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

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Table of Contents

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 September 30, 2024


☐	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.)

8 Cabot Road, Suite 1800, Woburn, Massachusetts 01801

(Address of principal executive offices) (Zip Code)

(781) 301-6700

(Registrant’s telephone number, including area code)

450 Bedford Street, Lexington, Massachusetts 02420

(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 November 4, 2024, there were 962,637 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 SEPTEMBER 30, 2024

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION
ITEM 1.	Financial Statements
	Condensed Balance Sheets as of September 30, 2024 (Unaudited) and December 31, 2023	3
	Unaudited Condensed Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2024 and 2023	4
	Unaudited Condensed Statements of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2024 and 2023	5
	Unaudited Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023	7
	Notes to Unaudited Condensed Financial Statements	8
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	39
ITEM 4.	Controls and Procedures	39

PART II – OTHER INFORMATION
ITEM 1.	Legal Proceedings	41
ITEM 1A.	Risk Factors	41
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
ITEM 3.	Defaults Upon Senior Securities	41
ITEM 4.	Mine Safety Disclosures	41
ITEM 5.	Other Information	42
ITEM 6.	Exhibits	43
SIGNATURES		44

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

iSpecimen Inc.

Condensed Balance Sheets



	September 30, 2024		December 31, 2023
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	1,751,854	$	2,343,666
Available-for-sale securities		—		2,661,932
Accounts receivable – unbilled		1,654,019		2,212,538
Accounts receivable, net of allowance for doubtful accounts of $639,116 and $520,897 at September 30, 2024 and December 31, 2023, respectively		974,383		728,388
Prepaid expenses and other current assets		277,579		292,079
Total current assets		4,657,835		8,238,603
Property and equipment, net		102,803		127,787
Internally developed software, net		5,357,188		6,323,034
Other intangible assets, net		764,589		908,255
Operating lease right-of-use asset		342,107		193,857
Security deposits		39,701		27,601
Total assets	$	11,264,223	$	15,819,137
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,055,332	$	3,925,438
Accrued expenses		1,022,373		1,540,607
Senior note payable, net of debt discount		864,425		—
Operating lease current obligation		42,513		167,114
Deferred revenue		283,571		415,771
Total current liabilities		6,268,214		6,048,930
Operating lease long-term obligation		281,437		29,130
Total liabilities		6,549,651		6,078,060

Commitments and contingencies (See Note 9)

Stockholders’ equity
Common stock, $0.0001 par value, 200,000,000 shares authorized, 831,373 issued and 829,823 outstanding at September 30, 2024 and 455,719 issued and 454,169 outstanding at December 31, 2023		83		45
Additional paid-in capital		70,530,467		69,105,176
Treasury stock, 1,550 shares, at cost		(172)		(172)
Accumulated other comprehensive income		—		840
Accumulated deficit		(65,815,806)		(59,364,812)
Total stockholders’ equity		4,714,572		9,741,077
Total liabilities and stockholders’ equity	$	11,264,223	$	15,819,137

See accompanying notes to these unaudited condensed financial statements.

Reflects retroactive effect of a 1-for-20 reverse stock split on September 13, 2024.

Table of Contents

iSpecimen Inc.

Condensed Statements of Operations and Comprehensive Loss

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenue	$	2,661,936	$	2,777,751	$	7,815,608	$	7,353,090
Operating expenses:
Cost of revenue		1,554,159		1,392,534		3,978,557		3,393,079
Technology		754,730		921,580		2,578,624		2,599,086
Sales and marketing		631,625		897,433		2,380,515		2,972,757
Supply development		84,972		186,176		420,322		801,038
Fulfillment		449,142		471,735		1,293,185		1,363,427
General and administrative		892,712		1,102,373		4,051,994		4,522,028
Total operating expenses		4,367,340		4,971,831		14,703,197		15,651,415

Loss from operations		(1,705,404)		(2,194,080)		(6,887,589)		(8,298,325)

Other income, net
Interest expense		(7,364)		(4,465)		(16,303)		(11,535)
Interest income		1,235		67,362		40,896		292,506
Other income (expense), net		271,680		20,082		412,002		(9,173)
Total other income, net		265,551		82,979		436,595		271,798

Net loss	$	(1,439,853)	$	(2,111,101)	$	(6,450,994)	$	(8,026,527)

Other comprehensive income (loss):
Net loss	$	(1,439,853)	$	(2,111,101)	$	(6,450,994)	$	(8,026,527)
Unrealized gain (loss) on available-for-sale securities		—		(47)		(840)		641
Total other comprehensive income (loss)		—		(47)		(840)		641
Comprehensive loss	$	(1,439,853)	$	(2,111,148)	$	(6,451,834)	$	(8,025,886)

Net loss per share - basic and diluted	$	(2.10)	$	(4.66)	$	(11.30)	$	(17.78)

Weighted average shares of common stock outstanding - basic and diluted		687,141		453,267		570,693		451,487

See accompanying notes to these unaudited condensed financial statements.

