value Available-for-sale securities: U.S. Treasury Bills $ 6,208,803 $ 26,230 $ (25,542) $ 6,209,491 Total Available-for-sale securities: $ 6,208,803 $ 26,230 $ (25,542) $ 6,209,491 The Company did not have any realized gains or losses in the six months ended June 30, 2023. Maturities of the U.S. Treasury bills are all due within the year. Marketable securities in an unrealized loss position as of June 30, 2023 were not deemed impaired at acquisition and subsequent declines in fair value are not deemed attributed to declines in credit quality. The Company believes that it is more likely than not that it will receive a full recovery of par value on the securities, although there can be no assurance that such recovery will occur. |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 6 Months Ended |
Jun. 30, 2023 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | 4. Property and equipment, net consisted of the following at the dates indicated: June 30, December 31, 2023 2022 Website $ 285,377 $ 285,377 Computer equipment and purchased software 90,304 84,589 Equipment 35,449 35,449 Furniture and fixtures 87,184 87,184 Leasehold improvements 68,471 60,441 Total property and equipment 566,785 553,040 Accumulated depreciation (402,914) (327,188) Total property and equipment, net $ 163,871 $ 225,852 Depreciation expense for property and equipment was $37,137 and $4,420 for the three months ended June 30, 2023 and 2022, respectively, and $75,726 and $9,132 for the six months ended June 30, 2023 and 2022, respectively |
INTERNALLY DEVELOPED SOFTWARE,
INTERNALLY DEVELOPED SOFTWARE, NET | 6 Months Ended |
Jun. 30, 2023 | |
INTERNALLY DEVELOPED SOFTWARE, NET | |
INTERNALLY DEVELOPED SOFTWARE, NET | 5. During the six months ended June 30, 2023 and 2022, the Company capitalized $2,731,507 and $771,181, respectively, of internally developed software costs in connection with the development and continued enhancement of the technology platform and web interfaces. Capitalized costs primarily consist of software costs, payroll, and payroll-related costs for the Company’s employees. The Company recognized $501,502 and $266,893 of amortization expense associated with capitalized internally developed software costs during the three months ended June 30, 2023 and 2022, respectively. The Company recognized $934,829 and $533,112 of amortization expense associated with capitalized internally developed software costs during the six months ended June 30, 2023 and 2022, respectively. |
SEVERANCE
SEVERANCE | 6 Months Ended |
Jun. 30, 2023 | |
SEVERANCE | |
SEVERANCE | 6. 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 (the “Ianelli Separation Date”), as a result of the non-renewal of his Executive Employment Agreement dated June 21, 2021. Dr. Ianelli continued to serve on the Company’s board of directors until his resignation on July 7, 2023. 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 Ianelli 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 Ianelli Separation Date and ending on the 12-month anniversary of the Ianelli Separation Date. In the year ended December 31, 2022, the Company recognized a severance expense and corresponding liability in the amount of $376,400 for Dr. Ianelli’s severance payment and COBRA benefits. On January 1, 2023, the Company accrued an additional $23,580 in severance expense and liability which represents the employer’s portion of the applicable taxes on the remaining severance payments. As of June 30, 2023, the balance of the severance, COBRA benefits and employer taxes liabilities was $142,935 and is recorded on the balance sheet. 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 the renewal of her employment with the Company. Ms. Mullan continued to serve on the Company’s board of directors until May 24, 2023, the end of the term of her directorship. The Company and Ms. Mullan executed a separation agreement on October 28, 2022 with an effective date of October 24, 2022. 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. On January 1, 2023, the Company accrued an additional $21,896 in severance expense and liability which represents the employer’s portion of the applicable taxes on the remaining severance payments. As of June 30, 2023, the balance of the severance and employer taxes liabilities was $121,457 and is recorded on the balance sheet. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2023 | |
FAIR VALUE OF DERIVATIVE LIABILITY | |
FAIR VALUE MEASUREMENTS | 7. FAIR VALUE MEASUREMENTS The following table sets forth the Company’s assets to be measured at fair value on a recurring basis and their respective classification within the fair value hierarchy as of June 30, 2023: Fair Value at June 30, 2023 Total Level 1 Level 2 Level 3 Assets: Available-for-sale securities $ 6,209,491 $ 6,209,491 $ — $ — Total Assets $ 6,209,491 $ 6,209,491 $ — $ — As of June 30, 2023, the Company did not have any liabilities measured at fair value on a recurring basis. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 8. Leases The Company has one operating lease of office space in Lexington, Massachusetts, which 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 the remaining lease term of 1.92 years as of January 1, 2022. There was no sublease rental income for the six months ended June 30, 2023, and the Company is not the lessor in any lease arrangement, and there have been 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 the six months ended June 30, 2023: Operating lease expense $ 82,157 Short-term lease expense 2,500 Total lease cost $ 84,657 Lease Position as of June 30, 2023 Right-of-use lease assets and lease liabilities for the Company’s operating lease as of June 30, 2023 were recorded in the balance sheet as follows: Assets Operating lease right-of-use assets $ 107,115 Total lease assets $ 107,115 Liabilities Current liabilities: Operating lease liability – current portion $ 107,975 Noncurrent liabilities: Operating lease liability – net of current portion — Total lease liability $ 107,975 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 June 30, 2023: Weighted average remaining lease term (in years) – operating leases 0.67 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 (excluding the six months ended June 30, 2023) $ 82,802 