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, 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.)

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 August 2, 2024, there were 13,097,031 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, 2024

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION
ITEM 1.	Financial Statements
	Condensed Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023	3
	Unaudited Condensed Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2024 and 2023	4
	Unaudited Condensed Statements of Changes in Stockholders’ Equity for the Six Months Ended June 30, 2024 and 2023	5
	Unaudited Condensed Statements of Cash Flows for the Six Months Ended June 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	22
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	33
ITEM 4.	Controls and Procedures	33

PART II – OTHER INFORMATION
ITEM 1.	Legal Proceedings	35
ITEM 1A.	Risk Factors	35
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
ITEM 3.	Defaults Upon Senior Securities	35
ITEM 4.	Mine Safety Disclosures	35
ITEM 5.	Other Information	35
ITEM 6.	Exhibits	36
SIGNATURES		37

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

iSpecimen Inc.

Condensed Balance Sheets



	June 30, 2024		December 31, 2023
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	2,151,243	$	2,343,666
Available-for-sale securities		—		2,661,932
Accounts receivable – unbilled		1,953,632		2,212,538
Accounts receivable, net of allowance for doubtful accounts of $700,862 and $520,897 at June 30, 2024 and December 31, 2023, respectively		892,814		728,388
Prepaid expenses and other current assets		237,564		292,079
Total current assets		5,235,253		8,238,603
Property and equipment, net		104,822		127,787
Internally developed software, net		5,695,166		6,323,034
Other intangible assets, net		812,478		908,255
Operating lease right-of-use asset		26,538		193,857
Security deposits		27,601		27,601
Total assets	$	11,901,858	$	15,819,137
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,205,371	$	3,925,438
Accrued expenses		1,319,201		1,540,607
Operating lease current obligation		29,130		167,114
Deferred revenue		258,872		415,771
Total current liabilities		5,812,574		6,048,930
Operating lease long-term obligation		—		29,130
Total liabilities		5,812,574		6,078,060

Commitments and contingencies (See Note 8)

Stockholders’ equity
Common stock, $0.0001 par value, 200,000,000 shares authorized, 13,126,770 issued and 13,095,770 outstanding at June 30, 2024 and 9,114,371 issued and 9,083,371 outstanding at December 31, 2023		1,309		908
Additional paid-in capital		70,464,100		69,104,313
Treasury stock, 31,000 shares, at cost		(172)		(172)
Accumulated other comprehensive income		—		840
Accumulated deficit		(64,375,953)		(59,364,812)
Total stockholders’ equity		6,089,284		9,741,077
Total liabilities and stockholders’ equity	$	11,901,858	$	15,819,137

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,
	2024		2023		2024		2023
Revenue	$	2,863,679	$	1,625,140	$	5,153,672	$	4,575,339
Operating expenses:
Cost of revenue		1,424,392		853,633		2,424,398		2,000,545
Technology		911,927		843,099		1,823,894		1,677,506
Sales and marketing		1,082,949		977,748		1,748,890		2,025,346
Supply development		137,511		291,360		335,350		614,862
Fulfillment		433,189		462,672		844,043		891,692
General and administrative		1,055,376		1,758,451		3,159,282		3,469,633
Total operating expenses		5,045,344		5,186,963		10,335,857		10,679,584

Loss from operations		(2,181,665)		(3,561,823)		(5,182,185)		(6,104,245)

Other income, net
Interest expense		(4,474)		(3,535)		(8,939)		(7,070)
Interest income		9,163		110,882		39,661		225,144
Other income (expense), net		67,952		(29,138)		140,322		(29,255)
Total other income, net		72,641		78,209		171,044		188,819

Net loss	$	(2,109,024)	$	(3,483,614)	$	(5,011,141)	$	(5,915,426)

Other comprehensive income (loss):
Net loss	$	(2,109,024)	$	(3,483,614)	$	(5,011,141)	$	(5,915,426)
Unrealized gain (loss) on available-for-sale securities		(41)		(18,155)		(840)		688
Total other comprehensive income (loss)		(41)		(18,155)		(840)		688
Comprehensive loss	$	(2,109,065)	$	(3,501,769)	$	(5,011,981)	$	(5,914,738)

Net loss per share - basic and diluted	$	(0.19)	$	(0.39)	$	(0.49)	$	(0.66)

Weighted average shares of common stock outstanding - basic and diluted		11,340,586		9,033,868		10,236,523		9,011,644

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, 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	9,083,371	$	908	31,000	$	(172)	$	69,104,313	$	840	$	(59,364,812)	$	9,741,077
Stock-based compensation expense	—		—	—		—		45,871		—		—		45,871
Vesting of restricted stock	8,771		1	—		—		48,053		—		—		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	377,970		38	—		—		138,449		—		—		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	9,470,112	$	947	31,000	$	(172)	$	69,079,341	$	41	$	(62,266,929)	$	6,813,228
Stock-based compensation expense	—		—	—		—		34,834		—		—		34,834
Vesting of restricted stock	23,553		2	—		—		44,801		—		—		44,803
Issuance of common stock in connection with At The Market Offering Agreement	3,602,105		360	—		—		1,355,567		—		—		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	13,095,770	$	1,309	31,000	$	(172)	$	70,464,100	$	—	$	(64,375,953)	$	6,089,284

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 Cash Flows

(Unaudited)


	Six Months Ended June 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(5,011,141)	$	(5,915,426)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		173,562		245,254
Amortization of internally developed software		1,075,555		934,829
Amortization of other intangible assets		95,777		—
Depreciation of property and equipment		32,101		75,726
Bad debt expense		204,510		261,610
Non-cash interest income related to accretion of discount on available-for-sale securities		(28,976)		(97,874)
Loss from sales of available-for-sale securities		680		—
Change in operating assets and liabilities:
Accounts receivable – unbilled		258,906		1,229,433
Accounts receivable		(368,936)		(122,540)
Prepaid expenses and other current assets		54,515		112,665
Operating lease right-of-use asset		81,640		77,577
Tax credit receivable		—		128,541
Accounts payable		279,933		(679,143)
Accrued expenses		(221,406)		(648,964)
Operating lease liability		(81,435)		(77,872)
Deferred revenue		(156,899)		(42,734)
Net cash used in operating activities		(3,611,614)		(4,518,918)

CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalization of internally developed software		(447,687)		(2,731,507)
Purchase of property and equipment		(9,136)		(13,745)
Purchase of available-for-sale securities		(460,932)		(7,642,929)
Proceeds from sales and maturities of available-for-sale securities		3,150,320		1,532,000
Net cash provided by (used in) investing activities		2,232,565		(8,856,181)

CASH FLOWS FROM FINANCING ACTIVITIES:
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 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		1,186,626		70,889

Net decreases in cash and cash equivalents		(192,423)		(13,304,210)
Cash and cash equivalents at beginning of period		2,343,666		15,308,710
Cash and cash equivalents at end of period	$	2,151,243	$	2,004,500

Supplemental disclosure of cash flow information:
Cash paid for interest	$	8,939	$	7,070
Supplemental disclosure of non-cash investing and financing activities:
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.

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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, was designed to solve this problem and transform the biospecimen procurement process to accelerate medical discovery. The Company is headquartered in Lexington, Massachusetts and its principal market is North America. The Company operates as one operating and reporting 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.

Going Concern Uncertainty and Management’s Plan

The Company has recognized recurring losses since inception. As of June 30, 2024, the Company had negative working capital of $577,321, an accumulated deficit of $64,375,953, cash and cash equivalents and short-term investments of $2,151,243, and accounts payable and accrued expenses of $5,524,572. 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 expenditures by cutting costs and right sizing the Company through reductions in workforce while streamlining operations and rationalizing resources to focus on key market opportunities. The reductions in workforce since January 1, 2023 through June 30, 2024, cumulatively resulted in an estimated reduction in monthly compensation costs of approximately 45% and technology costs of approximately 66% by the end of June 30, 2024 when compared to January 1, 2023. In addition, the Company plans to add additional customers to increase and add additional revenues through its new revenue enhancement projects as well as to reduce and manage expenditures to improve its financial position and ensure continued funding of operations. However, as certain elements of the Company’s operating plan are not within the Company’s control, the Company is unable to assess their probability of success. The Company may also seek to fund its operations through public equity or debt financing, as well as other sources but it has not currently identified any other specific source of funding except for the ATM Agreement that is defined and discussed in Note 9.

The Company may be unsuccessful in increasing its revenues from its new enhancement projects or contain its operating expenses, or it may be unable to raise additional capital on commercially favorable terms. The Company’s failure to generate additional revenues or contain operating costs would have a negative impact on the Company’s business, results of operations and financial condition and the Company’s ability to continue as a going concern. If the Company does not generate enough revenue to provide an adequate level of working capital, its business plan will be scaled down further.

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iSpecimen Inc.

Notes to Unaudited Condensed Financial Statements

These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year from the date these unaudited condensed financial statements are issued. Management’s plan to mitigate the conditions that raise substantial doubt includes generating additional revenues through its revenue enhancement projects, deferring certain projects and capital expenditures and eliminating certain future operating expenses for the Company to continue as a going concern. However, there can be no assurance that the Company will be successful in completing any of these options. As a result, management’s plans cannot be considered probable and thus do not alleviate substantial doubt about the Company’s ability to continue as a going concern.

The accompanying unaudited condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The unaudited condensed financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company’s significant accounting policies and recent accounting standards are summarized in Note 2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. There were no significant changes to these accounting policies during the six months ended June 30, 2024.

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 deferred tax valuation allowances, revenue recognition, stock-based compensation, allowance for doubtful accounts, accrued expenses, and the useful lives of internally developed software and sequenced data. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results could differ from such estimates.

Investments

The Company’s investments are considered to be available-for-sale 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 there is a decline in value include: the length of time and the extent to which the fair value has been less than cost; the financial condition and near-term prospects of the issuer; and the likelihood that it will be required to sell the investment.

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iSpecimen Inc.

Notes to Unaudited Condensed Financial Statements

Fair Value Measurements

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

●

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

●

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

●

Level 3 — Valuations based on unobservable inputs reflecting 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, 2024 and December 31, 2023, 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 customers using the Company’s proprietary software, the iSpecimen Marketplace, to identify, locate, and ultimately validate the required specimens to the Company’s customers’ requested specifications. The Company’s performance obligation is to procure a specimen meeting the customer’s specification(s) from a supplier, on a “best efforts” basis, for the Company’s customer at the agreed price per specimen as indicated in the customer’s contract with the Company. The Company does not currently charge suppliers or customers for the use of the Company’s proprietary software. Each customer will execute a material and data use agreement with the Company or agree to online purchase terms, each of which includes terms such as specimen and data use, shipment terms, payment, and cancellation terms. These are then supplemented by purchase orders that specify specimen requirements including detailed inclusion/exclusion criteria, quantities to be collected, and pricing. Collectively, these customer agreements represent the Company’s contracts with its customers. 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 as 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.

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iSpecimen Inc.

Notes to Unaudited Condensed Financial Statements

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 a 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,
	2024		2023		2024		2023
Specimens - contracts with customers	$	2,835,449	$	1,522,108	$	5,127,432	$	4,234,485
Shipping and other		28,230		103,032		26,240		340,854
Revenue	$	2,863,679	$	1,625,140	$	5,153,672	$	4,575,339

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 the current expected credit loss model. Receivables are written off when deemed uncollectible, with any future recoveries recorded as income when received. As of June 30, 2024 and December 31, 2023, the Company had an allowance for doubtful accounts of $700,862 and $520,897, 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.

Other Intangible Assets, Net

The Company procures data generated from sequencing of Formalin-Fixed Paraffin-Embedded (“FFPE”) blocks from a third-party sequencer which the Company licenses to its customers with the sale of FFPE blocks at an additional cost. The sequenced data is also organized to form a database of research content that is available for sale through a subscription model. The Company has determined

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that the sequenced data is an intangible asset and capitalizes the cost to procure the sequenced data. The sequenced data is amortized to cost of revenue over an estimated useful life of five years on a straight-line basis. The costs paid to the third-party sequencer are the only costs capitalized and all other related costs are expensed to operations as incurred.

Impairment of Long-Lived Assets

Management reviews long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable. An impairment loss is recognized when expected cash flows are less than the asset’s carrying value. Long-lived assets consist of property and equipment, internal-use software and other intangible assets. No impairment charges were recorded for the six months ended June 30, 2024 and 2023.

