Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Mar. 11, 2024 | Jun. 30, 2023 | |
Document and Entity Information [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 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 Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Emerging Growth Company | true | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Ex Transition Period | false | ||
Document Financial Statement Error Correction [Flag] | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 9,087,467 | ||
Entity Central Index Key | 0001558569 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Entity Public Float | $ 10,362,059 | ||
Auditor Name | Wolf & Company, P.C. | ||
Auditor Location | Boston, Massachusetts | ||
Auditor Firm ID | 392 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 2,343,666 | $ 15,308,710 |
Available-for-sale securities | 2,661,932 | 0 |
Accounts receivable - unbilled | 2,212,538 | 2,327,789 |
Accounts receivable, net of allowance for doubtful accounts of $520,897 and $230,999 at December 31, 2023 and 2022, respectively | 728,388 | 1,597,915 |
Prepaid expenses and other current assets | 292,079 | 300,434 |
Tax credit receivable | 140,873 | |
Total current assets | 8,238,603 | 19,675,721 |
Property and equipment, net | 127,787 | 225,852 |
Internally developed software, net | 6,323,034 | 4,503,787 |
Other intangible assets, net | 908,255 | |
Operating lease right-of-use asset | 193,857 | 184,692 |
Security deposits | 27,601 | 27,601 |
Total assets | 15,819,137 | 24,617,653 |
Current liabilities: | ||
Accounts payable | 3,925,438 | 2,459,063 |
Accrued expenses | 1,540,607 | 1,531,238 |
Operating lease - current obligation | 167,114 | 158,451 |
Deferred revenue | 415,771 | 132,335 |
Total current liabilities | 6,048,930 | 4,281,087 |
Operating lease long - term obligation | 29,130 | 27,396 |
Total liabilities | 6,078,060 | 4,308,483 |
Stockholders' equity | ||
Common stock, $0.0001 par value, 200,000,000 shares authorized, 9,114,371 issued, and 9,083,371 outstanding at December 31, 2023 and 8,956,808 issued and 8,925,808 outstanding at December 31, 2022 | 908 | 892 |
Additional paid-in capital | 69,104,313 | 68,573,774 |
Treasury stock, 31,000 shares at December 31, 2023 and 2022, at cost | (172) | (172) |
Accumulated other comprehensive income | 840 | |
Accumulated deficit | (59,364,812) | (48,265,324) |
Total stockholders' equity | 9,741,077 | 20,309,170 |
Total liabilities and stockholders' equity | $ 15,819,137 | $ 24,617,653 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Condensed Balance Sheets | ||
Allowance for doubtful accounts | $ 520,897 | $ 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) | 9,114,371 | 8,956,808 |
Common stock, outstanding (in shares) | 9,083,371 | 8,925,808 |
Treasury stock (in shares) | 31,000 | 31,000 |
Condensed Statements of Operati
Condensed Statements of Operations and Comprehensive Loss - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Condensed Statements of Operations | ||
Revenue | $ 9,928,184 | $ 10,402,303 |
Operating expenses: | ||
Cost of revenue | 4,820,268 | 4,756,965 |
Technology | 3,566,917 | 2,656,287 |
Sales and marketing | 3,955,974 | 3,445,344 |
Supply development | 1,030,403 | 801,125 |
Fulfillment | 1,788,879 | 1,995,937 |
General and administrative | 5,935,092 | 6,932,727 |
Total operating expenses | 21,097,533 | 20,588,385 |
Loss from operations | (11,169,349) | (10,186,082) |
Other income (expense), net | ||
Interest expense | (16,001) | (238,963) |
Interest income | 339,750 | 169,345 |
Interest and penalties on sales tax liability | (214,784) | |
Other income (expense), net | (39,104) | 9,778 |
Total other income (expense), net | 69,861 | (59,840) |
Net loss | (11,099,488) | (10,245,922) |
Unrealized gains on available-for-sale securities | 840 | |
Total other comprehensive income | 840 | |
Comprehensive loss | $ (11,098,648) | $ (10,245,922) |
Net loss per share | ||
Basic (in dollars per share) | $ (1.23) | $ (1.16) |
Diluted (in dollars per share) | $ (1.23) | $ (1.16) |
Weighted average shares of common stock outstanding | ||
Basic (in shares) | 9,041,341 | 8,844,307 |
Diluted (in shares) | 9,041,341 | 8,844,307 |
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 (in shares) at Dec. 31, 2021 | 8,733,479 | |||||
Balance at the beginning at Dec. 31, 2021 | $ 873 | $ (172) | $ 67,810,289 | $ (38,019,402) | $ 29,791,588 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock in exchange for services | 6,250 | 6,250 | ||||
Issuance of common stock in exchange for services (in shares) | 1,000 | |||||
Issuance of common stock through exercise of stock options | $ 8 | 78,633 | 78,641 | |||
Issuance of common stock through exercise of stock options (in shares) | 81,043 | |||||
Stock-based compensation expense | 642,077 | 642,077 | ||||
Vesting of restricted stock units | $ 11 | 36,525 | 36,536 | |||
Vesting of restricted stock units (in shares) | 110,286 | |||||
Net loss | (10,245,922) | (10,245,922) | ||||
Balance at the end (in shares) at Dec. 31, 2022 | 8,925,808 | |||||
Balance at the end at Dec. 31, 2022 | $ 892 | (172) | 68,573,774 | (48,265,324) | $ 20,309,170 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Treasury stock (in shares) | 31,000 | |||||
Issuance of common stock through exercise of stock options | $ 7 | 70,882 | $ 70,889 | |||
Issuance of common stock through exercise of stock options (in shares) | 70,889 | |||||
Stock-based compensation expense | 160,010 | 160,010 | ||||
Other comprehensive income | 840 | |||||
Vesting of restricted stock units | $ 9 | 299,647 | 299,656 | |||
Vesting of restricted stock units (in shares) | 86,674 | |||||
Gross unrealized gains | 36,138 | |||||
Unrealized gains on available-for-sale securities | $ 840 | 840 | ||||
Net loss | (11,099,488) | (11,099,488) | ||||
Balance at the end (in shares) at Dec. 31, 2023 | 9,083,371 | |||||
Balance at the end at Dec. 31, 2023 | $ 908 | $ (172) | $ 69,104,313 | $ 840 | $ (59,364,812) | $ 9,741,077 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Treasury stock (in shares) | 31,000 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (11,099,488) | $ (10,245,922) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation | 459,666 | 678,613 |
Proceeds from issuance of common stock in exchange for services | 6,250 | |
Amortization of internally developed software | 1,948,085 | 1,182,766 |
Amortization of other intangible assets | 49,520 | |
Depreciation of property and equipment | 117,543 | 22,433 |
Bad debt expense | 305,039 | 106,581 |
Non-cash interest income related to accretion of discount on available-for-sale securities | (177,294) | |
Amortization of debt issuance costs on note payable | 77,384 | |
Change in operating assets and liabilities: | ||
Accounts receivable - unbilled | 115,251 | (588,769) |
Accounts receivable | 564,488 | 1,297,946 |
Prepaid expenses and other current assets | 8,355 | 26,601 |
Operating lease right-of-use asset | 157,192 | 148,431 |
Tax credit receivable | 140,873 | |
Accounts payable | 1,466,375 | 1,626,385 |
Accrued expenses | 9,369 | 521,435 |
Accrued interest | (8,167) | |
Operating lease liability | (155,960) | (147,276) |
Deferred revenue | 283,436 | (522,411) |
Net cash used in operating activities | (5,807,550) | (5,817,720) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Capitalization of internally developed software | (3,767,332) | (2,975,686) |
Capitalization of other intangible assets | (957,775) | |
Purchase of property and equipment | (19,478) | (215,504) |
Purchase of available-for-sale securities | (13,039,798) | |
Proceeds from maturities of available-for-sale securities | 10,556,000 | |
Net cash used in investing activities | (7,228,383) | (3,191,190) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from exercise of stock options | 70,889 | 78,641 |
Payment of term loan | (3,500,000) | |
Net cash (used in) financing activities | 70,889 | (3,421,359) |
Net change in cash | (12,965,044) | (12,430,269) |
Cash at beginning of period | 15,308,710 | 27,738,979 |
Cash at end of period | 2,343,666 | 15,308,710 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 16,001 | 161,579 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Non-cash amounts of lease liabilities arising from obtaining right-of use-assets | $ 166,357 | $ 333,123 |
NATURE OF BUSINESS
NATURE OF BUSINESS | 12 Months Ended |
Dec. 31, 2023 | |
NATURE OF BUSINESS | |
NATURE OF BUSINESS | 1. iSpecimen Inc. (“iSpecimen” or the “Company”) was incorporated in 2009 under the laws of the state of Delaware. The Company has developed and launched a proprietary online marketplace platform that connects medical researchers who need access to subjects, samples, and data, with hospitals, laboratories, and other organizations who have access to them. iSpecimen is a technology-driven company founded to address a critical challenge: how to connect life science researchers who need human biofluids, tissues, and living cells (“biospecimens”) for their research, with biospecimens available (but not easily accessible) in healthcare provider organizations worldwide. The iSpecimen Marketplace platform was designed to solve this problem and transform the biospecimen procurement process to accelerate medical discovery. The Company is headquartered in Lexington, Massachusetts and its principal market is North America. The Company operates as one operating and reporting Basis of Presentation The Company’s financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). Going Concern Uncertainty and Management’s Plan The Company has recognized recurring losses since inception. As of December 31, 2023, the Company had working capital of $2,189,673, an accumulated deficit of $59,364,812, cash and cash equivalents and short-term investments of $5,005,598, and accounts payable and accrued expenses of $5,466,045. Since inception, the Company has relied upon raising capital and its revenues to finance operations. The future success of the Company is dependent on its ability to successfully obtain additional working capital and/or to ultimately attain profitable operations. The Company has initiated efforts to decrease its capital and operational expenditures by cutting costs and right sizing the Company through a reduction in workforce. Throughout the year and primarily on September 6, 2023, the Company executed a reduction in workforce, resulting in an estimated reduction in monthly compensation costs of 29% and additional expenditure reductions estimated to be over 50% of monthly expenditures for the remainder of the year, after streamlining operations and rationalizing resources to focus on key market opportunities. As a result, the Company experienced a significant decrease in expenditures during the second half of 2023 compared to the first half of 2023. In addition, the Company plans to add additional customers and suppliers to increase and add additional revenues through its new revenue enhancement projects as well as to reduce and manage expenditures to improve its financial position and fund operations. However, as certain elements of the Company’s operating plan are not within the Company’s control, the Company is unable to assess their probability of success. The Company may also seek to fund its operations through public equity or debt financing, as well as other sources, but it has not currently identified any specific source of funding except for the At the Market Offering Agreement (the “ATM Agreement”) having an aggregate offering price of up to $1,500,000 (the “ATM Shares”), from time to time through the Sales Agent These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year from the date these financial statements are issued. Management’s plan to mitigate the conditions that raise substantial doubt includes generating additional revenues through its revenue enhancement projects, deferring certain projects and capital expenditures and eliminating certain future operating expenses for the Company to continue as a going concern. However, there can be no assurance that the Company will be successful in completing any of these options. As a result, management’s plans cannot be considered probable and thus do not alleviate substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above 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 biospecimen industries, which may adversely affect the Company’s business and financial condition. The Company increased its allowance for doubtful accounts in accounts receivables by $289,898 during the year ended December 31, 2023 due to certain boutique life sciences customers either lacking liquidity or having 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, that 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, enhancing internal team communications to accelerate the sales cycle, moving to a new line of business structure organized by our internal categorization of biospecimen suppliers capabilities to increase efficiency in operations, implementation of next day quotes to increase conversion ratios of quotes to purchase orders, and initiation of efforts to decrease expenditures through reductions in workforce. The Company believes that its business will continue to be resilient through a continued industry-wide economic slowdown in life science research, and that the Company has and will continue to work on improving 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 specimen collections from other supply sites took time, which caused a delay in the fulfillment of such purchase orders. Alternate suppliers do not have the same favorable unit economics or specimen collection rates, As of December 31, 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 the Company’s Annual Report on Form 10-K in which these financial statements are included (the “Annual 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 | 12 Months Ended |