2024 27,600 Total future minimum lease payments 110,402 Less effect of discounting (2,427) Present value of future minimum lease payments $ 107,975 Rent expense for the three months ended June 30, 2023 and 2022 amounted to $42,078 and $44,281, respectively. Rent expense for the six months ended June 30, 2023 and 2022 amounted to $84,657 and $89,238, respectively. Cash Flows Supplemental cash flow information related to the operating lease for the six months ended June 30, 2023 was as follows: Non-cash operating lease expense (operating cash flow) $ 77,577 Change in operating lease liabilities (operating cash flow) $ (77,872) Sales Tax Payable The majority of the Company’s customers are researchers, universities, hospitals, and not-for-profit entities that are believed by the Company to have a research and development (“R&D”) tax exemption that generally excludes them from paying sales taxes, with a few exceptions in some tax jurisdictions, provided they have a R&D tax exemption certificate. The main types of specimens the Company sells are blood, blood plasma, human tissue, human parts, and human bodily fluids. Certain of these products are typically not taxable in some states regardless of the buyer’s tax exemption status. The Company historically has not collected sales tax in states where it had sales. Had the Company contemporaneously collected and remitted sales tax for all customers and in all jurisdictions where it would have been required, there would have been no material impact on the Company’s financial statements. As a result of an entity-wide risk assessment process that commenced in the second quarter of 2023, the Company engaged external tax consultant advisors to complement internal resources and efforts to provide support in assessing the appropriate sales tax treatment associated with the Company’s products for all prior years in which the Company had generated revenue, to assist with the collection and tracking of Voluntary Disclosure Agreements (“VDAs”) where a potential tax liability may exist and to assist with the implementation of a sales tax software platform solution for the calculation, collection, and remittance of sales tax for all non-exempt future sales. From the Company’s inception through the filing date of this report, the Company now believes it is probable that an obligation to collect and remit sales tax existed for certain of its sales of products to certain of its customers. Currently, the Company is in the early stage of analyzing its product sales, on an invoice-by-invoice basis, to determine which products are subject to sales tax in each jurisdiction. In addition, the Company is in the early stage of determining which of its customers are exempt from sales tax, and which customers who were not exempt from sales tax have already paid compensating use tax. Part of this process includes requesting and obtaining exemption letters from its customers or proof of payment of their compensating use tax. For all customers that are not exempt from the payment of sales tax and have not remitted use tax, the Company intends to invoice such customers for past sales tax due. However, the Company’s ability to collect the tax due on such invoices is uncertain. Therefore, the Company does not have sufficient information to reasonably estimate the minimum or maximum amount of its sales tax liability as of the date of this report. The Company is also in the process of identifying in which states there may be a need to file VDAs with relevant taxing jurisdictions regarding its failure to collect and remit sales tax obligations. As of June 30, 2023, the Company had not recorded an accrual for the probable sales tax liability nor the interest and penalties likely to be imposed by the taxing jurisdictions for the current and prior reporting periods in the financial statements. The Company will record a liability when the amount of its liability becomes reasonably estimable. Revenue Share from Sequencing of Specimens The Company has determined that it has a contingent liability arising from a certain amendment to one of its contracts signed during the three-month period ended June 30, 2023 with suppliers from which it procured Formalin-Fixed Paraffin-Embedded (“FFPE”) blocks specimens for its project utilizing sequencing. The contract amendment provided that the Company is required to pay the supplier 20% of the revenue derived from sales of the sequenced blocks after it generates $150,000 of sales revenue. The Company considered the revenue share to be probable and estimable as of June 30, 2023, and therefore recorded a liability of $30,000 in its accrued expenses on the balance sheet as of June 30, 2023. 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 June 30, 2023, there was no material litigation against the Company. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2023 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | 9. The Company’s authorized capital is 250,000,000 shares, of which (1) 200,000,000 shares are common stock, par value $0.0001 per share and (2) 50,000,000 are preferred stock, par value $0.0001 per share, which may, at the sole discretion of the Company’s board of directors, be issued in one or more series. Common Stock During the six months ended June 30, 2023, the Company issued 70,889 shares of common stock for cash exercises of options of $70,889. Warrants Underwriter Warrant 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 issued to ThinkEquity a warrant to purchase up to 90,000 shares of common stock (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 Lender Warrant In connection with a term loan (“Term Loan”) entered into with Western Alliance Bank (the “Lender”) on August 13, 2021, the Company issued a warrant to the Lender (the “Lender Warrant”) 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 June 30, 2023, the Lender Warrant had not been exercised, and had a weighted average exercise price of $8.00 per share and a remaining weighted average time to expiration of 8.13 years. PIPE Warrants On December 1, 2021, the Company completed a private placement (the “PIPE”) in which the Company issued warrants (the “PIPE Warrants”) to purchase up to an aggregate of 1,312,500 shares of common stock. These PIPE Warrants have