Stock-Based Compensation

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

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

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

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

Restricted Stock Units (“RSUs”)

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

Common Stock Warrants

The Company accounts for common stock warrants as either equity instruments or liabilities, depending on the specific terms of the warrant agreement. The warrants shall be classified as a liability if 1) the underlying shares are classified as liabilities or 2) the entity can be required under any circumstances to settle the warrant by transferring cash or other assets. The measurement of equity-classified non-employee 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 common 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

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outstanding for the period, determined using the treasury-stock method. Therefore, basic and diluted net loss per share applicable to common stockholders were the same for all periods presented.

The table below provides information on shares of the Company’s common stock issuable upon vesting and exercise, as of June 30:


	2024	2023
Shares issuable upon vesting of RSUs	56,558	168,641
Shares issuable upon exercise of stock options	351,670	345,987
Shares issuable upon exercise of PIPE Warrant (defined below) to purchase common stock	—	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 August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies an issuer’s accounting for convertible instruments by reducing the number of accounting models that require separate accounting for embedded conversion features. ASU 2020-06 also simplifies the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification and makes targeted improvements to the disclosures for convertible instruments and earnings-per-share (EPS) guidance. This update will be effective for the Company’s fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Entities can elect to adopt the new guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The Company adopted this new standard as of January 1, 2024. ASU 2020-06 did not have a material impact on the Company’s unaudited condensed financial statements.

3.AVAILABLE-FOR-SALE SECURITIES

The Company’s U.S. Treasury bills that were classified as available-for-sale securities fully matured during the six months ended June 30, 2024. There were no available-for-sale securities as of June 30, 2024. The balance of amortized cost, gross unrealized gains and losses, and fair value for available-for-sale securities as of December 31, 2023 is as follows:


	December 31, 2023
			Gross		Gross
	Amortized		unrealized		unrealized
	cost		gains		losses		Fair value
Available-for-sale securities:
U.S. Treasury Bills	$	2,661,092	$	36,138	$	(35,298)	$	2,661,932
Total Available-for-sale securities	$	2,661,092	$	36,138	$	(35,298)	$	2,661,932

The Company recorded $680 of realized losses in the six months ended June 30, 2024. The Company did not have any realized gains or losses in the six months ended June 30, 2023.

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4.PROPERTY AND EQUIPMENT, NET

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


	June 30,		December 31,
	2024		2023
Website	$	285,377	$	285,377
Computer equipment and purchased software		105,173		96,037
Equipment		35,449		35,449
Furniture and fixtures		87,184		87,184
Leasehold improvements		68,471		68,471
Total property and equipment		581,654		572,518
Accumulated depreciation		(476,832)		(444,731)
Total property and equipment, net	$	104,822	$	127,787

Depreciation expense for property and equipment was $16,051 and $37,137 for the three months ended June 30, 2024 and 2023, respectively, and $32,101 and $75,726 for the six months ended June 30, 2024 and 2023, respectively.

5.INTERNALLY DEVELOPED SOFTWARE, NET

During the six months ended June 30, 2024 and 2023, the Company capitalized $447,687 and $2,731,507, respectively, of internally developed software costs in connection with the development and continued enhancement of the technology platform and web interfaces. Capitalized costs primarily consist of payroll and payroll-related costs for the Company’s employees. The Company recognized $542,805 and $501,502 of amortization expense associated with capitalized internally developed software costs during the three months ended June 30, 2024 and 2023, respectively. The Company recognized $1,075,555 and $934,829 of amortization expense associated with capitalized internally developed software costs during the six months ended June 30, 2024 and 2023, respectively. Accumulated amortization associated with capitalized internally developed software costs as of June 30, 2024 and December 31, 2023 was $8,040,310 and $6,964,755, respectively.

6. OTHER INTANGIBLE ASSETS, NET

During the six months ended June 30, 2024, the Company did not sequence any FFPE blocks and therefore did not capitalize any sequenced data as other intangible assets. The Company licenses to its customers, at an additional cost, the sequenced data associated with the sequenced FFPE blocks with the sale of said FFPE blocks. The sequenced data is also organized to form a database of research content that is available for sale to the Company’s customers through a subscription model. Amortization expense associated with the capitalized sequenced data was $47,888 for the three months ended June 30, 2024 and $95,777 for the six months ended June 30, 2024. No amortization expense was recognized during the six months ended June 30, 2023 as the Company had not commenced the sequencing of FFPE blocks at this time.

7. FAIR VALUE MEASUREMENTS

As of June 30, 2024, the Company did not have any assets or liabilities measured at fair value on a recurring basis. The following table sets forth the Company’s assets to be measured at fair value on a recurring basis and their respective classification within the fair value hierarchy as of December 31, 2023:


	Fair Value at December 31, 2023
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities	$	2,661,932	$	2,661,932	$	—	$	—
Total Assets	$	2,661,932	$	2,661,932	$	—	$	—

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Notes to Unaudited Condensed Financial Statements

8.COMMITMENTS AND CONTINGENCIES

Leases

As of June 30, 2024, the Company had one operating lease of office space in Lexington, Massachusetts, which was initially set to expire on February 28, 2024 (the “Lexington Lease”). The Lexington Lease was renewed on September 27, 2023 to extend the lease term for a period of 12 months from February 29, 2024 through February 28, 2025. The lease renewal included an option to terminate the lease before its expiration date if notice is provided to the lessor by June 30, 2024. On June 28, 2024, the Company exercised the termination option and terminated the Lexington Lease effective August 31, 2024.

Subsequently, on July 2, 2024, the Company entered into a new operating lease (the “Woburn Lease”) of office space in Woburn, Massachusetts (the “Woburn Premises”) for a term of five years and two months, commencing on September 1, 2024, and terminating on October 30, 2029. The Company has a one-time option to extend the term of the Woburn Lease for one additional term of five years, provided that the Company is not in arrears in any payment of rent, the payment of any outstanding invoice, or otherwise in default.

Right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. The Company’s Lexington 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.

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.

There was no sublease rental income for the three and six months ended June 30, 2024, and the Company is not the lessor in any lease arrangement, and there were no related-party lease agreements.

Lease Costs

The table below presents certain information related to the lease costs for the Company’s operating lease for the six months ended June 30, 2024:


Operating lease expense	$	91,632
Short-term lease expense		—
Total lease cost	$	91,632

Lease Position as of June 30, 2024

During the three months ended June 30, 2024, right-of-use lease assets and lease liabilities for the Lexington Lease were adjusted by $85,679 to reflect the early termination of the lease and the balance as of June 30, 2024 was recorded in the balance sheet as follows:


Assets
Operating lease right-of-use assets	$	26,538
Total lease assets	$	26,538

Liabilities
Current liabilities:
Operating lease liability – current portion	$	29,130
Non-current liabilities:
Operating lease liability – net of current portion		—
Total lease liability	$	29,130

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Lease Terms and Discount Rate

The table below presents certain information related to the weighted average remaining lease term and the weighted average discount rate for the Company’s operating lease as of June 30, 2024:


Weighted average remaining lease term (in years) – operating lease			0.17
Weighted average discount rate – operating lease			5.96%

Undiscounted Cash Flows

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


2024 (excluding the six months ended June 30, 2024)	$	29,348
2025		—
Total future minimum lease payments		29,348
Less effect of discounting		(218)
Present value of future minimum lease payments	$	29,130

Rent expense for the three months ended June 30, 2024 and 2023 amounted to $48,382 and $42,078, respectively. Rent expense for the six months ended June 30, 2024 and 2023 amounted to $91,632 and $84,657, respectively.

Cash Flows

Supplemental cash flow information related to the operating lease for the six months ended June 30, 2024 was as follows:


Non-cash operating lease expense (operating cash flow)	$	81,640
Change in operating lease liabilities (operating cash flow)	$	(81,435)

Sales Tax Payable

The majority of the Company’s customers are researchers, universities, hospitals, and not-for-profit entities that were believed by the Company to have a sales and use tax exemption that generally excludes them from paying sales taxes. The main types of specimens the Company sells are blood, blood plasma, human tissue, human parts, and human bodily fluids and only a few of these products are typically not taxable in some states regardless of the buyer’s tax exemption status. The Company historically has not collected sales tax in states where it had sales. Had the Company contemporaneously collected and remitted sales tax for all customers and in all jurisdictions where it would have been required, there would have been no material impact on the Company’s unaudited condensed financial statements.

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

From the Company’s inception through the filing date of this Quarterly Report, the Company now believes that an obligation to collect and remit sales tax existed for certain of its sales of products to certain of its customers. The Company has analyzed its product sales, on an invoice-by-invoice and customer-by-customer basis, to determine which products are subject to sales tax in each jurisdiction, and determining which of its customers are exempt from sales tax, and which customers who were not exempt from sales tax have already

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Notes to Unaudited Condensed Financial Statements

paid compensating use tax to the appropriate jurisdiction. Part of this process includes requesting and obtaining exemption letters or representations from its customers or proof of payment of their compensating use tax. As the Company continues to make progress on this project, certain customers have notified the Company that they are not exempt from the payment of sales tax and have not remitted use tax and the Company has started to invoice such customers for past sales tax due.

As of December 31, 2023, the Company had established and accrued a reliable point estimate with a maximum potential of the sales tax liability of approximately $707,000 and the related interests and penalties of approximately $215,000 in accrued expenses on the balance sheet. The estimated liability represents the estimated tax liability for sales made to customers who have notified the Company that they are not exempt from sales taxes and customers who have not responded to Company’s request to provide a sales exemption letter. As of December 31, 2023, the Company had also recovered approximately $359,000 of prior taxes from certain customers who do not have a sales tax exemption. During the year ended December 31, 2023, the Company recognized a loss of approximately $564,000 in its statement of operations and comprehensive loss related to the sales tax liability. The Company continued to pursue nonresponsive customers with the expectation that over time, further exemption letters or representations will be received that will reduce the liability.

During the first half of 2024, the Company received additional sales tax exemption letters or representations from customers. The Company also registered in some states and commenced the filing and remittance of sales taxes. Both factors contributed to the reduction of the sales tax liability to approximately $617,000 and the related interests and penalties to approximately $208,000 as of June 30, 2024.

As of June 30, 2024, the Company had recovered approximately $439,000 of prior taxes from certain customers who do not have a sales tax exemption. The Company did not recognize any additional loss in its statement of operations and comprehensive loss related to the sales tax liability during the six months ended June 30, 2024. The Company will commence its VDA filings with certain taxing jurisdictions regarding its noncompliance in the third quarter of 2024, during which it will start remitting its sales tax obligations.

Legal Proceedings

From time to time the Company is involved in litigation, claims, and other proceedings arising in the ordinary course of business. Such litigation and other proceedings may include, but are not limited to, actions relating to employment law and misclassification, intellectual property, commercial or contractual claims, or other consumer protection statutes. Litigation and other disputes are inherently unpredictable and subject to substantial uncertainties and unfavorable resolutions could occur. As of June 30, 2024, 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 shares 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

On March 5, 2024, the Company put in place an At the Market Offering Agreement (the “ATM Agreement”) which allowed the Company to issue and sell shares of its common stock, having an aggregate offering price of up to $1,500,000 (the “ATM Shares”), from time to time through the Sales Agent. During the six months ended June 30, 2024, the Company sold 3,980,075 ATM Shares for gross proceeds of approximately $1,494,000 under the ATM Agreement. The Company incurred offering costs of approximately $255,000, resulting in net proceeds of approximately $1,239,000.

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. There were no options exercises during the six months ended June 30, 2024.

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Warrants

Underwriter Warrants

In connection with the Company's underwriting agreement with ThinkEquity, a division of Fordham Financial Management, Inc. (“ThinkEquity”) and the representative of the Company’s IPO underwriters, the Company entered into a warrant agreement to purchase up to 90,000 shares of common stock to several affiliates of ThinkEquity (the “Underwriter Warrants”). The Underwriter Warrants are exercisable at a per share exercise price of $10.00 and are 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 Warrants became exercisable on or after December 16, 2021 (six months from the effective date of the offering) and expire on June 15, 2026. Upon issuance of the Underwriter Warrants, 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, 2024, the Underwriter Warrants had not been exercised, and had a weighted average exercise price of $10 per share and a remaining weighted average time to expiration of 1.96 years.