Dec. 31, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company utilizes certain estimates in the determination of the deferred tax valuation allowances, revenue recognition, stock-based compensation, allowance for doubtful accounts, accrued expenses, and the useful lives of internally developed software and sequenced data. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results could differ from such estimates. Off-Balance Sheet Risk and Concentrations of Credit Risk The Company has no significant off-balance sheet risks, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. As of December 31, 2022, the Company maintained all of its cash with one financial institution which potentially subjected the Company to concentration of credit risk. To reduce this risk, the Company purchased treasury bills at a different financial institution in 2023. As of December 31, 2023, the Company maintained the remainder of its cash, which exceeds the federally insured limits, with a reputable financial institution and accordingly, the Company believes such funds are subject to minimal credit risk. Concentration of credit risk with respect to accounts receivable is typically related to customers who account for a significant portion of revenue. During the year ended December 31, 2023, one customer represented 25% of the Company’s revenues. As of December 31, 2023, one customer represented approximately 27% of accounts receivable and one customer represented approximately 31% of accounts receivable-unbilled. During 2022, two customers represented 14% and 12% of the Company’s revenues, respectively. As of December 31, 2022, one customer represented approximately 15% of accounts receivable and two customers represented approximately 13% and 11% of accounts receivable-unbilled. During the years ended December 31, 2023 and 2022, revenue attributable to customers located in foreign countries was approximately 11% and 11% of revenue, respectively. As of December 31, 2023 and 2022, accounts receivable attributable to customers located in foreign countries was approximately 31% and 10% of accounts receivable, respectively. As of December 31, 2023 and 2022, accounts receivable-unbilled attributable to customers located in foreign countries was approximately 20% and 18% of accounts receivable-unbilled, respectively. 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 measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: ➢ Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets. ➢ Level 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. ➢ Level 3 — Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. For certain financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable, the carrying amounts approximate their fair values as of December 31, 2023 and 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 agrees to online purchase terms, each of which includes terms such as specimen and data use, shipment terms, payment and cancellation terms. These are then supplemented by purchase orders that specify specimen requirements including detailed inclusion/exclusion criteria, quantities to be collected, and pricing. Collectively, these customer agreements represent the Company’s contracts with its customer. Generally, contracts have fixed unit pricing. For certain specimen orders, a refundable customer deposit may be required prior to order fulfillment depending on project set-up requirements which is presented as deferred revenue. The Company expects to recognize the deferred revenue within the next twelve months. Specimen collections occur at supply sites within the Company’s network. “Collection” is when the specimen has been removed, or “collected” from the patient or donor. A specimen is often collected specifically for a particular Company order. Once collected, the specimen is assigned by the supplier to the Company and control of the specimen passes to the Company. “Accession” is the process whereby a collected specimen and associated data are registered and assigned in the iSpecimen Marketplace to a particular customer order, which can occur while a specimen is at the supplier site or while at the Company site and it is when control of the specimen passes to the customer. Suppliers may ship specimens to the Company or directly to the customer if specimens must be delivered within a short time period (less than 24 hours after collection) or shipping to the Company is not practical. The Company has evaluated principal versus agent considerations as part of the Company’s revenue recognition policy. The Company has concluded that it acts as principal in the arrangement as it manages the procurement process from beginning to end and determines which suppliers will be used to fulfill an order, usually 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 typically invoiced upon shipment. Depending on the quantity of specimens ordered, it may take several accounting periods to completely fulfill a purchase order. In other words, there can be multiple invoices issued for a single purchase order, reflecting the specimens being accessioned over time. However, specimens are generally shipped as soon as possible after they have been accessioned. Once a specimen that has no alternative future use, and for which the Company has an enforceable right to payment, has been accessioned, the Company records the offset to revenue in accounts receivable - unbilled. Once the specimen has been shipped and invoiced, a reclassification is made from accounts receivable - unbilled to accounts receivable. Customers are generally given fourteen days from the receipt of specimens to inspect the specimens to ensure compliance with specifications set forth in the purchase order documentation. Customers are entitled to either receive replacement specimens or receive reimbursement of payments made for such specimens. The Company has a nominal history of returns for nonacceptance of specimens delivered. When this has occurred, the Company has given the customer a credit for the returns. The Company has not recorded a returns allowance. The following table summarizes the Company’s revenue for the years ended December 31: Year ended December 31, 2023 2022 Specimens - contracts with customers $ 9,361,721 $ 9,956,582 Shipping and other 566,463 445,721 Revenue $ 9,928,184 $ 10,402,303 The Company carries its accounts receivable at the invoiced amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable to determine if an allowance for doubtful accounts is necessary, based on economic conditions and each customer’s payment history. Receivables are written off when deemed uncollectible, with any future recoveries recorded as income when received. As of December 31, 2023, and 2022, the Company had an allowance for doubtful accounts of $520,897 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. Property and Equipment, net Property and equipment are stated at cost, net of accumulated depreciation and amortization. When an item is sold or retired, the costs and related accumulated depreciation or amortization are eliminated, and the resulting gain or loss, if any, is credited or charged to income in the statement of operations. The Company provides for depreciation and amortization using the straight-line method over the estimated useful lives of the respective assets. A summary of estimated useful lives is as follows: Asset category Estimated Useful Life Website 3 years Computer equipment and purchased software 5 years Equipment 5 years Furniture and fixtures 5 years Leasehold improvements Shorter of useful life of asset or lease term Major improvements are capitalized while replacement, maintenance and repairs which do not improve or extend the lives of the respective assets are expensed as incurred. Internally Developed Software, net The Company capitalizes certain internal and external costs incurred during the application development stage of internal-use software projects until the software is ready for its intended use. Amortization of the asset commences when the software is complete and placed into service and is recorded in operating expenses. The Company amortizes completed internal-use software over its estimated useful life of five years on a straight-line basis. Costs incurred during the planning, training and post-implementation stages of the software development life cycle are classified as technology and are expensed to operations as incurred. Other Intangible Assets, Net The Company procures data generated from sequencing of Formalin-Fixed Paraffin-Embedded (“FFPE”) blocks from a third-party sequencer which the Company licenses to its customers with the sale of FFPE blocks at an additional cost. The sequenced data is also organized to form a database of research content that is available for sale through a subscription model. The Company determined that the sequenced data is an intangible asset and capitalizes the cost to procure the sequenced data. The sequenced data is amortized to cost of revenue over an estimated useful life of five years on a straight-line basis. The costs paid to the third-party sequencer are the only costs capitalized and all other related costs 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, internal-use software and other intangible assets. No impairment charges were recorded for the years ended December 31, 2023 and 2022. Cost of Revenue Cost of revenue primarily consists of the purchase price to acquire specimens from hospitals and laboratories; inbound and outbound shipping costs; supply costs related to samples; payment processing and related transaction costs; costs paid to the supply sites to support sample collections; amortization of capitalized sequenced data costs and other assets related to sequenced data. Shipping costs upon receipt of products from suppliers are recognized in cost of revenue. For the year ended December 31, 2023, the Company acquired approximately 13% of specimens from one supplier. For the year ended December 31, 2022, the Company acquired approximately 12% of specimens from one supplier. Technology Technology costs include consulting fees; payroll and related expenses for employees involved in the development and implementation of iSpecimen’s technology; software license and system maintenance fees; outsourced data center costs; data management costs; depreciation of property and equipment and amortization of internally developed software; and other expenses necessary to support technology initiatives. Collectively, these costs reflect the investments the Company makes in order to offer a wide variety of products and services to customers. Technology and data costs are generally expensed as incurred. A portion of technology costs are related to research and development. Costs incurred for research and development are expensed