an exercise price of $13.00 per share and are immediately exercisable upon issuance and will expire on the five - and one-half-year anniversary of the issuance date. , the PIPE Warrants had not been exercised, and had a weighted average exercise price of $13.00 per share and a remaining weighted average time to expiration o |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2023 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | 10. Stock Incentive Plans 2021 Plan In March 2021, the Company adopted the iSpecimen Inc. 2021 Stock Incentive Plan, which was subsequently amended in June 2021 and then on May 25, 2022 (the “2021 Plan”). The 2021 Plan was adopted to enhance the Company’s ability to attract, retain and motivate employees, officers, directors, consultants, and advisors by providing such persons with equity ownership opportunities and performance-based incentives. The 2021 Plan authorizes options, restricted stock, RSUs and other stock-based awards. The Company's board of directors, or any committee to which the board of directors delegates such authority, has the sole discretion in administering, interpreting, amending, or accelerating the 2021 Plan. Awards may be made under the 2021 Plan for up to 608,000 shares of the Company's common stock, and the 2021 Plan was made effective with the completion of the IPO. On May 24, 2023, at the Company’s annual meeting of stockholders, the stockholders approved an amendment to the 2021 Plan to increase the number of shares under the 2021 Plan from 608,000 shares of common stock to 1,869,500 shares of common stock. During the six months ended June 30, 2023 and 2022, 163,419 and 166,793 equity awards were issued under the 2021 Plan, respectively. During the three months ended June 30, 2023 and 2022, 45,172 and 155,793 equity awards were issued under the 2021 Plan, respectively. As of June 30, 2023, there were 1,283,763 shares of common stock available for future grants under the 2021 Plan. 2013 Plan The iSpecimen Inc. 2013 Stock Incentive Plan (the “2013 Plan”) was adopted on April 12, 2013 and subsequently amended on July 29, 2015. The aggregate number of shares of common stock that may be issued pursuant to the 2013 Plan was 1,713,570. No equity awards were issued under the 2013 Plan during the six months ended June 30, 2023 and 2022. According to the 2013 Plan which was adopted by the Company’s board of directors on April 12, 2013, no awards shall be granted under the 2013 Plan after the completion of ten years from the date on which the 2013 Plan was adopted by the Company’s board of directors. Therefore, as of April 13, 2023, no further shares from the remaining shares balance of 3,681 can be granted under the 2013 Plan. Stock Options The Company granted 162,672 stock options during the six months ended June 30, 2023. The Company did not 2023 2022 Assumptions: Risk-free interest rate 0.37% – 0.39% — Expected term (in years) 0.61 – 4.00 — Expected volatility 59.35% –59.95% — Expected dividend yield — — A summary of stock option activity under the 2021 Plan and 2013 Plan is as follows: Weighted Average Weighted Remaining Options Average Contractual Term Aggregate Outstanding Exercise Price in Years Intrinsic Value Balance at December 31, 2022 297,559 $ 2.69 6.96 $ 63,237 Granted 162,672 1.42 — — Exercised (70,889) 1.00 — 48,494 Cancelled/forfeited (43,355) 3.59 — — Balance at June 30, 2023 345,987 $ 2.23 8.61 $ 12,267 Options exercisable at June 30, 2023 121,666 $ 3.05 7.47 $ 8,770 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 aggregate intrinsic value of stock options exercised was $48,494 and $91,018 during the six months ended June 30, 2023 and 2022, respectively. The weighted average grant date fair value of stock options issued in the six months ended June 30, 2023 was $0.52. The following table sets forth the recorded stock options compensation expense of the Company during the three and six months ended June 30: Three Months Ended June 30, Six Months Ended June 30, Operating expenses: 2023 2022 2023 2022 Technology $ 2,475 $ 1,023 $ 5,106 $ 2,034 Sales and marketing 623 1,695 1,498 2,772 Supply development 446 348 820 653 Fulfillment 681 1,055 1,325 1,881 General and administrative 26,343 27,824 54,883 54,160 Total stock options expense $ 30,568 $ 31,945 $ 63,632 $ 61,500 A total of $185,260 of unamortized compensation expense as of June 30, 2023 will be recognized over the remaining requisite service period of 2.42 years. During the six months ended June 30, 2023 and 2022, the Company received proceeds of $70,889 and $77,104, respectively, from the exercise of stock options. Restricted Stock Units A summary of RSUs activity under the 2021 Plan and 2013 Plan is as follows: Weighted RSUs Average Grant Outstanding Date Fair Value Unvested Balance at December 31, 2022 267,505 $ 5.43 Granted 747 1.62 Vested (66,577) 5.36 Forfeited (33,034) 5.29 Unvested Balance at June 30, 2023 168,641 $ 5.47 The Company recorded RSUs compensation expense during the three and six months ended June 30 as follows: Three Months Ended June 30, Six Months Ended June 30, Operating expenses: 2023 2022 2023 2022 Technology $ 32,876 $ 25,198 $ 67,653 $ 38,598 Sales and marketing 18,959 26,092 30,814 40,259 Supply development 2,824 10,948 2,824 18,145 Fulfillment 17,608 24,330 39,052 37,960 General and administrative 21,862 110,835 41,279 217,077 Total RSU expense $ 94,129 $ 197,403 $ 181,622 $ 352,039 As of June 30, 2023, the total unrecognized stock-based compensation expense related to unvested RSUs was $890,912, and it is expected to be recognized on a straight-line basis over a weighted average period of approximately 2.37 years. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2023 | |
INCOME TAXES | |
