Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___ to ___

Commission File No. 001-40501

iSpecimen Inc.

(Exact name of registrant as specified in its charter)

Delaware		27-0480143
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

450 Bedford Street, Lexington, Massachusetts 02420

(Address of principal executive offices) (Zip Code)

(781) 301-6700

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Common Stock, par value $0.0001 per share		ISPC		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒Yes ☐No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, 2023, there were 9,065,483 shares of common stock, par value $0.0001 per share, issued and outstanding.

Table of Contents

iSPECIMEN INC.

FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2023

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION
ITEM 1.	Financial Statements
	Condensed Balance Sheets as of June 30, 2023 (Unaudited) and December 31, 2022	3
	Unaudited Condensed Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2023 and 2022	4
	Unaudited Condensed Statements of Changes in Stockholders’ Equity for the Six Months Ended June 30, 2023 and 2022	5
	Unaudited Condensed Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022	7
	Notes to Unaudited Condensed Financial Statements	8
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	34
ITEM 4.	Controls and Procedures	34

PART II – OTHER INFORMATION
ITEM 1.	Legal Proceedings	36
ITEM 1A.	Risk Factors	36
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
ITEM 3.	Defaults Upon Senior Securities	37
ITEM 4.	Mine Safety Disclosures	37
ITEM 5.	Other Information	37
ITEM 6.	Exhibits	37
SIGNATURES		38

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

iSpecimen Inc.

Condensed Balance Sheets



	June 30, 2023		December 31, 2022
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	2,004,500	$	15,308,710
Available-for-sale securities		6,209,491		—
Accounts receivable – unbilled		1,098,356		2,327,789
Accounts receivable, net of allowance for doubtful accounts of $492,609 and $230,999 at June 30, 2023 and December 31, 2022, respectively		1,458,845		1,597,915
Prepaid expenses and other current assets		187,769		300,434
Tax credit receivable		12,332		140,873
Total current assets		10,971,293		19,675,721
Property and equipment, net		163,871		225,852
Internally developed software, net		6,300,465		4,503,787
Operating lease right-of-use asset		107,115		184,692
Security deposits		27,601		27,601
Total assets	$	17,570,345	$	24,617,653
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,779,920	$	2,459,063
Accrued expenses		882,274		1,531,238
Operating lease current obligation		107,975		158,451
Deferred revenue		89,601		132,335
Total current liabilities		2,859,770		4,281,087
Operating lease long-term obligation		—		27,396
Total liabilities		2,859,770		4,308,483

Commitments and contingencies (See Note 8)

Stockholders’ equity
Common stock, $0.0001 par value, 200,000,000 shares authorized, 9,094,274 issued, and 9,063,274 outstanding at June 30, 2023 and 8,956,808 issued and 8,925,808 outstanding at December 31, 2022		906		892
Additional paid-in capital		68,889,903		68,573,774
Treasury stock, 31,000 shares at June 30, 2023 and December 31, 2022, at cost		(172)		(172)
Accumulated other comprehensive income		688		—
Accumulated deficit		(54,180,750)		(48,265,324)
Total stockholders’ equity		14,710,575		20,309,170
Total liabilities and stockholders’ equity	$	17,570,345	$	24,617,653

See accompanying notes to these unaudited condensed financial statements.

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iSpecimen Inc.

Condensed Statements of Operations and Comprehensive Loss

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022

Revenue	$	1,625,140	$	2,338,688	$	4,575,339	$	4,857,348
Operating expenses:
Cost of revenue		853,633		999,743		2,000,545		2,165,659
Technology		843,099		635,650		1,677,506		1,163,173
Sales and marketing		977,748		950,563		2,025,346		1,697,994
Supply development		291,360		242,380		614,862		424,450
Fulfillment		462,672		519,994		891,692		963,788
General and administrative		1,758,451		1,575,365		3,469,633		3,385,679
Total operating expenses		5,186,963		4,923,695		10,679,584		9,800,743

Loss from operations		(3,561,823)		(2,585,007)		(6,104,245)		(4,943,395)

Other income (expense), net
Interest expense		(3,535)		(42,273)		(7,070)		(80,321)
Interest income		110,882		13,881		225,144		26,535
Other income (expense), net		(29,138)		6,590		(29,255)		6,630
Total other income (expense), net		78,209		(21,802)		188,819		(47,156)

Net loss	$	(3,483,614)	$	(2,606,809)	$	(5,915,426)	$	(4,990,551)

Other comprehensive income:
Net loss	$	(3,483,614)	$	(2,606,809)	$	(5,915,426)	$	(4,990,551)
Unrealized (loss) gain on available-for-sale securities		(18,155)		—		688		—
Total other comprehensive income		(18,155)		—		688		—
Comprehensive loss	$	(3,501,769)	$	(2,606,809)	$	(5,914,738)	$	(4,990,551)

Net loss per share - basic and diluted	$	(0.39)	$	(0.30)	$	(0.66)	$	(0.57)

Weighted average shares of common stock outstanding - basic and diluted		9,033,868		8,821,698		9,011,644		8,793,723

See accompanying notes to these unaudited condensed financial statements.

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iSpecimen Inc.

Condensed Statements of Changes in Stockholders’ Equity

(Unaudited)


	Six Months Ended June 30, 2023
									Accumulated
							Additional		Other				Total
	Common Stock			Treasury Stock			Paid-In		Comprehensive		Accumulated		Stockholders'
	Shares	Amount		Shares	Amount		Capital		Income		Deficit		Equity
Balance at December 31, 2022	8,925,808	$	892	31,000	$	(172)	$	68,573,774	$	—	$	(48,265,324)	$	20,309,170
Stock-based compensation expense	—		—	—		—		54,608		—		—		54,608
Vesting of restricted stock	28,776		3	—		—		65,946		—		—		65,949
Issuance of common stock through exercise of stock options	67,736		7	—		—		67,729		—		—		67,736
Unrealized gain on available-for-sale securities	—		—	—		—		—		18,843		—		18,843
Net loss	—		—	—		—		—		—		(2,431,812)		(2,431,812)
Balance at March 31, 2023	9,022,320	$	902	31,000	$	(172)	$	68,762,057	$	18,843	$	(50,697,136)	$	18,084,494
Stock-based compensation expense	—		—	—		—		29,829		—		—		29,829
Vesting of restricted stock	37,801		4	—		—		94,864		—		—		94,868
Issuance of common stock through exercise of stock options	3,153		—	—		—		3,153		—		—		3,153
Unrealized loss on available-for-sale securities	—		—	—		—		—		(18,155)		—		(18,155)
Net loss	—		—	—		—		—		—		(3,483,614)		(3,483,614)
Balance at June 30, 2023	9,063,274	$	906	31,000	$	(172)	$	68,889,903	$	688	$	(54,180,750)	$	14,710,575

See accompanying notes to these unaudited condensed financial statements.

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iSpecimen Inc.

Condensed Statements of Changes in Stockholders’ Equity

(Unaudited)


	Six Months Ended June 30, 2022
							Additional				Total
	Common Stock			Treasury Stock			Paid-In		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Deficit		Equity
Balance at December 31, 2021	8,733,479	$	873	31,000	$	(172)	$	67,810,289	$	(38,019,402)	$	29,791,588
Stock-based compensation expense	—		—	—		—		183,410		—		183,410
Vesting of restricted stock units	3,125		—	—		—		781		—		781
Issuance of common stock through exercise of stock options	77,679		8	—		—		75,269		—		75,277
Net loss	—		—	—		—		—		(2,383,742)		(2,383,742)
Balance at March 31, 2022	8,814,283	$	881	31,000	$	(172)	$	68,069,749	$	(40,403,144)	$	27,667,314
Stock-based compensation expense	—		—	—		—		202,318		—		202,318
Vesting of restricted stock units	56,601		6	—		—		27,024		—		27,030
Issuance of common stock through exercise of stock options	1,827		—	—		—		1,827		—		1,827
Issuance of common stock in exchange for services	1,000		—	—		—		6,250		—		6,250
Net loss	—		—	—		—		—		(2,606,809)		(2,606,809)
Balance at June 30, 2022	8,873,711	$	887	31,000	$	(172)	$	68,307,168	$	(43,009,953)	$	25,297,930

See accompanying notes to these unaudited condensed financial statements.

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iSpecimen Inc.

Condensed Statements of Cash Flows

(Unaudited)


	Six Months Ended June 30,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(5,915,426)	$	(4,990,551)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		245,254		413,539
Amortization of internally developed software		934,829		533,112
Depreciation of property and equipment		75,726		9,132
Bad debt expense		261,610		269,645
Accretion of discount on available-for-sale securities		(97,874)		—
Amortization of debt issuance costs on Term Loan		—		6,116
Change in operating assets and liabilities:
Accounts receivable – unbilled		1,229,433		474,742
Accounts receivable		(122,540)		1,072,721
Prepaid expenses and other current assets		112,665		(47,832)
Operating lease right-of-use asset		77,577		73,120
Tax credit receivable		128,541		—
Accounts payable		(679,143)		(399,652)
Accrued expenses		(648,964)		(375,547)
Accrued interest		—		(389)
Operating lease liability		(77,872)		(72,367)
Deferred revenue		(42,734)		(319,766)
Net cash used in operating activities		(4,518,918)		(3,353,977)

CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalization of internally developed software		(2,731,507)		(777,181)
Purchase of property and equipment		(13,745)		—
Purchase of available-for-sale securities		(7,642,929)		—
Proceeds from sales and maturities of available-for-sale securities		1,532,000		—
Net cash used in investing activities		(8,856,181)		(777,181)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options		70,889		77,104
Proceeds from issuance of common stock in exchange for services		—		6,250
Net cash provided by financing activities		70,889		83,354

Net decreases in cash and cash equivalents		(13,304,210)		(4,047,804)
Cash and cash equivalents at beginning of period		15,308,710		27,738,979
Cash and cash equivalents at end of period	$	2,004,500	$	23,691,175

Supplemental disclosure of cash flow information:
Cash paid for interest	$	7,070	$	74,205
Supplemental disclosure of non-cash investing and financing activities:
Non-cash amounts of lease liabilities arising from obtaining right-of use-assets	$	—	$	333,123

See accompanying notes to these unaudited condensed financial statements.

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iSpecimen Inc.

Notes to Unaudited Condensed Financial Statements

1.NATURE OF BUSINESS AND BASIS OF PRESENTATION

Business

iSpecimen Inc. (“iSpecimen” or the “Company”) was incorporated in 2009 under the laws of the state of Delaware. The Company has developed and launched a proprietary online marketplace platform that connects medical researchers who need access to subjects, samples, and data, with hospitals, laboratories, and other organizations who have access to them. iSpecimen is a technology-driven company founded to address a critical challenge: how to connect life science researchers who need human biofluids, tissues, and living cells (“biospecimens”) for their research, with biospecimens available (but not easily accessible) in healthcare provider organizations worldwide. The Company’s proprietary platform, the iSpecimen Marketplace platform, is designed to solve this problem and transform the biospecimen procurement process to accelerate medical discovery. The Company is headquartered in Lexington, Massachusetts and its principal market is North America. The Company operates as one operating and reporting segment.

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) as determined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for interim financial information, and, pursuant to the rules and regulations of Article 10 of Regulation S-X of the Securities Act of 1933, as amended (the “Securities Act”), published by the Securities and Exchange Commission (“SEC”) for interim financial statements. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results of operations for the periods presented. They may not include all of the information and footnotes required by GAAP for complete financial statements. Therefore, these unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto contained in Amendment No. 1 to the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2022.

Liquidity and Going Concern

The Company has recognized recurring losses and as of June 30, 2023, the Company had working capital of $8,111,523 and accumulated deficit of $54,180,750. The Company also had accounts payable and accrued expenses of $2,662,194 as of June 30, 2023. Additionally, as of June 30, 2023, the Company had cash and cash equivalents of $2,004,500 and available-for-sale securities of $6,209,491, which can be quickly liquidated. Management believes that the Company's existing cash and cash equivalents, and its available-for-sale securities provide the Company with sufficient liquidity to continue its operations for at least the next 12 months from the date these unaudited condensed financial statements are issued. As a result of recurring losses, the continued viability of the Company beyond August 2024 may be dependent on its ability to continue to raise additional capital to finance its operations.

Impact of the Current Economy

The Company’s financial performance is subject to global economic conditions and their impact on the levels of spending by its customer research organizations, particularly discretionary spending for procurement of specimens used for research. Economic recessions may have adverse consequences across industries, including the health and bio-specimen industries, which may adversely affect the Company’s business and financial condition. The Company increased its allowance for doubtful accounts in accounts receivables by $261,610 during the six months ended June 30, 2023 due to a few boutique life sciences customers that have filed for bankruptcy. The Company has enhanced procedures related to its credit check process for new and existing customers in fiscal year 2023 to mitigate the risk to future collectability of receivables.

Changes in general market, economic and political conditions in domestic and foreign economies or financial markets, including fluctuation in stock markets resulting from, among other things, trends in the economy and inflation, as are being currently experienced, may result in a reduction in researchers’ demand for specimens due to the research organization’s inability to obtain funding.

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iSpecimen Inc.

Notes to Unaudited Condensed Financial Statements

To further address the current market conditions, the Company has taken steps, which include but are not limited to, reevaluating its pricing in order to be more competitive, creating campaigns to highlight and fast-track high demand items, and enhancing internal team communications to accelerate the sales cycle.

The Company believes that its business will continue to be resilient through a continued economic downturn or recession, or slowing or stalled recovery therefrom, and that the Company has the liquidity to address its financial obligations and alleviate possible adverse effects on its business, financial condition, results of operations or prospects.

Impact of the Russian-Ukrainian War on the Company’s Operations

The Company’s business was negatively impacted during the first half of 2022 by the ongoing war between Russia and Ukraine. At the start of the war, the Company had approximately $1 million of purchase orders that were slated to be fulfilled by the Company’s supply network in Ukraine and Russia. This supply network was shut down at the start of the war. Ukrainian suppliers were disabled due to war conditions and evacuations and some of the Company’s Russian suppliers were disabled by sanctions. While the Company mobilized to shift these purchase orders to other suppliers in the network, the process of getting specimen collections from other supply sites took time, which caused a delay in the fulfillment of such purchase orders. Alternate suppliers do not have the same favorable unit economics or specimen collection rates, and this impacted the Company’s margins. Additionally, key resources were diverted from operations to resolving the re-fulfillment issues caused by the conflict.

As of June 30, 2023, the Company’s supply sites in Russia that had not been under sanctions were accessible and the Company’s supply sites in Ukraine were mostly reopened. However, logistics and transportation of specimens out of the country of Ukraine remains challenging and not as economically feasible as they were prior to the beginning of the war. Due to the uncertainty caused by the ongoing war, Ukrainian and Russian suppliers may again become inaccessible to the Company. Therefore, as long as the uncertainty continues, the Company’s policy is to ensure at a purchase order level that an order is not solely sourced from the two countries. The short and long term implications of the war are difficult to predict as of the filing date of this report. The imposition of more sanctions and counter sanctions may have an adverse effect on the economic markets generally and could impact the Company’s business and the businesses of the Company’s supply partners, especially those in Ukraine and Russia. Because of the highly uncertain and dynamic nature of these events, it is not currently possible to estimate the impact of the war on the Company’s business and the companies from which the Company obtains supplies and distributes specimens.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company’s significant accounting policies and recent accounting standards are summarized in Note 2 of Amendment No. 1 to the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2022. There were no significant changes to these accounting policies during the six months ended June 30, 2023.

Use of Estimates

The preparation of the Company’s unaudited condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company utilizes certain estimates in the determination of the fair value of its common stock and warrants, deferred tax valuation allowances, revenue recognition, stock-based compensation, allowance for doubtful accounts, and accrued expenses amongst others. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results could differ from such estimates.

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iSpecimen Inc.