as incurred, except for software development costs that are eligible for capitalization. Research and development costs primarily include salaries and related expenses, in addition to the cost of external service providers. For the years ended December 31, 2023 and 2022, research and development costs totaled $1,618,833 and $1,473,520, respectively. Sales and Marketing Sales and marketing costs primarily consist of payroll and related expenses for personnel engaged in marketing and selling activities, including salaries and sales commissions; travel expenses; public relations and social media costs; ispecimen.com website development and maintenance costs; search engine optimization fees; advertising costs; direct marketing costs; trade shows and events fees; marketing and customer relationship management software; and other marketing-related costs. Advertising expenses consist primarily of marketing, public relations, and promotional materials. Advertising costs are expensed as incurred and totaled $219,033 and $188,026 for the years ended December 31, 2023 and 2022, respectively. Supply Development The Company has agreements with supply partners that allow the Company to procure specimens from them and distribute these samples to customers. Supply development costs primarily include payroll and related expenses for personnel engaged in the development and management of this supply network; related travel expenses; regulatory compliance costs to support the network; and other supply development and management costs. Fulfillment Fulfillment costs primarily consist of those costs incurred in operating and staffing operations and customer service teams, including costs attributable to assess the feasibility of specimen requests; creating and managing orders; picking, packaging, and preparing customer orders for shipment; responding to inquiries from customers; and laboratory equipment and supplies. General and Administrative General and administrative expenses primarily consist of costs for corporate functions, including payroll and related expenses for human resources, legal, finance, and executive teams; associated software licenses; facilities and equipment expenses, such as depreciation and amortization expense and rent, outside legal expenses, insurance costs, and other general and administrative costs. 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 (“RSUs”) The Company recognizes stock-based compensation expense from RSUs ratably over the specified vesting period. The fair value of the 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 10. Income Taxes The Company provides for income taxes using the asset and liability method. The Company provides deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the Company’s financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. A valuation allowance is provided to reduce the deferred tax assets to the amount that will more likely than not be realized. The Company does not have any material uncertain tax positions for which reserves would be required. The Company will recognize interest and penalties related to uncertain tax positions, if any, in income tax expense. Net Loss Per Share Basic net loss per share is calculated by dividing net loss applicable to common stockholders by the weighted-average number of shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting the weighted-average number of shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. Therefore, basic and diluted net loss per share applicable to common stockholders were the same for all periods presented. The table below provides total shares outstanding, as of December 31: 2023 2022 Shares issuable upon vesting of RSUs 116,357 267,505 Shares issuable upon exercise of stock options 296,268 297,559 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 From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”). The JOBS Act permits an emerging growth company such as the Company to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. The Company has elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company. In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses Measurement of Credit Losses on Financial Instruments Accounting Standards Issued, Not Yet Adopted In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity are required to perform to determine whether a contract qualifies for equity classification and makes targeted improvements to the disclosures for convertible instruments and earnings-per-share (EPS) guidance. This update will be effective for the Company’s fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Entities can elect to adopt the new guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The Company is currently evaluating the impact of the pending adoption of the new standard on its financial statements and intends to adopt the standard as of January 1, 2024. |
AVAILABLE-FOR-SALE SECURITIES
AVAILABLE-FOR-SALE SECURITIES | 12 Months Ended |
Dec. 31, 2023 | |
AVAILABLE-FOR-SALE SECURITIES | |
AVAILABLE-FOR-SALE SECURITIES | 3. AVAILABLE-FOR-SALE SECURITIES The Company purchased U.S. Treasury bills during the year ended December 31, 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 December 31, 2023 are as follows: Gross Gross Amortized unrealized unrealized cost gains losses Fair value Available-for-sale securities: U.S. Treasury Bills $ 2,661,092 $ 36,138 $ (35,298) $ 2,661,932 Total Available-for-sale securities $ 2,661,092 $ 36,138 $ (35,298) $ 2,661,932 The Company did not |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2023 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | 4. Property and equipment, net consisted of the following at December 31: 2023 2022 Website $ 285,377 $ 285,377 Computer equipment and purchased software 96,037 84,589 Equipment 35,449 35,449 Furniture and fixtures 87,184 87,184 Leasehold improvements 68,471 60,441 Total property and equipment 572,518 553,040 Accumulated depreciation (444,731) (327,188) Total property and equipment, net $ 127,787 $ 225,852 Depreciation expense for property and equipment was $117,543 and $22,433 for the years ended December 31, 2023 and 2022, respectively. |
INTERNALLY DEVELOPED SOFTWARE,
INTERNALLY DEVELOPED SOFTWARE, NET | 12 Months Ended |
Dec. 31, 2023 | |
INTERNALLY DEVELOPED SOFTWARE, NET | |
INTERNALLY DEVELOPED SOFTWARE, NET | 5. During the years ended December 31, 2023 and 2022, the Company capitalized $3,767,332 and $2,975,686, respectively, of internally developed software costs in connection with the development and continued enhancement of the technology platform and web interfaces. Capitalized costs primarily consist of payroll and payroll-related costs for the Company’s employees. The Company recognized $1,948,085 and $1,182,766 of amortization expense associated with capitalized internally developed software costs during the years ended December 31, 2023 and 2022, respectively. Accumulated amortization associated with capitalized internally developed software costs as of December 31, 2023 and 2022 was $6,964,755 and $5,016,670, respectively. |
OTHER INTANGIBLE ASSETS, NET
OTHER INTANGIBLE ASSETS, NET | 12 Months Ended |
Dec. 31, 2023 | |
OTHER INTANGIBLE ASSETS, NET | |
OTHER INTANGIBLE ASSETS, NET | 6. OTHER INTANGIBLE ASSETS, NET During the year ended December 31, 2023, the Company $957,775 capitalized of sequenced data procured from a third-party sequencer as other intangible assets. The sequenced data is generated from sequencing of FFPE blocks. The Company licenses to its customers, at an additional cost, the sequenced data associated with the sequenced FFPE blocks with the sale of said FFPE blocks. The sequenced data is also organized to form a database of research content that is available for sale to the Company’s customers through a subscription model. The Company recognized $49,520 of amortization expense associated with the capitalized sequenced data during the year ended December 31, 2023. Accumulated amortization associated with the capitalized sequenced data as of December 31, 2023 was $49,520. |
SEVERANCE
SEVERANCE | 12 Months Ended |
Dec. 31, 2023 | |
SEVERANCE | |
SEVERANCE | 7. SEVERANCE Dr. Christopher Ianelli On September 19, 2022, the Company received a notice of departure from Dr. Christopher Ianelli to vacate his position of Chief Executive Officer and President of the Company, effective as of October 24, 2022 (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. The severance and related payroll taxes was fully paid in October 2023. As of December 31, 2023, the balance of the COBRA benefits which is expected to be fully paid by April 2024 was $7,462 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 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. The balance of the severance and employer taxes liabilities was fully paid in October 2023. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2023 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 8. 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 December 31, 2023: Fair Value at December 31, 2023 Total Level 1 Level 2 Level 3 Assets: Available-for-sale securities $ 2,661,932 $ 2,661,932 $ — $ — Total Assets $ 2,661,932 $ 2,661,932 $ — $ — As of December 31, 2023, the Company did not |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 9. Leases The Company has one operating lease of office space in Lexington, Massachusetts, which was initially set to expire on February 28, 2024. The lease was renewed on September 27, 2023 to extend the lease term for a period of 12 months from February 29, 2024 through February 28, 2025. The lease renewal includes an option to terminate the lease before its expiration date if notice is provided to the lessor by June 30, 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. There was no sublease rental income for the year ended December 31, 2023, and the Company is not the lessor in any lease arrangement, and there were no related-party lease agreements. Lease Costs The table below presents certain information related to the lease costs for the Company’s operating lease for year ended December 31, 2023: Operating lease expense $ 166,486 Short-term lease expense 2,500 Total lease cost $ 168,986 Lease Position as of December 31, 2023 Right-of-use lease assets and lease liabilities for the Company’s operating lease were recorded in the balance sheet as follows: Assets Operating lease right-of-use assets $ 193,857 Total lease assets $ 193,857 Liabilities Current liabilities: Operating lease liability – current portion $ 167,114 Non-current liabilities: Operating lease liability – net of current portion 29,130 Total lease liability $ 196,244 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 lease as of December 31, 2023: Weighted average remaining lease term (in years) – operating lease 1.17 Weighted average discount rate – operating lease 5.96% Undiscounted Cash Flows Future lease payments included in the measurement of lease liabilities on the balance sheet are as follows: 2024 $ 174,338 2025 29,348 Total future minimum lease payments 203,686 Less effect of discounting (7,442) Present value of future minimum lease payments $ 196,244 Rent expense for the years ended December 31, 2023 and 2022 amounted to $168,986 and $176,336, respectively. Cash Flows Supplemental cash flow information related to operating lease for the year ended December 31, 2023 was as follows: Non-cash operating lease expense (operating cash flow) $ 157,192 Change in operating lease liabilities (operating cash flow) $ (155,960) Supplemental non-cash amounts of operating lease liabilities arising from obtaining right-of-use assets $ 166,357 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 sales and use tax exemption that generally excludes them from paying sales taxes. The main types of specimens the Company sells are blood, blood plasma, human tissue, human parts, and human bodily fluids and only a few 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 audited 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 facilitation and tracking of Voluntary Disclosure Agreements (“VDAs”) in jurisdictions where a potential tax liability may exist and to assist with the implementation of a sales tax software platform solution for the calculation, communication, collection, and remittance of sales tax for all non-exempt future