Reflects retroactive effect of a 1-for-20 reverse stock split on September 13, 2024.

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iSpecimen Inc.

Condensed Statements of Changes in Stockholders’ Equity

(Unaudited)


	Nine Months Ended September 30, 2024
									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, 2023	454,169	$	45	1,550	$	(172)	$	69,105,176	$	840	$	(59,364,812)	$	9,741,077
Stock-based compensation expense	—		—	—		—		45,871		—		—		45,871
Vesting of restricted stock	438		—	—		—		48,054		—		—		48,054
Repurchase of common stock purchase warrants exercisable under PIPE Warrants	—		—	—		—		(52,500)		—		—		(52,500)
Issuance of common stock in connection with At the Market Offering Agreement	18,899		2	—		—		138,485		—		—		138,487
Offering costs in connection with At the Market Offering Agreement	—		—	—		—		(204,845)		—		—		(204,845)
Unrealized loss on available-for-sale securities	—		—	—		—		—		(799)		—		(799)
Net loss	—		—	—		—		—		—		(2,902,117)		(2,902,117)
Balance at March 31, 2024	473,506	$	47	1,550	$	(172)	$	69,080,241	$	41	$	(62,266,929)	$	6,813,228
Stock-based compensation expense	—		—	—		—		34,834		—		—		34,834
Vesting of restricted stock	1,178		—	—		—		44,803		—		—		44,803
Issuance of common stock in connection with At The Market Offering Agreement	180,105		18	—		—		1,355,909		—		—		1,355,927
Offering costs in connection with At The Market Offering Agreement	—		—	—		—		(50,443)		—		—		(50,443)
Unrealized loss on available-for-sale securities	—		—	—		—		—		(41)		—		(41)
Net loss	—		—	—		—		—		—		(2,109,024)		(2,109,024)
Balance at June 30, 2024	654,789	$	65	1,550	$	(172)	$	70,465,344	$	—	$	(64,375,953)	$	6,089,284
Stock-based compensation expense	—		—	—		—		20,302		—		—		20,302
Vesting of restricted stock	296			—		—		44,839		—		—		44,839
Reverse stock split adjustment	174,738		18	—		—		(18)		—		—		—
Net loss	—		—	—		—		—		—		(1,439,853)		(1,439,853)
Balance at September 30, 2024	829,823	$	83	1,550	$	(172)	$	70,530,467	$	—	$	(65,815,806)	$	4,714,572

See accompanying notes to these unaudited condensed financial statements.

Reflects retroactive effect of a 1-for-20 reverse stock split on September 13, 2024.

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iSpecimen Inc.

Condensed Statements of Changes in Stockholders’ Equity

(Unaudited)


	Nine Months Ended September 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	446,290	$	45	1,550	$	(172)	$	68,574,621	$	—	$	(48,265,324)	$	20,309,170
Stock-based compensation expense	—		—	—		—		54,608		—		—		54,608
Vesting of restricted stock	1,439		—	—		—		65,949		—		—		65,949
Issuance of common stock through exercise of stock options	3,387		—	—		—		67,736		—		—		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	451,116	$	45	1,550	$	(172)	$	68,762,914	$	18,843	$	(50,697,136)	$	18,084,494
Stock-based compensation expense	—		—	—		—		29,829		—		—		29,829
Vesting of restricted stock	1,890		—	—		—		94,868		—		—		94,868
Issuance of common stock through exercise of stock options	158		—	—		—		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	453,164	$	45	1,550	$	(172)	$	68,890,764	$	688	$	(54,180,750)	$	14,710,575
Stock-based compensation expense	—		—	—		—		49,394		—		—		49,394
Vesting of restricted stock	539		—	—		—		56,899		—		—		56,899
Unrealized loss on available-for-sale securities	—		—	—		—		—		(47)		—		(47)
Net loss	—		—	—		—		—		—		(2,111,101)		(2,111,101)
Balance at September 30, 2023	453,703	$	45	1,550	$	(172)	$	68,997,057	$	641	$	(56,291,851)	$	12,705,720

See accompanying notes to these unaudited condensed financial statements

Reflects retroactive effect of a 1-for-20 reverse stock split on September 13, 2024.

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iSpecimen Inc.