Notes to Unaudited Condensed Financial Statements

Investments

The Company’s investments are considered to be available-for-sale as defined under ASC 320, Investments- Debt Securities, and are recorded at fair value. Unrealized gains and losses are included in accumulated other comprehensive income. Purchases and sales of securities are reflected on a trade-date basis. Realized gains or losses are released from accumulated other comprehensive income and into earnings on the statement of operations, and amortization of premiums and accretion of discounts on the U.S treasury bills are recorded in interest expense or income, respectively.

The Company continually monitors the difference between its cost basis and the estimated fair value of its investments. The Company’s accounting policy for impairment recognition requires other-than-temporary impairment charges to be recorded when it determines that it is more likely than not that it will be unable to collect all amounts due according to the contractual terms of the fixed maturity security or that the anticipated recovery in fair value of the equity security will not occur in a reasonable amount of time. Impairment charges on investments are recorded based on the fair value of the investments at the measurement date or based on the value calculated using a discounted cash flow model. Credit-related impairments on fixed maturity securities that the Company does not plan to sell, and for which it is not more likely than not to be required to sell, are recognized in net income. Any non-credit related impairment is recognized as a component of other comprehensive income. Factors considered in evaluating whether a decline in value is other-than-temporary include: the length of time and the extent to which fair value has been less than cost; the financial condition and near-term prospects of the issuer; its intention to hold the investment; and the likelihood that it will be required to sell the investment.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measurements, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

●

Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets.

●

Level 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

●

Level 3 — Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

For certain financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable, the carrying amounts approximate their fair values as of June 30, 2023 and December 31, 2022, respectively, because of their short-term nature. Available-for-sale securities are recorded at fair value and as level 1 investments.

Revenue Recognition and Accounts Receivable

The Company recognizes revenue using the five-step approach as follows: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the Company satisfies the performance obligations.

The Company generates revenue by procuring various specimens from hospitals, laboratories, and other supply sites, for the Company’s medical research customers using the Company’s proprietary software, the iSpecimen Marketplace, to identify, locate, and ultimately validate the required specimens to the Company’s customers’ requested specifications. The Company’s performance obligation is to procure a specimen meeting the customer’s specification(s) from a supplier, on a “best efforts” basis, for the Company’s customer at the agreed price per specimen as indicated in the customer’s contract with the Company. The Company does not currently charge suppliers or customers for the use of the Company’s proprietary software. Each customer will execute a material and data use agreement with the Company or agree to online purchase terms, each of which includes terms such as specimen and data use, shipment terms, payment, and cancellation terms. These are then supplemented by purchase orders that specify specimen requirements including detailed

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iSpecimen Inc.

Notes to Unaudited Condensed Financial Statements

inclusion/exclusion criteria, quantities to be collected, and pricing. Collectively, these customer agreements represent the Company’s contracts with its customer. Generally, contracts have fixed unit pricing. For certain specimen orders, a refundable customer deposit may be required prior to order fulfillment depending on project set-up requirements, which is presented as deferred revenue. The Company expects to recognize the deferred revenue within the next twelve months.

Specimen collections occur at supply sites within the Company’s network. “Collection” is when the specimen has been removed, or “collected” from the patient or donor. A specimen is often collected specifically for a particular Company order. Once collected, the specimen is assigned by the supplier to the Company and control of the specimen passes to the Company. “Accession” is the process whereby a collected specimen and associated data are registered and assigned in the iSpecimen Marketplace to a particular customer order, which can occur while a specimen is at the supplier site or while at the Company site and it is when control of the specimen passes to the customer. Suppliers may ship specimens to the Company or directly to the customer if specimens must be delivered within a short time period (less than 24 hours after collection) or shipping to the Company is not practical.

The Company has evaluated principal versus agent considerations as part of the Company’s revenue recognition policy. The Company has concluded that it acts as principal in the arrangement as it manages the procurement process from beginning to end, and determines which suppliers will be used to fulfill an order, usually takes physical possession of the specimens, sets prices for the specimens, and bears the responsibility for customer credit risk.

The Company recognizes revenue over time, as the Company has created an asset with no alternative use to the Company, which has an enforceable right to payment for performance completed to date. At contract inception, the Company reviews a contract and related order upon receipt to determine if the specimen ordered has an alternative use by the Company. Generally, specimens ordered do not have an alternative future use to the Company and the performance obligation is satisfied when the related specimens are accessioned. The Company uses an output method to recognize revenue for specimens with no alternative future use. The output is measured based on the number of specimens accessioned. In the rare circumstances where specimens do have an alternative future use, the Company's performance obligation is satisfied at the time of shipment.

Customers are generally invoiced upon shipment. Depending on the quantity of specimens ordered, it may take several accounting periods to completely fulfill a purchase order. In other words, there can be multiple invoices issued for a single purchase order, reflecting the specimens being accessioned over time. However, specimens are generally shipped as soon as possible after they have been accessioned.

Once a specimen that has no alternative future use and for which the Company has an enforceable right to payment has been accessioned, the Company records the offset to revenue in accounts receivable -- unbilled. Once the specimen has been shipped and invoiced, a reclassification is made from accounts receivable-unbilled to accounts receivable.

Customers are generally given fourteen days from the receipt of specimens to inspect the specimens to ensure compliance with specifications set forth in the purchase order documentation. Customers are entitled to either receive replacement specimens or receive reimbursement of payments made for such specimens. The Company has a nominal history of returns for nonacceptance of specimens delivered. When this occurs, the Company gives the customer credit for the returns. The Company has not recorded a returns allowance.

The following table summarizes the Company’s revenue for the three and six months ended June 30:


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Specimens – contracts with customers	$	1,522,108	$	2,207,820	$	4,234,485	$	4,580,206
Shipping and other		103,032		130,868		340,854		277,142
Revenue	$	1,625,140	$	2,338,688	$	4,575,339	$	4,857,348

The Company carries its accounts receivable at the invoiced amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable to determine if an allowance for doubtful accounts is necessary, based on economic conditions and each customer’s payment history. Receivables are written off when deemed uncollectible, with any future recoveries

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iSpecimen Inc.

Notes to Unaudited Condensed Financial Statements

recorded as income when received. As of June 30, 2023 and December 31, 2022, the Company had an allowance for doubtful accounts of $492,609 and $230,999, respectively.

The Company applies the practical expedient to account for shipping and handling activities as fulfillment cost rather than as a separate performance obligation. Shipping and handling costs incurred are included in cost of revenue.

Internally Developed Software, Net

The Company capitalizes certain internal and external costs incurred during the application development stage of internal-use software projects until the software is ready for its intended use. Amortization of the asset commences when the software is complete and placed into service and is recorded in operating expenses. The Company amortizes completed internal-use software over its estimated useful life of five years on a straight-line basis. Costs incurred during the planning, training and post-implementation stages of the software development life cycle are classified as technology costs and are expensed to operations as incurred.

Impairment of Long-Lived Assets

Management reviews long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable. An impairment loss is recognized when expected cash flows are less than the asset’s carrying value. Long-lived assets consist of property and equipment and internal-use software. No impairment charges were recorded for the six months ended June 30, 2023 and 2022.

Stock-Based Compensation

The Company records stock-based compensation for options granted to employees, non-employees, and to members of the board of directors for their services to the Company based on the grant date fair value of awards issued, and the expense is recorded on a straight-line basis over the requisite service period. Forfeitures are recognized when they occur.

The Company uses the Black-Scholes-Merton option pricing model to determine the fair value of stock options. The use of the Black-Scholes-Merton option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock. The Company has concluded that its historical share option exercise experience does not provide a reasonable basis upon which to estimate expected term. Therefore, the expected term was determined according to the simplified method, which is the average of the vesting tranche dates and the contractual term. Due to the lack of Company-specific historical and implied volatility data, the estimate of expected volatility is primarily based on the historical volatility of a group of similar companies that are publicly traded. For these analyses, companies with comparable characteristics are selected, including enterprise value and position within the industry, and with historical share price information sufficient to meet the expected life of the stock-based awards. The Company computes the historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of its stock-based awards.

The risk-free interest rate is determined by reference to U.S. Treasury zero-coupon issues with remaining maturities similar to the expected term of the options. The Company has not paid, and does not anticipate paying, cash dividends on shares of its common stock.

The fair value of the Company's common stock is equal to the closing price on the specified grant date.

Restricted Stock Units

The Company recognizes stock-based compensation expense from restricted stock units (the “RSUs”) ratably over the specified vesting period. The fair value of RSUs is determined to be the closing share price of the Company's common stock on the grant date.

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iSpecimen Inc.

Notes to Unaudited Condensed Financial Statements

Common Stock Warrants

The Company accounts for common stock warrants as either equity instruments or liabilities, depending on the specific terms of the warrant agreement. The warrants shall be classified as a liability if 1) the underlying shares are classified as liabilities or 2) the entity can be required under any circumstances to settle the warrant by transferring cash or other assets. The measurement of equity-classified nonemployee stock-based payments is generally fixed on the grant date and are considered compensatory. For additional discussion on warrants, see Note 9.

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss applicable to stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting the weighted-average number of shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net loss per share calculation, the potential impact of common stock to be issued upon conversion of stock options and warrants to purchase common stock are considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share applicable to stockholders were the same for all periods presented.

The table below provides potentially dilutive common stock equivalents excluded from diluted net loss per share as of June 30:


	2023	2022
Shares issuable upon vesting of RSUs	168,641	367,118
Shares issuable upon exercise of stock options	345,987	171,154
Shares issuable upon exercise of PIPE Warrant (defined below) to purchase common stock	1,312,500	1,312,500
Shares issuable upon exercise of Lender Warrant (defined below) to purchase common stock	12,500	12,500
Shares issuable upon exercise of Underwriter Warrant (defined below) to purchase common stock	90,000	90,000

Recently Adopted Accounting Standards

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for losses. In addition, an entity will have to disclose significantly more information about allowances and credit quality indicators. The new standard is effective for the Company for fiscal years beginning after December 15, 2022. The Company adopted this new standard as of January 1, 2023. ASU 2016-13 did not have a material impact on the Company’s financial statements.

3.AVAILABLE-FOR-SALE SECURITIES

The Company purchased U.S. treasury bills in the six months ended June 30, 2023 and has classified them as available-for-sale securities. The amortized cost, gross unrealized gains and losses, and fair value for available-for-sale securities as of June 30, 2023 are as follows:


			Gross		Gross
	Amortized		unrealized		unrealized
	cost		gains		losses		Fair value
Available-for-sale securities:
U.S. Treasury Bills	$	6,208,803	$	26,230	$	(25,542)	$	6,209,491
Total Available-for-sale securities:	$	6,208,803	$	26,230	$	(25,542)	$	6,209,491

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iSpecimen Inc.

Notes to Unaudited Condensed Financial Statements

The Company did not have any realized gains or losses in the six months ended June 30, 2023. Maturities of the U.S. Treasury bills are all due within the year. Marketable securities in an unrealized loss position as of June 30, 2023 were not deemed impaired at acquisition and subsequent declines in fair value are not deemed attributed to declines in credit quality. The Company believes that it is more likely than not that it will receive a full recovery of par value on the securities, although there can be no assurance that such recovery will occur.

4.PROPERTY AND EQUIPMENT, NET

Property and equipment, net consisted of the following at the dates indicated:


	June 30,		December 31,
	2023		2022
Website	$	285,377	$	285,377
Computer equipment and purchased software		90,304		84,589
Equipment		35,449		35,449
Furniture and fixtures		87,184		87,184
Leasehold improvements		68,471		60,441
Total property and equipment		566,785		553,040
Accumulated depreciation		(402,914)		(327,188)
Total property and equipment, net	$	163,871	$	225,852

Depreciation expense for property and equipment was $37,137 and $4,420 for the three months ended June 30, 2023 and 2022, respectively, and $75,726 and $9,132 for the six months ended June 30, 2023 and 2022, respectively.

5.INTERNALLY DEVELOPED SOFTWARE, NET

During the six months ended June 30, 2023 and 2022, the Company capitalized $2,731,507 and $771,181, respectively, of internally developed software costs in connection with the development and continued enhancement of the technology platform and web interfaces. Capitalized costs primarily consist of software costs, payroll, and payroll-related costs for the Company’s employees. The Company recognized $501,502 and $266,893 of amortization expense associated with capitalized internally developed software costs during the three months ended June 30, 2023 and 2022, respectively. The Company recognized $934,829 and $533,112 of amortization expense associated with capitalized internally developed software costs during the six months ended June 30, 2023 and 2022, respectively.

6.SEVERANCE

Dr. Christopher Ianelli

On September 19, 2022, the Company received a notice of departure from Dr. Christopher Ianelli to vacate his position of Chief Executive Officer and President of the Company, effective as of October 24, 2022 (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.

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iSpecimen Inc.

Notes to Unaudited Condensed Financial Statements

On January 1, 2023, the Company accrued an additional $23,580 in severance expense and liability which represents the employer’s portion of the applicable taxes on the remaining severance payments. As of June 30, 2023, the balance of the severance, COBRA benefits and employer taxes liabilities was $142,935 and is recorded on the balance sheet.

Jill Mullan

On September 20, 2022, the Company received a notice of departure from Jill Mullan to vacate the position of Chief Operating Officer of the Company, effective as of October 24, 2022. At the time the notice of departure was received from Ms. Mullan, she had received an executive employment agreement for the renewal of her employment with the Company. Ms. Mullan continued to serve on the Company’s board of directors until May 24, 2023, the end of the term of her directorship.

The Company and Ms. Mullan executed a separation agreement on October 28, 2022 with an effective date of October 24, 2022. The Company recognized $325,000 in severance expense for Ms. Mullan on November 4, 2022, the date on which her separation agreement revocation period expired. The severance expense is recorded within general and administrative expense on the statement of operations and the corresponding liability is recorded in accrued liabilities on the balance sheet.

On January 1, 2023, the Company accrued an additional $21,896 in severance expense and liability which represents the employer’s portion of the applicable taxes on the remaining severance payments. As of June 30, 2023, the balance of the severance and employer taxes liabilities was $121,457 and is recorded on the balance sheet.

7. FAIR VALUE MEASUREMENTS

The following table sets forth the Company’s assets to be measured at fair value on a recurring basis and their respective classification within the fair value hierarchy as of June 30, 2023:


	Fair Value at June 30, 2023
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities	$	6,209,491	$	6,209,491	$	—	$	—
Total Assets	$	6,209,491	$	6,209,491	$	—	$	—

As of June 30, 2023, the Company did not have any liabilities measured at fair value on a recurring basis.

8.COMMITMENTS AND CONTINGENCIES

Leases

The Company has one operating lease of office space in Lexington, Massachusetts, which will expire on February 28, 2024.

Leases with an initial term of twelve months or less are not recorded on the balance sheet date, and the Company does not separate lease and non-lease components of contracts. There are no material residual guarantees associated with any of the Company’s leases, and there are no significant restrictions or covenants included in the Company’s lease agreements.

The Company’s lease agreement does not provide an implicit borrowing rate. Therefore, the Company used a benchmark approach to derive an appropriate imputed discount rate. The Company benchmarked itself against other companies of similar credit ratings and comparable quality and derived an imputed rate, which was used to discount its real estate lease liabilities. The Company used estimated incremental borrowing rates for its active real estate lease. The calculated incremental borrowing rate was 5.96%, which was calculated based on the remaining lease term of 1.92 years as of January 1, 2022.

There was no sublease rental income for the six months ended June 30, 2023, and the Company is not the lessor in any lease arrangement, and there have been no related-party lease agreements.

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iSpecimen Inc.