Lender Warrant

In connection with the loan agreement entered into with Western Alliance Bank (the “Lender”) on August 13, 2021, the Company issued a warrant (the “Lender Warrant”) to the Lender to purchase 12,500 shares of common stock of the Company. The Lender Warrant is exercisable at a per share exercise price of $8.00 and is exercisable at any time on or after August 13, 2021 through August 12, 2031. The Company determined that the Lender Warrant was equity-classified. As of June 30, 2024, the Lender Warrant had not been exercised, and had a weighted average exercise price of $8 per share and a remaining weighted average time to expiration of 7.12 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.

On February 13, 2024, the Company entered into certain warrant repurchase and termination agreements with the holders of the PIPE Warrants to repurchase the PIPE Warrants for a purchase price equal to $0.04 multiplied by the number of shares of common stock issuable pursuant to such PIPE Warrants. In connection with such repurchases, all past, current and future obligations of the Company relating to the PIPE Warrants were released, discharged and are of no further force or effect.

A summary of total warrant activity during the six months ended June 30, 2024 is as follows:


				Weighted
				Average
		Weighted		Remaining
	Warrants	Average		Contractual Term
	Outstanding	Exercise Price		in Years
Balance at December 31, 2023	1,415,000	$	12.77	3.47
Granted	—		—	—
Exercised	—		—	—
Repurchased	(1,312,500)		—	—
Balance at June 30, 2024	102,500	$	9.76	2.59

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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 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, 2024 and 2023, 95,340 and 163,419 equity awards were granted under the 2021 Plan, respectively. During the three months ended June 30, 2024 and 2023, 15,000 and 45,172 equity awards were granted under the 2021 Plan, respectively. As of June 30, 2024, there were 1,334,377 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 granted under the 2013 Plan during the six months ended June 30, 2024 and 2023. According to the 2013 Plan, which was adopted by the Company’s board of directors on April 12, 2013, no awards shall be granted under the 2013 Plan after the completion of ten years from the date on which the 2013 Plan was adopted by the Company’s board of directors. Therefore, as of April 13, 2023, no further shares had been granted under the 2013 Plan.

Stock Options

During the six months ended June 30, 2024 and 2023, the Company granted 95,340 and 162,672 stock options, respectively. The following assumptions were used to estimate the fair value of stock options granted using the Black-Scholes-Merton option pricing model during the six months ended June 30:


	2024	2023
Assumptions:
Risk-free interest rate	3.93% – 4.56%	3.75% – 3.95%
Expected term (in years)	0.78 – 4.00	0.61 – 4.00
Expected volatility	57.49% –58.71%	59.35% – 59.95%
Expected dividend yield	—	—

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Notes to Unaudited Condensed Financial Statements

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, 2023	296,268	$	2.17	8.53	$	—
Granted	95,340		0.38	—		—
Exercised	—		—	—		—
Cancelled/forfeited	(39,938)		1.14	—		—
Balance at June 30, 2024	351,670	$	1.81	8.35	$	1,564

Options exercisable at June 30, 2024	181,723	$	2.47	7.72	$	70.89

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. No stock options were exercised during the six months ended June 30, 2024. The aggregate intrinsic value of stock options exercised was $48,494 during the six months ended June 30, 2023.

The weighted average grant date fair value of stock options issued in the six months ended June 30, 2024 and 2023 was $0.13 and $0.52, respectively. 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:	2024		2023		2024		2023
Technology	$	1,658	$	2,475	$	3,203	$	5,106
Sales and marketing		335		623		831		1,498
Supply development		220		446		431		820
Fulfillment		—		681		869		1,325
General and administrative		15,882		26,343		32,201		54,883
Total stock options expense	$	18,095	$	30,568	$	37,535	$	63,632

As of June 30, 2024 and 2023, a total of $72,233 and $185,260 of unamortized compensation expense is being recognized over the remaining requisite service period of 2.26 and 2.42 years, respectively.

There were no stock options exercises during the six months ended June 30, 2024. During the six months ended June 30, 2023, the Company received proceeds of $70,889 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, 2023	116,357	$	5.67
Granted	—		—
Vested	(32,324)		5.98
Forfeited	(27,475)		5.27
Unvested Balance at June 30, 2024	56,558	$	5.67

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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:	2024		2023		2024		2023
Technology	$	22,833	$	32,876	$	49,776	$	67,653
Sales and marketing		9,508		18,959		25,417		30,814
Supply development		52		2,824		277		2,824
Fulfillment		8,217		17,608		17,728		39,052
General and administrative		20,932		21,862		42,829		41,279
Total RSU expense	$	61,542	$	94,129	$	136,027	$	181,622

As of June 30, 2024 and 2023, the total unrecognized stock-based compensation expense related to unvested RSUs was $311,044 and $890,912, and it is expected to be recognized on a straight-line basis over a weighted average period of approximately 1.35 and 2.37 years, respectively.

11.INCOME TAXES

As of June 30, 2024 and December 31, 2023, the Company had federal net operating loss carryforwards of approximately $55,200,000 and $50,800,000, respectively, of which approximately $13,000,000 expires at various periods through 2037 and approximately $42,200,000 and $37,800,000, respectively, can be carried forward indefinitely. As of June 30, 2024 and December 31, 2023, the Company had state net operating loss carryforwards of approximately $32,700,000 and $31,100,000, respectively, that expire at various periods through 2044, respectively. As of June 30, 2024 and December 31, 2023, the Company had federal and state tax credits of approximately $2,116,000 and $2,058,300, respectively, available for future periods that expire at various periods through 2044. 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 unaudited condensed 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 the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 13, 2024. 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.

In addition to creating a single global platform where both specimen providers and researchers can connect, the platform automates the process of searching for and selecting specimens for research. The platform taps into healthcare provider data to gain insights into the available samples in biobanks or laboratories, or to gain insights into the patient populations to support specimen collections directly from research subjects. The platform receives de-identified data from electronic medical records, laboratory information systems, and other healthcare data sources of available specimens and research subjects and harmonizes the data across all participating organizations.

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, workflow, data, and administrative reporting. As capital is made available to do so, 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 our 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 comprising our network, and delivering them to our medical research customers using our proprietary software to identify and locate the required specimens. 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 where biorepositories take inventory risks, and where inventory turnover and cash conversion cycles can be lengthy.

Private Placement Offering

On December 1, 2021, we closed on a private placement offering (“PIPE”) for gross proceeds of approximately $21 million, before deducting approximately $1.4 million for underwriting discounts and commissions and estimated offering expenses, for (i) an aggregate of 1,749,999 shares of common stock and (ii) warrants, which are exercisable for an aggregate of up to 1,312,500 shares of common stock, all of which were repurchased by us on February 13, 2024, and are no longer outstanding.

At the Market Offering

On March 5, 2024, we entered into an At the Market Offering Agreement (the “ATM Agreement”) with Rodman & Renshaw LLC as agent (the “Sales Agent”) pursuant to which we may issue and sell shares of our common stock, having an aggregate offering price of up to $1,500,000 (the “ATM Shares”), from time to time through the Sales Agent (the “ATM Offering”). The ATM Shares, when issued, will be registered pursuant to our shelf registration statement on Form S-3 (File No 333-265976), which became effective on July 12, 2022. We intend to sell the ATM Shares, from time to time, pursuant to the ATM Agreement, in transactions that are “at the market offerings” as defined in Rule 415(a)(4) promulgated under the Securities Act. During the six months ended June 30, 2024, we issued 3,980,075 shares of common stock for gross proceeds of approximately $1,494,000 under the ATM Agreement. In connection with the ATM Offering, we incurred offering costs of approximately $255,000, resulting in net proceeds of approximately $1,239,000.

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 biospecimen industries, which may adversely affect our business and financial condition. We increased our allowance for doubtful accounts in accounts receivables by $289,898 during the year ended December 31, 2023 due to certain boutique life sciences customers either lacking liquidity or having filed for bankruptcy. We have enhanced procedures related to our credit check process for new and existing customers to mitigate the risk to future collectability of receivables.

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

To further address the current market conditions, we have taken steps, which include but are not limited to, reevaluating our pricing in order to be more competitive, creating campaigns to highlight and fast-track high demand items, enhancing internal team communications to accelerate the sales cycle, moving to a new line of business structure organized by our internal categorization of biospecimen suppliers capabilities to increase efficiency in operations, implementation of next day quotes to increase conversion ratios of quotes to purchase orders, and initiation of efforts to decrease expenditures through reductions in our workforce.

We believe that our business will continue to be resilient through a continued industry-wide economic slowdown in life science research, and that we will continue to work on improving our liquidity to address our financial obligations and alleviate possible adverse effects on our business, financial condition, results of operations or prospects.

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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 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 also impacted our margins. Additionally, key resources were diverted from operations to resolving the re-fulfillment issues caused by the conflict.

As of June 30, 2024, 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 date of this Quarterly Report. The imposition of more sanctions and countersanctions 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 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

The Company’s mission remains to accelerate life sciences research and development, pursuant to a single global marketplace platform. Executive management of the Company 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 the business.

Throughout the year ended December 31, 2023 and in the first half of 2024, we initiated efforts to decrease our capital and operational expenditures by cutting costs and right sizing the Company through reductions in our workforce while streamlining operations and rationalizing our resources to focus on key market opportunities. As a result, we began to experience significant decreases in expenditures starting in the second half of 2023. The reductions in workforce since January 1, 2023 through the end of June 30, 2024 has resulted in an estimated reduction in compensation costs of approximately 45% and technology costs of approximately 66% by the end of June 30, 2024 when compared to January 1, 2023.

During the year ended December 31, 2023, we performed operational process improvement activities to increase collaboration within and between departments. We moved to a line of business structure organized by our internal categorization of biospecimen suppliers’ capabilities, which has increased efficiency in our operations and throughout the Company. We continue to see benefits from this move.

We completed the implementation of a next day quote system in the third quarter of 2023 and we continue to see positive results in 2024, as evidenced by increased conversion ratios of quotes to purchase orders of 62%, which contributed to the increased revenue results for the six months ended June 30, 2024 compared to June 30, 2023. Previously, it took an extended number of days to complete a feasibility study in order to provide a customer quote, which negatively impacted the time to convert a quote to a purchase order.

While we are committed to developing our technology, we are investing at a significantly lower level in 2024 when compared to 2023 and prior years, while we focus on growing our revenues through key market opportunities and assessing our capital raise prospects. During the six months ended June 30, 2024 and 2023, we capitalized approximately $448,000 and $2,732,000, respectively, of internally developed software costs. These investments have resulted in multiple process improvements, streamlining workflows and providing deeper insights into orders for all users of our marketplace.

We have shifted our focus from high volume to high value suppliers that meet our newly defined costs, quality and speed requirements. We established business criteria that focus on supplier capabilities and revenue growth strategies as well as technology criteria for integrating onto our iSpecimen Marketplace platform and participating with us. In the first quarter of 2024, we terminated over 100 supplier agreements and are in the final stages of what we call our “supplier network refresh project”. This has resulted in fewer key suppliers, supported by our lean workforce and processes more effectively. We have been reengaging our suppliers in a more meaningful

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manner which assisted us in the implementation of our next day quote system. We now have a key supplier program whereby we proactively engage with the suppliers to promote our business through marketing campaigns and supplier organizations’ offerings.

Going forward, we will leverage the hard work detailed above to support a sales overhaul. As we wrap up several operationally focused projects, we will now be re-organizing the commercial end of the business. This starts with a new account-based sales approach and the introduction of an outbound sales team to ensure we are meeting our customers and prospects where they are. We are also bringing marketing and sales closer to enable the same efficiencies within the commercial organization, the same way that our line of business realignment brought to the operational side of the business this past year. This refined approach and tighter internal integration will continue to accelerate our next day quote program and deepen customer relationships for increased predictability.

Our strategic business intelligence initiatives have enabled us to understand our market and business better than ever before. We now have the capabilities to use data to know how and where to grow. We will continue adjusting the shape of the business toward our core competencies and the market. We can better use key insights from our sales data to understand market needs to assess areas where we lose deals today, through multiple lenses, in order to adjust our supplier network and marketing efforts accordingly. Conversely, this strategy will also allow us to assess areas where we win with an eye toward expanding deeper into those market niches or disease states.

Following the completion of our supplier network refresh efforts, we will have a better than ever understanding of our key supplier capabilities, specifically focused on their pricing, quality, and speed. Using this information and the outputs of our strategic business intelligence capabilities, we will continue to be able to increase the speed of an opportunity through our sales funnel and our conversion ratios, which we believe will continue to grow our revenue.