sales. From the Company’s inception through the filing date of this Annual Report, the Company now believes that an obligation to collect and remit sales tax existed for certain of its sales of products to certain of its customers. The Company has analyzed its product sales, on an invoice-by-invoice and customer-by-customer basis, to determine which products are subject to sales tax in each jurisdiction, and 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 to the appropriate jurisdiction. Part of this process includes requesting and obtaining exemption letters or representations from its customers or proof of payment of their compensating use tax. As the Company continues to make progress on this project, certain customers have notified the Company that they are not exempt from the payment of sales tax and have not remitted use tax and the Company has started to invoice such customers for past sales tax due. As of December 31, 2023, the Company has established and accrued a reliable point estimate with a maximum potential of the sales tax liability of approximately $707,000 and the related interests and penalties of approximately $215,000 in Accrued expenses on the Balance Sheet. The estimated liability represents the estimated tax liability for sales made to customers who have notified the Company that they are not exempt from sales taxes and customers who have not responded to Company’s request to provide a sales exemption letter. As of December 31, 2023, the Company has also recovered approximately $359,000 of prior taxes from certain customers who do not have a sales tax exemption. The Company continues to pursue those non responsive customers and expects over time that further exemption letters or representations will be received that will reduce the lability. During the year ended December 31, 2023, the Company recognized a loss of approximately $564,000 in its Statement of Operations and Comprehensive Loss related to the sales tax liability. The Company is in the process of commencing its VDA filings with relevant taxing jurisdictions regarding its noncompliance, during which it will remit its sales tax obligations. Legal Proceedings From time to time the Company is involved in litigation, claims, and other proceedings arising in the ordinary course of business. Such litigation and other proceedings may include, but are not limited to, actions relating to employment law and misclassification, intellectual property, commercial or contractual claims, or other consumer protection statutes. Litigation and other disputes are inherently unpredictable and subject to substantial uncertainties and unfavorable resolutions could occur. As of December 31, 2023, there was no material litigation against the Company. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2023 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | 10. Pursuant to the Company's fourth amended and restated certificate of incorporation dated June 17, 2021, the Company's authorized capital is 250,000,000 shares, of which (1) 200,000,000 shares are common stock, par value $0.0001 per share and (2) 50,000,000 are preferred stock, par value $0.0001 per share, which may, at the sole discretion of the Company's board of directors be issued in one or more series. Common Stock During the year ended December 31, 2022, the Company issued 1,000 shares of common stock in exchange for investor relations services. The shares of common stock had a fair value of $6.25 per share for a total aggregate value of $6,250. During the years ended December 31, 2023 and 2022, the Company issued 70,889 and 81,043 shares of common stock for cash exercises of options totaling $70,889 and $78,641, respectively. Warrants Underwriter Warrants In connection with the Company's underwriting agreement with ThinkEquity, a division of Fordham Financial Management, Inc. and the representative of the Company’s IPO underwriters, the Company entered into a warrant agreement to purchase up to 90,000 shares of common stock, par value $0.0001 (the "Underwriter Warrant"). The Underwriter Warrant is exercisable at a per share exercise price of $10.00 and is exercisable at any time and from time to time, in whole or in part, during the four and one-half 2.46 Lender Warrant In connection with the Term Loan entered into on August 13, 2021, the Company issued a Lender Warrant to Lender to purchase 12,500 shares of common stock of the Company. The Lender Warrant is exercisable at a per share exercise price of $8.00 and is exercisable at any time on or after August 13, 2021 through August 12, 2031. The Company determined that the Lender Warrant was equity-classified. As of December 31, 2023, the Lender Warrant had not been exercised, and had a weighted average exercise price of $8 per share and a remaining weighted average time to expiration of 7.62 PIPE Warrants On December 1, 2021, the Company completed a private placement (the “PIPE”) in which the Company issued warrants (the “PIPE Warrants”) to purchase up to an aggregate of 1,312,500 shares of common stock. These PIPE Warrants have an exercise price of $13.00 per share and are immediately exercisable upon issuance and will expire on the five and one-half -year anniversary of the issuance date. As of December 31, 2023, the PIPE Warrants had not been exercised, and had a weighted average exercise price of $13 per share and a remaining weighted average time to expiration o 3.50 A summary of total warrant activity during the years ended December 31, 2023 and 2022 is as follows: Weighted Average Weighted Remaining Warrants Average Contractual Term Outstanding Exercise Price in Years Balance at December 31, 2021 1,415,000 $ 9.76 5.34 Granted — — — Exercised — — — Cancelled/forfeited — — — Balance at December 31, 2022 1,415,000 $ 12.77 4.47 Granted — — — Exercised — — — Cancelled/forfeited — — — Balance at December 31, 2023 1,415,000 $ 12.77 3.47 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2023 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | 11. STOCK-BASED COMPENSATION 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 years ended December 31, 2023 and 2022, 182,919 and 187,569 equity awards were granted under the 2021 Plan, respectively. As of December 31, 2023, there were 1,363,464 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. During the year ended December 31, 2022, 122,485 equity awards were granted under the 2013 Plan. No equity awards were granted under the 2013 Plan during the year ended December 31, 2023. 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 had been granted under the 2013 Plan. Stock Options During the year ended December 31, 2023 and 2022, the Company granted 182,172 and 131,668 stock options, respectively. The following assumptions were used to estimate the fair value of stock options granted using the Black-Scholes-Merton option pricing model during the years ended December 31: 2023 2022 Assumptions: Risk-free interest rate 3.75% – 4.52% 4.27% – 4.76% Expected term (in years) 0.61 – 4.00 1.09 – 3.64 Expected volatility 59.17% –59.95% 59.97% Expected dividend yield — — A summary of stock option activity under the 2021 and 2013 Plans is as follows: Weighted Average Weighted Remaining Options Average Contractual Term Aggregate Outstanding Exercise Price in Years Intrinsic Value Balance at December 31, 2021 255,147 $ 2.32 7.75 $ 1,550,409 Granted 131,668 1.60 — 35,725 Exercised (81,043) 1.00 — 216,626 Cancelled/forfeited (8,213) 1.18 — — Balance at December 31, 2022 297,559 $ 2.69 6.96 $ 63,237 Granted 182,172 1.38 — — Exercised (70,889) 1.00 — 48,494 Cancelled/forfeited (112,574) 2.63 — — Balance at December 31, 2023 296,268 $ 2.17 8.53 $ — Options exercisable at December 31, 2023 142,910 $ 2.61 8.05 $ — 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 approximately $48,494 and $216,626 during the years ended December 31, 2023 and 2022, respectively. The weighted-average grant date fair value of stock options issued in the years ended December 31, 2023 and 2022 was $0.53 and $0.76, respectively. The following table sets forth the recorded stock options compensation expense of the Company during the years ended December 31: Operating expenses: 2023 2022 Technology $ 7,638 $ 8,900 Sales and marketing 2,640 3,915 Supply development 973 982 Fulfillment 2,781 2,442 General and administrative 101,123 63,265 Total stock options expense $ 115,155 $ 79,504 As of December 31, 2023 and 2022, a total of $110,375 and $233,004 of unamortized compensation expense is being recognized over the remaining requisite service period of 2.72 years and 2.3 years, respectively. During the years ended December 31, 2023 and 2022, the Company received proceeds of $70,889 and $78,641 from the exercise of stock options, respectively. 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 Balane at December 31, 2021 279,720 $ 6.78 Granted 178,386 4.15 Vested (110,286) 6.41 Forfeited (80,315) 5.90 Unvested Balance at December 31, 2022 267,505 $ 5.43 Granted 747 1.62 Vested (86,674) 5.38 Forfeited (65,221) 5.00 Unvested Balance at December 31, 2023 116,357 $ 5.67 The Company recorded RSUs compensation expense during the year ended December 31, 2023 and 2022 as follows: Operating expenses: 2023 2022 Technology $ 134,126 $ 122,863 Sales and marketing 63,750 89,765 Supply development 6,035 33,677 Fulfillment 52,591 81,508 General and administrative 88,009 271,296 Total RSU expense $ 344,511 $ 599,109 As of December 31, 2023 and 2022, the total unrecognized stock-based compensation expense related to unvested RSUs was $591,953 and $1,259,507, respectively, and it is expected to be recognized on a straight-line basis over a weighted average period of approximately 1.86 years and 2.87 years, respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2023 | |
INCOME TAXES | |
INCOME TAXES | 12. There was no provision for income taxes for the years ended December 31, 2023 and 2022 due to the Company’s operating losses and a full valuation allowance on deferred tax assets. The Company completed research and development studies covering all tax years currently under the applicable statute of limitations. A tax method change was adopted for the year ended December 31, 2022, requiring amortization of research and experimentation expenses under Section 174. Management has reviewed its impact and has determined that any effect of the Company’s financials would be immaterial. Significant components of the Company’s deferred tax assets and liabilities as of December 31 are as follows: 2023 2022 Deferred tax assets: Operating loss carryforwards $ 12,630,800 $ 10,164,000 Research and development tax credit 2,058,300 1,095,000 Other 749,000 542,000 Total deferred tax assets 15,438,100 11,801,000 Deferred tax liability: Other (52,400) (50,400) Intangibles (224,500) (357,600) Total deferred tax liabilities (276,900) (408,000) Net deferred tax assets before valuation allowance 15,161,200 11,393,000 Valuation allowance (15,161,200) (11,393,000) Net deferred tax asset $ — $ — The Company has provided a valuation allowance against the deferred tax assets as it has incurred significant losses since its inception. Management currently believes that it is more likely than not that the deferred tax assets will not be realized in the future. The change in the valuation allowance during 2023 was an increase of $3,768,200. At December 31, 2023, the Company had federal net operating loss (“NOL”) carryforwards of approximately $50,800,000 of which approximately $13,000,000 expire at various periods through 2037 and approximately $37,800,000 can be carried forward indefinitely. The Company also had state NOL carryforwards of approximately $31,100,000 that expire at various periods through 2043. At December 31, 2023, the Company had federal and state tax credits of approximately $2,058,300 available for future periods that expire at various periods through 2043. Due to changes in ownership provisions of the Internal Revenue Code, the availability of the Company's NOL carryforwards may be subject to annual limitations under Section 382 of the Internal Revenue Code against taxable income in the future period, which could substantially limit the eventual utilization of such carryforwards. The Company applies the standards on uncertainty in income taxes. The Company did not have any significant unrecognized tax benefits during the year ended December 31, 2023. The Company’s U.S. federal operating losses have occurred since its inception and as such, tax years subject to potential tax examination could apply from that date because the utilization of net operating losses from prior years opens the relevant year to audit by the IRS and/or state taxing authorities. The Company’s income tax provision was computed using the federal statutory rate and average state statutory rates, net of related federal benefit. The following represents a reconciliation of the statutory income tax rates to the effective rates at December 31: 2023 2022 Reconciliation to statutory rates Expected federal income taxes benefit at statutory rates (21.0) % (21.0) % Expected state tax benefit at statutory rates, net of federal benefit (6.4) (6.3) Change in valuation allowance 27.4 27.3 Income tax expense (benefit) — % — % |