Notes to Unaudited Condensed Financial Statements

Lease Costs

The table below presents certain information related to the lease costs for the Company’s operating lease for the six months ended June 30, 2023:


Operating lease expense	$	82,157
Short-term lease expense		2,500
Total lease cost	$	84,657

Lease Position as of June 30, 2023

Right-of-use lease assets and lease liabilities for the Company’s operating lease as of June 30, 2023 were recorded in the balance sheet as follows:


Assets
Operating lease right-of-use assets	$	107,115
Total lease assets	$	107,115

Liabilities
Current liabilities:
Operating lease liability – current portion	$	107,975
Noncurrent liabilities:
Operating lease liability – net of current portion		—
Total lease liability	$	107,975

Lease Terms and Discount Rate

The table below presents certain information related to the weighted average remaining lease term and the weighted average discount rate for the Company’s operating leases as of June 30, 2023:


Weighted average remaining lease term (in years) – operating leases			0.67
Weighted average discount rate – operating leases			5.96%

Undiscounted Cash Flows

Future lease payments included in the measurement of lease liabilities on the balance sheet are as follows:




2023 (excluding the six months ended June 30, 2023)	$	82,802
2024		27,600
Total future minimum lease payments		110,402
Less effect of discounting		(2,427)
Present value of future minimum lease payments	$	107,975

Rent expense for the three months ended June 30, 2023 and 2022 amounted to $42,078 and $44,281, respectively. Rent expense for the six months ended June 30, 2023 and 2022 amounted to $84,657 and $89,238, respectively.

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iSpecimen Inc.

Notes to Unaudited Condensed Financial Statements

Cash Flows

Supplemental cash flow information related to the operating lease for the six months ended June 30, 2023 was as follows:


Non-cash operating lease expense (operating cash flow)	$	77,577
Change in operating lease liabilities (operating cash flow)	$	(77,872)

Sales Tax Payable

The majority of the Company’s customers are researchers, universities, hospitals, and not-for-profit entities that are believed by the Company to have a research and development (“R&D”) tax exemption that generally excludes them from paying sales taxes, with a few exceptions in some tax jurisdictions, provided they have a R&D tax exemption certificate. The main types of specimens the Company sells are blood, blood plasma, human tissue, human parts, and human bodily fluids. Certain of these products are typically not taxable in some states regardless of the buyer’s tax exemption status. The Company historically has not collected sales tax in states where it had sales. Had the Company contemporaneously collected and remitted sales tax for all customers and in all jurisdictions where it would have been required, there would have been no material impact on the Company’s financial statements.

As a result of an entity-wide risk assessment process that commenced in the second quarter of 2023, the Company engaged external tax consultant advisors to complement internal resources and efforts to provide support in assessing the appropriate sales tax treatment associated with the Company’s products for all prior years in which the Company had generated revenue, to assist with the collection and tracking of Voluntary Disclosure Agreements (“VDAs”) where a potential tax liability may exist and to assist with the implementation of a sales tax software platform solution for the calculation, collection, and remittance of sales tax for all non-exempt future sales.

From the Company’s inception through the filing date of this report, the Company now believes it is probable that an obligation to collect and remit sales tax existed for certain of its sales of products to certain of its customers. Currently, the Company is in the early stage of analyzing its product sales, on an invoice-by-invoice basis, to determine which products are subject to sales tax in each jurisdiction. In addition, the Company is in the early stage of determining which of its customers are exempt from sales tax, and which customers who were not exempt from sales tax have already paid compensating use tax. Part of this process includes requesting and obtaining exemption letters from its customers or proof of payment of their compensating use tax. For all customers that are not exempt from the payment of sales tax and have not remitted use tax, the Company intends to invoice such customers for past sales tax due. However, the Company’s ability to collect the tax due on such invoices is uncertain. Therefore, the Company does not have sufficient information to reasonably estimate the minimum or maximum amount of its sales tax liability as of the date of this report. The Company is also in the process of identifying in which states there may be a need to file VDAs with relevant taxing jurisdictions regarding its failure to collect and remit sales tax obligations. As of June 30, 2023, the Company had not recorded an accrual for the probable sales tax liability nor the interest and penalties likely to be imposed by the taxing jurisdictions for the current and prior reporting periods in the financial statements. The Company will record a liability when the amount of its liability becomes reasonably estimable.

Revenue Share from Sequencing of Specimens

The Company has determined that it has a contingent liability arising from a certain amendment to one of its contracts signed during the three-month period ended June 30, 2023 with suppliers from which it procured Formalin-Fixed Paraffin-Embedded (“FFPE”) blocks specimens for its project utilizing sequencing. The contract amendment provided that the Company is required to pay the supplier 20% of the revenue derived from sales of the sequenced blocks after it generates $150,000 of sales revenue. The Company considered the revenue share to be probable and estimable as of June 30, 2023, and therefore recorded a liability of $30,000 in its accrued expenses on the balance sheet as of June 30, 2023.

Legal Proceedings

From time to time the Company is involved in litigation, claims, and other proceedings arising in the ordinary course of business. Such litigation and other proceedings may include, but are not limited to, actions relating to employment law and misclassification, intellectual property, commercial or contractual claims, or other consumer protection statutes. Litigation and other disputes are inherently

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iSpecimen Inc.

Notes to Unaudited Condensed Financial Statements

unpredictable and subject to substantial uncertainties and unfavorable resolutions could occur. As of June 30, 2023, there was no material litigation against the Company.

9.STOCKHOLDERS’ EQUITY

The Company’s authorized capital is 250,000,000 shares, of which (1) 200,000,000 shares are common stock, par value $0.0001 per share and (2) 50,000,000 are preferred stock, par value $0.0001 per share, which may, at the sole discretion of the Company’s board of directors, be issued in one or more series.

Common Stock

During the six months ended June 30, 2023, the Company issued 70,889 shares of common stock for cash exercises of options of $70,889.

Warrants

Underwriter Warrant

In connection with the Company's underwriting agreement with ThinkEquity, a division of Fordham Financial Management, Inc. and the representative of the Company’s IPO underwriters, the Company issued to ThinkEquity a warrant to purchase up to 90,000 shares of common stock (the "Underwriter Warrant"). The Underwriter Warrant is exercisable at a per share exercise price of $10.00 and is exercisable at any time and from time to time, in whole or in part, during the four- and one-half year period commencing 180 days from the effective date of the IPO registration statement. The Underwriter Warrant became exercisable on or after December 16, 2021 (six months from the effective date of the offering) and expires on June 15, 2026. Upon issuance of the Underwriter Warrant, as partial compensation for its services as an underwriter, the fair value of approximately $0.4 million was recorded as equity issuance costs in the year ended December 31, 2021. As of June 30, 2023, the Underwriter Warrant had not been exercised, and had a weighted average exercise price of $10.00 per share and a remaining weighted average time to expiration of 2.96 years.

Lender Warrant

In connection with a term loan (“Term Loan”) entered into with Western Alliance Bank (the “Lender”) on August 13, 2021, the Company issued a warrant to the Lender (the “Lender Warrant”) to purchase 12,500 shares of common stock of the Company. The Lender Warrant is exercisable at a per share exercise price of $8.00 and is exercisable at any time on or after August 13, 2021 through August 12, 2031. The Company determined that the Lender Warrant was equity-classified. As of June 30, 2023, the Lender Warrant had not been exercised, and had a weighted average exercise price of $8.00 per share and a remaining weighted average time to expiration of 8.13 years.

PIPE Warrants

On December 1, 2021, the Company completed a private placement (the “PIPE”) in which the Company issued warrants (the “PIPE Warrants”) to purchase up to an aggregate of 1,312,500 shares of common stock. These PIPE Warrants have an exercise price of $13.00 per share and are immediately exercisable upon issuance and will expire on the five- and one-half-year anniversary of the issuance date. As of June 30, 2023, the PIPE Warrants had not been exercised, and had a weighted average exercise price of $13.00 per share and a remaining weighted average time to expiration of 4.0 years.

10.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

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Notes to Unaudited Condensed Financial Statements

employees, officers, directors, consultants, and advisors by providing such persons with equity ownership opportunities and performance-based incentives. The 2021 Plan authorizes options, restricted stock, RSUs and other stock-based awards. The Company's board of directors, or any committee to which the board of directors delegates such authority, has the sole discretion in administering, interpreting, amending, or accelerating the 2021 Plan. Awards may be made under the 2021 Plan for up to 608,000 shares of the Company's common stock, and the 2021 Plan was made effective with the completion of the IPO.

On May 24, 2023, at the Company’s annual meeting of stockholders, the stockholders approved an amendment to the 2021 Plan to increase the number of shares under the 2021 Plan from 608,000 shares of common stock to 1,869,500 shares of common stock.

During the six months ended June 30, 2023 and 2022, 163,419 and 166,793 equity awards were issued under the 2021 Plan, respectively. During the three months ended June 30, 2023 and 2022, 45,172 and 155,793 equity awards were issued under the 2021 Plan, respectively. As of June 30, 2023, there were 1,283,763 shares of common stock available for future grants under the 2021 Plan.

2013 Plan

The iSpecimen Inc. 2013 Stock Incentive Plan (the “2013 Plan”) was adopted on April 12, 2013 and subsequently amended on July 29, 2015. The aggregate number of shares of common stock that may be issued pursuant to the 2013 Plan was 1,713,570.

No equity awards were issued under the 2013 Plan during the six months ended June 30, 2023 and 2022. According to the 2013 Plan which was adopted by the Company’s board of directors on April 12, 2013, no awards shall be granted under the 2013 Plan after the completion of ten years from the date on which the 2013 Plan was adopted by the Company’s board of directors. Therefore, as of April 13, 2023, no further shares from the remaining shares balance of 3,681 can be granted under the 2013 Plan.

Stock Options

The Company granted 162,672 stock options during the six months ended June 30, 2023. The Company did not grant any stock options in the six months ended June 30, 2022. The following assumptions were used to estimate the fair value of stock options granted using the Black-Scholes-Merton option pricing model during the six months ended June 30:


	2023	2022
Assumptions:
Risk-free interest rate	0.37% – 0.39%	—
Expected term (in years)	0.61 – 4.00	—
Expected volatility	59.35% –59.95%	—
Expected dividend yield	—	—

A summary of stock option activity under the 2021 Plan and 2013 Plan is as follows:


				Weighted
				Average
		Weighted		Remaining
	Options	Average		Contractual Term	Aggregate
	Outstanding	Exercise Price		in Years	Intrinsic Value
Balance at December 31, 2022	297,559	$	2.69	6.96	$	63,237
Granted	162,672		1.42	—		—
Exercised	(70,889)		1.00	—		48,494
Cancelled/forfeited	(43,355)		3.59	—		—
Balance at June 30, 2023	345,987	$	2.23	8.61	$	12,267

Options exercisable at June 30, 2023	121,666	$	3.05	7.47	$	8,770

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iSpecimen Inc.

Notes to Unaudited Condensed Financial Statements

The aggregate intrinsic value in the table above represents the difference between the Company's stock price as of the balance sheet date and the exercise price of each in-the-money option on the last day of the period. The aggregate intrinsic value of stock options exercised was $48,494 and $91,018 during the six months ended June 30, 2023 and 2022, respectively.

The weighted average grant date fair value of stock options issued in the six months ended June 30, 2023 was $0.52. The following table sets forth the recorded stock options compensation expense of the Company during the three and six months ended June 30:


	Three Months Ended June 30,				Six Months Ended June 30,
Operating expenses:	2023		2022		2023		2022
Technology	$	2,475	$	1,023	$	5,106	$	2,034
Sales and marketing		623		1,695		1,498		2,772
Supply development		446		348		820		653
Fulfillment		681		1,055		1,325		1,881
General and administrative		26,343		27,824		54,883		54,160
Total stock options expense	$	30,568	$	31,945	$	63,632	$	61,500

A total of $185,260 of unamortized compensation expense as of June 30, 2023 will be recognized over the remaining requisite service period of 2.42 years. During the six months ended June 30, 2023 and 2022, the Company received proceeds of $70,889 and $77,104, respectively, from the exercise of stock options.

Restricted Stock Units

A summary of RSUs activity under the 2021 Plan and 2013 Plan is as follows:


		Weighted
	RSUs	Average Grant
	Outstanding	Date Fair Value
Unvested Balance at December 31, 2022	267,505	$	5.43
Granted	747		1.62
Vested	(66,577)		5.36
Forfeited	(33,034)		5.29
Unvested Balance at June 30, 2023	168,641	$	5.47

The Company recorded RSUs compensation expense during the three and six months ended June 30 as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
Operating expenses:	2023		2022		2023		2022
Technology	$	32,876	$	25,198	$	67,653	$	38,598
Sales and marketing		18,959		26,092		30,814		40,259
Supply development		2,824		10,948		2,824		18,145
Fulfillment		17,608		24,330		39,052		37,960
General and administrative		21,862		110,835		41,279		217,077
Total RSU expense	$	94,129	$	197,403	$	181,622	$	352,039

As of June 30, 2023, the total unrecognized stock-based compensation expense related to unvested RSUs was $890,912, and it is expected to be recognized on a straight-line basis over a weighted average period of approximately 2.37 years.

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iSpecimen Inc.

Notes to Unaudited Condensed Financial Statements

11.INCOME TAXES

As of June 30, 2023 and December 31, 2022, the Company had federal net operating loss carryforwards of approximately $47,750,000 and $40,800,000, respectively, of which approximately $13,000,000 expires at various periods through 2037 and approximately $34,750,000 and $27,800,000, respectively, can be carried forward indefinitely. As of June 30, 2023 and December 31, 2022, the Company had state net operating loss carryforwards of approximately $29,600,000 and $25,000,000, respectively, that expire at various periods through 2043, respectively. As of June 30, 2023 and December 31, 2022, the Company had federal and state tax credits of approximately $1,860,000 and $1,094,000, respectively, available for future periods that expire at various periods through 2043. The Company has recorded a full valuation allowance against net deferred income tax assets due to a history of losses generated since inception.

Due to changes in ownership provisions of the Internal Revenue Code of 1986 (the “IRC”), the availability of the Company's net operating loss carryforwards may be subject to annual limitations under Section 382 of the IRC against taxable income in the future period, which could substantially limit the eventual utilization of such carryforwards.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to iSpecimen Inc. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Special Note Regarding Forward-Looking Statements

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance, or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the “Risk Factors” section of Amendment No. 1 to the Company’s Annual Report on Form 10-K/A filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 30, 2023. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Overview

We were incorporated in 2009 under the laws of the state of Delaware. Our mission is to accelerate life science research and development via a single global marketplace platform, the iSpecimen Marketplace, which connects researchers to subjects, specimens, and associated data. We are headquartered in Lexington, Massachusetts. We operate as one operating and reporting segment.

The iSpecimen Marketplace is an automated search and request platform for researchers seeking human biospecimens, and a full suite of fulfillment and management tools for biospecimen providers. The platform taps into information management systems found in biobanks and laboratories for specimen data, and electronic Medical Records to gain insights into the patient populations to support specimen collections directly from research subjects.

Researchers can search this data using our intuitive web-based user interface to obtain specimens more efficiently. They can instantly find the specific specimens they need for their studies, request quotes for these specimens or for custom collections directly from research subjects, place orders, and track and manage their specimens and associated data across projects.

Biospecimen providers also gain efficiencies using the iSpecimen Marketplace, not only because the platform provides instant access to a large researcher base, but because the technology orchestrates the bioprocurement workflow from specimen request to fulfillment. Specimen providers can access intuitive dashboards to view requests, create proposals, and track and manage their orders.

Finally, the platform helps with administrative and reporting functions for researchers, suppliers, and our internal personnel, including user and compliance management.

The iSpecimen Marketplace is composed of four major functional areas: search, fulfillment, data, and administrative reporting. We continue to invest in the evolution of these areas to improve engagement with the platform and liquidity across it. Our core business objective is to retain and grow both researcher and supplier usage of our platform to support biospecimen procurement, as well as to position the Company to explore other adjacent business opportunities that can benefit from the use of the iSpecimen Marketplace.