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, costs paid to the supply sites to support sample collections, amortization of capitalized sequenced data costs and other assets related to sequenced data. Shipping costs upon receipt of products from suppliers are recognized in cost of revenue.

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Technology

Technology costs include consulting fees, 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, amortization of internally developed software, 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, 2024 and 2023 (Unaudited)

Comparison of the Three Months Ended June 30, 2024 and 2023


		Three Months Ended June 30,			Change
	2024		2023		Dollars		Percentage
Revenue	$	2,863,679	$	1,625,140	$	1,238,539	76	%
Operating expenses:
Cost of revenue		1,424,392		853,633		570,759	67	%
Technology		911,927		843,099		68,828	8	%
Sales and marketing		1,082,949		977,748		105,201	11	%
Supply development		137,511		291,360		(153,849)	(53)	%
Fulfillment		433,189		462,672		(29,483)	(6)	%
General and administrative		1,055,376		1,758,451		(703,075)	(40)	%
Total operating expenses		5,045,344		5,186,963		(141,619)	(3)	%
Loss from operations		(2,181,665)		(3,561,823)		1,380,158	39	%
Other income, net
Interest expense		(4,474)		(3,535)		(939)	(27)	%
Interest income		9,163		110,882		(101,719)	(92)	%
Other income (expense), net		67,952		(29,138)		97,090	333	%
Total other income, net		72,641		78,209		(5,568)	(7)	%
Net loss	$	(2,109,024)	$	(3,483,614)		1,374,590	39	%

Revenue

Revenue increased by approximately $1,239,000, or 76%, from approximately $1,625,000 for the three months ended June 30, 2023 to approximately $2,864,000 for the three months ended June 30, 2024. This was primarily due to an increase of 1,236, or approximately 26%, in specimen count from 4,682 specimens in the three months ended June 30, 2023 to 5,918 specimens in the three months ended June 30, 2024. The average selling price per specimen also increased by approximately $137, or 39%, from approximately $347 in the three months ended June 30, 2023 to approximately $484 in the three months ended June 30, 2024.

Cost of Revenue

Cost of revenue increased by approximately $570,000, or 67%, from approximately $854,000 for the three months ended June 30, 2023 to approximately $1,424,000 for the three months ended June 30, 2024, which was attributable to an approximately 26% increase in the number of specimens accessioned for the current period compared to the same period in the prior year and an approximately $58, or 32%, increase in the average cost per specimen.

Technology

Total technology expenditures decreased by approximately $951,000, or 47%, from approximately $2,035,000 for the three months ended June 30, 2023 to approximately $1,084,000 for the three months ended June 30, 2024. Technology expenditures are either capitalized as internally developed software or expensed in the period incurred.

Technology expenditure capitalized as internally developed software costs decreased by approximately $1,020,000, or 86%, from approximately $1,192,000 for the three months ended June 30, 2023 to approximately $172,000 for the three months ended June 30, 2024 due to reductions in workforce stemming from our decision to invest in the software at a significantly lower level in 2024 when compared to 2023 and prior years.

Product development and technology expense that were not eligible for capitalization increased by approximately $69,000, or 8%, from approximately $843,000 for the three months ended June 30, 2023 to approximately $912,000 for the three months ended June 30, 2024. The increase was related to increases in professional fees of approximately $68,000, and amortization of internally developed software

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of approximately $41,000, which were partially offset by decreases in headcount and payroll and related expenses of approximately $40,000.

Sales and Marketing Expenses

Sales and marketing expenses increased by approximately $105,000, or 11%, from approximately $978,000 for the three months ended June 30, 2023 to approximately $1,083,000 for the three months ended June 30, 2024. The increase was primarily attributable to increases in payroll and related expenses of approximately $123,000, and advertising and promotions expense of approximately $100,000, which were partially offset by decreases in external marketing expense of approximately $96,000, and general operating expenses related to sales and marketing of approximately $22,000.

Supply Development

Supply development expenses decreased by approximately $153,000, or 53%, from approximately $291,000 for the three months ended June 30, 2023 to approximately $138,000 for the three months ended June 30, 2024. The decrease was primarily attributable to decreases in professional fees of approximately $104,000, payroll and related expenses of approximately $42,000, and general supply development expenses of approximately $7,000.

Fulfillment

Fulfillment costs decreased by approximately $30,000, or 6%, from approximately $463,000 for the three months ended June 30, 2023 to approximately $433,000 for the three months ended June 30, 2024. The decrease was primarily attributable to decreases in general operating expenses related to fulfillment of approximately $17,000, and payroll and related expenses of approximately $16,000 for personnel engaged in pre-sales feasibility assessments and order fulfillment, which were partially offset by an increase in professional fees of approximately $3,000.

General and Administrative Expenses

General and administrative expenses decreased by approximately $703,000, or 40%, from approximately $1,758,000 for the three months ended June 30, 2023 to approximately $1,055,000 for the three months ended June 30, 2024. The decrease was attributable to decreases in compensation costs of approximately $183,000, taxes and insurance of approximately $176,000, professional fees of approximately $165,000, bad debt expense of approximately $102,000, general operating expenses of approximately $51,000, depreciation and amortization of approximately $21,000, and utilities and facilities expenses of approximately $5,000.

Other Income, net

Other income, net, decreased by approximately $5,000, or 7%, from approximately $78,000 for the three months ended June 30, 2023 to approximately $73,000 for the three months ended June 30, 2024. The decrease in other income, net, was attributable to a decrease in interest income of approximately $102,000 and an increase in interest expense of approximately $1,000, partially offset by an increase in other income (expense) of approximately $97,000.

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Comparison of the Six Months Ended June 30, 2024 and 2023


		Six Months Ended June 30			Change
	2024		2023		Dollars		Percentage
Revenue	$	5,153,672	$	4,575,339	$	578,333	13	%
Operating expenses:
Cost of revenue		2,424,398		2,000,545		423,853	21	%
Technology		1,823,894		1,677,506		146,388	9	%
Sales and marketing		1,748,890		2,025,346		(276,456)	(14)	%
Supply development		335,350		614,862		(279,512)	(45)	%
Fulfillment		844,043		891,692		(47,649)	(5)	%
General and administrative		3,159,282		3,469,633		(310,351)	(9)	%
Total operating expenses		10,335,857		10,679,584		(343,727)	(3)	%
Loss from operations		(5,182,185)		(6,104,245)		922,060	15	%
Other income, net
Interest expense		(8,939)		(7,070)		(1,869)	(26)	%
Interest income		39,661		225,144		(185,483)	(82)	%
Other income (expense), net		140,322		(29,255)		169,577	580	%
Total other income, net		171,044		188,819		(17,775)	(9)	%
Net loss	$	(5,011,141)	$	(5,915,426)		904,285	15	%

Revenue

Revenue increased by approximately $579,000, or 13%, from approximately $4,575,000 for the six months ended June 30, 2023 to approximately $5,154,000 for the six months ended June 30, 2024. This was primarily due to an increase in average selling price per specimen of $119, or 34%, from approximately $343 in the six months ended June 30, 2023 to $462 in the six months ended June 30, 2024. The increase in average selling price per specimen was offset by a decrease of 2,152, or 16%, in specimen count from 13,311 specimens in the six months ended June 30, 2023 to 11,159 specimens in the six months ended June 30, 2024.

Cost of Revenue

Cost of revenue increased by approximately $423,000, or 21%, from approximately $2,001,000 for the six months ended June 30, 2023 to approximately $2,424,000 for the six months ended June 30, 2024, which was attributable to a 45% increase in the average cost per specimen impacted by the specimen mix during the six months ended June 30, 2024 over the same period in 2023, offset by a 16% decrease in the number of specimens accessioned during the six months ended June 30, 2024 over the same period in the prior year.

Technology

Total technology expenditure decreased by approximately $2,137,000, or 48%, from approximately $4,409,000 for the six months ended June 30, 2023 to approximately $2,272,000 for the six months ended June 30, 2024. Technology expenditures are either capitalized as internally developed software or expensed in the period incurred.

Technology expenditures capitalized as internally developed software costs decreased by approximately $2,284,000, or 84%, from approximately $2,732,000 for the six months ended June 30, 2023 to approximately $448,000 for the six months ended June 30, 2024 due to reductions in workforce stemming from our decision to invest in the software at a significantly lower level in 2024 when compared to 2023 and prior years.

Product development and technology expense that were not eligible for capitalization increased by approximately $146,000, or 9%, from approximately $1,678,000 for the six months ended June 30, 2023 to approximately $1,824,000 for the six months ended June 30, 2024. The period over period increase was related to increases in amortization of approximately $141,000 and professional fees of approximately $78,000, which were partially offset by a decrease in payroll and related expenses of approximately $73,000.

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Sales and Marketing Expenses

Sales and marketing expenses decreased approximately $276,000, or 14%, from approximately $2,025,000 for the six months ended June 30, 2023 to approximately $1,749,000 for the six months ended June 30, 2024. The period over period decrease was primarily attributable to decreases in external marketing expense of approximately $191,000, payroll and related expenses of approximately $179,000, and general operating expenses related to sales and marketing of approximately $42,000, which were partially offset by increases in advertising and promotions expense of approximately $136,000.

Supply Development

Supply development expenses decreased approximately $280,000, or 45%, from approximately $615,000 for the six months ended June 30, 2023 to approximately $335,000 for the six months ended June 30, 2024. The period over period decrease was primarily attributable to decreases in professional fees of approximately $183,000, payroll and related expenses of approximately $80,000, and general supply development expenses of approximately $17,000.

Fulfillment

Fulfillment costs decreased approximately $48,000, or 5%, from approximately $892,000 for the six months ended June 30, 2023 to approximately $844,000 for the six months ended June 30, 2024. The decrease was primarily attributable to decreases in payroll and related expenses of approximately $26,000 for personnel engaged in pre-sales feasibility assessments and order fulfillment, general operating expenses related to fulfillment of approximately $24,000, which were partially offset by an increase in professional fees of approximately $2,000.

General and Administrative Expenses

General and administrative expenses decreased approximately $311,000, or 9%, from approximately $3,470,000 for the six months ended June 30, 2023 to approximately $3,159,000 for the six months ended June 30, 2024. The period over period decrease was attributable to decreases in compensation costs of approximately $348,000, general operating expenses of approximately $105,000, bad debt expense of approximately $57,000, depreciation and amortization of approximately $44,000, utilities and facilities expenses of approximately $9,000, which were partially offset by increases in professional fees of approximately $161,000 and taxes and insurance of approximately $91,000.

Other Income (Expense), net

Other income (expense), net, decreased by approximately $18,000, or 9%, from approximately $189,000 for the six months ended June 30, 2023 to approximately $171,000 for the six months ended June 30, 2024. The decrease in other income, net, was attributable to a decrease in interest income of approximately $185,000 and an increase in interest expense of approximately $2,000, offset by an increase in other income (expense) of approximately $170,000.

Liquidity and Capital Resources


						Change
	June 30, 2024		December 31, 2023		Dollars		Percentage
	(unaudited)
Balance Sheet Data:
Cash and cash equivalents	$	2,151,243	$	2,343,666	$	(192,423)	(8)	%
Available-for-sale securities		—		2,661,932		(2,661,932)	(100)	%
Working capital		(577,321)		2,189,673		(2,766,994)	(126)	%
Total assets		11,901,858		15,819,137		(3,917,279)	(25)	%
Total stockholders' equity		6,089,284		9,741,077		(3,651,793)	(37)	%

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	Six Months Ended June 30,				Change
	2024		2023		Dollars		Percentage
Statement of Cash Flow Data:
Net cash flows used in operating activities	$	(3,611,614)	$	(4,518,918)	$	907,304	20	%
Net cash flows provided by (used in) investing activities		2,232,565		(8,856,181)		11,088,746	125	%
Net cash flows provided by financing activities		1,186,626		70,889		1,115,737	1,574	%
Net decrease in cash and cash equivalents	$	(192,423)	$	(13,304,210)	$	13,111,787

Capital Resources

We have had recurring losses since inception. As of June 30, 2024, our available cash and available-for-sale securities totaled approximately $2,151,000, which represented a decrease of approximately $2,855,000 from approximately $5,006,000, as of December 31, 2023. We had negative working capital of approximately $577,000, an accumulated deficit of approximately $64,376,000, cash and cash equivalents and short-term investments of approximately $2,151,000, and accounts payable and accrued expenses of approximately $5,525,000. Our continued viability is dependent on the ability to successfully obtain additional working capital and/or ultimately attain profitable operations. During the year ended December 31, 2023, we began initiating efforts to decrease our capital and operational expenditures by cutting costs and right sizing the Company through reductions in workforce while streamlining operations and rationalizing resources to focus on key market opportunities. The reduction in workforce since January 1, 2023 through June 30, 2024, cumulatively resulted in an estimated reduction in monthly compensation costs of approximately 45% and technology costs of approximately 66% by the end of June 30, 2024 when compared to January 1, 2023. We plan to add additional customers to increase and add additional revenues through our new revenue enhancement projects as well as to reduce and manage expenditures to improve our financial position and ensure continued funding of operations. However, as certain elements of our operating plan are not within our control, we are unable to assess their probability. We may also seek to fund our operations through public equity or debt financing, as well as other sources but it has not currently identified any other specific source of funding except for the ATM Agreement.