EMPLOYEE BENEFITS PLAN
EMPLOYEE BENEFITS PLAN | 12 Months Ended |
Dec. 31, 2023 | |
EMPLOYEE BENEFITS PLAN | |
EMPLOYEE BENEFITS PLAN | 13. The Company has established a defined contribution savings plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”). The 401(k) Plan is available to all eligible employees. The 401(k) Plan allows participants to defer a portion of their annual compensation subject to certain Internal Revenue Service limitations. The Company may make matching contributions and additional profit-sharing contributions at its discretion. During the years ended December 31, 2023 and 2022, the Company made a matching contribution to the 401(k) Plan in amount of $48,772 and $0, respectively. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2023 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 14. SUBSEQUENT EVENTS PIPE Warrants On February 13, 2024, the Company entered into certain warrant repurchase and termination agreements (the “Repurchase Agreements”) with the holders of the PIPE Warrants to repurchase an aggregate of 1,312,500 shares of Common Stock exercisable under the PIPE Warrants. In connection with such repurchases all past, current and future obligations of the Company relating to the PIPE Warrants were released, discharged and are of no further force or effect. At the Market Offering On March 5, 2024, the Company entered into an At the Market Offering Agreement (the “ATM Agreement”) with Rodman & Renshaw LLC as agent (the “Sales Agent”) pursuant to which the Company may issue and sell shares of its common stock, having an aggregate offering price of up to $1,500,000 (the “ATM Shares”), from time to time through the Sales Agent. The ATM Shares when issued will be registered pursuant to the Company’s “shelf” registration statement on Form S-3 (File No 333-265976) , which became effective on July 12, 2022. The Company intends to sell Shares, from time to time, pursuant to the ATM Agreement, in transactions that are “at the market offerings” as defined in Rule 415(a)(4) promulgated under the Securities Act . |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Use of Estimates | Use of Estimates The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company utilizes certain estimates in the determination of the deferred tax valuation allowances, revenue recognition, stock-based compensation, allowance for doubtful accounts, accrued expenses, and the useful lives of internally developed software and sequenced data. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results could differ from such estimates. |
Off-Balance Sheet Risk and Concentrations of Credit Risk | Off-Balance Sheet Risk and Concentrations of Credit Risk The Company has no significant off-balance sheet risks, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. As of December 31, 2022, the Company maintained all of its cash with one financial institution which potentially subjected the Company to concentration of credit risk. To reduce this risk, the Company purchased treasury bills at a different financial institution in 2023. As of December 31, 2023, the Company maintained the remainder of its cash, which exceeds the federally insured limits, with a reputable financial institution and accordingly, the Company believes such funds are subject to minimal credit risk. Concentration of credit risk with respect to accounts receivable is typically related to customers who account for a significant portion of revenue. During the year ended December 31, 2023, one customer represented 25% of the Company’s revenues. As of December 31, 2023, one customer represented approximately 27% of accounts receivable and one customer represented approximately 31% of accounts receivable-unbilled. During 2022, two customers represented 14% and 12% of the Company’s revenues, respectively. As of December 31, 2022, one customer represented approximately 15% of accounts receivable and two customers represented approximately 13% and 11% of accounts receivable-unbilled. During the years ended December 31, 2023 and 2022, revenue attributable to customers located in foreign countries was approximately 11% and 11% of revenue, respectively. As of December 31, 2023 and 2022, accounts receivable attributable to customers located in foreign countries was approximately 31% and 10% of accounts receivable, respectively. As of December 31, 2023 and 2022, accounts receivable-unbilled attributable to customers located in foreign countries was approximately 20% and 18% of accounts receivable-unbilled, respectively. |
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 measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: ➢ Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets. ➢ Level 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. ➢ Level 3 — Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment. For certain financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable, the carrying amounts approximate their fair values as of December 31, 2023 and 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 agrees to online purchase terms, each of which includes terms such as specimen and data use, shipment terms, payment and cancellation terms. These are then supplemented by purchase orders that specify specimen requirements including detailed inclusion/exclusion criteria, quantities to be collected, and pricing. Collectively, these customer agreements represent the Company’s contracts with its customer. Generally, contracts have fixed unit pricing. For certain specimen orders, a refundable customer deposit may be required prior to order fulfillment depending on project set-up requirements which is presented as deferred revenue. The Company expects to recognize the deferred revenue within the next twelve months. Specimen collections occur at supply sites within the Company’s network. “Collection” is when the specimen has been removed, or “collected” from the patient or donor. A specimen is often collected specifically for a particular Company order. Once collected, the specimen is assigned by the supplier to the Company and control of the specimen passes to the Company. “Accession” is the process whereby a collected specimen and associated data are registered and assigned in the iSpecimen Marketplace to a particular customer order, which can occur while a specimen is at the supplier site or while at the Company site and it is when control of the specimen passes to the customer. Suppliers may ship specimens to the Company or directly to the customer if specimens must be delivered within a short time period (less than 24 hours after collection) or shipping to the Company is not practical. The Company has evaluated principal versus agent considerations as part of the Company’s revenue recognition policy. The Company has concluded that it acts as principal in the arrangement as it manages the procurement process from beginning to end and determines which suppliers will be used to fulfill an order, usually 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 typically invoiced upon shipment. Depending on the quantity of specimens ordered, it may take several accounting periods to completely fulfill a purchase order. In other words, there can be multiple invoices issued for a single purchase order, reflecting the specimens being accessioned over time. However, specimens are generally shipped as soon as possible after they have been accessioned. Once a specimen that has no alternative future use, and for which the Company has an enforceable right to payment, has been accessioned, the Company records the offset to revenue in accounts receivable - unbilled. Once the specimen has been shipped and invoiced, a reclassification is made from accounts receivable - unbilled to accounts receivable. Customers are generally given fourteen days from the receipt of specimens to inspect the specimens to ensure compliance with specifications set forth in the purchase order documentation. Customers are entitled to either receive replacement specimens or receive reimbursement of payments made for such specimens. The Company has a nominal history of returns for nonacceptance of specimens delivered. When this has occurred, the Company has given the customer a credit for the returns. The Company has not recorded a returns allowance. The following table summarizes the Company’s revenue for the years ended December 31: Year ended December 31, 2023 2022 Specimens - contracts with customers $ 9,361,721 $ 9,956,582 Shipping and other 566,463 445,721 Revenue $ 9,928,184 $ 10,402,303 The Company carries its accounts receivable at the invoiced amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable to determine if an allowance for doubtful accounts is necessary, based on economic conditions and each customer’s payment history. Receivables are written off when deemed uncollectible, with any future recoveries recorded as income when received. As of December 31, 2023, and 2022, the Company had an allowance for doubtful accounts of $520,897 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. |
Property and Equipment, net | Property and Equipment, net Property and equipment are stated at cost, net of accumulated depreciation and amortization. When an item is sold or retired, the costs and related accumulated depreciation or amortization are eliminated, and the resulting gain or loss, if any, is credited or charged to income in the statement of operations. The Company provides for depreciation and amortization using the straight-line method over the estimated useful lives of the respective assets. A summary of estimated useful lives is as follows: Asset category Estimated Useful Life Website 3 years Computer equipment and purchased software 5 years Equipment 5 years Furniture and fixtures 5 years Leasehold improvements Shorter of useful life of asset or lease term Major improvements are capitalized while replacement, maintenance and repairs which do not improve or extend the lives of the respective assets are expensed as incurred. |
Internally Developed Software, net | Internally Developed Software, net The Company capitalizes certain internal and external costs incurred during the application development stage of internal-use software projects until the software is ready for its intended use. Amortization of the asset commences when the software is complete and placed into service and is recorded in operating expenses. The Company amortizes completed internal-use software over its estimated useful life of five years on a straight-line basis. Costs incurred during the planning, training and post-implementation stages of the software development life cycle are classified as technology and are expensed to operations as incurred. |
Other Intangible Assets, Net | Other Intangible Assets, Net The Company procures data generated from sequencing of Formalin-Fixed Paraffin-Embedded (“FFPE”) blocks from a third-party sequencer which the Company licenses to its customers with the sale of FFPE blocks at an additional cost. The sequenced data is also organized to form a database of research content that is available for sale through a subscription model. The Company determined that the sequenced data is an intangible asset and capitalizes the cost to procure the sequenced data. The sequenced data is amortized to cost of revenue over an estimated useful life of five years on a straight-line basis. The costs paid to the third-party sequencer are the only costs capitalized and all other related costs 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, internal-use software and other intangible assets. No impairment charges were recorded for the years ended December 31, 2023 and 2022. |