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The iSpecimen Marketplace currently supports the supply chain management and bioprocurement process for specimens and associated data. We generate revenue by procuring various specimens from hospitals, laboratories, and other supply sites, which comprise our global network, and delivering them to our medical research customers using our proprietary software. Costs paid to acquire specimens from hospitals and laboratories generally vary depending upon the sample type, collection requirements, and data provided. We generally operate in a “just in time” fashion, meaning we procure specimens from our suppliers and distribute specimens to our customers after we obtain an order for specimens from a research client. Generally, we do not speculatively purchase and bank samples in anticipation of future, unspecified needs. We believe our approach offers many advantages over a more traditional inventory-based supplier business model. In a fast-paced industry where personalized and precision medicine are growing at extraordinary rates, having access to hundreds of biorepositories to source supplies of biospecimens, rather than being limited to sourcing such biospecimens from a limited number of biorepositories under our management, substantially reduces the risks associated with a limited source of supply and provides us with the ability to avoid many of the operational constraints inherent in an industry where inventory turnover and cash conversion cycles can be lengthy.

Impact of the Current Economy

The Company’s financial performance is subject to global economic conditions and their impact on levels of spending by our customer research organizations, particularly discretionary spending for procurement of specimens used for research. Economic recessions may have adverse consequences across industries, including the health and bio-specimen industries, which may adversely affect our business and financial condition. We increased our allowance for doubtful accounts in accounts receivables by $261,610 during the six months ended June 30, 2023 due to a few boutique life sciences customers that have filed for bankruptcy. We have enhanced procedures related to our credit check process for new and existing customers in fiscal year 2023 to mitigate the risk to future collectability of receivables.

We believe that our business will continue to be resilient through a continued economic downturn or recession, or slowing or stalled recovery therefrom, and that we have the liquidity to address our financial obligations and alleviate possible adverse effects on our business, financial condition, results of operations or prospects.

Impact of the Russian-Ukrainian War on Our Operations

Our business was negatively impacted during the first half of 2022 by the ongoing war between Russia and Ukraine. At the start of the war, we had approximately $1 million of purchase orders that were slated to be fulfilled by our 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 our Russian suppliers were disabled by sanctions. While we mobilized to shift these purchase orders to other suppliers in the network, the process of getting specimen collections from other supply sites took time, which caused a delay in the fulfillment of such purchase orders. Alternate suppliers do not have the same favorable unit economics or specimen collection rates, and this impacted our margins. Additionally, key resources were diverted from operations to resolving the re-fulfillment issues caused by the conflict.

As of June 30, 2023, our supply sites in Russia that had not been under sanctions were accessible and our 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 us. Therefore, as long as the uncertainty continues, our policy is to ensure at a purchase order level that an order is not solely sourced from the two countries. The short and long-term implications of the war are difficult to predict as of the filing date of this report. The imposition of more sanctions and counter sanctions may have an adverse effect on the economic markets generally and could impact our business and the businesses of our supply partners, especially those in Ukraine

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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 our business and the companies from which we obtain supplies and distribute specimens.

Known Trends, Demands, Commitments, Events or Uncertainties Impacting Our Business

Chief Executive Officer Initiatives

Under the direction of Ms. Curley, our Chief Executive Officer, the Company’s mission to accelerate life sciences research and development, pursuant to a single global marketplace platform, remains unchanged from that of prior management. Ms. Curley continues to review the Company’s structure, processes, and resources to evaluate and identify areas for improvement, and has been focused on creating and ensuring a runway for growth and scale for our business. The focus of our activities is directed at increasing our revenue in the second half of 2023 with new revenue enhancement initiatives that are underway and increasing our cross-functional team communications to help improve execution.

One of our key new revenue enhancement initiatives is to identify, through sequencing runs, high value cancer patients which possess specific mutations in donor FFPE blocks. We have invested in active repetitive screening to create a virtual inventory available for our research customers in areas of high value. This initiative is extremely valuable, not only to our business, but we believe, for the entire industry. The power of our supplier network makes this initiative possible and when paired with the search functionality of our proprietary iSpecimen Marketplace, it provides an easier solution than what currently exists in our industry. We have successfully launched our first pilot and anticipate a modest level of revenue from this initial sequencing run, starting at the end of the third quarter of 2023. This is the first of several sequencing runs we anticipate performing throughout 2023 for this initiative.

Ms. Curley has also reviewed our technology roadmap and has been green-lighting projects to accelerate development timelines. We are committed to investing in and developing our technology. In the six months ended June 30, 2023, we capitalized approximately $2,732,000 of internally developed software costs with plans to invest at lower levels for the remainder of the year. We anticipate that these investments will increase revenue opportunities and result in operational efficiencies, positively impacting our liquidity, capital resources and results of operations in the future with a less than two-year rate of return on the investment.

We have identified and are addressing opportunities to match specimen requests more effectively to the inventory and capabilities of our supplier network. We believe that during the second half of 2023, this will result in an increase in the utilization rate of our supplier network, which currently is heavily skewed toward the top 10-15% of our suppliers. Our initiative designed to reduce or eliminate supplier concentration is underway. We expect the re-leveling of our network will result in higher match rates, market depth and improved time-to-match.

Our iSpecimen Marketplace Onsite Program, which offers additional support to our biospecimen provider partners, is underway and we have begun to appoint iSpecimen Marketplace Onsite coordinators, whose responsibility is to field all requests made by the provider partner and submit proposals on behalf of the provider partner, resulting in streamlined sample-related management and reducing strain on existing staff and product pipelines.

Market Conditions

In order to address a downturn in the industry that impacted our financial results during the three months ended June 30, 2023, we have revised our sales approach as detailed below, which we believe, will put us in a better position, to obtain favorable results faster for the remainder of 2023 and also recognize revenue more in line with historical levels. The majority of our customers are economically impacted by the availability of funding. We believe that the reduction in revenue in the second quarter was a result of the potential of a global economic slowdown at the end of the first quarter and that uncertainty negatively impacted on the equity markets for our industry. These economic challenges negatively impacted spending by our customers, having a direct effect on our revenue results for the second quarter of 2023. Specifically, in the second quarter of 2023, we experienced a substantial decline in the receipt of purchase orders from our customers. Due to this decline in purchase orders from customers, we also experienced a lower backlog of purchase orders compared to prior quarters. This adversely impacted on our ability to fulfill orders and generated lower levels of revenue in the second quarter of 2023.

During the second quarter of 2023 we focused on launching several new initiatives with the express purpose of increasing our success rates for converting quotes to secured purchase orders, with the goal of reinstating our fulfillment of orders to the levels achieved in

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quarters prior to the second quarter of 2023. By the end of the second quarter of 2023, we began to see the results of those efforts as evidenced by an increase in the level of our backlog compared to the beginning of the second quarter of 2023. Based on the increase in our backlog by the end of the second quarter, we believe that this downturn in revenue for the second quarter of 2023 represents a temporary downturn and that we have taken the required actions to address these issues which, we believe, will allow us to achieve better results for the third quarter of 2023 and beyond.

Mitigating Concentration Risks – Cash

As of December 31, 2022, we maintained all of our cash with one financial institution and our cash balance with this financial institution was in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit. If this bank fails in the future, we may not be able to immediately (or ever) recover our cash in excess of the FDIC insured limits which would adversely impact our operating liquidity and could negatively impact our operations, results of operations and financial performance.

Since the March 2023 failure and FDIC takeover of Silicon Valley Bank and the inability of its customers to readily access their cash deposits, there has been a heightened risk and greater focus on the potential failures of other banks in the future. In order to reduce the risks associated with maintaining all of our cash at a single bank, we have diversified our holdings by purchasing U.S Treasury bills at a different financial institution. As of June 30, 2023, we had a balance of approximately $6.2 million of U.S. Treasury bills at a financial institution that is different from where our cash is held. The Company will continue to assess other opportunities to ensure the safeguarding of our assets.

Components of Our Results of Operations

Revenue

We generate revenue by procuring various specimens from hospitals, laboratories, and other supply sites for our medical research customers using our proprietary software, the iSpecimen Marketplace, to identify, locate, and ultimately validate the required specimens to our customers’ requested specifications. The Company’s performance obligation is to procure a specimen meeting the customer specification(s) from a supplier, on a “best efforts” basis, for our customer at the agreed price per specimen as indicated in the customer contract with the Company. We do not currently charge suppliers or customers for the use of our proprietary software. Each customer will execute a material and data use agreement with the Company or agree to online purchase terms, each of which includes terms such as specimen and data use, shipment terms, payment, and cancellation terms. These are then supplemented by purchase orders that specify specimen requirements including detailed inclusion/exclusion criteria, quantities to be collected, and pricing. Collectively, these customer agreements represent the Company’s contracts with its customer. Generally, contracts have fixed unit pricing. For certain specimen orders, a refundable customer deposit may be required prior to order fulfillment depending on project set-up requirements, presented as deferred revenue. The Company expects to recognize the deferred revenue within the next twelve months.

We recognize revenue over time, as we have created an asset with no alternative use and we have an enforceable right to payment for performance completed to date. At contract inception, we review a contract and related order upon receipt to determine if the specimen ordered has an alternative use to us. Generally, specimens ordered do not have an alternative future use to us and our performance obligation is satisfied when the related specimens are accessioned. We use an output method to recognize revenue for specimens with no alternative future use. The output is measured based on the number of specimens accessioned.

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.

Cost of Revenue

Cost of revenue primarily consists of the purchase price to acquire specimens from hospitals and laboratories, inbound and outbound shipping costs, supply costs related to samples, payment processing and related transaction costs, and costs paid to the supply sites to support sample collections. Shipping costs upon receipt of products from suppliers are recognized in cost of revenue.

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Technology

Technology costs include payroll and related expenses for employees involved in the development and implementation of our technology, software license and system maintenance fees, outsourced data center costs, data management costs, depreciation and amortization, and other expenses necessary to support technology initiatives. Collectively, these costs reflect the efforts we make to offer a wide variety of products and services to our 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.

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.

Supply Development

We have agreements with supply partners that allow us 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.

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Financial Operations Overview and Analysis for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited)

Comparison of the Three Months Ended June 30, 2023 and 2022


		Three Months Ended June 30,			Change
	2023		2022		Dollars		Percentage
Revenue	$	1,625,140	$	2,338,688	$	(713,548)	(31)	%
Operating expenses:
Cost of revenue		853,633		999,743		(146,110)	(15)	%
Technology		843,099		635,650		207,449	33	%
Sales and marketing		977,748		950,563		27,185	3	%
Supply development		291,360		242,380		48,980	20	%
Fulfillment		462,672		519,994		(57,322)	(11)	%
General and administrative		1,758,451		1,575,365		183,086	12	%
Total operating expenses		5,186,963		4,923,695		263,268	5	%
Loss from operations		(3,561,823)		(2,585,007)		(976,816)	(38)	%
Other income (expense), net
Interest expense		(3,535)		(42,273)		38,738	92	%
Interest income		110,882		13,881		97,001	699	%
Other expense, net		(29,138)		6,590		(35,728)	(542)	%
Other income (expense), net		78,209		(21,802)		100,011	459	%
Net loss	$	(3,483,614)	$	(2,606,809)		(876,805)	(34)	%

Revenue

Revenue decreased by approximately $714,000, or 31%, from approximately $2,339,000 for the three months ended June 30, 2022 to approximately $1,625,000 for the three months ended June 30, 2023. This was primarily due to a decrease of 2,322, or 33%, in specimen count from 7,004 specimens in the three months ended June 30, 2022 to 4,682 specimens in the three months ended June 30, 2023. The effect of the decrease in specimen count was offset by a change in the specimen mix which caused the average selling price per specimen to increase by $13, or 4%, from approximately $334 in the three months ended June 30, 2022 to $347 in the three months ended June 30, 2023.

Cost of Revenue

Cost of revenue decreased by approximately $146,000, or 15%, from approximately $1,000,000 for the three months ended June 30, 2022 to approximately $854,000 for the three months ended June 30, 2023, which was attributable to a 33% decrease in the number of specimens accessioned for the current period compared to the same period in the prior year, offset by a $40 or 28% increase in the average cost per specimen.

Technology

Technology expenses increased by approximately $207,000, or 33% from approximately $636,000 for the three months ended June 30, 2022 to approximately $843,000 for the three months ended June 30, 2023. The increase was related to increases in headcount and payroll and related expenses of approximately $75,000, amortization of internally developed software of approximately $234,000, offset by decreases in professional fees unrelated to internally developed software of approximately $99,000 and in general and administrative expenses of approximately $3,000.

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Sales and Marketing Expenses

Sales and marketing expenses increased by approximately $27,000, or 3%, from approximately $951,000 for the three months ended June 30, 2022 to approximately $978,000 for the three months ended June 30, 2023. The increase was attributable to increases due to hiring more sales personnel, professional fees of approximately $72,000, payroll and related expenses of approximately $58,000, travel expenses of approximately $6,000, offset by a decrease in external marketing expenses of approximately $109,000.

Supply Development

Supply development expenses increased by approximately $49,000, or 20%, from approximately $242,000 for the three months ended June 30, 2022 to approximately $291,000 for the three months ended June 30, 2023. The increase was primarily attributable to increases in professional fees of approximately $104,000, offset by decreases in payroll and related expenses of approximately $53,000, and travel expenses of approximately $2,000.

Fulfillment

Fulfillment costs decreased by approximately $57,000, or 11%, from approximately $520,000 for the three months ended June 30, 2022 to approximately $463,000 for the three months ended June 30, 2023. The decrease was primarily attributable to decreases in payroll and related expenses of approximately $69,000 for personnel engaged in pre-sales feasibility assessments and post-sales fulfillment activities, offset by an increase in operating expenses of approximately $12,000.

General and Administrative Expenses

General and administrative expenses increased by approximately $183,000, or 12%, from approximately $1,575,000 for the three months ended June 30, 2022 to approximately $1,758,000 for the three months ended June 30, 2023. The increase was attributable to increases in directors’ and officers’ insurance of approximately $157,000, professional fees of approximately $123,000, depreciation expenses of $33,000, advertising expense of approximately $15,000, utilities and facilities expenses of approximately $4,000, offset by decreases in payroll and related expenses of approximately $125,000, and travel expense of approximately $24,000.

Other Income (Expense), Net

Other income (expense), net, increased by approximately $100,000, or 459%, from approximately $22,000 of other expense net, for the three months ended June 30, 2022 to approximately $78,000 of other income, net, for the three months ended June 30, 2023. The increase in other income (expense), net, was attributable to increases in interest income of approximately $97,000, and a decrease in interest expense of approximately $39,000, offset by an increase in other expense of approximately $36,000.

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Comparison of the Six Months Ended June 30, 2023 and 2022


		Six Months Ended June 30			Change
	2023		2022		Dollars		Percentage
Revenue	$	4,575,339	$	4,857,348	$	(282,009)	(6)	%
Operating expenses:
Cost of revenue		2,000,545		2,165,659		(165,114)	(8)	%
Technology		1,677,506		1,163,173		514,333	44	%
Sales and marketing		2,025,346		1,697,994		327,352	19	%
Supply development		614,862		424,450		190,412	45	%
Fulfillment		891,692		963,788		(72,096)	(7)	%
General and administrative		3,469,633		3,385,679		83,954	2	%
Total operating expenses		10,679,584		9,800,743		878,841	9	%
Loss from operations		(6,104,245)		(4,943,395)		(1,160,850)	(23)	%
Other income (expense), net
Interest expense		(7,070)		(80,321)		73,251	91	%
Interest income		225,144		26,535		198,609	748	%
Other expense, net		(29,255)		6,630		(35,885)	(541)	%
Other income (expense), net		188,819		(47,156)		235,975	500	%
Net loss	$	(5,915,426)	$	(4,990,551)		(924,875)	(19)	%

Revenue

Revenue decreased by approximately $282,000, or 6%, from approximately $4,857,000 for the six months ended June 30, 2022 to approximately $4,575,000 for the six months ended June 30, 2023. This was primarily due to a decrease in average selling price per specimen of $64, or 16%, from approximately $407 in the six months ended June 30, 2022 to $343 in the six months ended June 30, 2023. The decrease in average selling price per specimen was offset by an increase of 1,383, or 12%, in specimen count from 11,928 specimens in the six months ended June 30, 2022 to 13,311 specimens in the six months ended June 30, 2023.