INCOME TAXES | 11. As of June 30, 2023 and December 31, 2022, the Company had federal net operating loss carryforwards of approximately $47,750,000 and $40,800,000, respectively, of which approximately $13,000,000 expires at various periods through 2037 and approximately $34,750,000 and $27,800,000, respectively, can be carried forward indefinitely. As of June 30, 2023 and December 31, 2022, the Company had state net operating loss carryforwards of approximately $29,600,000 and $25,000,000, respectively, that expire at various periods through 2043, respectively. As of June 30, 2023 and December 31, 2022, the Company had federal and state tax credits of approximately $1,860,000 and $1,094,000, respectively, available for future periods that expire at various periods through 2043. The Company has recorded a full valuation allowance against net deferred income tax assets due to a history of losses generated since inception. Due to changes in ownership provisions of the Internal Revenue Code of 1986 (the “IRC”), the availability of the Company's net operating loss carryforwards may be subject to annual limitations under Section 382 of the IRC against taxable income in the future period, which could substantially limit the eventual utilization of such carryforwards |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Use of Estimates | Use of Estimates The preparation of the Company’s unaudited condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company utilizes certain estimates in the determination of the fair value of its common stock and warrants, deferred tax valuation allowances, revenue recognition, stock-based compensation, allowance for doubtful accounts, 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. |
Investments | Investments The Company’s investments are considered to be available-for-sale as defined under ASC 320, Investments- Debt Securities, The Company continually monitors the difference between its cost basis and the estimated fair value of its investments. The Company’s accounting policy for impairment recognition requires other-than-temporary impairment charges to be recorded when it determines that it is more likely than not that it will be unable to collect all amounts due according to the contractual terms of the fixed maturity security or that the anticipated recovery in fair value of the equity security will not occur in a reasonable amount of time. Impairment charges on investments are recorded based on the fair value of the investments at the measurement date or based on the value calculated using a discounted cash flow model. Credit-related impairments on fixed maturity securities that the Company does not plan to sell, and for which it is not more likely than not to be required to sell, are recognized in net income. Any non-credit related impairment is recognized as a component of other comprehensive income. Factors considered in evaluating whether a decline in value is other-than-temporary include: the length of time and the extent to which fair value has been less than cost; the financial condition and near-term prospects of the issuer; its intention to hold the investment; and the likelihood that it will be required to sell the investment. |
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 measurements, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: ● Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets. ● Level 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. ● Level 3 — Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. For certain financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable, the carrying amounts approximate their fair values as of June 30, 2023 and December 31, 2022, respectively, because of their short-term nature. Available-for-sale securities are recorded at fair value and as level 1 investments. |
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 agree 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 takes physical possession of the specimens, sets 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 generally 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 occurs, the Company gives the customer credit for the returns. The Company has not recorded a returns allowance. The following table summarizes the Company’s revenue for the three and six months ended June 30: Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Specimens – contracts with customers $ 1,522,108 $ 2,207,820 $ 4,234,485 $ 4,580,206 Shipping and other 103,032 130,868 340,854 277,142 Revenue $ 1,625,140 $ 2,338,688 $ 4,575,339 $ 4,857,348 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 June 30, 2023 and December 31, 2022, the Company had an allowance for doubtful accounts of $492,609 and $230,999, respectively. The Company applies the practical expedient to account for shipping and handling activities as fulfillment cost rather than as a separate performance obligation. Shipping and handling costs incurred are included in cost of revenue. |
Internally Developed Software, Net | Internally Developed Software, Net The Company capitalizes certain internal and external costs incurred during the application development stage of internal-use software projects until the software is ready for its intended use. Amortization of the asset commences when the software is complete and placed into service and is recorded in operating expenses. The Company amortizes completed internal-use software over its estimated useful life of five years on a straight-line basis. Costs incurred during the planning, training and post-implementation stages of the software development life cycle are classified as technology costs and are expensed to operations as incurred. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Management reviews long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable. An impairment loss is recognized when expected cash flows are less than the asset’s carrying value. Long-lived assets consist of property and equipment and internal-use software. No impairment charges were recorded for the six months ended June 30, 2023 and 2022. |
Share-Based Compensation | Stock-Based Compensation The Company records stock-based compensation for options granted to employees, non-employees, and to members of the board of directors for their services to the Company 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 stock-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 stock-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. The fair value of the Company's common stock is equal to the closing price on the specified grant date. Restricted Stock Units The Company recognizes stock-based compensation expense from restricted stock units (the “RSUs”) ratably over the specified vesting period. The fair value of RSUs is determined to be the closing share price of the Company's common stock on the grant date. |