Cost of Revenue | Cost of Revenue Cost of revenue primarily consists of the purchase price to acquire specimens from hospitals and laboratories; inbound and outbound shipping costs; supply costs related to samples; payment processing and related transaction costs; costs paid to the supply sites to support sample collections; amortization of capitalized sequenced data costs and other assets related to sequenced data. Shipping costs upon receipt of products from suppliers are recognized in cost of revenue. For the year ended December 31, 2023, the Company acquired approximately 13% of specimens from one supplier. For the year ended December 31, 2022, the Company acquired approximately 12% of specimens from one supplier. |
Technology | Technology Technology costs include consulting fees; payroll and related expenses for employees involved in the development and implementation of iSpecimen’s technology; software license and system maintenance fees; outsourced data center costs; data management costs; depreciation of property and equipment and amortization of internally developed software; and other expenses necessary to support technology initiatives. Collectively, these costs reflect the investments the Company makes in order to offer a wide variety of products and services to customers. Technology and data costs are generally expensed as incurred. A portion of technology costs are related to research and development. Costs incurred for research and development are expensed as incurred, except for software development costs that are eligible for capitalization. Research and development costs primarily include salaries and related expenses, in addition to the cost of external service providers. For the years ended December 31, 2023 and 2022, research and development costs totaled $1,618,833 and $1,473,520, respectively. |
Sales and Marketing | Sales and Marketing Sales and marketing costs primarily consist of payroll and related expenses for personnel engaged in marketing and selling activities, including salaries and sales commissions; travel expenses; public relations and social media costs; ispecimen.com website development and maintenance costs; search engine optimization fees; advertising costs; direct marketing costs; trade shows and events fees; marketing and customer relationship management software; and other marketing-related costs. Advertising expenses consist primarily of marketing, public relations, and promotional materials. Advertising costs are expensed as incurred and totaled $219,033 and $188,026 for the years ended December 31, 2023 and 2022, respectively. |
Supply Development | Supply Development The Company has agreements with supply partners that allow the Company to procure specimens from them and distribute these samples to customers. Supply development costs primarily include payroll and related expenses for personnel engaged in the development and management of this supply network; related travel expenses; regulatory compliance costs to support the network; and other supply development and management costs. |
Fulfillment | Fulfillment Fulfillment costs primarily consist of those costs incurred in operating and staffing operations and customer service teams, including costs attributable to assess the feasibility of specimen requests; creating and managing orders; picking, packaging, and preparing customer orders for shipment; responding to inquiries from customers; and laboratory equipment and supplies. |
General and Administrative | General and Administrative General and administrative expenses primarily consist of costs for corporate functions, including payroll and related expenses for human resources, legal, finance, and executive teams; associated software licenses; facilities and equipment expenses, such as depreciation and amortization expense and rent, outside legal expenses, insurance costs, and other general and administrative costs. |
Stock-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 (“RSUs”) The Company recognizes stock-based compensation expense from RSUs ratably over the specified vesting period. The fair value of the 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 10. |
Income taxes | Income Taxes The Company provides for income taxes using the asset and liability method. The Company provides deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the Company’s financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates expected to be in effect in the years in which the differences are expected to reverse. A valuation allowance is provided to reduce the deferred tax assets to the amount that will more likely than not be realized. The Company does not have any material uncertain tax positions for which reserves would be required. The Company will recognize interest and penalties related to uncertain tax positions, if any, in income tax expense. |
Net Loss Per Share | Net Loss Per Share Basic net loss per share is calculated by dividing net loss applicable to common stockholders by the weighted-average number of shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting the weighted-average number of shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. Therefore, basic and diluted net loss per share applicable to common stockholders were the same for all periods presented. The table below provides total shares outstanding, as of December 31: 2023 2022 Shares issuable upon vesting of RSUs 116,357 267,505 Shares issuable upon exercise of stock options 296,268 297,559 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 | Recently Adopted Accounting Standards From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption. The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”). The JOBS Act permits an emerging growth company such as the Company to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. The Company has elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company. In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses Measurement of Credit Losses on Financial Instruments Accounting Standards Issued, Not Yet Adopted In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity are required to perform to determine whether a contract qualifies for equity classification and makes targeted improvements to the disclosures for convertible instruments and earnings-per-share (EPS) guidance. This update will be effective for the Company’s fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Entities can elect to adopt the new guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The Company is currently evaluating the impact of the pending adoption of the new standard on its financial statements and intends to adopt the standard as of January 1, 2024. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of entity's revenue | Year ended December 31, 2023 2022 Specimens - contracts with customers $ 9,361,721 $ 9,956,582 Shipping and other 566,463 445,721 Revenue $ 9,928,184 $ 10,402,303 |
Schedule of estimated useful lives | Asset category Estimated Useful Life Website 3 years Computer equipment and purchased software 5 years Equipment 5 years Furniture and fixtures 5 years Leasehold improvements Shorter of useful life of asset or lease term |
Summary of total shares outstanding | 2023 2022 Shares issuable upon vesting of RSUs 116,357 267,505 Shares issuable upon exercise of stock options 296,268 297,559 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) | 12 Months Ended |
Dec. 31, 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 $ 2,661,092 $ 36,138 $ (35,298) $ 2,661,932 Total Available-for-sale securities $ 2,661,092 $ 36,138 $ (35,298) $ 2,661,932 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
PROPERTY AND EQUIPMENT, NET | |
Summary of property and equipment, net | 2023 2022 Website $ 285,377 $ 285,377 Computer equipment and purchased software 96,037 84,589 Equipment 35,449 35,449 Furniture and fixtures 87,184 87,184 Leasehold improvements 68,471 60,441 Total property and equipment 572,518 553,040 Accumulated depreciation (444,731) (327,188) Total property and equipment, net $ 127,787 $ 225,852 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
FAIR VALUE MEASUREMENTS | |
Summary of financial liabilities measured at fair value on a recurring basis | Fair Value at December 31, 2023 Total Level 1 Level 2 Level 3 Assets: Available-for-sale securities $ 2,661,932 $ 2,661,932 $ — $ — Total Assets $ 2,661,932 $ 2,661,932 $ — $ — |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of lease costs related to Company's operating lease | Operating lease expense $ 166,486 Short-term lease expense 2,500 Total lease cost $ 168,986 |
Schedule of Lease position in Balance Sheet | Lease Position as of December 31, 2023 Right-of-use lease assets and lease liabilities for the Company’s operating lease were recorded in the balance sheet as follows: Assets Operating lease right-of-use assets $ 193,857 Total lease assets $ 193,857 Liabilities Current liabilities: Operating lease liability – current portion $ 167,114 Non-current liabilities: Operating lease liability – net of current portion 29,130 Total lease liability $ 196,244 |
Schedule of Lease terms and discount rate | Weighted average remaining lease term (in years) – operating lease 1.17 Weighted average discount rate – operating lease 5.96% |
Schedule of Future lease payment - Undiscounted Cash Flows | 2024 $ 174,338 2025 29,348 Total future minimum lease payments 203,686 Less effect of discounting (7,442) Present value of future minimum lease payments $ 196,244 |
Schedule of Cash Flows information | Non-cash operating lease expense (operating cash flow) $ 157,192 Change in operating lease liabilities (operating cash flow) $ (155,960) Supplemental non-cash amounts of operating lease liabilities arising from obtaining right-of-use assets $ 166,357 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
STOCKHOLDERS' EQUITY | |
Schedule of warrant activity | Weighted Average Weighted Remaining Warrants Average Contractual Term Outstanding Exercise Price in Years Balance at December 31, 2021 1,415,000 $ 9.76 5.34 Granted — — — Exercised — — — Cancelled/forfeited — — — Balance at December 31, 2022 1,415,000 $ 12.77 4.47 Granted — — — Exercised — — — Cancelled/forfeited — — — Balance at December 31, 2023 1,415,000 $ 12.77 3.47 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
STOCK-BASED COMPENSATION | |
Schedule of share based compensation restricted stock units award activity | Weighted RSUs Average Grant Outstanding Date Fair Value Unvested Balane at December 31, 2021 279,720 $ 6.78 Granted 178,386 4.15 Vested (110,286) 6.41 Forfeited (80,315) 5.90 Unvested Balance at December 31, 2022 267,505 $ 5.43 Granted 747 1.62 Vested (86,674) 5.38 Forfeited (65,221) 5.00 Unvested Balance at December 31, 2023 116,357 $ 5.67 |
Restricted Stock Units | |
STOCK-BASED COMPENSATION | |
Schedule of summary of compensation expense | Operating expenses: 2023 2022 Technology $ 134,126 $ 122,863 Sales and marketing 63,750 89,765 Supply development 6,035 33,677 Fulfillment 52,591 81,508 General and administrative 88,009 271,296 Total RSU expense $ 344,511 $ 599,109 |
Employee Stock Option [Member] | |
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 3.75% – 4.52% 4.27% – 4.76% Expected term (in years) 0.61 – 4.00 1.09 – 3.64 Expected volatility 59.17% –59.95% 59.97% Expected dividend yield — — |
Schedule of summary of stock option activity | Weighted Average Weighted Remaining Options Average Contractual Term Aggregate Outstanding Exercise Price in Years Intrinsic Value Balance at December 31, 2021 255,147 $ 2.32 7.75 $ 1,550,409 Granted 131,668 1.60 — 35,725 Exercised (81,043) 1.00 — 216,626 Cancelled/forfeited (8,213) 1.18 — — Balance at December 31, 2022 297,559 $ 2.69 6.96 $ 63,237 Granted 182,172 1.38 — — Exercised (70,889) 1.00 — 48,494 Cancelled/forfeited (112,574) 2.63 — — Balance at December 31, 2023 296,268 $ 2.17 8.53 $ — Options exercisable at December 31, 2023 142,910 $ 2.61 8.05 $ — |