Cost of Revenue

Cost of revenue decreased by approximately $165,000, or 8%, from approximately $2,166,000 for the six months ended June 30, 2022 to approximately $2,001,000 for the six months ended June 30, 2023, which was attributable to a 17% decrease in the average cost per specimen impacted by the specimen mix during the six month period ended June 30, 2023 over the same period in 2022, offset by a 12% increase in the number of specimens accessioned during the six months ended June 30, 2023 over the same period in the prior year.

Technology

Technology expenses increased by approximately $515,000, or 44%, from approximately $1,163,000 for the six months ended June 30, 2022 to approximately $1,678,000 for the six months ended June 30, 2023. The period over period increase was related to increases in

payroll and related expenses of approximately $178,000 and in amortization of approximately $402,000, offset by decreases in general operating expense of approximately $39,000 and professional fees of approximately $26,000.

Sales and Marketing Expenses

Sales and marketing expenses increased approximately $327,000, or 19%, from approximately $1,698,000 for the six months ended June 30, 2022 to approximately $2,025,000 for the six months ended June 30, 2023. The period over period increase was primarily attributable to an increase in payroll and related expenses of approximately $372,000, and an increase in general operating expenses related to sales and marketing of approximately $168,000, offset by a decrease in external marketing expense of approximately $213,000.

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Supply Development

Supply development expenses increased approximately $191,000, or 45%, from approximately $424,000 for the six months ended June 30, 2022 to approximately $615,000 for the six months ended June 30, 2023. The period over period increase was primarily attributable to increases in professional fees of approximately $263,000 and general supply development expenses of approximately $6,000, offset by a decrease in payroll and related expenses of approximately $78,000.

Fulfillment

Fulfillment costs decreased approximately $72,000, or 7%, from approximately $964,000 for the six months ended June 30, 2022 to approximately $892,000 for the six months ended June 30, 2023. The decrease was primarily attributable to a decrease in payroll and related expenses of approximately $86,000 for personnel engaged in pre-sales feasibility assessments and order fulfillment, offset by an increase in general operating expenses related to fulfillment of approximately $14,000.

General and Administrative Expenses

General and administrative expenses increased approximately $84,000, or 2%, from approximately $3,386,000 for the six months ended June 30, 2022 to approximately $3,470,000 for the six months ended June 30, 2023. The period over period increase was attributable to increases in professional fees of approximately $164,000, directors’ and officers’ insurance of approximately $72,000, and depreciation expense of approximately $67,000, offset by decreases in compensation costs of approximately $135,000, software costs of approximately $81,000, and general operating expenses of approximately $3,000.

Other Income (Expense), net

Other income (expense), net, increased by approximately $236,000, or 500%, from approximately $47,000 of other expense net, for the six months ended June 30, 2022 to approximately $189,000 of other income, net, for the six months ended June 30, 2023. The increase in other income (expense), net, was attributable to increases in interest income of approximately $199,000, and a decrease in interest expense of approximately $73,000, offset by an increase in other expense of approximately $36,000.

Liquidity and Capital Resources


						Change
	June 30, 2023		December 31, 2022		Dollars		Percentage
Balance Sheet Data:
Cash and cash equivalents	$	2,004,500	$	15,308,710	$	(13,304,210)		(87)	%
Available-for-sale securities		6,209,491		—		6,209,491		100	%
Working capital		8,111,523		15,394,634		(7,283,111)		(47)	%
Total assets		17,570,345		24,617,653		(7,047,308)		(29)	%
Total stockholders' equity		14,710,575		20,309,170		(5,598,595)		(28)	%


	Six Months Ended June 30,				Change
	2023		2022		Dollars		Percentage
Statement of Cash Flow Data:
Net cash flows used in operating activities	$	(4,518,918)	$	(3,353,977)	$	(1,164,941)	(35)	%
Net cash flows used in investing activities		(8,856,181)		(777,181)		(8,079,000)	(1,040)	%
Net cash flows provided by financing activities		70,889		83,354		(12,465)	(15)	%
Net decrease in cash and cash equivalents	$	(13,304,210)	$	(4,047,804)	$	(9,256,406)

In November 2022, we paid off the outstanding principal balance of $3,500,000 and outstanding interests on our Term Loan. As of December 31, 2022, we had a balance of cash and cash equivalents of approximately $15,309,000. During the six months ended June 30, 2023, to reduce the risks associated with maintaining all our cash at a single bank, we diversified our cash into investments by

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purchasing U.S. Treasury bills with maturities ranging from one to six months. The U.S. Treasury bills have been classified as available-for-sale securities. As of June 30, 2023, we had a balance of cash and cash equivalents of approximately $2,000,000 and available-for-sale securities of approximately $6,200,000, with a sum of both classifications totaling approximately $8,200,000. We also had working capital of approximately $8,100,000 as of June 30, 2023, and no longer have any debt that could decrease our liquidity.

Since inception, we have relied upon raising capital to finance our operations. In the six months ended June 30, 2023, we invested approximately $2.7 million of cash on developing our Marketplace technology to bring it closer to revenue feasibility. We intend to continue to use our existing cash to further develop our technology, grow our supply network, increase our marketing and sales presence, scale our operations, and for working capital and general corporate purposes.

We believe our cash and cash equivalents, along with our available-for-sale securities, together with the anticipated cash flow from operations will be sufficient to meet our working capital, and capital expenditure requirements for at least the next 12 months. The liquidity we derive from cash flows from operations is, to a large degree, predicated on our ability to process our unbilled receivables and collect our receivables in a timely manner. In the event that revenue during the next 12 months continues to fall short of our projections or if our plans or assumptions change, including if inflation begins to have a greater impact on our business or if we decide to move forward with any activities that require more outlays of cash than originally planned, we may need to raise additional capital sooner than expected.

Our ability to obtain capital to implement our growth strategy over the longer term will depend on our future operating performance, financial condition and, more broadly, on the availability of equity and debt financing. Capital availability will be affected by prevailing conditions in our industry, the global economy, the global financial markets, and other factors, many of which are beyond our control. Specifically, as a result of recent volatility and weakness in the public markets, due to, among other factors, uncertainty in the global economy and financial markets, it may be much more difficult to raise additional capital, if and when it is needed, unless the public markets become less volatile and stronger at such time that we seek to raise additional capital. In addition, any additional debt service requirements we take on could be based on higher interest rates and shorter maturities and could impose a significant burden on our results of operations and financial condition, and the issuance of additional equity securities could result in significant dilution to stockholders.

Cash Flows

Operating Activities

For the six months ended June 30, 2023, net cash used in operating activities was approximately $4,519,000 which consisted of a net loss of approximately $5,915,000 offset by non-cash charges of approximately $1,420,000, which included $935,000 related to amortization of internally developed software, $245,000 in stock-based compensation, $262,000 in bad debt expense, and $76,000 related to depreciation and amortization of property and equipment, offset by $98,000 of amortization of discount on available-for-sale securities. Total changes in assets and liabilities of approximately $23,000 were attributable to a $122,540 increase in accounts receivable, a $679,143 decrease in accounts payable, a $649,000 decrease in accrued expenses, a $77,872 decrease in operating lease liability, a $42,734 decrease in deferred revenue, offset by a $1,229,433 decrease in accounts receivables-unbilled, a $112,665 decrease in prepaid expenses and other current assets, a $77,577 decrease in right-of-use asset, and a $128,541 decrease in tax credit receivable.

For the six months ended June 30, 2022, net cash used in operating activities was approximately $3,354,000, which consisted of a net loss of approximately $4,991,000 offset by non-cash charges of approximately $1,232,000, which included $533,000 related to amortization of internally developed software, $414,000 in stock-based compensation, $270,000 in bad debt expense, $9,000 related to depreciation and amortization of property and equipment, and $6,000 of amortization of discount on the Term Loan with the Lender. Total changes in assets and liabilities of approximately $405,000 were attributable to a $475,000 decrease in accounts receivable-unbilled, a $1,073,000 decrease in accounts receivable, partially offset by a $400,000 decrease in accounts payable, a $376,000 decrease in accrued expenses, a $320,000 decrease in deferred revenue, and a $48,000 increase in prepaid expenses and other current assets.

Investing Activities

Net cash used in investing activities was approximately $8,856,000 and $777,000 for the six months ended June 30, 2023 and 2022, respectively. Net cash used in investing activities for the six months ended June 30, 2023 consisted of $2,731,507 of capitalization of internally developed software, $7,642,929 of purchase of available-for-sale securities, and $13,745 of purchases of property and

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equipment, offset by $1,532,000 of proceeds from sale and maturities of available-for-sale securities. Net cash used in investing activities for the six months ended June 30, 2022 consisted of $777,181 of capitalization of internally developed software.

Financing Activities

Net cash provided by financing activities was approximately $71,000 and $83,000 for the six months ended June 30, 2023 and 2022, respectively. Net cash provided by financing activities for the six months ended June 30, 2023 consists of $71,000 received from the exercise of stock options. Net cash provided by financing activities for the six months ended June 30, 2022 consists of $77,000 received from the exercise of stock options and $6,250 proceeds from issuance of common stock in exchange for services.

Effects of Inflation and Supply Chain Shortages

Our operations are heavily reliant on specimen availability, and as a result, we often receive more requests than we can fulfill. While the Company is subject to these types of supply chain constraints that are specific to the specimen industry, we have not been affected by the more common supply chain issues currently affecting the economy, specifically surrounding transportation. Due to the small size of the packages that we ship, our carriers were able to continue making timely deliveries during the six months ended June 30, 2023.

We have experienced negative effects of inflation in certain areas of our business due to the high rates of inflation in the world’s current economy. This inflation is affecting employee salaries, which account for a significant portion of our operating costs. Additionally, the costs of supplies have been affected by inflation; however, these costs are not significant to the Company’s results.

Inflation has not had a significant impact on the cost of specimens due to our long-term contracts maintained with vendors, which include revenue sharing plans.

Non-GAAP Financial Measure

To supplement our financial statements, which are prepared and presented in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), we use adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”), a non-GAAP financial measure, to understand and evaluate our core operating performance. This non-GAAP financial measure, which may be different than similarly titled measures used by other companies, is presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

We define our non-GAAP financial measure of Adjusted EBITDA as net loss, excluding income tax benefit, depreciation and amortization, stock-based compensation expense and interest expense.

We believe that Adjusted EBITDA provides useful information about our financial performance, enhances the overall understanding of our past performance and future prospects, and allows for greater transparency with respect to a key metric used by our management for financial and operational decision-making. We believe that Adjusted EBITDA helps identify underlying trends in our business that otherwise could be masked by the effect of the expenses that we exclude in Adjusted EBITDA. In particular, we believe the exclusion of the change in fair value of derivative liabilities on the bridge notes and convertible notes provides a useful supplemental measure in evaluating the performance of our operations and provides better transparency into our results of operations.

We are presenting the non-GAAP measure of Adjusted EBITDA to assist investors in seeing our financial performance through the eyes of management, and because we believe this measure provides an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry.

Adjusted EBITDA should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA compared to net loss, the closest comparable GAAP measure. Some of these limitations are that:

ØAdjusted EBITDA excludes certain recurring, non-cash charges such as depreciation of leasehold improvements, property and equipment and amortization of internally developed software and, although these are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future;

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ØAdjusted EBITDA excludes stock-based compensation expense which has been, and will continue to be for the foreseeable future, significant recurring expenses in our business and an important part of our compensation strategy; and

ØAdjusted EBITDA excludes amortization of debt issuance costs and discounts on convertible notes which are components of interest expense.

The following table presents a reconciliation of Adjusted EBITDA to net loss, the most comparable GAAP financial measure, for each of the periods presented:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net loss	$	(3,483,614)	$	(2,606,809)	$	(5,915,426)	$	(4,990,551)
Depreciation and amortization		538,640		271,312		1,010,555		542,244
Stock-based compensation		124,697		229,348		245,254		413,539
Interest expense		3,535		42,273		7,070		80,321
Adjusted EBITDA	$	(2,816,742)	$	(2,063,876)	$	(4,652,547)	$	(3,954,447)

Critical Accounting Policies

We have chosen accounting policies that we believe are appropriate to accurately and fairly report our operating results and financial condition in conformity with GAAP. We apply these accounting policies in a consistent manner. Our significant accounting policies are discussed in Note 2, “Summary of Significant Accounting Policies,” in our financial statements included in Amendment No. 1 to our Annual Report on Form 10-K/A for the year ended December 31, 2022.

The application of critical accounting policies requires that we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. These estimates and assumptions are based on historical experience and other market-specific or other relevant assumptions that we believe to be reasonable under the circumstances. We evaluate these estimates and assumptions on an ongoing basis. If actual results ultimately differ from previous estimates, the revisions are included in results of operations in the period in which the actual amounts become known. The critical accounting policies that involve the most significant management judgments and estimates used in preparation of our financial statements or are the most sensitive to change from outside factors, are discussed in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Amendment No. 1 to the Company’s Annual Report on the Form 10-K/A for the year ended December 31, 2022. There have been no material changes in our critical accounting policies and procedures during the six months ended June 30, 2023.

JOBS Act Transition Period

On April 5, 2012, the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company.

We are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we intend to rely on certain of these exemptions, including without limitation, (i) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 and (ii) complying with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an “emerging growth

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company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (ii) December 31, 2026; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable for smaller reporting companies.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2023, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. These controls and procedures are designed to provide reasonable assurance that the information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial and accounting officer, in a manner to allow timely decisions regarding required disclosures. Based on this evaluation, management has concluded that our disclosure controls and procedures were not effective as of June 30, 2023 due to the following material weakness in internal control over financial reporting:

●	The Company did not design and maintain adequate controls to maintain appropriate documentation for the tax exempt status of its customers, calculate and collect sales tax at point of sale, and subsequently report and remit in a timely manner to the relevant tax jurisdictions sales tax obligations.

Notwithstanding the existence of the material weakness described above, management believes that the condensed financial statements included in this Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows as of and for the periods presented, in conformity with GAAP.

Management’s Plan for Remediation

The material weakness described above was identified as a result of an entity-wide risk assessment process that commenced in the quarter ended June 30, 2023. The Company is in the process of implementing a remediation plan to improve our internal control over financial reporting and to remediate the related control deficiencies that led to the material weakness. In response to these deficiencies, management, with the oversight of the Audit Committee of the Board of Directors, has identified and implemented steps to remediate the material weakness.

The Company began implementing the remediation plan during the second quarter of fiscal 2023. The following remedial measures are designed to address the material weakness and to continue to improve our internal control over financial reporting.

●

We have engaged external tax advisors to complement internal resources and efforts and 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, will implement a sales tax software platform solution for the calculation, collection, and remittance of sales tax for all non-exempt future sales, and assist with the collection and tracking of Voluntary Disclosure Agreements received from states where a potential tax liability may exist.

●	We will design and implement enhanced policies, procedures and controls related to the calculation, collection, and remittance of sales tax to relevant jurisdictions.

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●	We will train appropriate personnel in the effective design and execution of our enhanced policies, procedures, and controls, including the importance of the ongoing, consistent effective execution of such procedures and controls.

We are committed to the remediation of the material weakness and expect to successfully implement enhanced control processes. However, as we continue to evaluate, and work to improve our internal control over financial reporting, management may determine that additional measures to address control deficiencies or modifications to the remediation plan are necessary. Therefore, we cannot assure you when we will be able to fully remediate such weakness, nor can we be certain that additional actions will not be required or what the costs may be of any such additional actions. Moreover, we cannot assure you that additional material weaknesses will not arise in the future.