Common Stock Warrants | Common Stock Warrants The Company accounts for common stock warrants as either equity instruments or liabilities, depending on the specific terms of the warrant agreement. The warrants shall be classified as a liability if 1) the underlying shares are classified as liabilities or 2) the entity can be required under any circumstances to settle the warrant by transferring cash or other assets. The measurement of equity-classified nonemployee stock-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 the net loss applicable to stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting the weighted-average number of shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net loss per share calculation, the potential impact of common stock to be issued upon conversion of stock options and warrants to purchase common stock are considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share applicable to stockholders were the same for all periods presented. The table below provides potentially dilutive common stock equivalents excluded from diluted net loss per share as of June 30: 2023 2022 Shares issuable upon vesting of RSUs 168,641 367,118 Shares issuable upon exercise of stock options 345,987 171,154 Shares issuable upon exercise of PIPE Warrant (defined below) to purchase common stock 1,312,500 1,312,500 Shares issuable upon exercise of Lender Warrant (defined below) to purchase common stock 12,500 12,500 Shares issuable upon exercise of Underwriter Warrant (defined below) to purchase common stock 90,000 90,000 |
Recently Adopted Accounting Standards | 2023 2022 Shares issuable upon vesting of RSUs 168,641 367,118 Shares issuable upon exercise of stock options 345,987 171,154 Shares issuable upon exercise of PIPE Warrant (defined below) to purchase common stock 1,312,500 1,312,500 Shares issuable upon exercise of Lender Warrant (defined below) to purchase common stock 12,500 12,500 Shares issuable upon exercise of Underwriter Warrant (defined below) to purchase common stock 90,000 90,000 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of entity's revenue | Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Specimens – contracts with customers $ 1,522,108 $ 2,207,820 $ 4,234,485 $ 4,580,206 Shipping and other 103,032 130,868 340,854 277,142 Revenue $ 1,625,140 $ 2,338,688 $ 4,575,339 $ 4,857,348 |
Summary of total shares outstanding | 2023 2022 Shares issuable upon vesting of RSUs 168,641 367,118 Shares issuable upon exercise of stock options 345,987 171,154 Shares issuable upon exercise of PIPE Warrant (defined below) to purchase common stock 1,312,500 1,312,500 Shares issuable upon exercise of Lender Warrant (defined below) to purchase common stock 12,500 12,500 Shares issuable upon exercise of Underwriter Warrant (defined below) to purchase common stock 90,000 90,000 |
AVAILABLE-FOR-SALE SECURITIES (
AVAILABLE-FOR-SALE SECURITIES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Available for Sale Securities | |
Summary of amortized cost, gross unrealized holding gains, and fair value for available-for-sale securities | Gross Gross Amortized unrealized unrealized cost gains losses Fair value Available-for-sale securities: U.S. Treasury Bills $ 6,208,803 $ 26,230 $ (25,542) $ 6,209,491 Total Available-for-sale securities: $ 6,208,803 $ 26,230 $ (25,542) $ 6,209,491 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
PROPERTY AND EQUIPMENT, NET | |
Summary of property and equipment, net | June 30, December 31, 2023 2022 Website $ 285,377 $ 285,377 Computer equipment and purchased software 90,304 84,589 Equipment 35,449 35,449 Furniture and fixtures 87,184 87,184 Leasehold improvements 68,471 60,441 Total property and equipment 566,785 553,040 Accumulated depreciation (402,914) (327,188) Total property and equipment, net $ 163,871 $ 225,852 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
FAIR VALUE OF DERIVATIVE LIABILITY | |
Summary of financial liabilities measured at fair value on a recurring basis | Fair Value at June 30, 2023 Total Level 1 Level 2 Level 3 Assets: Available-for-sale securities $ 6,209,491 $ 6,209,491 $ — $ — Total Assets $ 6,209,491 $ 6,209,491 $ — $ — |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of lease costs related to Company's operating lease | Operating lease expense $ 82,157 Short-term lease expense 2,500 Total lease cost $ 84,657 |
Schedule of Lease position in Balance Sheet | Assets Operating lease right-of-use assets $ 107,115 Total lease assets $ 107,115 Liabilities Current liabilities: Operating lease liability – current portion $ 107,975 Noncurrent liabilities: Operating lease liability – net of current portion — Total lease liability $ 107,975 |
Schedule of Lease terms and discount rate | Weighted average remaining lease term (in years) – operating leases 0.67 Weighted average discount rate – operating leases 5.96% |
Schedule of Future lease payment - Undiscounted Cash Flows | 2023 (excluding the six months ended June 30, 2023) $ 82,802 2024 27,600 Total future minimum lease payments 110,402 Less effect of discounting (2,427) Present value of future minimum lease payments $ 107,975 |
Schedule of Cash Flows information | Non-cash operating lease expense (operating cash flow) $ 77,577 Change in operating lease liabilities (operating cash flow) $ (77,872) |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
STOCK-BASED COMPENSATION | |
Summary of assumptions used to estimate the fair value of stock options granted using the Black-Scholes-Merton option pricing model | 2023 2022 Assumptions: Risk-free interest rate 0.37% – 0.39% — Expected term (in years) 0.61 – 4.00 — Expected volatility 59.35% –59.95% — 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, 2022 297,559 $ 2.69 6.96 $ 63,237 Granted 162,672 1.42 — — Exercised (70,889) 1.00 — 48,494 Cancelled/forfeited (43,355) 3.59 — — Balance at June 30, 2023 345,987 $ 2.23 8.61 $ 12,267 Options exercisable at June 30, 2023 121,666 $ 3.05 7.47 $ 8,770 |
Schedule of share based compensation restricted stock units award activity | Weighted RSUs Average Grant Outstanding Date Fair Value Unvested Balance at December 31, 2022 267,505 $ 5.43 Granted 747 1.62 Vested (66,577) 5.36 Forfeited (33,034) 5.29 Unvested Balance at June 30, 2023 168,641 $ 5.47 |