We may be unsuccessful in increasing our revenues from our new enhancement project or contain our operating expenses, or we may be unable to raise additional capital on commercially favorable terms. Our failure to generate additional revenues or contain operating costs would have a negative impact on our business, results of operations and financial condition and our ability to continue as a going concern. If we do not generate enough revenue to provide an adequate level of working capital, our business plan will be scaled down further.

These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of one year after the date of this Quarterly Report. Management’s plan to mitigate the conditions that raise substantial doubt includes generating additional revenues through its revenue enhancement projects, deferring certain projects and capital expenditures and eliminating certain future operating expenses for us to continue as a going concern. However, there can be no assurance that we will be successful in completing any of these options. As a result, management’s plans cannot be considered probable and thus do not alleviate substantial doubt about our ability to continue as a going concern.

Cash Flows

Operating Activities

For the six months ended June 30, 2024, net cash used in operating activities was approximately $3,612,000, which consisted of a net loss of approximately $5,011,000 offset by non-cash charges of approximately $1,553,000, which included approximately $1,076,000 related to amortization of internally developed software, approximately $205,000 in bad debt expense, approximately $174,000 in stock-based compensation, approximately $96,000 related to amortization of other intangible assets, approximately $32,000 related to depreciation of property and equipment, and approximately $1,000 of losses from sales of available-for-sale securities, which were offset by approximately $29,000 of accretion of discount on available-for-sale securities.

Total changes in assets and liabilities of approximately $154,000 were attributable to an approximately $369,000 increase in accounts receivable, an approximately $221,000 decrease in accrued expense, an approximately $157,000 decrease in deferred revenue, and an

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approximately $81,000 decrease in lease liability, offset by an approximately $280,000 increase in accounts payable, an approximately $259,000 decrease in accounts receivable-unbilled, an approximately $82,000 decrease in operating lease right-of-use asset, and an approximately $55,000 decrease in prepaid expenses and other current assets.

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 approximately $935,000 related to amortization of internally developed software, approximately $262,000 in bad debt expense, approximately $245,000 in stock-based compensation, and approximately $76,000 related to depreciation 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 an approximately $679,000 decrease in accounts payable, an approximately $649,000 decrease in accrued expenses, an approximately $123,000 increase in accounts receivable, an approximately $78,000 decrease in operating lease liability, and an approximately $43,000 decrease in deferred revenue, offset by an approximately $1,229,000 decrease in accounts receivable-unbilled, an approximately $129,000 decrease in tax credit receivable, an approximately $113,000 decrease in prepaid expenses and other current assets, and an approximately $78,000 decrease in operating lease right-of-use asset.

Investing Activities

Net cash provided by investing activities was approximately $2,233,000 for the six months ended June 30, 2024, which consisted of approximately $3,150,000 of proceeds from sales and maturities of available-for-sale securities, which were offset by approximately $461,000 of purchases of available-for-sale securities, approximately $448,000 of capitalization of internally developed software, and approximately $9,000 of purchase of property and equipment.

Net cash used in investing activities was approximately $8,856,000 for the six months ended June 30, 2023, which consisted of approximately $7,643,000 of purchase of available-for-sale securities, approximately $2,732,000 of capitalization of internally developed software, and approximately $14,000 of purchase of property and equipment, offset by approximately $1,532,000 of proceeds from sale and maturities of available-for-sale securities.

Financing Activities

Net cash provided by financing activities was approximately $1,187,000 for the six months ended June 30, 2024, which consisted of approximately $1,494,000 of proceeds received from the issuance of common stock in connection with the ATM Offering, offset by approximately $255,000 for the payment of offering costs in connection with the issuance of common stock in connection with the ATM Offering and approximately $53,000 for the repurchase of common stock exercisable under PIPE Warrants.

Net cash provided by financing activities was approximately $71,000 for the six months ended June 30, 2023, due to proceeds received from the exercise of stock options.

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 materially 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, 2024. However, there had been an increase in our shipping costs period over period during the six months ended June 30, 2024.

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.

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Critical Accounting Policies and Estimates

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 our Annual Report on Form 10-K for the year ended December 31, 2023.

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 unaudited condensed 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 the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes in our critical accounting policies and procedures during the six months ended June 30, 2024.

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 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

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30, 2024, 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, 2024 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 unaudited condensed financial statements included in this Quarterly Report 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 year 2023 and this remediation is ongoing as of the filing date of this Quarterly Report. 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.

●

We have begun obtaining sales tax exemption letters, representation letters or proof of payments of compensating use tax from our customers and we have started a collection effort of these sales taxes from certain customers who have notified the Company that they do not have a sales tax exemption letter.

●	We have begun implementing a sales tax software platform solution for the calculation, collection, and remittance of sales tax for all non-exempt future sales, and assisting with the collection and tracking of VDAs received from states where a potential sales tax liability may exist.

●	We have begun designing and implementing enhanced policies, procedures and controls related to the calculation, communication, collection, and remittance of sales tax to relevant jurisdictions.

●	We have begun training 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 six months ended June 30, 2024 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.

There have been no material changes with respect to risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 13, 2024.

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

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not Applicable.

Item 5. Other Information.

Board Committees

On July 19, 2024, the Board of Directors of the Company approved the following composition of each standing committee of the Board of Directors:

Committee	Chair	Members
Audit Committee	John L. Brooks III	John L. Brooks III, Elizabeth Graham and Steven Gullans
Compensation Committee	Steven Gullans	Steven Gullans, John L. Brooks III and Theresa L. Mock
Nominating and Corporate Governance Committee	Theresa L. Mock	Theresa L. Mock and Elizabeth Graham

Trading Arrangements

During the quarterly period ended June 30, 2024, none of our directors or officers (as defined in Rule 16a-1(f) promulgated under the Exchange Act) adopted or terminated any “Rule 10b5-1 trading arrangement” or any “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

Departure of Officer

In the Company’s Current Report on Form 8-K filed with the SEC on July 8, 2024, the Company reported the resignation of Benjamin Bielak, as Chief Information Officer and Secretary of the Company. Mr. Bielak also performed the functions of Chief Information Security Officer in connection with various security matters relating to the Company’s operations, including cybersecurity matters. As a result of his resignation, the remaining members of the Company’s Risk Management Committee, including the Company’s Chief Executive Officer, oversee this function.

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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	Commercial Lease, dated July 2, 2024, between the Company and Cummings Properties, LLC (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on July 3, 2024)
10.2	Notice of Lease Termination, dated June 28, 2024 (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on July 3, 2024)
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

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	iSpecimen Inc.


Date: August 6, 2024	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 6, 2024

	/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 6, 2024


	/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, 2024, 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 6, 2024

	/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, 2024	Aug. 02, 2024
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2024
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		13,097,031
Entity Central Index Key	0001558569
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q2

Condensed Balance Sheets - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 2,151,243	$ 2,343,666
Available-for-sale securities	0	2,661,932
Accounts receivable - unbilled	1,953,632	2,212,538
Accounts receivable, net of allowance for doubtful accounts of $700,862 and $520,897 at June 30, 2024 and December 31, 2023, respectively	892,814	728,388
Prepaid expenses and other current assets	237,564	292,079
Total current assets	5,235,253	8,238,603
Property and equipment, net	104,822	127,787
Internally developed software, net	5,695,166	6,323,034
Other intangible assets, net	812,478	908,255
Operating lease right-of-use asset	26,538	193,857
Security deposits	27,601	27,601
Total assets	11,901,858	15,819,137
Current liabilities:
Accounts payable	4,205,371	3,925,438
Accrued expenses	1,319,201	1,540,607
Operating lease - current obligation	29,130	167,114
Deferred revenue	258,872	415,771
Total current liabilities	5,812,574	6,048,930
Operating lease long - term obligation		29,130
Total liabilities	5,812,574	6,078,060
Commitments and contingencies (See Note 8)
Stockholders' equity
Common stock, $0.0001 par value, 200,000,000 shares authorized, 13,126,770 issued and 13,095,770 outstanding at June 30, 2024 and 9,114,371 issued and 9,083,371 outstanding at December 31, 2023	1,309	908
Additional paid-in capital	70,464,100	69,104,313
Treasury stock, 31,000 shares	(172)	(172)
Accumulated other comprehensive income		840
Accumulated deficit	(64,375,953)	(59,364,812)
Total stockholders' equity	6,089,284	9,741,077
Total liabilities and stockholders' equity	$ 11,901,858	$ 15,819,137

Condensed Balance Sheets (Parenthetical) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Condensed Balance Sheets
Allowance for doubtful accounts	$ 700,862	$ 520,897
Common stock, par value	$ 0.0001	$ 0.0001
Common Stock, Shares Authorized	200,000,000	200,000,000
Common stock, issued (in shares)	13,126,770	9,114,371
Common stock, outstanding (in shares)	13,095,770	9,083,371
Treasury stock (in shares)	31,000	31,000

Condensed Statements of Operations and Comprehensive Loss - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Condensed Statements of Operations
Revenue	$ 2,863,679	$ 1,625,140	$ 5,153,672	$ 4,575,339
Operating expenses:
Cost of revenue	1,424,392	853,633	2,424,398	2,000,545
Technology	911,927	843,099	1,823,894	1,677,506
Sales and marketing	1,082,949	977,748	1,748,890	2,025,346
Supply development	137,511	291,360	335,350	614,862
Fulfillment	433,189	462,672	844,043	891,692
General and administrative	1,055,376	1,758,451	3,159,282	3,469,633
Total operating expenses	5,045,344	5,186,963	10,335,857	10,679,584
Loss from operations	(2,181,665)	(3,561,823)	(5,182,185)	(6,104,245)
Other income, net
Interest expense	(4,474)	(3,535)	(8,939)	(7,070)
Interest income	9,163	110,882	39,661	225,144
Other income (expense), net	67,952	(29,138)	140,322	(29,255)
Total other income, net	72,641	78,209	171,044	188,819
Net loss	(2,109,024)	(3,483,614)	(5,011,141)	(5,915,426)
Unrealized loss on available-for-sale securities	(41)	(18,155)	(840)	688
Total other comprehensive income (loss)	(41)	(18,155)	(840)	688
Comprehensive loss	$ (2,109,065)	$ (3,501,769)	$ (5,011,981)	$ (5,914,738)
Net loss per share
Basic (in dollars per share)	$ (0.19)	$ (0.39)	$ (0.49)	$ (0.66)
Diluted (in dollars per share)			$ (0.49)	$ (0.66)
Weighted average shares of common stock outstanding
Basic (in shares)	11,340,586	9,033,868	10,236,523	9,011,644
Diluted (in shares)			10,236,523	9,011,644