Schedule of summary of compensation expense | Operating expenses: 2023 2022 Technology $ 7,638 $ 8,900 Sales and marketing 2,640 3,915 Supply development 973 982 Fulfillment 2,781 2,442 General and administrative 101,123 63,265 Total stock options expense $ 115,155 $ 79,504 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
INCOME TAXES | |
Summary of significant components of the Company's deferred tax assets and liabilities | 2023 2022 Deferred tax assets: Operating loss carryforwards $ 12,630,800 $ 10,164,000 Research and development tax credit 2,058,300 1,095,000 Other 749,000 542,000 Total deferred tax assets 15,438,100 11,801,000 Deferred tax liability: Other (52,400) (50,400) Intangibles (224,500) (357,600) Total deferred tax liabilities (276,900) (408,000) Net deferred tax assets before valuation allowance 15,161,200 11,393,000 Valuation allowance (15,161,200) (11,393,000) Net deferred tax asset $ — $ — |
Summary of reconciliation of the statutory income tax rates to the effective rates | 2023 2022 Reconciliation to statutory rates Expected federal income taxes benefit at statutory rates (21.0) % (21.0) % Expected state tax benefit at statutory rates, net of federal benefit (6.4) (6.3) Change in valuation allowance 27.4 27.3 Income tax expense (benefit) — % — % |
NATURE OF BUSINESS AND BASIS OF
NATURE OF BUSINESS AND BASIS OF PRESENTATION (Details) | 12 Months Ended |
Dec. 31, 2023 segment | |
NATURE OF BUSINESS | |
Reporting units | 1 |
Operating segments | 1 |
NATURE OF BUSINESS AND BASIS _2
NATURE OF BUSINESS AND BASIS OF PRESENTATION - Additional information (Details) - USD ($) | 12 Months Ended | |||||
Mar. 24, 2024 | Mar. 05, 2024 | Sep. 06, 2023 | Sep. 30, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |
Subsidiary, Sale of Stock [Line Items] | ||||||
Working capital | $ (2,189,673) | |||||
Accumulated deficit | 59,364,812 | $ 48,265,324 | ||||
Cash and cash equivalents and short-term investments | 5,005,598 | |||||
Accounts payable and accrued expenses | 5,466,045 | |||||
Estimated reduction in monthly compensation costs | 29% | |||||
Amount of estimated reductions in additional expenditure | 50% | |||||
Increased its allowance for doubtful accounts in accounts receivables | $ 289,898 | |||||
Purchase orders negatively impacted due to Russia's invasion of Ukraine | $ 1,000,000 | |||||
ATM Agreement | Maximum | Subsequent event | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Net proceeds from offering | $ 1,500,000 | $ 1,500,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - customer | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Revenue | Customer concentration | ||
Concentration Risk [Line Items] | ||
Number of Customers | 1 | 2 |
Revenue | Customer concentration | Customer One | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 25% | 14% |
Revenue | Customer concentration | Customer Two | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 12% | |
Revenue | Geographic concentration | Foreign customers | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 11% | 11% |
Account receivable | Customer concentration | ||
Concentration Risk [Line Items] | ||
Number of Customers | 1 | 1 |
Account receivable | Customer concentration | Customer One | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 27% | 15% |
Account receivable | Geographic concentration | Foreign customers | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 31% | 10% |
Accounts receivable-unbilled | Customer concentration | ||
Concentration Risk [Line Items] | ||
Number of Customers | 1 | 2 |
Accounts receivable-unbilled | Customer concentration | Customer One | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 13% | |
Accounts receivable-unbilled | Customer concentration | Customer Two | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 31% | 11% |
Accounts receivable-unbilled | Geographic concentration | Foreign customers | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 20% | 18% |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition and Accounts Receivable (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Revenue | ||
Revenue | $ 9,928,184 | $ 10,402,303 |
Accounts receivable | ||
Allowance for doubtful accounts | 520,897 | 230,999 |
Specimens | ||
Revenue | ||
Revenue | 9,361,721 | 9,956,582 |
Shipping and other | ||
Revenue | ||
Revenue | $ 566,463 | $ 445,721 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment, net (Details) | Dec. 31, 2023 |
Website | |
Property, Plant and Equipment [Line Items] | |
Useful life (in years) | 3 years |
Computer equipment and purchased software | |
Property, Plant and Equipment [Line Items] | |
Useful life (in years) | 5 years |
Equipment | |
Property, Plant and Equipment [Line Items] | |
Useful life (in years) | 5 years |
Furniture and fixtures | |
Property, Plant and Equipment [Line Items] | |
Useful life (in years) | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Internally Developed Software, net (Details) | Dec. 31, 2023 |
Internal-use software | |
Internally Developed Software, Net | |
Estimated useful life (in years) | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cost of Revenue (Details) - Cost of Revenue - Vendor concentration | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Concentration Risk [Line Items] | ||
Number of vendors | 1 | 1 |
Vendor One | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 13% | |
Vendor Four | ||
Concentration Risk [Line Items] | ||
Concentration risk (as a percent) | 12% |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional information (Details) - USD ($) | 12 Months Ended | 24 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Impairment charges | $ 0 | ||
Research and development costs | $ 1,618,833 | $ 1,473,520 | |
Advertising Expense | $ 219,033 | $ 188,026 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Shares issuable upon conversion of preferred stock (Details) - shares | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Net Loss Per Share | ||
Shares issuable upon vesting of RSU's | 116,357 | 267,505 |
Shares issuable upon exercise of stock options | 296,268 | 297,559 |
Private Placement | ||
Net Loss Per Share | ||
Shares issuable upon exercise to purchase common stock | 1,312,500 | 1,312,500 |
Underwriter Warrants | ||
Net Loss Per Share | ||
Shares issuable upon exercise of warrants | 90,000 | 90,000 |
Lender Warrant | ||
Net Loss Per Share | ||
Shares issuable upon exercise to purchase common stock | 12,500 | 12,500 |
AVAILABLE FOR SALE SECURITIES (
AVAILABLE FOR SALE SECURITIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Available for Sale Securities | ||
Amortized cost | $ 2,661,092 | |
Gross unrealized gains | 36,138 | |
Gross unrealized losses | (35,298) | |
Fair value | 2,661,932 | $ 0 |
Realized gains or losses | 0 | |
US Treasury Bills | ||
Available for Sale Securities | ||
Amortized cost | 2,661,092 | |
Gross unrealized gains | 36,138 | |
Gross unrealized losses | (35,298) | |
Fair value | $ 2,661,932 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
PP&E, Net, by Type | ||
Total property and equipment | $ 572,518 | $ 553,040 |
Accumulated depreciation | (444,731) | (327,188) |
Total property and equipment, net | 127,787 | 225,852 |
Depreciation of property and equipment | 117,543 | 22,433 |
Website | ||
PP&E, Net, by Type | ||
Total property and equipment | 285,377 | 285,377 |
Computer equipment and purchased software | ||
PP&E, Net, by Type | ||
Total property and equipment | 96,037 | 84,589 |
Equipment | ||
PP&E, Net, by Type | ||
Total property and equipment | 35,449 | 35,449 |
Furniture and fixtures | ||
PP&E, Net, by Type | ||
Total property and equipment | 87,184 | 87,184 |
Leasehold improvements | ||
PP&E, Net, by Type | ||
Total property and equipment | $ 68,471 | $ 60,441 |
INTERNALLY DEVELOPED SOFTWARE_2
INTERNALLY DEVELOPED SOFTWARE, NET (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
INTERNALLY DEVELOPED SOFTWARE, NET | ||
Internally developed software capitalized | $ 3,767,332 | $ 2,975,686 |
Amortization of internally developed software | 1,948,085 | 1,182,766 |
Accumulated amortization | $ 6,964,755 | $ 5,016,670 |
OTHER INTANGIBLE ASSETS, NET (D
OTHER INTANGIBLE ASSETS, NET (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | ||
Capitalization of other intangible assets | $ (957,775) | |
Amortization of other intangible assets | 49,520 | |
Accumulated amortization | 6,964,755 | $ 5,016,670 |
FFPE blocks from a third-party sequencer | ||
Finite-Lived Intangible Assets [Line Items] | ||
Capitalization of other intangible assets | (957,775) | |
Amortization of other intangible assets | 49,520 | |
Accumulated amortization | $ 49,520 |
SEVERANCE (Details)
SEVERANCE (Details) - USD ($) | Nov. 04, 2022 | Oct. 24, 2022 | Dec. 31, 2023 | Jan. 01, 2023 | Dec. 31, 2022 |
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 | $ 7,462 | $ 376,400 | |||
Chief Operating Officer | |||||
Severance | |||||
Amount of employer's portion of the applicable taxes on the remaining severance payments | $ 21,896 | ||||
Employee Severance [Member] | Chief Operating Officer | |||||
Severance | |||||
Restructuring, Incurred Cost, Statement of Income or Comprehensive Income [Extensible Enumeration] | General and Administrative Expense | ||||
Severance Costs | $ 325,000 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities | $ 2,661,932 | $ 0 |
Liabilities: | ||
Derivative liability | 0 | |
Recurring | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities | 2,661,932 | |
Level 1 | Recurring | ||
Assets, Fair Value Disclosure [Abstract] | ||
Available-for-sale securities | $ 2,661,932 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) - lease | 12 Months Ended | |
Dec. 31, 2023 | Sep. 27, 2023 | |
COMMITMENTS AND CONTINGENCIES | ||
Number of operating lease | 1 | |
Remaining lease term | 1 year 2 months 1 day | 12 months |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Company operating lease (Details) - Office Space in Lexington, Massachusetts [Member] | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Lessee, Lease, Description [Line Items] | |
Operating lease expense | $ 166,486 |
Short-term lease expense | 2,500 |
Total Lease cost | $ 168,986 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES - Lease positions in Balance Sheets (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Assets and Liabilities, Lessee [Abstract] | ||
Operating lease right-of-use assets | $ 193,857 | $ 184,692 |
Total lease assets | 193,857 | |
Operating lease liability - current portion | 167,114 | 158,451 |
Operating lease liability - net of current portion | 29,130 | $ 27,396 |
Total lease liability | $ 196,244 |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES - Lease Terms and Discount Rate (Details) | Dec. 31, 2023 | Sep. 27, 2023 |
COMMITMENTS AND CONTINGENCIES | ||
Weighted average remaining lease term (in years) - operating leases | 1 year 2 months 1 day | 12 months |
Weighted average discount rate - operating leases | 5.96% |
COMMITMENTS AND CONTINGENCIES_5
COMMITMENTS AND CONTINGENCIES - Future lease payments (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Operating Leases | ||
2024 | $ 174,338 | |
2025 | 29,348 | |
Total future minimum lease payments | 203,686 | |
Less effect of discounting | (7,442) | |
Total lease liability | 196,244 | |
Rent expense | $ 168,986 | $ 176,336 |
COMMITMENTS AND CONTINGENCIES_6
COMMITMENTS AND CONTINGENCIES - Cash Flows - Operating lease (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES | ||
Non-cash lease expense (operating cash flow) | $ 157,192 | |
Change in lease liabilities (operating cash flow) | (155,960) | $ (147,276) |
Supplemental non-cash amounts of lease liabilities arising from obtaining right of use assets | $ 166,357 |
COMMITMENTS AND CONTINGENCIES_7
COMMITMENTS AND CONTINGENCIES - Sales Tax (Details) | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Loss Contingencies [Line Items] | |
Interest and penalties on sales tax liability | $ (214,784) |
Sales Tax Payable | |
Loss Contingencies [Line Items] | |
Sales and Excise Tax Payable | 707,000 |
Interest and penalties on sales tax liability | $ 215,000 |
Amount of prior taxes recovered | $359,000 |
Loss recognized | $ 564,000 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - $ / shares | Dec. 31, 2023 | Dec. 31, 2022 | Jun. 17, 2021 |
STOCKHOLDERS' EQUITY | |||
Number of shares authorized | 250,000,000 | ||
Common stock, shares authorized | 200,000,000 | 200,000,000 | 200,000,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 50,000,000 | ||