Changes in Internal Control Over Financial Reporting

We are in the process of implementing certain changes to our internal controls to remediate the material weakness described above. Except as noted above, there were no changes in the Company’s internal control over financial reporting during the three months ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

Other than as described below, there have been no material changes with respect to risk factors previously disclosed in Amendment No. 1 to the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2022, filed with the SEC on March 30, 2023.

We have identified a material weakness in our internal controls over financial reporting that may cause us to fail to meet our reporting obligations or result in material misstatements of our financial statements. If we fail to remediate a material weakness or if we otherwise fail to establish and maintain effective control over financial reporting, our ability to accurately and timely report our financial results could be adversely affected.

We are required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which requires management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our controls over financial reporting. Although we are required to disclose changes made in our internal controls and procedures on a quarterly basis, we are not required to make our first annual assessment of our internal controls over financial reporting pursuant to Section 404 until the later of (i) the year following our first annual report required to be filed with the SEC or (ii) the date we are no longer an emerging growth company. This assessment needs to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting, as well as a statement that our independent registered public accounting firm has issued an opinion on the effectiveness of our internal control over financial reporting, provided that our independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting until our first annual report required to be filed with the SEC, following the later of the date we are deemed to be an “accelerated filer” or a “large accelerated filer,” each as defined in the Exchange Act, or the date we are no longer an emerging growth company, as defined in the JOBS Act. We could be an emerging growth company for up to five years after the date of our initial public offering.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. 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 Company’s tax liability associated with products for all prior years in which the Company had generated revenue, to assist with the collection and tracking of VDAs where a potential tax liability may exist and to assist with the implementation of a sales tax software platform solution for the calculation, collection, and remittance of sales tax for all non-exempt future sales. From the Company’s inception through present, the Company now believes it is probable that a sales tax liability existed for certain of its sales of products to certain of its customers; however, due to the complexity and uncertainty around the application of these rules by taxing authorities, results may vary materially from the Company’s expectations. Currently, the Company does not have sufficient information to reasonably estimate a minimum or maximum amount of the sales tax liability as of the date of this report. The Company is also in the process of identifying where there may be a need to file VDAs with relevant taxing jurisdictions regarding its failure to collect and remit sales tax obligations. As of June 30, 2023, the Company had not recorded an accrual for the probable sales tax liability nor the interest and penalties likely to be imposed by the taxing jurisdictions for the current and prior reporting periods in the financial statements. The Company will record a liability when the amount of the liability becomes reasonably estimable.

We also may identify future material weaknesses in our internal controls over financial reporting or fail to meet the demands that will be placed upon us as a public company, including the requirements of the Sarbanes-Oxley Act, and we may be unable to accurately report our financial results, or report them within the timeframes required by law or stock exchange regulations. We cannot assure that additional material weaknesses will not exist or otherwise be discovered, any of which could adversely affect our reputation, financial condition and results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

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Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

None.

Item 6. Exhibits

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report.


No.	Description of Exhibit
10.1	Amendment No. 1 to iSpecimen Inc. Second Amended and Restated 2021 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on May 25, 2023)
31.1*	Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*	Inline XBRL Instance Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*	Cover Page Interactive Data File––the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

*	Filed herewith.

**	Furnished.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	iSpecimen Inc.


Date: August 2, 2023	By:	/s/ Tracy Curley
	Name:	Tracy Curley
	Title:	Chief Executive Officer, Chief Financial Officer and Treasurer (Principal Executive Officer and Principal Financial and Accounting Officer)

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Tracy Curley, certify that:


	1.	I have reviewed this Quarterly Report on Form 10-Q of iSpecimen Inc.;


	2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


	3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the period presented in this report;


	4.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


	5.	I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 2, 2023

	/s/ Tracy Curley
	Tracy Curley
	Chief Executive Officer
	(Principal Executive Officer)

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Tracy Curley, certify that:


	1.	I have reviewed this Quarterly Report on Form 10-Q of iSpecimen Inc.;


	2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


	3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the period presented in this report;


	4.	I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


	5.	I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 2, 2023


	/s/ Tracy Curley
	Tracy Curley
	Chief Financial Officer and Treasurer
	(Principal Accounting and Financial Officer)

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of iSpecimen Inc. (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2023, as filed with the Securities and Exchange Commission (the “Report”), I, Tracy Curley, Chief Executive Officer, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. §1350, as added by §906 of the Sarbanes-Oxley Act of 2002, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.

ay 4, 200
Date: August 2, 2023

	/s/ Tracy Curley
	Tracy Curley
	Chief Executive Officer, Chief Financial Officer and Treasurer
	(Principal Executive Officer and Principal Financial Officer and Accounting Officer)

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2023	Jul. 31, 2023
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-40501
Entity Registrant Name	iSpecimen Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	27-0480143
Entity Address, Address Line One	450 Bedford Street,
Entity Address, City or Town	Lexington,
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02420
City Area Code	781
Local Phone Number	301-6700
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	ISPC
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Emerging Growth Company	true
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		9,065,483
Entity Central Index Key	0001558569
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2

Condensed Balance Sheets - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 2,004,500	$ 15,308,710
Available-for-sale securities	6,209,491
Accounts receivable - unbilled	1,098,356	2,327,789
Accounts receivable, net of allowance for doubtful accounts of $492,609 and $230,999 at June 30, 2023 and December 31, 2022, respectively	1,458,845	1,597,915
Prepaid expenses and other current assets	187,769	300,434
Tax credit receivable, current portion	12,332	140,873
Total current assets	10,971,293	19,675,721
Property and equipment, net	163,871	225,852
Internally developed software, net	6,300,465	4,503,787
Operating lease right-of-use asset	107,115	184,692
Security deposits	27,601	27,601
Total assets	17,570,345	24,617,653
Current liabilities:
Accounts payable	1,779,920	2,459,063
Accrued expenses	882,274	1,531,238
Operating lease - current obligation	107,975	158,451
Deferred revenue	89,601	132,335
Total current liabilities	2,859,770	4,281,087
Operating lease long - term obligation		27,396
Total liabilities	2,859,770	4,308,483
Commitments and contingencies (See Note 7)
Stockholders' equity
Common stock, $0.0001 par value, 200,000,000 shares authorized, 9,094,274 issued, and 9,063,274 outstanding at June 30, 2023 and 8,956,808 issued and 8,925,808 outstanding at December 31, 2022	906	892
Additional paid-in capital	68,889,903	68,573,774
Treasury stock, 31,000 shares at June 30, 2023 and December 31, 2022, at cost	(172)	(172)
Accumulated other comprehensive income	688
Accumulated deficit	(54,180,750)	(48,265,324)
Total stockholders' equity	14,710,575	20,309,170
Total liabilities and stockholders' equity	$ 17,570,345	$ 24,617,653

Condensed Balance Sheets (Parenthetical) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Condensed Balance Sheets
Allowance for doubtful accounts	$ 492,609	$ 230,999
Common stock, par value	$ 0.0001	$ 0.0001
Common Stock, Shares Authorized	200,000,000	200,000,000
Common stock, issued (in shares)	9,094,274	8,956,808
Common stock, outstanding (in shares)	9,063,274	8,925,808
Treasury stock (in shares)	31,000	31,000

Condensed Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
Condensed Statements of Operations - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Condensed Statements of Operations
Revenue	$ 1,625,140	$ 2,338,688	$ 4,575,339	$ 4,857,348
Operating expenses:
Cost of revenue	853,633	999,743	2,000,545	2,165,659
Technology	843,099	635,650	1,677,506	1,163,173
Sales and marketing	977,748	950,563	2,025,346	1,697,994
Supply development	291,360	242,380	614,862	424,450
Fulfillment	462,672	519,994	891,692	963,788
General and administrative	1,758,451	1,575,365	3,469,633	3,385,679
Total operating expenses	5,186,963	4,923,695	10,679,584	9,800,743
Loss from operations	(3,561,823)	(2,585,007)	(6,104,245)	(4,943,395)
Other income (expense), net
Interest expense	(3,535)	(42,273)	(7,070)	(80,321)
Interest income	110,882	13,881	225,144	26,535
Other income		6,590		6,630
Other (expense)	(29,138)		(29,255)
Other income (expense), net	78,209	(21,802)	188,819	(47,156)
Net loss	(3,483,614)	(2,606,809)	(5,915,426)	(4,990,551)
Unrealized gains on available-for-sale securities	(18,155)		688
Total other comprehensive income	(18,155)		688
Comprehensive loss	$ (3,501,769)	$ (2,606,809)	$ (5,914,738)	$ (4,990,551)
Net loss per share
Basic (in dollars per share)	$ (0.39)	$ (0.30)	$ (0.66)	$ (0.57)
Diluted (in dollars per share)	$ (0.39)	$ (0.30)	$ (0.66)	$ (0.57)
Weighted average shares of common stock outstanding
Basic (in shares)	9,033,868	8,821,698	9,011,644	8,793,723
Diluted (in shares)	9,033,868	8,821,698	9,011,644	8,793,723

Condensed Statements of Changes in Stockholders' Equity - USD ($)	Common Stock	Treasury Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income	Accumulated Deficit	Total
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Treasury stock (in shares)		31,000
Balance at the beginning at Dec. 31, 2021	$ 873	$ (172)	$ 67,810,289		$ (38,019,402)	$ 29,791,588
Balance in beginning (in shares) at Dec. 31, 2021	8,733,479
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock through exercise of stock options	$ 8		75,269			75,277
Issuance of common stock through exercise of stock options (in shares)	77,679
Stock-based compensation expense			183,410			183,410
Vesting of restricted stock units			781			781
Vesting of restricted stock units (in shares)	3,125
Net loss					(2,383,742)	(2,383,742)
Balance at end (in shares) at Mar. 31, 2022	8,814,283
Balance at the end at Mar. 31, 2022	$ 881	(172)	68,069,749		(40,403,144)	27,667,314
Balance at the beginning at Dec. 31, 2021	$ 873	(172)	67,810,289		(38,019,402)	29,791,588
Balance in beginning (in shares) at Dec. 31, 2021	8,733,479
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss						(4,990,551)
Balance at end (in shares) at Jun. 30, 2022	8,873,711
Balance at the end at Jun. 30, 2022	$ 887	$ (172)	68,307,168		(43,009,953)	25,297,930
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Treasury stock (in shares)		31,000
Balance at the beginning at Mar. 31, 2022	$ 881	$ (172)	68,069,749		(40,403,144)	27,667,314
Balance in beginning (in shares) at Mar. 31, 2022	8,814,283
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in exchange for services			6,250			6,250
Issuance of common stock in exchange for services (in shares)	1,000
Issuance of common stock through exercise of stock options			1,827			1,827
Issuance of common stock through exercise of stock options (in shares)	1,827
Stock-based compensation expense			202,318			202,318
Vesting of restricted stock units	$ 6		27,024			27,030
Vesting of restricted stock units (in shares)	56,601
Net loss					(2,606,809)	(2,606,809)
Balance at end (in shares) at Jun. 30, 2022	8,873,711
Balance at the end at Jun. 30, 2022	$ 887	$ (172)	68,307,168		(43,009,953)	$ 25,297,930
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Treasury stock (in shares)		31,000
Treasury stock (in shares)		31,000				31,000
Balance at the beginning at Dec. 31, 2022	$ 892	$ (172)	68,573,774		(48,265,324)	$ 20,309,170
Balance in beginning (in shares) at Dec. 31, 2022	8,925,808
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock through exercise of stock options	$ 7		67,729			67,736
Issuance of common stock through exercise of stock options (in shares)	67,736
Stock-based compensation expense			54,608			54,608
Vesting of restricted stock units	$ 3		65,946			65,949
Vesting of restricted stock units (in shares)	28,776
Gross unrealized gains				$ 18,843		18,843
Net loss					(2,431,812)	(2,431,812)
Balance at end (in shares) at Mar. 31, 2023	9,022,320
Balance at the end at Mar. 31, 2023	$ 902	(172)	68,762,057	18,843	(50,697,136)	18,084,494
Balance at the beginning at Dec. 31, 2022	$ 892	(172)	68,573,774		(48,265,324)	20,309,170
Balance in beginning (in shares) at Dec. 31, 2022	8,925,808
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock through exercise of stock options						$ 70,889
Issuance of common stock through exercise of stock options (in shares)						70,889
Other comprehensive income						$ 688
Gross unrealized gains						26,230
Net loss						(5,915,426)
Balance at end (in shares) at Jun. 30, 2023	9,063,274
Balance at the end at Jun. 30, 2023	$ 906	$ (172)	68,889,903	688	(54,180,750)	14,710,575
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Treasury stock (in shares)		31,000
Balance at the beginning at Mar. 31, 2023	$ 902	$ (172)	68,762,057	18,843	(50,697,136)	18,084,494
Balance in beginning (in shares) at Mar. 31, 2023	9,022,320
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in exchange for services (in shares)	3,153
Issuance of common stock through exercise of stock options			3,153			3,153
Stock-based compensation expense			29,829			29,829
Other comprehensive income				(18,155)		(18,155)
Vesting of restricted stock units	$ 4		94,864			94,868
Vesting of restricted stock units (in shares)	37,801
Net loss					(3,483,614)	(3,483,614)
Balance at end (in shares) at Jun. 30, 2023	9,063,274
Balance at the end at Jun. 30, 2023	$ 906	$ (172)	$ 68,889,903	$ 688	$ (54,180,750)	$ 14,710,575
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Treasury stock (in shares)		31,000				31,000

Condensed Statements of Cash Flows - USD ($)	6 Months Ended
Condensed Statements of Cash Flows - USD ($)	Jun. 30, 2023	Jun. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (5,915,426)	$ (4,990,551)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	245,254	413,539
Amortization of internally developed software	934,829	533,112
Depreciation of property and equipment	75,726	9,132
Bad debt expense	261,610	269,645
Amortization of debt issuance costs on note payable		6,116
Amortization of discount on available-for-sale securities	(97,874)
Change in operating assets and liabilities:
Accounts receivable - unbilled	1,229,433	474,742
Accounts receivable	(122,540)	1,072,721
Prepaid expenses and other current assets	112,665	(47,832)
Operating lease right-of-use asset	77,577	73,120
Tax credit receivable	128,541
Accounts payable	(679,143)	(399,652)
Accrued expenses	(648,964)	(375,547)
Accrued interest		(389)
Operating lease liability	(77,872)	(72,367)
Deferred revenue	(42,734)	(319,766)
Net cash used in operating activities	(4,518,918)	(3,353,977)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalization of internally developed software	(2,731,507)	(777,181)
Purchase of property and equipment	(13,745)
Purchase of available-for-sale securities	(7,642,929)
Proceeds from sales and maturities of available-for-sale securities	1,532,000
Net cash used in investing activities	(8,856,181)	(777,181)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options	70,889	77,104
Proceeds from issuance of common stock in exchange for services		6,250
Net cash (used in) provided by financing activities	70,889	83,354
Net change in cash	(13,304,210)	(4,047,804)
Cash at beginning of period	15,308,710	27,738,979
Cash at end of period	2,004,500	23,691,175
Supplemental disclosure of cash flow information:
Cash paid for interest	$ 7,070	74,205
Supplemental disclosure of non-cash investing and financing activities:
Non-cash amounts of lease liabilities arising from obtaining right-of use-assets		$ 333,123

NATURE OF BUSINESS AND BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2023

NATURE OF BUSINESS AND BASIS OF PRESENTATION

NATURE OF BUSINESS AND BASIS OF PRESENTATION

1.NATURE OF BUSINESS AND BASIS OF PRESENTATION

Business

Basis of Presentation

Liquidity and Going Concern

Impact of the Current Economy

Impact of the Russian-Ukrainian War on the Company’s Operations

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2023

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

Investments

Fair Value Measurements

●

Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets.

●

Revenue Recognition and Accounts Receivable

The following table summarizes the Company’s revenue for the three and six months ended June 30:


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Specimens – contracts with customers	$	1,522,108	$	2,207,820	$	4,234,485	$	4,580,206
Shipping and other		103,032		130,868		340,854		277,142
Revenue	$	1,625,140	$	2,338,688	$	4,575,339	$	4,857,348

recorded as income when received. As of June 30, 2023 and December 31, 2022, the Company had an allowance for doubtful accounts of $492,609 and $230,999, respectively.