Condensed Statements of Changes in Stockholders' Equity - USD ($)	Common Stock	Treasury Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income	Accumulated Deficit	Total
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Treasury stock (in shares)						31,000
Balance at the beginning (in shares) at Dec. 31, 2022	8,925,808
Balance at the beginning at Dec. 31, 2022	$ 892	$ (172)	$ 68,573,774		$ (48,265,324)	$ 20,309,170
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
Unrealized loss on available-for-sale securities				$ 18,843		18,843
Net loss					(2,431,812)	$ (2,431,812)
Balance at the end (in shares) at Mar. 31, 2023	9,022,320					31,000
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 (in shares) at Dec. 31, 2022	8,925,808
Balance at the beginning at Dec. 31, 2022	$ 892	(172)	68,573,774		(48,265,324)	20,309,170
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
Unrealized loss on available-for-sale securities						$ 688
Net loss						$ (5,915,426)
Balance at the end (in shares) at Jun. 30, 2023	9,063,274					31,000
Balance at the end at Jun. 30, 2023	$ 906	(172)	68,889,903	688	(54,180,750)	$ 14,710,575
Balance at the beginning (in shares) at Mar. 31, 2023	9,022,320					31,000
Balance at the beginning at Mar. 31, 2023	$ 902	(172)	68,762,057	18,843	(50,697,136)	$ 18,084,494
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock through exercise of stock options			3,153			3,153
Issuance of common stock through exercise of stock options (in shares)	3,153
Stock-based compensation expense			29,829			29,829
Vesting of restricted stock units	$ 4		94,864			94,868
Vesting of restricted stock units (in shares)	37,801
Unrealized loss on available-for-sale securities				(18,155)		(18,155)
Net loss					(3,483,614)	$ (3,483,614)
Balance at the end (in shares) at Jun. 30, 2023	9,063,274					31,000
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 (in shares) at Dec. 31, 2023	9,083,371
Balance at the beginning at Dec. 31, 2023	$ 908	(172)	69,104,313	840	(59,364,812)	$ 9,741,077
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with At the Market Offering Agreement	$ 38		138,449			138,487
Issuance of common stock in connection with At the Market Offering Agreement (in shares)	377,970
Offering costs in connection with At the Market Offering Agreement			(204,845)			(204,845)
Stock-based compensation expense			45,871			45,871
Vesting of restricted stock units	$ 1		48,053			48,054
Vesting of restricted stock units (in shares)	8,771
Repurchase of common stock exercisable under PIPE Warrants			(52,500)			(52,500)
Unrealized loss on available-for-sale securities				(799)		(799)
Net loss					(2,902,117)	$ (2,902,117)
Balance at the end (in shares) at Mar. 31, 2024	9,470,112					31,000
Balance at the end at Mar. 31, 2024	$ 947	(172)	69,079,341	41	(62,266,929)	$ 6,813,228
Balance at the beginning (in shares) at Dec. 31, 2023	9,083,371
Balance at the beginning at Dec. 31, 2023	$ 908	(172)	69,104,313	840	(59,364,812)	$ 9,741,077
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock through exercise of stock options (in shares)						0
Unrealized loss on available-for-sale securities						$ (840)
Net loss						$ (5,011,141)
Balance at the end (in shares) at Jun. 30, 2024	13,095,770					31,000
Balance at the end at Jun. 30, 2024	$ 1,309	(172)	70,464,100		(64,375,953)	$ 6,089,284
Balance at the beginning (in shares) at Mar. 31, 2024	9,470,112					31,000
Balance at the beginning at Mar. 31, 2024	$ 947	(172)	69,079,341	41	(62,266,929)	$ 6,813,228
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with At the Market Offering Agreement	$ 360		1,355,567			1,355,927
Issuance of common stock in connection with At the Market Offering Agreement (in shares)	3,602,105
Offering costs in connection with At the Market Offering Agreement			(50,443)			(50,443)
Stock-based compensation expense			34,834			34,834
Vesting of restricted stock units	$ 2		44,801			44,803
Vesting of restricted stock units (in shares)	23,553
Unrealized loss on available-for-sale securities				$ (41)		(41)
Net loss					(2,109,024)	$ (2,109,024)
Balance at the end (in shares) at Jun. 30, 2024	13,095,770					31,000
Balance at the end at Jun. 30, 2024	$ 1,309	$ (172)	$ 70,464,100		$ (64,375,953)	$ 6,089,284
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Treasury stock (in shares)						31,000

Condensed Statements of Cash Flows - USD ($)	6 Months Ended
Condensed Statements of Cash Flows - USD ($)	Jun. 30, 2024	Jun. 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (5,011,141)	$ (5,915,426)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	173,562	245,254
Amortization of internally developed software	1,075,555	934,829
Amortization of other intangible assets	95,777	0
Depreciation of property and equipment	32,101	75,726
Bad debt expense	204,510	261,610
Non-cash interest income related to accretion of discount on available-for-sale securities	(28,976)	(97,874)
Loss from sales of available-for-sale securities	680
Change in operating assets and liabilities:
Accounts receivable - unbilled	258,906	1,229,433
Accounts receivable	(368,936)	(122,540)
Prepaid expenses and other current assets	54,515	112,665
Operating lease right-of-use asset	81,640	77,577
Tax credit receivable		128,541
Accounts payable	279,933	(679,143)
Accrued expenses	(221,406)	(648,964)
Operating lease liability	(81,435)	(77,872)
Deferred revenue	(156,899)	(42,734)
Net cash used in operating activities	(3,611,614)	(4,518,918)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalization of internally developed software	(447,687)	(2,731,507)
Purchase of property and equipment	(9,136)	(13,745)
Purchase of available-for-sale securities	(460,932)	(7,642,929)
Proceeds from sales and maturities of available-for-sale securities	3,150,320	1,532,000
Net cash provided by (used in) investing activities	2,232,565	(8,856,181)
CASH FLOWS FROM FINANCING ACTIVITIES:
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 offering costs in connection with the issuance of common stock in connection with At the Market Offering Agreement	(255,288)
Repurchase of common stock exercisable under PIPE warrants	(52,500)
Net cash provided for financing activities	1,186,626	70,889
Net decreases in cash and cash equivalents	(192,423)	(13,304,210)
Cash at beginning of period	2,343,666	15,308,710
Cash at end of period	2,151,243	2,004,500
Supplemental disclosure of cash flow information:
Cash paid for interest	8,939	$ 7,070
Supplemental disclosure of non-cash investing and financing activities:
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

NATURE OF BUSINESS

6 Months Ended

Jun. 30, 2024

NATURE OF BUSINESS

NATURE OF BUSINESS

1.NATURE OF BUSINESS AND BASIS OF PRESENTATION

Business

Basis of Presentation

Going Concern Uncertainty and Management’s Plan

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2024

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,
	2024		2023		2024		2023
Specimens - contracts with customers	$	2,835,449	$	1,522,108	$	5,127,432	$	4,234,485
Shipping and other		28,230		103,032		26,240		340,854
Revenue	$	2,863,679	$	1,625,140	$	5,153,672	$	4,575,339

Internally Developed Software, Net

Other Intangible Assets, 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 (“RSUs”)

Common Stock Warrants

Net Loss Per Share

outstanding for the period, determined using the treasury-stock method. Therefore, basic and diluted net loss per share applicable to common stockholders were the same for all periods presented.

The table below provides information on shares of the Company’s common stock issuable upon vesting and exercise, as of June 30:


	2024	2023
Shares issuable upon vesting of RSUs	56,558	168,641
Shares issuable upon exercise of stock options	351,670	345,987
Shares issuable upon exercise of PIPE Warrant (defined below) to purchase common stock	—	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, 2024

AVAILABLE-FOR-SALE SECURITIES

AVAILABLE-FOR-SALE SECURITIES

3.AVAILABLE-FOR-SALE SECURITIES


	December 31, 2023
			Gross		Gross
	Amortized		unrealized		unrealized
	cost		gains		losses		Fair value
Available-for-sale securities:
U.S. Treasury Bills	$	2,661,092	$	36,138	$	(35,298)	$	2,661,932
Total Available-for-sale securities	$	2,661,092	$	36,138	$	(35,298)	$	2,661,932

The Company recorded $680 of realized losses in the six months ended June 30, 2024. The Company did not have any realized gains or losses in the six months ended June 30, 2023.

PROPERTY AND EQUIPMENT, NET

6 Months Ended

Jun. 30, 2024

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,
	2024		2023
Website	$	285,377	$	285,377
Computer equipment and purchased software		105,173		96,037
Equipment		35,449		35,449
Furniture and fixtures		87,184		87,184
Leasehold improvements		68,471		68,471
Total property and equipment		581,654		572,518
Accumulated depreciation		(476,832)		(444,731)
Total property and equipment, net	$	104,822	$	127,787

INTERNALLY DEVELOPED SOFTWARE, NET

6 Months Ended

Jun. 30, 2024

INTERNALLY DEVELOPED SOFTWARE, NET

INTERNALLY DEVELOPED SOFTWARE, NET

5.INTERNALLY DEVELOPED SOFTWARE, NET

OTHER INTANGIBLE ASSETS, NET

6 Months Ended

Jun. 30, 2024

OTHER INTANGIBLE ASSETS, NET.

OTHER INTANGIBLE ASSETS, NET

6. OTHER INTANGIBLE ASSETS, NET

FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2024

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

7. FAIR VALUE MEASUREMENTS


	Fair Value at December 31, 2023
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities	$	2,661,932	$	2,661,932	$	—	$	—
Total Assets	$	2,661,932	$	2,661,932	$	—	$	—

COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2024

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

8.COMMITMENTS AND CONTINGENCIES

Leases

There was no sublease rental income for the three and six months ended June 30, 2024, and the Company is not the lessor in any lease arrangement, and there were no related-party lease agreements.

Lease Costs

The table below presents certain information related to the lease costs for the Company’s operating lease for the six months ended June 30, 2024:


Operating lease expense	$	91,632
Short-term lease expense		—
Total lease cost	$	91,632

Lease Position as of June 30, 2024


Assets
Operating lease right-of-use assets	$	26,538
Total lease assets	$	26,538

Liabilities
Current liabilities:
Operating lease liability – current portion	$	29,130
Non-current liabilities:
Operating lease liability – net of current portion		—
Total lease liability	$	29,130

Lease Terms and Discount Rate

The table below presents certain information related to the weighted average remaining lease term and the weighted average discount rate for the Company’s operating lease as of June 30, 2024:


Weighted average remaining lease term (in years) – operating lease			0.17
Weighted average discount rate – operating lease			5.96%

Undiscounted Cash Flows

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


2024 (excluding the six months ended June 30, 2024)	$	29,348
2025		—
Total future minimum lease payments		29,348
Less effect of discounting		(218)
Present value of future minimum lease payments	$	29,130

Cash Flows

Supplemental cash flow information related to the operating lease for the six months ended June 30, 2024 was as follows:


Non-cash operating lease expense (operating cash flow)	$	81,640
Change in operating lease liabilities (operating cash flow)	$	(81,435)

Sales Tax Payable

Legal Proceedings

STOCKHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2024

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

9.STOCKHOLDERS’ EQUITY

Common Stock

Warrants

Underwriter Warrants

Lender Warrant

PIPE Warrants

A summary of total warrant activity during the six months ended June 30, 2024 is as follows:


				Weighted
				Average
		Weighted		Remaining
	Warrants	Average		Contractual Term
	Outstanding	Exercise Price		in Years
Balance at December 31, 2023	1,415,000	$	12.77	3.47
Granted	—		—	—
Exercised	—		—	—
Repurchased	(1,312,500)		—	—
Balance at June 30, 2024	102,500	$	9.76	2.59

STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2024

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

10.STOCK-BASED COMPENSATION

Stock Incentive Plans

2021 Plan

2013 Plan

Stock Options


	2024	2023
Assumptions:
Risk-free interest rate	3.93% – 4.56%	3.75% – 3.95%
Expected term (in years)	0.78 – 4.00	0.61 – 4.00
Expected volatility	57.49% –58.71%	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, 2023	296,268	$	2.17	8.53	$	—
Granted	95,340		0.38	—		—
Exercised	—		—	—		—
Cancelled/forfeited	(39,938)		1.14	—		—
Balance at June 30, 2024	351,670	$	1.81	8.35	$	1,564

Options exercisable at June 30, 2024	181,723	$	2.47	7.72	$	70.89


	Three Months Ended June 30,				Six Months Ended June 30,
Operating expenses:	2024		2023		2024		2023
Technology	$	1,658	$	2,475	$	3,203	$	5,106
Sales and marketing		335		623		831		1,498
Supply development		220		446		431		820
Fulfillment		—		681		869		1,325
General and administrative		15,882		26,343		32,201		54,883
Total stock options expense	$	18,095	$	30,568	$	37,535	$	63,632

As of June 30, 2024 and 2023, a total of $72,233 and $185,260 of unamortized compensation expense is being recognized over the remaining requisite service period of 2.26 and 2.42 years, respectively.