Preferred stock, par value | $ 0.0001 |
STOCKHOLDERS' EQUITY - Common S
STOCKHOLDERS' EQUITY - Common Stock - (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Class of Stock [Line Items] | ||
Issuance of common stock through exercise of stock options | $ 70,889 | $ 78,641 |
Issuance of common stock in exchange for services | $ 6,250 | |
Common Stock | ||
Class of Stock [Line Items] | ||
Share price | $ 6.25 | |
Issuance of common stock through exercise of stock options (in shares) | 70,889 | 81,043 |
Issuance of common stock through exercise of stock options | $ 70,889 | $ 78,641 |
Issuance of common stock in exchange for services | $ 6,250 | |
Issuance of common stock in exchange for services (in shares) | 1,000 |
STOCKHOLDERS' EQUITY - Underwri
STOCKHOLDERS' EQUITY - Underwriter Warrants (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Jun. 17, 2021 | |
Warrants | |||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Underwriter Warrants | |||
Warrants | |||
Warrants to purchase shares of common stock | 90,000 | ||
Common stock, par value | $ 0.0001 | ||
Exercise price of warrant | $ 10 | ||
Warrants exercisable term | 46 months | ||
Weighted Average Time To Expiration | 3 years 4 months 6 days | ||
Commencing term from effective date of registration statement | 180 days | ||
Warrants Not Settleable in Cash, Fair Value Disclosure | $ 0.4 |
STOCKHOLDERS' EQUITY - Warrants
STOCKHOLDERS' EQUITY - Warrants (Details) - $ / shares | 12 Months Ended | ||||
Dec. 31, 2023 | Dec. 31, 2022 | Feb. 13, 2024 | Dec. 01, 2021 | Aug. 13, 2021 | |
Private Placement | |||||
Class of Warrant or Right [Line Items] | |||||
Warrants exercisable term | 4 years 5 months | 5 years 6 months | |||
Warrants to purchase shares of common stock | 1,312,500 | 1,312,500 | |||
Exercise price of warrant | $ 13 | $ 13 | |||
Warrant to purchase common stock shares issued | 1,312,500 | 1,312,500 | |||
Warrants other than Underwriter Warrants | |||||
Class of Warrant or Right [Line Items] | |||||
Warrants exercisable term | 8 years 6 months 2 days | ||||
Warrants to purchase shares of common stock | 12,500 | ||||
Exercise price of warrant | $ 8 | $ 8 |
STOCKHOLDERS' EQUITY - Warrant
STOCKHOLDERS' EQUITY - Warrant activity (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Options Outstanding. | |||
Balance at the beginning | 297,559 | ||
Balance at the end | 296,268 | 297,559 | |
Warrants | |||
Options Outstanding. | |||
Balance at the beginning | 1,415,000 | 1,415,000 | |
Balance at the end | 1,415,000 | 1,415,000 | 1,415,000 |
Weighted Average Exercise Price | |||
Balance at the beginning (in dollars per share) | $ 12.77 | $ 9.76 | |
Balance at the end (in dollars per share) | $ 12.77 | $ 12.77 | $ 9.76 |
Weighted Average Remaining Contractual Term (in years) | |||
Weighted Average Remaining Contractual Term (in years) | 3 years 5 months 19 days | 4 years 5 months 19 days | 5 years 4 months 2 days |
SHARE-BASED COMPENSATION - 2021
SHARE-BASED COMPENSATION - 2021 Stock Incentive Plan - shares (Details) - shares | 12 Months Ended | ||||||
Apr. 13, 2023 | Jul. 29, 2015 | Apr. 12, 2013 | Dec. 31, 2023 | Dec. 31, 2022 | May 24, 2023 | May 23, 2023 | |
2013 Stock Incentive Plan | |||||||
STOCK-BASED COMPENSATION | |||||||
Number of shares available for future grants | 0 | ||||||
Number of shares issued | 0 | 1,713,570 | 0 | 122,485 | |||
Plan Term | 10 years | ||||||
2021 Stock Incentive Plan | |||||||
STOCK-BASED COMPENSATION | |||||||
Options authorized | 1,869,500 | 608,000 | |||||
Number of shares available for future grants | 1,363,464 | ||||||
Number of shares issued | 182,919 | 187,569 |
SHARE-BASED COMPENSATION - Esti
SHARE-BASED COMPENSATION - Estimate the fair value of stock options (Details) - Employee Stock Option [Member] | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Minimum | ||
Assumptions used to estimate the fair value of stock options granted | ||
Risk-free interest rate, minimum | 3.75% | 4.27% |
Expected term (in years) | 7 months 9 days | 1 year 1 month 2 days |
Expected volatility, minimum | 59.97% | |
Maximum | ||
Assumptions used to estimate the fair value of stock options granted | ||
Risk-free interest rate, maximum | 4.52% | 4.76% |
Expected term (in years) | 4 years | 3 years 7 months 20 days |
SHARE-BASED COMPENSATION - Stoc
SHARE-BASED COMPENSATION - Stock option activity (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Options Outstanding | |||
Balance at the beginning | 297,559 | ||
Balance at the end | 296,268 | 297,559 | |
2013 and 2021 Stock Incentive Plan | |||
Options Outstanding | |||
Balance at the beginning | 297,559 | 255,147 | |
Granted | 182,172 | 131,668 | |
Exercised | (70,889) | (81,043) | |
Cancelled/forfeited | (112,574) | (8,213) | |
Balance at the end | 296,268 | 297,559 | 255,147 |
Options exercisable at the end | 142,910 | ||
Weighted Average Exercise Price | |||
Balance at the beginning (in dollars per share) | $ 2.69 | $ 2.32 | |
Granted (in dollars per share) | 1.38 | 1.60 | |
Exercised (in dollars per share) | 1 | 1 | |
Cancelled/forfeited (in dollars per share) | 2.63 | 1.18 | |
Balance at the end (in dollars per share) | 2.17 | $ 2.69 | $ 2.32 |
Options exercisable at the end (in dollars per share) | $ 2.61 | ||
Weighted Average Remaining Contractual Term (in years) | |||
Weighted Average Remaining Contractual Term (in years) | 8 years 6 months 10 days | 6 years 11 months 15 days | 7 years 9 months |
Options exercisable at the end (in years) | 8 years 18 days | ||
Aggregate Intrinsic Value | |||
Balance at the beginning (in dollars) | $ 63,237 | $ 1,550,409 | |
Granted (in dollars) | 35,725 | ||
Exercised (in dollars) | $ 48,494 | 216,626 | |
Balance at the end (in dollars) | $ 63,237 | $ 1,550,409 |
SHARE-BASED COMPENSATION - Comp
SHARE-BASED COMPENSATION - Compensation Expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Employee Stock Option [Member] | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | $ 115,155 | $ 79,504 |
Employee Stock Option [Member] | Technology | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 7,638 | 8,900 |
Employee Stock Option [Member] | Sales and marketing | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 2,640 | 3,915 |
Employee Stock Option [Member] | Supply development | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 973 | 982 |
Employee Stock Option [Member] | Fulfillment | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 2,781 | 2,442 |
Employee Stock Option [Member] | General and administrative | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 101,123 | 63,265 |
Restricted Stock Units | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 344,511 | 599,109 |
Restricted Stock Units | Technology | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 134,126 | 122,863 |
Restricted Stock Units | Sales and marketing | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 63,750 | 89,765 |
Restricted Stock Units | Supply development | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 6,035 | 33,677 |
Restricted Stock Units | Fulfillment | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | 52,591 | 81,508 |
Restricted Stock Units | General and administrative | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Allocated share based compensation expense | $ 88,009 | $ 271,296 |
SHARE-BASED COMPENSATION - Rest
SHARE-BASED COMPENSATION - Restricted Stock Units (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Options outstanding | ||
Unvested Balance at December 31, 2021 | 267,505 | 279,720 |
Granted | 747 | 178,386 |
Vested | $ (86,674) | $ (110,286) |
Forfeited | (65,221) | (80,315) |
Unvested Balance at December 31, 2022 | 116,357 | 267,505 |
Weighted Average Grant Date Fair Value | ||
Unvested Balance at December 31, 2021 | $ 5.43 | $ 6.78 |
Granted | 1.62 | 4.15 |
Vested | 5.38 | 6.41 |
Forfeited | 5 | 5.90 |
Unvested Balance at December 31, 2022 | $ 5.67 | $ 5.43 |
SHARE-BASED COMPENSATION - Re_2
SHARE-BASED COMPENSATION - Restricted Stock Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 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 8 months 19 days | 2 years 3 months 18 days |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 747 | 178,386 |
Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation expense | $ 344,511 | $ 599,109 |
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | 591,953 | 1,259,507 |
Restricted Stock Units | General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Compensation expense | $ 88,009 | $ 271,296 |
Restricted Stock Units | Director [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition | 1 year 10 months 9 days | 2 years 10 months 13 days |
SHARE-BASED COMPENSATION - Addi
SHARE-BASED COMPENSATION - Additional information (Details) - USD ($) | 12 Months Ended | |||
Apr. 13, 2023 | Jul. 29, 2015 | Dec. 31, 2023 | Dec. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total intrinsic value of stock options exercised | $ 48,494 | $ 216,626 | ||
Weighted-average grant date fair value | $ 0.53 | $ 0.76 | ||
Unamortized compensation expense | $ 110,375 | $ 233,004 | ||
Unamortized compensation expense recognized over the remaining requisite service period | 2 years 8 months 19 days | 2 years 3 months 18 days | ||
Proceeds from exercise of stock options | $ 70,889 | $ 78,641 | ||
2013 Stock Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares issued | 0 | 1,713,570 | 0 | 122,485 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 12 Months Ended | 24 Months Ended |
Dec. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | |
Income Taxes | ||
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | $ 3,768,200 | |
Provision for income taxes | $ 0 | |
Tax Credit Carryforward, Amount | 2,058,300 | 2,058,300 |
Federal | ||
Income Taxes | ||
Net operating loss carryforwards | 50,800,000 | 50,800,000 |
Net operating loss carryforwards, subject to expiration | 13,000,000 | 13,000,000 |
Net operating loss carryforwards, carried forward indefinitely | 37,800,000 | 37,800,000 |
State | ||
Income Taxes | ||
Net operating loss carryforwards, subject to expiration | $ 31,100,000 | $ 31,100,000 |
INCOME TAXES - Significant comp
INCOME TAXES - Significant components of the Company's deferred tax assets and liabilities (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
Deferred tax assets: | ||
Operating loss carryforwards | $ 12,630,800 | $ 10,164,000 |
Research and development tax credit | 2,058,300 | 1,095,000 |
Other | 749,000 | 542,000 |
Total deferred tax assets | 15,438,100 | 11,801,000 |
Deferred tax liability: | ||
Other | (52,400) | (50,400) |
Intangibles | (224,500) | (357,600) |
Total deferred tax liabilities | (276,900) | (408,000) |
Net deferred tax assets before valuation allowance | 15,161,200 | 11,393,000 |
Valuation allowance | $ (15,161,200) | $ (11,393,000) |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of the statutory income tax rates (Details) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Reconciliation to statutory rates | ||
Expected federal income taxes benefit at statutory rates | (21.00%) | (21.00%) |
Expected state tax benefit at statutory rates, net of federal benefit | (6.40%) | (6.30%) |
Change in valuation allowance | (27.40%) | (27.30%) |
EMPLOYEE BENEFITS PLAN (Details
EMPLOYEE BENEFITS PLAN (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
EMPLOYEE BENEFITS PLAN | ||
Employer matching contribution | $ 48,772 | $ 0 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | Mar. 24, 2024 | Mar. 05, 2024 | Feb. 13, 2024 | Dec. 01, 2021 |
Private Placement | ||||
Subsequent Events | ||||
Warrants to repurchase an aggregate shares | 1,312,500 | 1,312,500 | ||
Subsequent event | ATM Agreement | Maximum | ||||
Subsequent Events | ||||
Net proceeds from offering | $ 1,500,000 | $ 1,500,000 |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounting Standard Recently Adopted (Details) - USD ($) | Dec. 31, 2023 | Dec. 31, 2022 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Operating lease right-of-use asset | $ 193,857 | $ 184,692 |
Operating lease long - term obligation | $ 29,130 | $ 27,396 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ (11,099,488) | $ (10,245,922) |
Insider Trading Arrangements
Insider Trading Arrangements | 12 Months Ended |
Dec. 31, 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 |