Internally Developed Software, Net

Impairment of Long-Lived Assets

Stock-Based Compensation

The fair value of the Company's common stock is equal to the closing price on the specified grant date.

Restricted Stock Units

Common Stock Warrants

Net Loss Per Share

The table below provides potentially dilutive common stock equivalents excluded from diluted net loss per share as of June 30:


	2023	2022
Shares issuable upon vesting of RSUs	168,641	367,118
Shares issuable upon exercise of stock options	345,987	171,154
Shares issuable upon exercise of PIPE Warrant (defined below) to purchase common stock	1,312,500	1,312,500
Shares issuable upon exercise of Lender Warrant (defined below) to purchase common stock	12,500	12,500
Shares issuable upon exercise of Underwriter Warrant (defined below) to purchase common stock	90,000	90,000

Recently Adopted Accounting Standards

AVAILABLE-FOR-SALE SECURITIES

6 Months Ended

Jun. 30, 2023

Available for Sale Securities

AVAILABLE-FOR-SALE SECURITIES

3.AVAILABLE-FOR-SALE SECURITIES


			Gross		Gross
	Amortized		unrealized		unrealized
	cost		gains		losses		Fair value
Available-for-sale securities:
U.S. Treasury Bills	$	6,208,803	$	26,230	$	(25,542)	$	6,209,491
Total Available-for-sale securities:	$	6,208,803	$	26,230	$	(25,542)	$	6,209,491

PROPERTY AND EQUIPMENT, NET

6 Months Ended

Jun. 30, 2023

PROPERTY AND EQUIPMENT, NET

PROPERTY AND EQUIPMENT, NET

4.PROPERTY AND EQUIPMENT, NET

Property and equipment, net consisted of the following at the dates indicated:


	June 30,		December 31,
	2023		2022
Website	$	285,377	$	285,377
Computer equipment and purchased software		90,304		84,589
Equipment		35,449		35,449
Furniture and fixtures		87,184		87,184
Leasehold improvements		68,471		60,441
Total property and equipment		566,785		553,040
Accumulated depreciation		(402,914)		(327,188)
Total property and equipment, net	$	163,871	$	225,852

INTERNALLY DEVELOPED SOFTWARE, NET

6 Months Ended

Jun. 30, 2023

INTERNALLY DEVELOPED SOFTWARE, NET

INTERNALLY DEVELOPED SOFTWARE, NET

5.INTERNALLY DEVELOPED SOFTWARE, NET

SEVERANCE

6 Months Ended

Jun. 30, 2023

SEVERANCE

SEVERANCE

6.SEVERANCE

Dr. Christopher Ianelli

Jill Mullan

FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2023

FAIR VALUE OF DERIVATIVE LIABILITY

FAIR VALUE MEASUREMENTS

7. FAIR VALUE MEASUREMENTS

The following table sets forth the Company’s assets to be measured at fair value on a recurring basis and their respective classification within the fair value hierarchy as of June 30, 2023:


	Fair Value at June 30, 2023
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities	$	6,209,491	$	6,209,491	$	—	$	—
Total Assets	$	6,209,491	$	6,209,491	$	—	$	—

As of June 30, 2023, the Company did not have any liabilities measured at fair value on a recurring basis.

COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2023

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

8.COMMITMENTS AND CONTINGENCIES

Leases

The Company has one operating lease of office space in Lexington, Massachusetts, which will expire on February 28, 2024.

There was no sublease rental income for the six months ended June 30, 2023, and the Company is not the lessor in any lease arrangement, and there have been no related-party lease agreements.

Lease Costs

The table below presents certain information related to the lease costs for the Company’s operating lease for the six months ended June 30, 2023:


Operating lease expense	$	82,157
Short-term lease expense		2,500
Total lease cost	$	84,657

Lease Position as of June 30, 2023

Right-of-use lease assets and lease liabilities for the Company’s operating lease as of June 30, 2023 were recorded in the balance sheet as follows:


Assets
Operating lease right-of-use assets	$	107,115
Total lease assets	$	107,115

Liabilities
Current liabilities:
Operating lease liability – current portion	$	107,975
Noncurrent liabilities:
Operating lease liability – net of current portion		—
Total lease liability	$	107,975

Lease Terms and Discount Rate

The table below presents certain information related to the weighted average remaining lease term and the weighted average discount rate for the Company’s operating leases as of June 30, 2023:


Weighted average remaining lease term (in years) – operating leases			0.67
Weighted average discount rate – operating leases			5.96%

Undiscounted Cash Flows

Future lease payments included in the measurement of lease liabilities on the balance sheet are as follows:




2023 (excluding the six months ended June 30, 2023)	$	82,802
2024		27,600
Total future minimum lease payments		110,402
Less effect of discounting		(2,427)
Present value of future minimum lease payments	$	107,975

Cash Flows

Supplemental cash flow information related to the operating lease for the six months ended June 30, 2023 was as follows:


Non-cash operating lease expense (operating cash flow)	$	77,577
Change in operating lease liabilities (operating cash flow)	$	(77,872)

Sales Tax Payable

Revenue Share from Sequencing of Specimens

Legal Proceedings

unpredictable and subject to substantial uncertainties and unfavorable resolutions could occur. As of June 30, 2023, there was no material litigation against the Company.

STOCKHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2023

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

9.STOCKHOLDERS’ EQUITY

Common Stock

During the six months ended June 30, 2023, the Company issued 70,889 shares of common stock for cash exercises of options of $70,889.

Warrants

Underwriter Warrant

Lender Warrant

PIPE Warrants

STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2023

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

10.STOCK-BASED COMPENSATION

Stock Incentive Plans

2021 Plan

2013 Plan

Stock Options


	2023	2022
Assumptions:
Risk-free interest rate	0.37% – 0.39%	—
Expected term (in years)	0.61 – 4.00	—
Expected volatility	59.35% –59.95%	—
Expected dividend yield	—	—

A summary of stock option activity under the 2021 Plan and 2013 Plan is as follows:


				Weighted
				Average
		Weighted		Remaining
	Options	Average		Contractual Term	Aggregate
	Outstanding	Exercise Price		in Years	Intrinsic Value
Balance at December 31, 2022	297,559	$	2.69	6.96	$	63,237
Granted	162,672		1.42	—		—
Exercised	(70,889)		1.00	—		48,494
Cancelled/forfeited	(43,355)		3.59	—		—
Balance at June 30, 2023	345,987	$	2.23	8.61	$	12,267

Options exercisable at June 30, 2023	121,666	$	3.05	7.47	$	8,770


	Three Months Ended June 30,				Six Months Ended June 30,
Operating expenses:	2023		2022		2023		2022
Technology	$	2,475	$	1,023	$	5,106	$	2,034
Sales and marketing		623		1,695		1,498		2,772
Supply development		446		348		820		653
Fulfillment		681		1,055		1,325		1,881
General and administrative		26,343		27,824		54,883		54,160
Total stock options expense	$	30,568	$	31,945	$	63,632	$	61,500

Restricted Stock Units

A summary of RSUs activity under the 2021 Plan and 2013 Plan is as follows:


		Weighted
	RSUs	Average Grant
	Outstanding	Date Fair Value
Unvested Balance at December 31, 2022	267,505	$	5.43
Granted	747		1.62
Vested	(66,577)		5.36
Forfeited	(33,034)		5.29
Unvested Balance at June 30, 2023	168,641	$	5.47

The Company recorded RSUs compensation expense during the three and six months ended June 30 as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
Operating expenses:	2023		2022		2023		2022
Technology	$	32,876	$	25,198	$	67,653	$	38,598
Sales and marketing		18,959		26,092		30,814		40,259
Supply development		2,824		10,948		2,824		18,145
Fulfillment		17,608		24,330		39,052		37,960
General and administrative		21,862		110,835		41,279		217,077
Total RSU expense	$	94,129	$	197,403	$	181,622	$	352,039

INCOME TAXES

6 Months Ended

Jun. 30, 2023

INCOME TAXES

INCOME TAXES

11.INCOME TAXES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2023

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

Investments

Fair Value Measurements

●

Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets.

●

Revenue Recognition and Accounts Receivable

The following table summarizes the Company’s revenue for the three and six months ended June 30:


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Specimens – contracts with customers	$	1,522,108	$	2,207,820	$	4,234,485	$	4,580,206
Shipping and other		103,032		130,868		340,854		277,142
Revenue	$	1,625,140	$	2,338,688	$	4,575,339	$	4,857,348

recorded as income when received. As of June 30, 2023 and December 31, 2022, the Company had an allowance for doubtful accounts of $492,609 and $230,999, respectively.

Internally Developed Software, Net

Impairment of Long-Lived Assets

Share-Based Compensation

Stock-Based Compensation

The fair value of the Company's common stock is equal to the closing price on the specified grant date.

Restricted Stock Units

Common Stock Warrants

Net Loss Per Share

The table below provides potentially dilutive common stock equivalents excluded from diluted net loss per share as of June 30:


	2023	2022
Shares issuable upon vesting of RSUs	168,641	367,118
Shares issuable upon exercise of stock options	345,987	171,154
Shares issuable upon exercise of PIPE Warrant (defined below) to purchase common stock	1,312,500	1,312,500
Shares issuable upon exercise of Lender Warrant (defined below) to purchase common stock	12,500	12,500
Shares issuable upon exercise of Underwriter Warrant (defined below) to purchase common stock	90,000	90,000

Recently Adopted Accounting Standards


	2023	2022
Shares issuable upon vesting of RSUs	168,641	367,118
Shares issuable upon exercise of stock options	345,987	171,154
Shares issuable upon exercise of PIPE Warrant (defined below) to purchase common stock	1,312,500	1,312,500
Shares issuable upon exercise of Lender Warrant (defined below) to purchase common stock	12,500	12,500
Shares issuable upon exercise of Underwriter Warrant (defined below) to purchase common stock	90,000	90,000

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2023

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Summary of entity's revenue


	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022
Specimens – contracts with customers	$	1,522,108	$	2,207,820	$	4,234,485	$	4,580,206
Shipping and other		103,032		130,868		340,854		277,142
Revenue	$	1,625,140	$	2,338,688	$	4,575,339	$	4,857,348

Summary of total shares outstanding


	2023	2022
Shares issuable upon vesting of RSUs	168,641	367,118
Shares issuable upon exercise of stock options	345,987	171,154
Shares issuable upon exercise of PIPE Warrant (defined below) to purchase common stock	1,312,500	1,312,500
Shares issuable upon exercise of Lender Warrant (defined below) to purchase common stock	12,500	12,500
Shares issuable upon exercise of Underwriter Warrant (defined below) to purchase common stock	90,000	90,000

AVAILABLE-FOR-SALE SECURITIES (Tables)

6 Months Ended

Jun. 30, 2023

Available for Sale Securities

Summary of amortized cost, gross unrealized holding gains, and fair value for available-for-sale securities


			Gross		Gross
	Amortized		unrealized		unrealized
	cost		gains		losses		Fair value
Available-for-sale securities:
U.S. Treasury Bills	$	6,208,803	$	26,230	$	(25,542)	$	6,209,491
Total Available-for-sale securities:	$	6,208,803	$	26,230	$	(25,542)	$	6,209,491

PROPERTY AND EQUIPMENT, NET (Tables)

6 Months Ended

Jun. 30, 2023

PROPERTY AND EQUIPMENT, NET

Summary of property and equipment, net


	June 30,		December 31,
	2023		2022
Website	$	285,377	$	285,377
Computer equipment and purchased software		90,304		84,589
Equipment		35,449		35,449
Furniture and fixtures		87,184		87,184
Leasehold improvements		68,471		60,441
Total property and equipment		566,785		553,040
Accumulated depreciation		(402,914)		(327,188)
Total property and equipment, net	$	163,871	$	225,852

FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2023

FAIR VALUE OF DERIVATIVE LIABILITY

Summary of financial liabilities measured at fair value on a recurring basis


	Fair Value at June 30, 2023
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities	$	6,209,491	$	6,209,491	$	—	$	—
Total Assets	$	6,209,491	$	6,209,491	$	—	$	—

COMMITMENTS AND CONTINGENCIES (Tables)

6 Months Ended

Jun. 30, 2023

COMMITMENTS AND CONTINGENCIES

Schedule of lease costs related to Company's operating lease


Operating lease expense	$	82,157
Short-term lease expense		2,500
Total lease cost	$	84,657

Schedule of Lease position in Balance Sheet


Assets
Operating lease right-of-use assets	$	107,115
Total lease assets	$	107,115

Liabilities
Current liabilities:
Operating lease liability – current portion	$	107,975
Noncurrent liabilities:
Operating lease liability – net of current portion		—
Total lease liability	$	107,975

Schedule of Lease terms and discount rate


Weighted average remaining lease term (in years) – operating leases			0.67
Weighted average discount rate – operating leases			5.96%

Schedule of Future lease payment - Undiscounted Cash Flows




2023 (excluding the six months ended June 30, 2023)	$	82,802
2024		27,600
Total future minimum lease payments		110,402
Less effect of discounting		(2,427)
Present value of future minimum lease payments	$	107,975

Schedule of Cash Flows information


Non-cash operating lease expense (operating cash flow)	$	77,577
Change in operating lease liabilities (operating cash flow)	$	(77,872)

STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2023

STOCK-BASED COMPENSATION

Summary of assumptions used to estimate the fair value of stock options granted using the Black-Scholes-Merton option pricing model


	2023	2022
Assumptions:
Risk-free interest rate	0.37% – 0.39%	—
Expected term (in years)	0.61 – 4.00	—
Expected volatility	59.35% –59.95%	—
Expected dividend yield	—	—

Schedule of summary of stock option activity


				Weighted
				Average
		Weighted		Remaining
	Options	Average		Contractual Term	Aggregate
	Outstanding	Exercise Price		in Years	Intrinsic Value
Balance at December 31, 2022	297,559	$	2.69	6.96	$	63,237
Granted	162,672		1.42	—		—
Exercised	(70,889)		1.00	—		48,494
Cancelled/forfeited	(43,355)		3.59	—		—
Balance at June 30, 2023	345,987	$	2.23	8.61	$	12,267

Options exercisable at June 30, 2023	121,666	$	3.05	7.47	$	8,770

Schedule of share based compensation restricted stock units award activity


		Weighted
	RSUs	Average Grant
	Outstanding	Date Fair Value
Unvested Balance at December 31, 2022	267,505	$	5.43
Granted	747		1.62
Vested	(66,577)		5.36
Forfeited	(33,034)		5.29
Unvested Balance at June 30, 2023	168,641	$	5.47

Restricted Stock Units

STOCK-BASED COMPENSATION

Schedule of summary of compensation expense


	Three Months Ended June 30,				Six Months Ended June 30,
Operating expenses:	2023		2022		2023		2022
Technology	$	32,876	$	25,198	$	67,653	$	38,598
Sales and marketing		18,959		26,092		30,814		40,259
Supply development		2,824		10,948		2,824		18,145
Fulfillment		17,608		24,330		39,052		37,960
General and administrative		21,862		110,835		41,279		217,077
Total RSU expense	$	94,129	$	197,403	$	181,622	$	352,039

Employee Stock Option [Member]

STOCK-BASED COMPENSATION

Schedule of summary of compensation expense


	Three Months Ended June 30,				Six Months Ended June 30,
Operating expenses:	2023		2022		2023		2022
Technology	$	2,475	$	1,023	$	5,106	$	2,034
Sales and marketing		623		1,695		1,498		2,772
Supply development		446		348		820		653
Fulfillment		681		1,055		1,325		1,881
General and administrative		26,343		27,824		54,883		54,160
Total stock options expense	$	30,568	$	31,945	$	63,632	$	61,500