Restricted Stock Units

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


		Weighted
	RSUs	Average Grant
	Outstanding	Date Fair Value
Unvested Balance at December 31, 2023	116,357	$	5.67
Granted	—		—
Vested	(32,324)		5.98
Forfeited	(27,475)		5.27
Unvested Balance at June 30, 2024	56,558	$	5.67

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:	2024		2023		2024		2023
Technology	$	22,833	$	32,876	$	49,776	$	67,653
Sales and marketing		9,508		18,959		25,417		30,814
Supply development		52		2,824		277		2,824
Fulfillment		8,217		17,608		17,728		39,052
General and administrative		20,932		21,862		42,829		41,279
Total RSU expense	$	61,542	$	94,129	$	136,027	$	181,622

INCOME TAXES

6 Months Ended

Jun. 30, 2024

INCOME TAXES

INCOME TAXES

11.INCOME TAXES

Pay vs Performance Disclosure - USD ($)	3 Months Ended				6 Months Ended
Pay vs Performance Disclosure - USD ($)	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (2,109,024)	$ (2,902,117)	$ (3,483,614)	$ (2,431,812)	$ (5,011,141)	$ (5,915,426)

Insider Trading Arrangements	6 Months Ended
Insider Trading Arrangements	Jun. 30, 2024
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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2024

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,
	2024		2023		2024		2023
Specimens - contracts with customers	$	2,835,449	$	1,522,108	$	5,127,432	$	4,234,485
Shipping and other		28,230		103,032		26,240		340,854
Revenue	$	2,863,679	$	1,625,140	$	5,153,672	$	4,575,339

Internally Developed Software, Net

Other Intangible Assets, 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 (“RSUs”)

Common Stock Warrants

Net Loss Per Share

outstanding for the period, determined using the treasury-stock method. Therefore, basic and diluted net loss per share applicable to common stockholders were the same for all periods presented.

The table below provides information on shares of the Company’s common stock issuable upon vesting and exercise, as of June 30:


	2024	2023
Shares issuable upon vesting of RSUs	56,558	168,641
Shares issuable upon exercise of stock options	351,670	345,987
Shares issuable upon exercise of PIPE Warrant (defined below) to purchase common stock	—	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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2024

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Summary of entity's revenue


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Specimens - contracts with customers	$	2,835,449	$	1,522,108	$	5,127,432	$	4,234,485
Shipping and other		28,230		103,032		26,240		340,854
Revenue	$	2,863,679	$	1,625,140	$	5,153,672	$	4,575,339

Summary of total shares outstanding


	2024	2023
Shares issuable upon vesting of RSUs	56,558	168,641
Shares issuable upon exercise of stock options	351,670	345,987
Shares issuable upon exercise of PIPE Warrant (defined below) to purchase common stock	—	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, 2024

AVAILABLE-FOR-SALE SECURITIES

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


	December 31, 2023
			Gross		Gross
	Amortized		unrealized		unrealized
	cost		gains		losses		Fair value
Available-for-sale securities:
U.S. Treasury Bills	$	2,661,092	$	36,138	$	(35,298)	$	2,661,932
Total Available-for-sale securities	$	2,661,092	$	36,138	$	(35,298)	$	2,661,932

PROPERTY AND EQUIPMENT, NET (Tables)

6 Months Ended

Jun. 30, 2024

PROPERTY AND EQUIPMENT, NET

Summary of property and equipment, net


	June 30,		December 31,
	2024		2023
Website	$	285,377	$	285,377
Computer equipment and purchased software		105,173		96,037
Equipment		35,449		35,449
Furniture and fixtures		87,184		87,184
Leasehold improvements		68,471		68,471
Total property and equipment		581,654		572,518
Accumulated depreciation		(476,832)		(444,731)
Total property and equipment, net	$	104,822	$	127,787

FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2024

FAIR VALUE MEASUREMENTS

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


	Fair Value at December 31, 2023
	Total		Level 1		Level 2		Level 3
Assets:
Available-for-sale securities	$	2,661,932	$	2,661,932	$	—	$	—
Total Assets	$	2,661,932	$	2,661,932	$	—	$	—

COMMITMENTS AND CONTINGENCIES (Tables)

6 Months Ended

Jun. 30, 2024

COMMITMENTS AND CONTINGENCIES

Schedule of lease costs related to Company's operating lease


Operating lease expense	$	91,632
Short-term lease expense		—
Total lease cost	$	91,632

Schedule of Lease position in Balance Sheet


Assets
Operating lease right-of-use assets	$	26,538
Total lease assets	$	26,538

Liabilities
Current liabilities:
Operating lease liability – current portion	$	29,130
Non-current liabilities:
Operating lease liability – net of current portion		—
Total lease liability	$	29,130

Schedule of Lease terms and discount rate


Weighted average remaining lease term (in years) – operating lease			0.17
Weighted average discount rate – operating lease			5.96%

Schedule of Future lease payment - Undiscounted Cash Flows


2024 (excluding the six months ended June 30, 2024)	$	29,348
2025		—
Total future minimum lease payments		29,348
Less effect of discounting		(218)
Present value of future minimum lease payments	$	29,130

Schedule of Cash Flows information


Non-cash operating lease expense (operating cash flow)	$	81,640
Change in operating lease liabilities (operating cash flow)	$	(81,435)

STOCKHOLDERS' EQUITY (Tables)

6 Months Ended

Jun. 30, 2024

STOCKHOLDERS' EQUITY

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


	2024	2023
Assumptions:
Risk-free interest rate	3.93% – 4.56%	3.75% – 3.95%
Expected term (in years)	0.78 – 4.00	0.61 – 4.00
Expected volatility	57.49% –58.71%	59.35% – 59.95%
Expected dividend yield	—	—

Schedule of warrant activity


				Weighted
				Average
		Weighted		Remaining
	Warrants	Average		Contractual Term
	Outstanding	Exercise Price		in Years
Balance at December 31, 2023	1,415,000	$	12.77	3.47
Granted	—		—	—
Exercised	—		—	—
Repurchased	(1,312,500)		—	—
Balance at June 30, 2024	102,500	$	9.76	2.59

STOCK-BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2024

STOCK-BASED COMPENSATION

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


	2024	2023
Assumptions:
Risk-free interest rate	3.93% – 4.56%	3.75% – 3.95%
Expected term (in years)	0.78 – 4.00	0.61 – 4.00
Expected volatility	57.49% –58.71%	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, 2023	296,268	$	2.17	8.53	$	—
Granted	95,340		0.38	—		—
Exercised	—		—	—		—
Cancelled/forfeited	(39,938)		1.14	—		—
Balance at June 30, 2024	351,670	$	1.81	8.35	$	1,564

Options exercisable at June 30, 2024	181,723	$	2.47	7.72	$	70.89

Schedule of share based compensation restricted stock units award activity


		Weighted
	RSUs	Average Grant
	Outstanding	Date Fair Value
Unvested Balance at December 31, 2023	116,357	$	5.67
Granted	—		—
Vested	(32,324)		5.98
Forfeited	(27,475)		5.27
Unvested Balance at June 30, 2024	56,558	$	5.67

Restricted Stock Units

STOCK-BASED COMPENSATION

Schedule of summary of compensation expense


	Three Months Ended June 30,				Six Months Ended June 30,
Operating expenses:	2024		2023		2024		2023
Technology	$	22,833	$	32,876	$	49,776	$	67,653
Sales and marketing		9,508		18,959		25,417		30,814
Supply development		52		2,824		277		2,824
Fulfillment		8,217		17,608		17,728		39,052
General and administrative		20,932		21,862		42,829		41,279
Total RSU expense	$	61,542	$	94,129	$	136,027	$	181,622

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:	2024		2023		2024		2023
Technology	$	1,658	$	2,475	$	3,203	$	5,106
Sales and marketing		335		623		831		1,498
Supply development		220		446		431		820
Fulfillment		—		681		869		1,325
General and administrative		15,882		26,343		32,201		54,883
Total stock options expense	$	18,095	$	30,568	$	37,535	$	63,632

NATURE OF BUSINESS AND BASIS OF PRESENTATION (Details)	6 Months Ended
NATURE OF BUSINESS AND BASIS OF PRESENTATION (Details)	Jun. 30, 2024 segment
NATURE OF BUSINESS
Reporting units	1
Operating segments	1

NATURE OF BUSINESS AND BASIS OF PRESENTATION - Additional information (Details) - USD ($)		3 Months Ended		6 Months Ended	12 Months Ended
	Mar. 05, 2024	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2024	Dec. 31, 2023
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance of shares		$ 1,355,927	$ 138,487
Payment of offering costs in connection with the issuance of common stock in connection with At the Market Offering Agreement				$ 255,288
Proceeds from issuance of common stock in connection with At the Market Offering Agreement				1,494,414
Working capital		(577,321)		(577,321)
Accumulated deficit		64,375,953		64,375,953	$ 59,364,812
Cash and cash equivalents and short-term investments		2,151,243		2,151,243
Accounts payable and accrued expenses		$ 5,524,572		$ 5,524,572
Amount of estimated reductions in additional expenditure				66.00%	45.00%
ATM Agreement
Subsidiary, Sale of Stock [Line Items]
Issuance of shares (in shares)				3,980,075
Payment of offering costs in connection with the issuance of common stock in connection with At the Market Offering Agreement				$ 255,000
Proceeds from issuance of common stock in connection with At the Market Offering Agreement				1,239,000
ATM Agreement \| Maximum
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance of shares				$ 1,494,000
Proceeds from issuance of common stock in connection with At the Market Offering Agreement	$ 1,500,000

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition and Accounts Receivable (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Revenue
Right of return (in days)			14 days
Revenue	$ 2,863,679	$ 1,625,140	$ 5,153,672	$ 4,575,339
Accounts receivable
Allowance for doubtful accounts	700,862		700,862		$ 520,897
Specimens
Revenue
Revenue	2,835,449	1,522,108	5,127,432	4,234,485
Shipping and other
Revenue
Revenue	$ 28,230	$ 103,032	$ 26,240	$ 340,854

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Internally Developed Software, net (Details)	Jun. 30, 2024
Internal-use software
Internally Developed Software, Net
Estimated useful life (in years)	5 years
Licensing Agreements
Internally Developed Software, Net
Estimated useful life (in years)	5 years

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Impairment Charges (Details) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
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, 2024	Jun. 30, 2023
Net Loss Per Share
Shares issuable upon vesting of RSU's	56,558	168,641
Shares issuable upon exercise of stock options	351,670	345,987
Private Placement
Net Loss Per Share
Shares issuable upon exercise of warrants		1,312,500
Underwriter Warrants
Net Loss Per Share
Shares issuable upon exercise of warrants	90,000	90,000
Lender Warrant
Net Loss Per Share
Shares issuable upon exercise of warrants	12,500	12,500

AVAILABLE FOR SALE SECURITIES (Details) - USD ($)	6 Months Ended		12 Months Ended
AVAILABLE FOR SALE SECURITIES (Details) - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Available for Sale Securities
Amortized cost			$ 2,661,092
Gross unrealized gains			36,138
Gross unrealized losses			(35,298)
Fair value	$ 0		2,661,932
Realized gains or losses	$ 680	$ 0
US Treasury Bills
Available for Sale Securities
Amortized cost			2,661,092
Gross unrealized gains			36,138
Gross unrealized losses			(35,298)
Fair value			$ 2,661,932

PROPERTY AND EQUIPMENT, NET (Details) - USD ($)	3 Months Ended		6 Months Ended
PROPERTY AND EQUIPMENT, NET (Details) - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
PP&E, Net, by Type
Total property and equipment	$ 581,654		$ 581,654		$ 572,518
Accumulated depreciation	(476,832)		(476,832)		(444,731)
Total property and equipment, net	104,822		104,822		127,787
Depreciation of property and equipment	16,051	$ 37,137	32,101	$ 75,726
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	105,173		105,173		96,037
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		$ 68,471

INTERNALLY DEVELOPED SOFTWARE, NET (Details) - USD ($)	3 Months Ended		6 Months Ended
INTERNALLY DEVELOPED SOFTWARE, NET (Details) - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
INTERNALLY DEVELOPED SOFTWARE, NET
Internally developed software capitalized			$ 447,687	$ 2,731,507
Amortization of internally developed software	$ 542,805	$ 501,502	1,075,555	$ 934,829
Accumulated amortization	$ 8,040,310		$ 8,040,310		$ 6,964,755