Restricted Stock Units | |
STOCK-BASED COMPENSATION | |
Schedule of summary of compensation expense | Three Months Ended June 30, Six Months Ended June 30, Operating expenses: 2023 2022 2023 2022 Technology $ 32,876 $ 25,198 $ 67,653 $ 38,598 Sales and marketing 18,959 26,092 30,814 40,259 Supply development 2,824 10,948 2,824 18,145 Fulfillment 17,608 24,330 39,052 37,960 General and administrative 21,862 110,835 41,279 217,077 Total RSU expense $ 94,129 $ 197,403 $ 181,622 $ 352,039 |
Employee Stock Option [Member] | |
STOCK-BASED COMPENSATION | |
Schedule of summary of compensation expense | Three Months Ended June 30, Six Months Ended June 30, Operating expenses: 2023 2022 2023 2022 Technology $ 2,475 $ 1,023 $ 5,106 $ 2,034 Sales and marketing 623 1,695 1,498 2,772 Supply development 446 348 820 653 Fulfillment 681 1,055 1,325 1,881 General and administrative 26,343 27,824 54,883 54,160 Total stock options expense $ 30,568 $ 31,945 $ 63,632 $ 61,500 |
NATURE OF BUSINESS AND BASIS _2
NATURE OF BUSINESS AND BASIS OF PRESENTATION (Details) | 6 Months Ended |
Jun. 30, 2023 segment | |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | |
Reporting units | 1 |
Operating segments | 1 |
NATURE OF BUSINESS AND BASIS _3
NATURE OF BUSINESS AND BASIS OF PRESENTATION - Additional information (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | |||
Working capital | $ 8,111,523 | ||
Accumulated deficit | 54,180,750 | $ 48,265,324 | |
Cash and cash equivalents | 2,004,500 | $ 15,308,710 | |
Accounts payable and accrued expenses | 2,662,194 | ||
Increase in allowance for doubtful accounts | 261,610 | ||
Available-for-sale securities | $ 6,209,491 | ||
Purchase orders negatively impacted due to Russia's invasion of Ukraine | $ 1,000,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition and Accounts Receivable (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Revenue | |||||
Right of return (in days) | 14 days | ||||
Revenue | $ 1,625,140 | $ 2,338,688 | $ 4,575,339 | $ 4,857,348 | |
Accounts receivable | |||||
Allowance for doubtful accounts | 492,609 | 492,609 | $ 230,999 | ||
Specimens | |||||
Revenue | |||||
Revenue | 1,522,108 | 2,207,820 | 4,234,485 | 4,580,206 | |
Shipping and other | |||||
Revenue | |||||
Revenue | $ 103,032 | $ 130,868 | $ 340,854 | $ 277,142 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Internally Developed Software, net (Details) | Jun. 30, 2023 |
Internal-use software | |
Internally Developed Software, Net | |
Estimated useful life (in years) | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional information (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Impairment charges | $ 0 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Shares issuable upon conversion of preferred stock (Details) - shares | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Subsidiary, Sale of Stock [Line Items] | ||
Shares issuable upon vesting of RSU's | 168,641 | 367,118 |
Shares issuable upon exercise of stock options | 345,987 | 171,154 |
Private Placement | ||
Subsidiary, Sale of Stock [Line Items] | ||
Shares issuable upon exercise of warrants | 1,312,500 | 1,312,500 |
Lender | ||
Subsidiary, Sale of Stock [Line Items] | ||
Shares issuable upon exercise of warrants | 12,500 | 12,500 |
Underwriter Warrants | ||
Subsidiary, Sale of Stock [Line Items] | ||
Shares issuable upon exercise of warrants | 90,000 | 90,000 |
AVAILABLE FOR SALE SECURITIES (
AVAILABLE FOR SALE SECURITIES (Details) - USD ($) | 3 Months Ended | 6 Months Ended |
Mar. 31, 2023 | Jun. 30, 2023 | |
Available for Sale Securities | ||
Amortized cost | $ 6,208,803 | |
Gross unrealized gains | $ 18,843 | 26,230 |
Gross unrealized losses | (25,542) | |
Fair value | 6,209,491 | |
US Treasury Bills | ||
Available for Sale Securities | ||
Amortized cost | 6,208,803 | |
Gross unrealized gains | 26,230 | |
Gross unrealized losses | (25,542) | |
Fair value | $ 6,209,491 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
PP&E, Net, by Type | |||||
Total property and equipment | $ 566,785 | $ 566,785 | $ 553,040 | ||
Accumulated depreciation | (402,914) | (402,914) | (327,188) | ||
Total property and equipment, net | 163,871 | 163,871 | 225,852 | ||
Depreciation of property and equipment | 37,137 | $ 4,420 | 75,726 | $ 9,132 | |
Website | |||||
PP&E, Net, by Type | |||||
Total property and equipment | 285,377 | 285,377 | 285,377 | ||
Computer equipment and purchased software | |||||
PP&E, Net, by Type | |||||
Total property and equipment | 90,304 | 90,304 | 84,589 | ||
Equipment | |||||
PP&E, Net, by Type | |||||
Total property and equipment | 35,449 | 35,449 | 35,449 | ||
Furniture and fixtures | |||||
PP&E, Net, by Type | |||||
Total property and equipment | 87,184 | 87,184 | 87,184 | ||
Leasehold improvements | |||||
PP&E, Net, by Type | |||||
Total property and equipment | $ 68,471 | $ 68,471 | $ 60,441 |
INTERNALLY DEVELOPED SOFTWARE_2
INTERNALLY DEVELOPED SOFTWARE, NET (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
INTERNALLY DEVELOPED SOFTWARE, NET | ||||
Internally developed software capitalized | $ 2,731,507 | $ 771,181 | ||
Amortization expense | $ 501,502 | $ 266,893 | $ 934,829 | $ 533,112 |
SEVERANCE (Details)
SEVERANCE (Details) - USD ($) | 12 Months Ended | ||||
Oct. 24, 2022 | Sep. 24, 2022 | Dec. 31, 2022 | Jun. 30, 2023 | Jan. 01, 2023 | |
Severance | |||||
Amount of severance expense and corresponding liability recognized | $ 376,400 | ||||
Chief Executive Officer and President | |||||
Severance | |||||
Severance Costs | $ 350,000 | ||||
Amount of employer's portion of the applicable taxes on the remaining severance payments | $ 23,580 | ||||
Balance of the severance and employer taxes liabilities | $ 142,935 | ||||
Chief Operating Officer | |||||
Severance | |||||
Severance Costs | $ 325,000 | ||||
Amount of employer's portion of the applicable taxes on the remaining severance payments | 21,896 | ||||
Balance of the severance and employer taxes liabilities | $ 121,457 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) | Jun. 30, 2023 USD ($) |
Assets, Fair Value Disclosure [Abstract] | |
Available-for-sale securities | $ 6,209,491 |
Level 1 | Recurring | |
Assets, Fair Value Disclosure [Abstract] | |