NATURE OF BUSINESS AND BASIS OF PRESENTATION (Details)	6 Months Ended
NATURE OF BUSINESS AND BASIS OF PRESENTATION (Details)	Jun. 30, 2023 segment
NATURE OF BUSINESS AND BASIS OF PRESENTATION
Reporting units	1
Operating segments	1

NATURE OF BUSINESS AND BASIS OF PRESENTATION - Additional information (Details) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
NATURE OF BUSINESS AND BASIS OF PRESENTATION
Working capital	$ 8,111,523
Accumulated deficit	54,180,750		$ 48,265,324
Cash and cash equivalents	2,004,500		$ 15,308,710
Accounts payable and accrued expenses	2,662,194
Increase in allowance for doubtful accounts	261,610
Available-for-sale securities	$ 6,209,491
Purchase orders negatively impacted due to Russia's invasion of Ukraine		$ 1,000,000

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition and Accounts Receivable (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Revenue
Right of return (in days)			14 days
Revenue	$ 1,625,140	$ 2,338,688	$ 4,575,339	$ 4,857,348
Accounts receivable
Allowance for doubtful accounts	492,609		492,609		$ 230,999
Specimens
Revenue
Revenue	1,522,108	2,207,820	4,234,485	4,580,206
Shipping and other
Revenue
Revenue	$ 103,032	$ 130,868	$ 340,854	$ 277,142

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Internally Developed Software, net (Details)	Jun. 30, 2023
Internal-use software
Internally Developed Software, Net
Estimated useful life (in years)	5 years

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional information (Details) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Impairment charges	$ 0	$ 0

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Shares issuable upon conversion of preferred stock (Details) - shares	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Subsidiary, Sale of Stock [Line Items]
Shares issuable upon vesting of RSU's	168,641	367,118
Shares issuable upon exercise of stock options	345,987	171,154
Private Placement
Subsidiary, Sale of Stock [Line Items]
Shares issuable upon exercise of warrants	1,312,500	1,312,500
Lender
Subsidiary, Sale of Stock [Line Items]
Shares issuable upon exercise of warrants	12,500	12,500
Underwriter Warrants
Subsidiary, Sale of Stock [Line Items]
Shares issuable upon exercise of warrants	90,000	90,000

AVAILABLE FOR SALE SECURITIES (Details) - USD ($)	3 Months Ended	6 Months Ended
AVAILABLE FOR SALE SECURITIES (Details) - USD ($)	Mar. 31, 2023	Jun. 30, 2023
Available for Sale Securities
Amortized cost		$ 6,208,803
Gross unrealized gains	$ 18,843	26,230
Gross unrealized losses		(25,542)
Fair value		6,209,491
US Treasury Bills
Available for Sale Securities
Amortized cost		6,208,803
Gross unrealized gains		26,230
Gross unrealized losses		(25,542)
Fair value		$ 6,209,491

PROPERTY AND EQUIPMENT, NET (Details) - USD ($)	3 Months Ended		6 Months Ended
PROPERTY AND EQUIPMENT, NET (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
PP&E, Net, by Type
Total property and equipment	$ 566,785		$ 566,785		$ 553,040
Accumulated depreciation	(402,914)		(402,914)		(327,188)
Total property and equipment, net	163,871		163,871		225,852
Depreciation of property and equipment	37,137	$ 4,420	75,726	$ 9,132
Website
PP&E, Net, by Type
Total property and equipment	285,377		285,377		285,377
Computer equipment and purchased software
PP&E, Net, by Type
Total property and equipment	90,304		90,304		84,589
Equipment
PP&E, Net, by Type
Total property and equipment	35,449		35,449		35,449
Furniture and fixtures
PP&E, Net, by Type
Total property and equipment	87,184		87,184		87,184
Leasehold improvements
PP&E, Net, by Type
Total property and equipment	$ 68,471		$ 68,471		$ 60,441

INTERNALLY DEVELOPED SOFTWARE, NET (Details) - USD ($)	3 Months Ended		6 Months Ended
INTERNALLY DEVELOPED SOFTWARE, NET (Details) - USD ($)	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
INTERNALLY DEVELOPED SOFTWARE, NET
Internally developed software capitalized			$ 2,731,507	$ 771,181
Amortization expense	$ 501,502	$ 266,893	$ 934,829	$ 533,112

SEVERANCE (Details) - USD ($)			12 Months Ended
SEVERANCE (Details) - USD ($)	Oct. 24, 2022	Sep. 24, 2022	Dec. 31, 2022	Jun. 30, 2023	Jan. 01, 2023
Severance
Amount of severance expense and corresponding liability recognized			$ 376,400
Chief Executive Officer and President
Severance
Severance Costs	$ 350,000
Amount of employer's portion of the applicable taxes on the remaining severance payments					$ 23,580
Balance of the severance and employer taxes liabilities				$ 142,935
Chief Operating Officer
Severance
Severance Costs		$ 325,000
Amount of employer's portion of the applicable taxes on the remaining severance payments					21,896
Balance of the severance and employer taxes liabilities					$ 121,457

FAIR VALUE MEASUREMENTS (Details)	Jun. 30, 2023 USD ($)
Assets, Fair Value Disclosure [Abstract]
Available-for-sale securities	$ 6,209,491
Level 1 \| Recurring
Assets, Fair Value Disclosure [Abstract]
Available-for-sale securities	$ 6,209,491

COMMITMENTS AND CONTINGENCIES (Details)	6 Months Ended
COMMITMENTS AND CONTINGENCIES (Details)	Jun. 30, 2023 USD ($) item	Jan. 01, 2022
Lessee, Lease, Description [Line Items]
Remaining lease term	8 months 1 day
Office Space in Lexington, Massachusetts [Member]
Lessee, Lease, Description [Line Items]
Number of operating lease	1
Incremental borrowing rate		5.96%
Remaining lease term		1 year 11 months 1 day
Sublease rental income \| $	$ 0
Number of related party lease agreements	0

COMMITMENTS AND CONTINGENCIES - Company operating lease (Details)	6 Months Ended
	Jun. 30, 2023 USD ($)
COMMITMENTS AND CONTINGENCIES
Operating lease expense	$ 82,157
Short-term lease expense	2,500
Total Lease cost	$ 84,657

COMMITMENTS AND CONTINGENCIES - Lease positions in Balance Sheets (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Assets and Liabilities, Lessee [Abstract]
Operating lease right-of-use assets	$ 107,115	$ 184,692
Total lease assets	107,115
Operating lease liability - current portion	107,975	158,451
Operating lease liability - net of current portion		$ 27,396
Total lease liability	$ 107,975

COMMITMENTS AND CONTINGENCIES - Lease Terms and Discount Rate (Details)	Jun. 30, 2023
COMMITMENTS AND CONTINGENCIES
Weighted average remaining lease term (in years) - operating leases	8 months 1 day
Weighted average discount rate - operating leases	5.96%

COMMITMENTS AND CONTINGENCIES - Future lease payments (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Operating Leases
2023	$ 82,802		$ 82,802
2024	27,600		27,600
Total future minimum lease payments	110,402		110,402
Less effect of discounting	(2,427)		(2,427)
Total lease liability	107,975		107,975
Rent expense	$ 42,078	$ 44,281	$ 84,657	$ 89,238

COMMITMENTS AND CONTINGENCIES - Cash Flows - Operating lease (Details) - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
COMMITMENTS AND CONTINGENCIES
Non-cash lease expense (operating cash flow)	$ 77,577
Change in lease liabilities (operating cash flow)	$ (77,872)	$ (72,367)

COMMITMENTS AND CONTINGENCIES - Revenue Share from Sequencing of Specimens (Details) - Formalin-Fixed Paraffin-Embedded ("FFPE")	6 Months Ended
	Jun. 30, 2023 USD ($)
Revenue
Percentage of revenue derived from sales	20.00%
Amount of recorded liability	$ 30,000
Minimum
Revenue
Amount of sales revenue requirement	$ 150,000

STOCKHOLDERS' EQUITY (Details) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
STOCKHOLDERS' EQUITY
Number of shares authorized	250,000,000
Common stock, shares authorized	200,000,000	200,000,000
Common stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	50,000,000
Preferred stock, par value	$ 0.0001

STOCKHOLDERS' EQUITY - Common Stock - (Details) - USD ($)	3 Months Ended				6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023
STOCKHOLDERS' EQUITY
Issuance of common stock through exercise of stock options (in shares)					70,889
Issuance of common stock through exercise of stock options	$ 3,153	$ 67,736	$ 1,827	$ 75,277	$ 70,889
Issuance of common stock in exchange for services			$ 6,250

STOCKHOLDERS' EQUITY - Underwriter Warrants (Details) - Underwriter Warrants $ / shares in Units, $ in Millions	6 Months Ended
	Jun. 30, 2023 USD ($) $ / shares shares
Warrants
Warrants to purchase shares of common stock \| shares	90,000
Exercise price of warrant \| $ / shares	$ 10.00
Warrants exercisable term	4 years 6 months
Commencing term from effective date of registration statement	180 days
Warrants Not Settleable in Cash, Fair Value Disclosure \| $	$ 0.4
Weighted Average Time to Expiration	2 years 11 months 15 days

STOCKHOLDERS' EQUITY - Warrants (Details) - $ / shares	6 Months Ended
STOCKHOLDERS' EQUITY - Warrants (Details) - $ / shares	Jun. 30, 2023	Dec. 01, 2021	Aug. 01, 2021
Private Placement
Class of Warrant or Right [Line Items]
Warrants exercisable term	5 years 6 months
Weighted average time to expiration	4 years
Warrants to purchase shares of common stock		1,312,500
Exercise price of warrant	$ 13.00	$ 13.00
Warrants other than Underwriter Warrants
Class of Warrant or Right [Line Items]
Weighted average time to expiration	8 years 1 month 17 days
Warrants to purchase shares of common stock			12,500
Exercise price of warrant	$ 8.00		$ 8.00

SHARE-BASED COMPENSATION - 2021 Stock Incentive Plan - shares (Details) - shares		3 Months Ended		6 Months Ended		18 Months Ended
	Jul. 29, 2015	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	May 24, 2023	May 23, 2023	Apr. 13, 2023
2013 Stock Incentive Plan
STOCK-BASED COMPENSATION
Number of shares available for future grants									0
Number of shares issued	1,713,570			3,681		0
Plan term				10 years
2021 Stock Incentive Plan
STOCK-BASED COMPENSATION
Options authorized		608,000		608,000		608,000	1,869,500	608,000
Number of shares available for future grants		1,283,763		1,283,763		1,283,763
Number of shares issued		45,172	155,793	163,419	166,793

SHARE-BASED COMPENSATION - Estimate the fair value of stock options (Details)	6 Months Ended
	Jun. 30, 2023
Assumptions used to estimate the fair value of stock options granted
Risk-free interest rate, minimum	0.37%
Risk-free interest rate, maximum	0.39%
Expected volatility, minimum	59.35%
Expected volatility, maximum	59.95%
Minimum
Assumptions used to estimate the fair value of stock options granted
Expected term (in years)	7 months 9 days
Maximum
Assumptions used to estimate the fair value of stock options granted
Expected term (in years)	4 years

SHARE-BASED COMPENSATION - Stock option activity (Details) - USD ($)	6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Options Outstanding
Granted	162,672	0
Exercised	(70,889)
Balance at the end	345,987	171,154
Weighted Average Exercise Price
Granted (in dollars per share)	$ 0.52
2013 and 2021 Stock Incentive Plan
Options Outstanding
Balance at the beginning	297,559
Granted	162,672
Exercised	(70,889)
Cancelled/forfeited	(43,355)
Balance at the end	345,987		297,559
Options exercisable at the end	121,666
Weighted Average Exercise Price
Balance at the beginning (in dollars per share)	$ 2.69
Granted (in dollars per share)	1.42
Exercised (in dollars per share)	1.00
Cancelled/forfeited (in dollars per share)	3.59
Balance at the end (in dollars per share)	2.23		$ 2.69
Options exercisable at the end (in dollars per share)	$ 3.05
Weighted Average Remaining Contractual Term (in years)
Weighted Average Remaining Contractual Term (in years)	8 years 7 months 9 days		6 years 11 months 15 days
Options exercisable at the end (in years)	7 years 5 months 19 days
Aggregate Intrinsic Value
Balance at the beginning (in dollars)	$ 63,237
Exercised (in dollars)	48,494
Balance at the end (in dollars)	12,267		$ 63,237
Options exercisable at the end (in dollars)	$ 8,770

SHARE-BASED COMPENSATION - Additional information (Details) - USD ($)		6 Months Ended		18 Months Ended
	Jul. 29, 2015	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total intrinsic value of stock options exercised		$ 48,494	$ 91,018
Unamortized compensation expense		$ 185,260		$ 185,260
Unamortized compensation expense recognized over the remaining requisite service period		2 years 5 months 1 day
Proceeds from exercise of stock options		$ 70,889	$ 77,104
2013 Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares issued	1,713,570	3,681		0

SHARE-BASED COMPENSATION - Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Employee Stock Option [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	$ 30,568	$ 31,945	$ 63,632	$ 61,500
Employee Stock Option [Member] \| Technology
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	2,475	1,023	5,106	2,034
Employee Stock Option [Member] \| Sales and marketing
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	623	1,695	1,498	2,772
Employee Stock Option [Member] \| Supply development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	446	348	820	653
Employee Stock Option [Member] \| Fulfillment
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	681	1,055	1,325	1,881
Employee Stock Option [Member] \| General and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	26,343	27,824	54,883	54,160
Restricted Stock Units
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	94,129	197,403	181,622	352,039
Restricted Stock Units \| Technology
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	32,876	25,198	67,653	38,598
Restricted Stock Units \| Sales and marketing
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	18,959	26,092	30,814	40,259
Restricted Stock Units \| Supply development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	2,824	10,948	2,824	18,145
Restricted Stock Units \| Fulfillment
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	17,608	24,330	39,052	37,960
Restricted Stock Units \| General and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	$ 21,862	$ 110,835	$ 41,279	$ 217,077

SHARE-BASED COMPENSATION - Restricted Stock Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition			2 years 5 months 1 day
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period			747
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	$ 94,129,000	$ 197,403,000	$ 181,622,000	$ 352,039,000
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount	890,912		$ 890,912
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition			2 years 4 months 13 days
Restricted Stock Units \| General and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	$ 21,862,000	$ 110,835,000	$ 41,279,000	$ 217,077,000

SHARE-BASED COMPENSATION - Restricted Stock Units (Details)	6 Months Ended
	Jun. 30, 2023 USD ($) $ / shares shares
Options outstanding
Unvested Balance at December 31, 2021 \| shares	267,505
Granted \| shares	747
Vested \| $	$ (66,577)
Forfeited \| shares	(33,034)
Unvested Balance at December 31, 2022 \| shares	168,641
Weighted Average Grant Date Fair Value
Unvested Balance at December 31, 2021	$ 5.43
Granted	1.62
Vested	5.36
Forfeited	5.29
Unvested Balance at December 31, 2022	$ 5.47

INCOME TAXES (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Income Taxes
Net operating loss carryforwards, carried forward indefinitely	$ 34,750,000	$ 27,800,000
Tax Credit Carryforward, Amount	1,860,000	1,094,000
Federal
Income Taxes
Net operating loss carryforwards	47,750,000	40,800,000
Net operating loss carryforwards, subject to expiration	13,000,000
State
Income Taxes
Net operating loss carryforwards, subject to expiration	$ 29,600,000	$ 25,000,000

Pay vs Performance Disclosure - USD ($)	3 Months Ended				6 Months Ended
Pay vs Performance Disclosure - USD ($)	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2023	Jun. 30, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ (3,483,614)	$ (2,431,812)	$ (2,606,809)	$ (2,383,742)	$ (5,915,426)	$ (4,990,551)

Insider Trading Arrangements	6 Months Ended
Insider Trading Arrangements	Jun. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false