Condensed Statements of Cash Flows

(Unaudited)


	Nine Months Ended September 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(6,450,994)	$	(8,026,527)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		238,703		351,547
Amortization of internally developed software		1,553,939		1,429,182
Amortization of other intangible assets		143,666		6,383
Depreciation of property and equipment		48,607		99,125
Bad debt expense		205,764		243,053
Amortization of discount and debt issuance costs on senior note payable		4,445		—
Non-cash interest income related to accretion of discount on available-for-sale securities		(28,976)		(147,170)
Loss from sales of available-for-sale securities		680		—
Loss on disposal of property and equipment		58		—
Change in operating assets and liabilities:
Accounts receivable – unbilled		558,519		902,355
Accounts receivable		(451,759)		(350,781)
Prepaid expenses and other current assets		14,500		(20,179)
Operating lease right-of-use asset		112,876		(49,113)
Security deposits		(12,100)		—
Tax credit receivable		—		128,541
Accounts payable		129,894		(178,899)
Accrued expenses		(518,234)		(503,278)
Operating lease liability		(108,420)		48,495
Deferred revenue		(132,200)		(85,425)
Net cash used in operating activities		(4,691,032)		(6,152,691)

CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalization of internally developed software		(588,093)		(3,501,206)
Capitalization of other intangible assets		—		(191,500)
Purchase of property and equipment		(23,681)		(19,478)
Purchase of leasehold improvements included in operating lease right-of-use asset		(25,000)		—
Purchase of available-for-sale securities		(460,932)		(10,143,156)
Proceeds from sales and maturities of available-for-sale securities		3,150,320		7,350,000
Net cash provided by (used in) investing activities		2,052,614		(6,505,340)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of senior note payable		1,000,000		—
Proceeds from exercise of stock options		—		70,889
Proceeds from issuance of common stock in connection with At the Market Offering Agreement		1,494,414		—
Payment of debt issuance costs in connection with senior note payable		(140,020)		—
Payment of offering costs in connection with the issuance of common stock in connection with At the Market Offering Agreement		(255,288)		—
Repurchase of common stock purchase warrants exercisable under PIPE warrants		(52,500)		—
Net cash provided by financing activities		2,046,606		70,889

Net decreases in cash and cash equivalents		(591,812)		(12,587,142)
Cash and cash equivalents at beginning of period		2,343,666		15,308,710
Cash and cash equivalents at end of period	$	1,751,854	$	2,721,568

Supplemental disclosure of cash flow information:
Cash paid for interest	$	14,358	$	11,535
Supplemental disclosure of non-cash investing and financing activities:
Non-cash amounts of lease liabilities arising from obtaining right-of-use assets	$	321,805	$	166,357
Non-cash adjustment to reduce lease liabilities and right-of-use assets due to lease termination	$	85,679	$	—
Stock issuance costs included in accounts payable and accrued expenses	$	7,023	$	—

See accompanying notes to these unaudited condensed financial statements.

Table of Contents

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, was designed to solve this problem and transform the biospecimen procurement process to accelerate medical discovery. The Company is headquartered in Woburn, 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 the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Reclassifications

Certain reclassifications have been made to the Company’s prior year amounts to conform to the current year presentation.

Reverse Stock Split

On October 9, 2023, the Company received a notification from Nasdaq that its Common Stock failed to maintain a minimum bid price of $1.00 over the previous 30 consecutive business days as required by the Listing Rules of The Nasdaq Stock Market.

On July 19, 2024, the Company’s stockholders approved a proposal to amend the Company’s Fourth Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to effect a reverse stock split of the Company’s issued and outstanding shares of common stock, as well as any shares of common stock held by the Company in treasury, at a ratio in the range from 1-for-10 to 1-for-20.

On August 19, 2024, the Company’s board of directors approved a one-for-twenty (1:20) reverse stock split of the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split”). On September 13, 2024, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to the Company’s Certificate of Incorporation to effect the Reverse Stock Split. The Reverse Stock Split became effective on September 13, 2024, and the Company’s common stock began trading on a split-adjusted basis on Nasdaq on September 16, 2024.

On October 1, 2024, the Company received a notification from Nasdaq that the Staff has determined that for the last 11 consecutive business days, from September 16, 2024 to September 30, 2024, the closing bid price of the Company’s Common Stock was $1.00 per share or greater. Accordingly, the Company has regained compliance with Listing Rule 5559(a)(2).

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iSpecimen Inc.

Notes to Unaudited Condensed Financial Statements

Except as otherwise indicated, all references to the Company’s common stock, share data, per share data and related information has been adjusted for the Reverse Stock Split ratio of 1-for-20 as if they had occurred at the beginning of the earliest period presented. The Reverse Stock Split combined each 20 shares of our outstanding common stock and treasury shares into one share of common stock without any change in the par value per share, and the Reverse Stock Split correspondingly adjusted, among other things, the exercise rate of our warrants and options into the Company’s common stock. No fractional shares were issued in connection with the Reverse Stock Split, and any fractional shares resulting from the Reverse Stock Split were rounded up to the nearest whole share.

Going Concern Uncertainty and Management’s Plan

The Company has recognized recurring losses since inception. As of September 30, 2024, the Company had negative working capital of $1,610,379, an accumulated deficit of $65,815,806, cash and cash equivalents and short-term investments of $1,751,854, and accounts payable and accrued expenses of $5,077,705. Since inception, the Company has relied upon raising capital and its revenues to finance operations.

The future success of the Company is dependent on its ability to successfully obtain additional working capital and/or to ultimately attain profitable operations. During the year ended December 31, 2023, the Company began initiating efforts to decrease its capital and operational

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