Available-for-sale securities | $ 6,209,491 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) | 6 Months Ended | |
Jun. 30, 2023 USD ($) item | Jan. 01, 2022 | |
Lessee, Lease, Description [Line Items] | ||
Remaining lease term | 8 months 1 day | |
Office Space in Lexington, Massachusetts [Member] | ||
Lessee, Lease, Description [Line Items] | ||
Number of operating lease | 1 | |
Incremental borrowing rate | 5.96% | |
Remaining lease term | 1 year 11 months 1 day | |
Sublease rental income | $ | $ 0 | |
Number of related party lease agreements | 0 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Company operating lease (Details) | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
COMMITMENTS AND CONTINGENCIES | |
Operating lease expense | $ 82,157 |
Short-term lease expense | 2,500 |
Total Lease cost | $ 84,657 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES - Lease positions in Balance Sheets (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Assets and Liabilities, Lessee [Abstract] | ||
Operating lease right-of-use assets | $ 107,115 | $ 184,692 |
Total lease assets | 107,115 | |
Operating lease liability - current portion | 107,975 | 158,451 |
Operating lease liability - net of current portion | $ 27,396 | |
Total lease liability | $ 107,975 |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES - Lease Terms and Discount Rate (Details) | Jun. 30, 2023 |
COMMITMENTS AND CONTINGENCIES | |
Weighted average remaining lease term (in years) - operating leases | 8 months 1 day |
Weighted average discount rate - operating leases | 5.96% |
COMMITMENTS AND CONTINGENCIES_5
COMMITMENTS AND CONTINGENCIES - Future lease payments (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Operating Leases | ||||
2023 | $ 82,802 | $ 82,802 | ||
2024 | 27,600 | 27,600 | ||
Total future minimum lease payments | 110,402 | 110,402 | ||
Less effect of discounting | (2,427) | (2,427) | ||
Total lease liability | 107,975 | 107,975 | ||
Rent expense | $ 42,078 | $ 44,281 | $ 84,657 | $ 89,238 |
COMMITMENTS AND CONTINGENCIES_6
COMMITMENTS AND CONTINGENCIES - Cash Flows - Operating lease (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
COMMITMENTS AND CONTINGENCIES | ||
Non-cash lease expense (operating cash flow) | $ 77,577 | |
Change in lease liabilities (operating cash flow) | $ (77,872) | $ (72,367) |
COMMITMENTS AND CONTINGENCIES_7
COMMITMENTS AND CONTINGENCIES - Revenue Share from Sequencing of Specimens (Details) - Formalin-Fixed Paraffin-Embedded ("FFPE") | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Revenue | |
Percentage of revenue derived from sales | 20% |
Amount of recorded liability | $ 30,000 |
Minimum | |
Revenue | |
Amount of sales revenue requirement | $ 150,000 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
STOCKHOLDERS' EQUITY | ||
Number of shares authorized | 250,000,000 | |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 50,000,000 | |
Preferred stock, par value | $ 0.0001 |
STOCKHOLDERS' EQUITY - Common S
STOCKHOLDERS' EQUITY - Common Stock - (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | |
STOCKHOLDERS' EQUITY | |||||
Issuance of common stock through exercise of stock options (in shares) | 70,889 | ||||
Issuance of common stock through exercise of stock options | $ 3,153 | $ 67,736 | $ 1,827 | $ 75,277 | $ 70,889 |
Issuance of common stock in exchange for services | $ 6,250 |
STOCKHOLDERS' EQUITY - Underwri
STOCKHOLDERS' EQUITY - Underwriter Warrants (Details) - Underwriter Warrants $ / shares in Units, $ in Millions | 6 Months Ended |
Jun. 30, 2023 USD ($) $ / shares shares | |
Warrants | |
Warrants to purchase shares of common stock | shares | 90,000 |
Exercise price of warrant | $ / shares | $ 10 |
Warrants exercisable term | 4 years 6 months |
Commencing term from effective date of registration statement | 180 days |
Warrants Not Settleable in Cash, Fair Value Disclosure | $ | $ 0.4 |
Weighted Average Time to Expiration | 2 years 11 months 15 days |
STOCKHOLDERS' EQUITY - Warrants
STOCKHOLDERS' EQUITY - Warrants (Details) - $ / shares | 6 Months Ended | ||
Jun. 30, 2023 | Dec. 01, 2021 | Aug. 01, 2021 | |
Private Placement | |||
Class of Warrant or Right [Line Items] | |||
Warrants exercisable term | 5 years 6 months | ||
Weighted average time to expiration | 4 years | ||
Warrants to purchase shares of common stock | 1,312,500 | ||
Exercise price of warrant | $ 13 | $ 13 | |
Warrants other than Underwriter Warrants | |||
Class of Warrant or Right [Line Items] | |||
Weighted average time to expiration | 8 years 1 month 17 days | ||
Warrants to purchase shares of common stock | 12,500 | ||
Exercise price of warrant | $ 8 | $ 8 |
SHARE-BASED COMPENSATION - 2021
SHARE-BASED COMPENSATION - 2021 Stock Incentive Plan - shares (Details) - shares | 3 Months Ended | 6 Months Ended | 18 Months Ended | ||||||
Jul. 29, 2015 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | May 24, 2023 | May 23, 2023 | Apr. 13, 2023 | |
2013 Stock Incentive Plan | |||||||||
STOCK-BASED COMPENSATION | |||||||||
Number of shares available for future grants | 0 | ||||||||
Number of shares issued | 1,713,570 | 3,681 | 0 | ||||||
Plan term | 10 years | ||||||||
2021 Stock Incentive Plan | |||||||||
STOCK-BASED COMPENSATION | |||||||||
Options authorized | 608,000 | 608,000 | 608,000 | 1,869,500 | 608,000 | ||||
Number of shares available for future grants | 1,283,763 | 1,283,763 | 1,283,763 | ||||||
Number of shares issued | 45,172 | 155,793 | 163,419 | 166,793 |
SHARE-BASED COMPENSATION - Esti
SHARE-BASED COMPENSATION - Estimate the fair value of stock options (Details) | 6 Months Ended |
Jun. 30, 2023 | |
Assumptions used to estimate the fair value of stock options granted | |
Risk-free interest rate, minimum | 0.37% |
Risk-free interest rate, maximum | 0.39% |
Expected volatility, minimum | 59.35% |
Expected volatility, maximum | 59.95% |
Minimum | |
Assumptions used to estimate the fair value of stock options granted | |
Expected term (in years) | 7 months 9 days |
Maximum | |
Assumptions used to estimate the fair value of stock options granted | |
Expected term (in years) | 4 years |
SHARE-BASED COMPENSATION - Stoc
SHARE-BASED COMPENSATION - Stock option activity (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Options Outstanding | |||