OTHER INTANGIBLE ASSETS, NET (Details) - USD ($)	3 Months Ended	6 Months Ended
OTHER INTANGIBLE ASSETS, NET (Details) - USD ($)	Jun. 30, 2024	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Amortization of other intangible assets		$ 95,777	$ 0
Accumulated amortization	$ 8,040,310	$ 8,040,310		$ 6,964,755
FFPE blocks from a third-party sequencer
Finite-Lived Intangible Assets [Line Items]
Amortization of other intangible assets	$ 47,888

FAIR VALUE MEASUREMENTS (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Assets, Fair Value Disclosure [Abstract]
Available-for-sale securities	$ 0	$ 2,661,932
Recurring
Assets, Fair Value Disclosure [Abstract]
Available-for-sale securities		2,661,932
Level 1 \| Recurring
Assets, Fair Value Disclosure [Abstract]
Available-for-sale securities		$ 2,661,932

COMMITMENTS AND CONTINGENCIES (Details)		6 Months Ended
COMMITMENTS AND CONTINGENCIES (Details)	Jul. 02, 2024	Jun. 30, 2024 USD ($) lease	Jun. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)	Sep. 27, 2023
Lessee, Lease, Description [Line Items]
Option to extend	true
Operating lease right-of-use assets		$ 26,538		$ 193,857
Operating lease liability		(81,435)	$ (77,872)
Sublease rental income		$ 0
Number of related party lease agreements \| lease		0
Lexington Lease
Lessee, Lease, Description [Line Items]
Number of Operating Lease \| lease		1
Additional term					12 months
Option to terminate		true
Operating lease liability		$ 85,679
Woburn Lease
Lessee, Lease, Description [Line Items]
Lease Term	5 years 2 months
Additional term	5 years

COMMITMENTS AND CONTINGENCIES - Company operating lease (Details)	6 Months Ended
	Jun. 30, 2024 USD ($)
COMMITMENTS AND CONTINGENCIES
Operating lease expense	$ 91,632
Total Lease cost	$ 91,632

COMMITMENTS AND CONTINGENCIES - Lease positions in Balance Sheets (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Assets and Liabilities, Lessee [Abstract]
Operating lease right-of-use assets	$ 26,538	$ 193,857
Total lease assets	26,538
Operating lease liability - current portion	29,130	167,114
Operating lease liability - net of current portion		$ 29,130
Total lease liability	$ 29,130

COMMITMENTS AND CONTINGENCIES - Lease Terms and Discount Rate (Details)	Jun. 30, 2024
COMMITMENTS AND CONTINGENCIES
Weighted average remaining lease term (in years) - operating leases	2 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, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Operating Leases
2024	$ 29,348		$ 29,348
Total future minimum lease payments	29,348		29,348
Less effect of discounting	(218)		(218)
Total lease liability	29,130		29,130
Rent expense	$ 48,382	$ 42,078	$ 91,632	$ 84,657

COMMITMENTS AND CONTINGENCIES - Cash Flows - Operating lease (Details) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
COMMITMENTS AND CONTINGENCIES
Non-cash lease expense (operating cash flow)	$ 81,640
Change in lease liabilities (operating cash flow)	$ (81,435)	$ (77,872)

COMMITMENTS AND CONTINGENCIES - Sales Tax (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Loss Contingencies [Line Items]
Sales and Excise Tax Payable		$ 707,000
Interest and penalties on sales tax liability		$ (215,000)
Amount of prior taxes recovered		$359,000
Loss recognized		$ 564,000
Sales Tax Payable
Loss Contingencies [Line Items]
Sales and Excise Tax Payable	$ 617,000
Interest and penalties on sales tax liability	$ 208,000
Amount of prior taxes recovered	$439,000
Loss recognized	$ 0

STOCKHOLDERS' EQUITY (Details) - $ / shares	Jun. 30, 2024	Dec. 31, 2023
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
	Mar. 05, 2024	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023
Class of Stock [Line Items]
Proceeds from issuance of shares		$ 1,355,927	$ 138,487
Payment of offering costs in connection with the issuance of common stock in connection with At the Market Offering Agreement						$ (255,288)
Proceeds from issuance of common stock in connection with At the Market Offering Agreement						1,494,414
Net proceeds from issuance of shares						$ 1,494,414
Issuance of common stock through exercise of stock options (in shares)						0	70,889
Issuance of common stock through exercise of stock options				$ 3,153	$ 67,736		$ 70,889
ATM Agreement
Class of Stock [Line Items]
Issuance of shares (in shares)						3,980,075
Payment of offering costs in connection with the issuance of common stock in connection with At the Market Offering Agreement						$ (255,000)
Proceeds from issuance of common stock in connection with At the Market Offering Agreement						$ 1,239,000
Issuance of common stock in connection with public offering (in shares)						3,980,075
Net proceeds from issuance of shares						$ 1,239,000
ATM Agreement \| Maximum
Class of Stock [Line Items]
Proceeds from issuance of shares						$ 1,494,000
Proceeds from issuance of common stock in connection with At the Market Offering Agreement	$ 1,500,000
Net proceeds from issuance of shares	$ 1,500,000

STOCKHOLDERS' EQUITY - Underwriter Warrants (Details) - USD ($) $ / shares in Units, $ in Millions	6 Months Ended
	Jun. 30, 2024	Aug. 01, 2021
Underwriter Warrants
Warrants
Warrants to purchase shares of common stock	90,000
Exercise price of warrant	$ 10
Warrants exercisable term	4 years 6 months
Weighted Average Time To Expiration	1 year 11 months 15 days
Commencing term from effective date of registration statement	180 days
Warrants Not Settleable in Cash, Fair Value Disclosure	$ 0.4
Warrants other than Underwriter Warrants
Warrants
Warrants to purchase shares of common stock		12,500
Exercise price of warrant	$ 8	$ 8.00
Weighted Average Time To Expiration	7 years 1 month 13 days

STOCKHOLDERS' EQUITY - PIPE Warrants (Details) - Private Placement - $ / shares	Jun. 30, 2024	Feb. 13, 2024	Dec. 01, 2021
Class of Warrant or Right [Line Items]
Warrants exercisable term	5 years 6 months
Warrants to purchase shares of common stock			1,312,500
Exercise price of warrant		$ 0.04	$ 13.00

STOCKHOLDERS' EQUITY - Warrant activity (Details) - $ / shares	6 Months Ended		12 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Options Outstanding.
Granted	95,340	162,672
Exercised	0	(70,889)
Balance at the end	351,670	345,987
Weighted Average Exercise Price
Granted (in dollars per share)	$ 0.13	$ 0.52
Warrants
Options Outstanding.
Balance at the beginning	1,415,000
Repurchased	(1,312,500)
Balance at the end	102,500		1,415,000
Weighted Average Exercise Price
Balance at the beginning (in dollars per share)	$ 12.77
Balance at the end (in dollars per share)	$ 9.76		$ 12.77
Weighted Average Remaining Contractual Term (in years)
Weighted Average Remaining Contractual Term (in years)	2 years 7 months 2 days		3 years 5 months 19 days

SHARE-BASED COMPENSATION - 2021 Stock Incentive Plan - shares (Details) - shares		3 Months Ended		6 Months Ended
	Jul. 29, 2015	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	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			0	0
Plan Term				10 years
2021 Stock Incentive Plan
STOCK-BASED COMPENSATION
Options authorized		608,000		608,000		1,869,500	608,000
Number of shares available for future grants		1,334,377		1,334,377
Number of shares issued		15,000	45,172	95,340	163,419

SHARE-BASED COMPENSATION - Estimate the fair value of stock options (Details)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Assumptions used to estimate the fair value of stock options granted
Risk-free interest rate, minimum	3.93%	3.75%
Risk-free interest rate, maximum	4.56%	3.95%
Expected volatility, minimum	57.49%	59.35%
Expected volatility, maximum	58.71%	59.95%
Minimum
Assumptions used to estimate the fair value of stock options granted
Expected term (in years)	9 months 10 days	7 months 9 days
Maximum
Assumptions used to estimate the fair value of stock options granted
Expected term (in years)	4 years	4 years

SHARE-BASED COMPENSATION - Stock option activity (Details) - USD ($)	6 Months Ended		12 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Options Outstanding
Granted	95,340	162,672
Exercised	0	(70,889)
Balance at the end	351,670	345,987
Weighted Average Exercise Price
Granted (in dollars per share)	$ 0.13	$ 0.52
2013 and 2021 Stock Incentive Plan
Options Outstanding
Balance at the beginning	296,268
Granted	95,340
Cancelled/forfeited	(39,938)
Balance at the end	351,670		296,268
Options exercisable at the end	181,723
Weighted Average Exercise Price
Balance at the beginning (in dollars per share)	$ 2.17
Granted (in dollars per share)	0.38
Cancelled/forfeited (in dollars per share)	1.14
Balance at the end (in dollars per share)	1.81		$ 2.17
Options exercisable at the end (in dollars per share)	$ 2.47
Weighted Average Remaining Contractual Term (in years)
Weighted Average Remaining Contractual Term (in years)	8 years 4 months 6 days		8 years 6 months 10 days
Options exercisable at the end (in years)	7 years 8 months 19 days
Aggregate Intrinsic Value
Balance at the end (in dollars)	$ 1,564
Options exercisable at the end (in dollars)	$ 70.89

SHARE-BASED COMPENSATION - Compensation Expense (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	$ 18,095	$ 30,568
Technology
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	1,658	2,475
Sales and marketing
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	335	623
Supply development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	220	446
Fulfillment
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense		681
General and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	15,882	26,343
Employee Stock Option [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense			$ 37,535,000	$ 63,632,000
Employee Stock Option [Member] \| Technology
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense			3,203,000	5,106,000
Employee Stock Option [Member] \| Sales and marketing
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense			831,000	1,498,000
Employee Stock Option [Member] \| Supply development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense			431,000	820,000
Employee Stock Option [Member] \| Fulfillment
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense			869,000	1,325,000
Employee Stock Option [Member] \| General and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense			32,201,000	54,883,000
Restricted Stock Units
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	61,542	94,129	136,027,000	181,622,000
Restricted Stock Units \| Technology
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	22,833	32,876	49,776,000	67,653,000
Restricted Stock Units \| Sales and marketing
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	9,508	18,959	25,417,000	30,814,000
Restricted Stock Units \| Supply development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	52	2,824	277,000	2,824,000
Restricted Stock Units \| Fulfillment
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	8,217	17,608	17,728,000	39,052,000
Restricted Stock Units \| General and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Allocated share based compensation expense	$ 20,932	$ 21,862	$ 42,829,000	$ 41,279,000

SHARE-BASED COMPENSATION - Stock Options Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
STOCK-BASED COMPENSATION
Total intrinsic value of stock options exercised				$ 48,494
Compensation expense	$ 18,095	$ 30,568
Unamortized compensation expense	$ 72,233	$ 185,260	$ 72,233	$ 185,260
Unamortized compensation expense recognized over the remaining requisite service period			2 years 3 months 3 days	2 years 5 months 1 day
Proceeds from exercise of stock options				$ 70,889

SHARE-BASED COMPENSATION - Restricted Stock Units (Details)	6 Months Ended
	Jun. 30, 2024 USD ($) $ / shares shares
Options outstanding
Unvested Balance at December 31, 2021 \| shares	116,357
Vested \| $	$ (32,324)
Forfeited \| shares	(27,475)
Unvested Balance at December 31, 2022 \| shares	56,558
Weighted Average Grant Date Fair Value
Unvested Balance at December 31, 2021	$ 5.67
Vested	5.98
Forfeited	5.27
Unvested Balance at December 31, 2022	$ 5.67

SHARE-BASED COMPENSATION - Restricted Stock Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	$ 18,095	$ 30,568
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition			2 years 3 months 3 days	2 years 5 months 1 day
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	15,882	26,343
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense	61,542	94,129	$ 136,027,000	$ 181,622,000
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount	311,044	890,912	$ 311,044	$ 890,912
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition			1 year 4 months 6 days	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	$ 20,932	$ 21,862	$ 42,829,000	$ 41,279,000

INCOME TAXES (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Income Taxes
Net operating loss carryforwards, carried forward indefinitely	$ 42,200,000	$ 37,800,000
Tax Credit Carryforward, Amount	2,116,000	2,058,300
Federal
Income Taxes
Net operating loss carryforwards	55,200,000	50,800,000
Net operating loss carryforwards, subject to expiration	13,000,000
State
Income Taxes
Net operating loss carryforwards, subject to expiration	$ 32,700,000	$ 31,100,000