Granted | 162,672 | 0 | |
Exercised | (70,889) | ||
Balance at the end | 345,987 | 171,154 | |
Weighted Average Exercise Price | |||
Granted (in dollars per share) | $ 0.52 | ||
2013 and 2021 Stock Incentive Plan | |||
Options Outstanding | |||
Balance at the beginning | 297,559 | ||
Granted | 162,672 | ||
Exercised | (70,889) | ||
Cancelled/forfeited | (43,355) | ||
Balance at the end | 345,987 | 297,559 | |
Options exercisable at the end | 121,666 | ||
Weighted Average Exercise Price | |||
Balance at the beginning (in dollars per share) | $ 2.69 | ||
Granted (in dollars per share) | 1.42 | ||
Exercised (in dollars per share) | 1 | ||
Cancelled/forfeited (in dollars per share) | 3.59 | ||
Balance at the end (in dollars per share) | 2.23 | $ 2.69 | |
Options exercisable at the end (in dollars per share) | $ 3.05 | ||
Weighted Average Remaining Contractual Term (in years) | |||
Weighted Average Remaining Contractual Term (in years) | 8 years 7 months 9 days | 6 years 11 months 15 days | |
Options exercisable at the end (in years) | 7 years 5 months 19 days | ||
Aggregate Intrinsic Value | |||
Balance at the beginning (in dollars) | $ 63,237 | ||
Exercised (in dollars) | 48,494 | ||
Balance at the end (in dollars) | 12,267 | $ 63,237 | |
Options exercisable at the end (in dollars) | $ 8,770 |
SHARE-BASED COMPENSATION - Addi
SHARE-BASED COMPENSATION - Additional information (Details) - USD ($) | 6 Months Ended | 18 Months Ended | ||
Jul. 29, 2015 | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total intrinsic value of stock options exercised | $ 48,494 | $ 91,018 | ||
Unamortized compensation expense | $ 185,260 | $ 185,260 | ||
Unamortized compensation expense recognized over the remaining requisite service period | 2 years 5 months 1 day | |||
Proceeds from exercise of stock options | $ 70,889 | $ 77,104 | ||
2013 Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares issued | 1,713,570 | 3,681 | 0 |
SHARE-BASED COMPENSATION - Comp
SHARE-BASED COMPENSATION - Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Employee Stock Option [Member] | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Allocated share based compensation expense | $ 30,568 | $ 31,945 | $ 63,632 | $ 61,500 |
Employee Stock Option [Member] | Technology | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Allocated share based compensation expense | 2,475 | 1,023 | 5,106 | 2,034 |
Employee Stock Option [Member] | Sales and marketing | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Allocated share based compensation expense | 623 | 1,695 | 1,498 | 2,772 |
Employee Stock Option [Member] | Supply development | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Allocated share based compensation expense | 446 | 348 | 820 | 653 |
Employee Stock Option [Member] | Fulfillment | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Allocated share based compensation expense | 681 | 1,055 | 1,325 | 1,881 |
Employee Stock Option [Member] | General and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Allocated share based compensation expense | 26,343 | 27,824 | 54,883 | 54,160 |
Restricted Stock Units | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Allocated share based compensation expense | 94,129 | 197,403 | 181,622 | 352,039 |
Restricted Stock Units | Technology | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Allocated share based compensation expense | 32,876 | 25,198 | 67,653 | 38,598 |
Restricted Stock Units | Sales and marketing | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Allocated share based compensation expense | 18,959 | 26,092 | 30,814 | 40,259 |
Restricted Stock Units | Supply development | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Allocated share based compensation expense | 2,824 | 10,948 | 2,824 | 18,145 |
Restricted Stock Units | Fulfillment | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Allocated share based compensation expense | 17,608 | 24,330 | 39,052 | 37,960 |
Restricted Stock Units | General and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Allocated share based compensation expense | $ 21,862 | $ 110,835 | $ 41,279 | $ 217,077 |
SHARE-BASED COMPENSATION - Rest
SHARE-BASED COMPENSATION - Restricted Stock Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
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 5 months 1 day | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 747 | |||
Restricted Stock Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense | $ 94,129,000 | $ 197,403,000 | $ 181,622,000 | $ 352,039,000 |
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | 890,912 | $ 890,912 | ||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 2 years 4 months 13 days | |||
Restricted Stock Units | General and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Compensation expense | $ 21,862,000 | $ 110,835,000 | $ 41,279,000 | $ 217,077,000 |
SHARE-BASED COMPENSATION - Re_2
SHARE-BASED COMPENSATION - Restricted Stock Units (Details) | 6 Months Ended |
Jun. 30, 2023 USD ($) $ / shares shares | |
Options outstanding | |
Unvested Balance at December 31, 2021 | shares | 267,505 |
Granted | shares | 747 |
Vested | $ | $ (66,577) |
Forfeited | shares | (33,034) |
Unvested Balance at December 31, 2022 | shares | 168,641 |
Weighted Average Grant Date Fair Value | |
Unvested Balance at December 31, 2021 | $ 5.43 |
Granted | 1.62 |
Vested | 5.36 |
Forfeited | 5.29 |
Unvested Balance at December 31, 2022 | $ 5.47 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Income Taxes | ||
Net operating loss carryforwards, carried forward indefinitely | $ 34,750,000 | $ 27,800,000 |
Tax Credit Carryforward, Amount | 1,860,000 | 1,094,000 |
Federal | ||
Income Taxes | ||
Net operating loss carryforwards | 47,750,000 | 40,800,000 |
Net operating loss carryforwards, subject to expiration | 13,000,000 | |
State | ||
Income Taxes | ||
Net operating loss carryforwards, subject to expiration | $ 29,600,000 | $ 25,000,000 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Pay vs Performance Disclosure | ||||||
Net Income (Loss) | $ (3,483,614) | $ (2,431,812) | $ (2,606,809) | $ (2,383,742) | $ (5,915,426) | $ (4,990,551) |
Insider Trading Arrangements
Insider Trading Arrangements | 6 Months Ended |
Jun. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |