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What changed in iSpecimen Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of iSpecimen Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+290 added−246 removedSource: 10-K (2025-04-14) vs 10-K (2024-03-13)

Top changes in iSpecimen Inc.'s 2024 10-K

290 paragraphs added · 246 removed · 203 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeCurrently, we provide access to the following types of human biospecimens from healthy and diseased-state subjects: Ø Biofluids — such as whole blood, plasma, serum, urine, saliva, sputum, nasopharyngeal material, and cerebral spinal fluid; 9 Table of Contents Ø Solid tissue — such as fresh, fixed, and cryopreserved tissue; and formalin-fixed paraffin embedded blocks, slides, and curls; and Ø Hematopoietic stem and immune cells — such as bone marrow, cord blood, whole blood, or sub-components of these tissues such as peripheral blood mononuclear cells (including normal or mobilized leukapheresis collections) and other isolated cell types (CD34 + ,T cells, NK cells, B cells, and monocytes).
Biggest changeWe believe our approach offers many advantages over a more traditional inventory-based supplier business model where biorepositories take inventory risks, and where turnover and cash conversion cycles can be lengthy, depending on market demand for certain specimen types. 4 Currently, we provide access to the following types of human biospecimens from healthy and diseased-state subjects: Ø Biofluids — such as whole blood, plasma, serum, urine, saliva, sputum, nasopharyngeal material, and cerebral spinal fluid; Ø Solid tissue — such as fresh, fixed, and cryopreserved tissue; and formalin-fixed paraffin embedded blocks, slides, and curls; and Ø Hematopoietic stem and immune cells — such as bone marrow, cord blood, whole blood, or sub-components of these tissues such as peripheral blood mononuclear cells (including normal or mobilized leukapheresis collections) and other isolated cell types (CD34+,T cells, NK cells, B cells, and monocytes).
Our Technology Technology Components The iSpecimen Marketplace technology is comprised of four major functional areas: search, workflow, data, administrative, compliance and reporting.
Our Technology Technology Components The iSpecimen Marketplace technology is comprised of four major functional areas: search, workflow, data and administrative, compliance and reporting.
The iSpecimen Marketplace offers single-source access to millions of human biospecimens and patients across a diverse network of specimen providers quickly and compliantly, saving researchers time and money in their specimen procurement process while making it easier and more efficient for providers to get their specimens in the hands of researchers who need them.
The iSpecimen Marketplace Solution The iSpecimen Marketplace offers single-source access to millions of human biospecimens and patients across a diverse network of specimen providers quickly and compliantly, saving researchers time and money in their specimen procurement process while making it easier and more efficient for providers to get their specimens in the hands of researchers who need them.
In addition to providing the technology platform to connect researchers and healthcare providers, iSpecimen handles all marketing, sales, contracting, and compliance functions across both sides of the marketplace. We market to and develop relationships with researchers and specimen providers alike to bring them together into a single platform.
In addition to providing the technology platform to connect researchers and healthcare providers, iSpecimen handles all marketing, sales, contracting, and compliance functions across both sides of the marketplace. 1 We market to and develop relationships with researchers and specimen providers alike to bring them together into a single platform.
Our employees are primarily located in Lexington, Massachusetts with sixteen remote sales, marketing, and supply development personnel located elsewhere in the U.S. ​
Our employees are primarily located in Lexington, Massachusetts with sixteen (16) remote sales, marketing, and supply development personnel located elsewhere in the U.S.
However, FDA does harmonize its regulations with the Common Rule whenever permitted by law (see section 1002 of the 21st Century Cures Act, Public Law 114-255). iSpecimen follows the FDA regulations related to the protection of research subjects, so that its customers may submit data to the FDA resulting from research performed using data and specimens provided to the researcher by iSpecimen. 15 Table of Contents 21 CFR Part 11 Electronic Records; Electronic Signatures 21 CFR Part 11 is relevant when submissions to the FDA include records in electronic form that are created, modified, maintained, archived, retrieved, or transmitted under any records requirements set forth in FDA regulations.
However, FDA does harmonize its regulations with the Common Rule whenever permitted by law (see section 1002 of the 21st Century Cures Act, Public Law 114-255). iSpecimen follows the FDA regulations related to the protection of research subjects, so that its customers may submit data to the FDA resulting from research performed using data and specimens provided to the researcher by iSpecimen. 10 21 CFR Part 11 Electronic Records; Electronic Signatures 21 CFR Part 11 is relevant when submissions to the FDA include records in electronic form that are created, modified, maintained, archived, retrieved, or transmitted under any records requirements set forth in FDA regulations.
In the event we are required to contact a client about a shipped specimen that is not supported by informed consent, which had not happened as of December 31, 2023, the client would then determine whether it could use the specimen without informed consent.
In the event we are required to contact a client about a shipped specimen that is not supported by informed consent, which had not happened as of December 31, 2024, the client would then determine whether it could use the specimen without informed consent.
International Regulatory Environment Because iSpecimen procures specimens from and distributes specimens to countries outside of the United States, we are subject to international rules related to the protection of human subjects in research, data privacy and security, import and export regulations, tariffs, and foreign rules similar to any of the aforementioned U.S. rules, as well as those of which we are unaware. 17 Table of Contents One of the more prominent international regulations is the General Data Protection Regulation (“GDPR’) which took effect in May 2018.
International Regulatory Environment Because iSpecimen procures specimens from and distributes specimens to countries outside of the United States, we are subject to international rules related to the protection of human subjects in research, data privacy and security, import and export regulations, tariffs, and foreign rules similar to any of the aforementioned U.S. rules, as well as those of which we are unaware. 12 One of the more prominent international regulations is the General Data Protection Regulation (“GDPR’) which took effect in May 2018.
According to the Common Rule, as long as the physical sample and 14 Table of Contents any associated dataset is de-identified before being used for research, the use of clinical remnant samples is not considered Human Subject Research and therefore does not need IRB review and approval, nor does it require patient consent.
According to the Common Rule, as long as the physical sample and any associated dataset is de-identified before being used for research, the use of clinical remnant samples is not considered Human Subject Research and therefore does not need IRB review and approval, nor does it require patient consent.
Other Information Laws and Regulations Other information laws and regulations include all applicable laws concerning the privacy and/or security of personal information including, but not limited to, state data breach notification laws; personal data protection laws such as the California Consumer Privacy 16 Table of Contents Act of 2018, Nevada Senate Bill 220 (an amendment to the state’s existing online privacy policy statute) and Maine’s Act to Protect the Privacy of Online Consumer Information; and all applicable Payment Card Industry Security Standards with respect to account data protection.
Other Information Laws and Regulations Other information laws and regulations include all applicable laws concerning the privacy and/or security of personal information including, but not limited to, state data breach notification laws; personal data protection laws such as the California Consumer Privacy 11 Act of 2018, Nevada Senate Bill 220 (an amendment to the state’s existing online privacy policy statute) and Maine’s Act to Protect the Privacy of Online Consumer Information; and all applicable Payment Card Industry Security Standards with respect to account data protection.
Some of the aforementioned products are collected from healthy subjects or diagnosed (diseased) subjects and may be offered to researchers in fresh or cryopreserved format. They are prospectively collected 10 Table of Contents primarily from our blood donor center partners or picked from banked inventory maintained by our supply site partners.
Some of the aforementioned products are collected from healthy subjects or diagnosed (diseased) subjects and may be offered to researchers in fresh or cryopreserved format. They are prospectively collected primarily from our blood donor center partners or picked from banked inventory maintained by our supply site partners.
This supply network was built over a ten-year period and as of December 31, 2023, our supply network consisted of approximately 234 unique healthcare organizations and biospecimen providers under agreement, including healthcare systems, community hospitals, clinics, private practice groups, commercial laboratories, blood centers, commercial biobanks, clinical research sites, and cadaveric donation centers.
This supply network was built over a ten-year period and as of December 31, 2024, our supply network consisted of approximately 76 unique healthcare organizations and biospecimen providers under agreement, including healthcare systems, community hospitals, clinics, private practice groups, commercial laboratories, blood centers, commercial biobanks, clinical research sites, and cadaveric donation centers.
Government departments and agencies, at the federal, state, and local levels have regulations related to research activities 13 Table of Contents that involve human subject research as well as regulations about the collection, storage, and dissemination of personal and healthcare data related to individuals.
Government departments and agencies, at the federal, state, and local levels have regulations related to research activities that involve human subject research as well as regulations about the collection, storage, and dissemination of personal and healthcare data related to individuals.
These specimens contributed to approximately 39% and 38% of our revenue in 2023 and 2022, respectively. Ø Research use only tissue — Research use only tissues are collected directly from subjects, with their consent, and under an IRB (or equivalent) protocol. They are typically collected during a clinically required surgical procedure.
These specimens contributed to approximately 49% and 39% of our revenue in 2024 and 2023, respectively. Ø Research use only tissue — Research use only tissues are collected directly from subjects, with their consent, and under an IRB (or equivalent) protocol. They are typically collected during a clinically required surgical procedure.
This pursuit of precision medicine by the healthcare and life science industries has further increased the already high demand for human biospecimens and the clinical data that describe them. 12 Table of Contents Our Competitors We compete with a highly fragmented landscape of organizations who have access to human biospecimens.
This pursuit of precision medicine by the healthcare and life science industries has further increased the already high demand for human biospecimens and the clinical data that describe them. 7 Our Competitors We compete with a highly fragmented landscape of organizations who have access to human biospecimens.
Research use only hematopoietic stem and immune cells were a relatively new product to us in 2019. These specimens accounted for approximately 1% and 2% of our revenue in 2023 and 2022, respectively.
Research use only hematopoietic stem and immune cells were a relatively new product to us in 2019. These specimens accounted for approximately 1% and 1% of our revenue in 2024 and 2023, respectively.
As of December 31, 2023, approximately 34 of our healthcare supply sites provided us with access to remnant biofluids originating in clinical labs; Ø Pathology labs — This environment provides access to remnant tissue and remnant hematopoietic stem and immune cells and typically exists within hospitals or commercial laboratories.
As of December 31, 2024, approximately 11 of our healthcare supply sites provided us with access to remnant biofluids originating in clinical labs; Ø Pathology labs — This environment provides access to remnant tissue and remnant hematopoietic stem and immune cells and typically exists within hospitals or commercial laboratories.
These specimens contributed to approximately 13% and 15% of our revenue in 2023 and 2022, respectively. Ø Remnant tissue — These leftover anatomic pathology samples are procured from our pathology lab partners and typically are available years after they were first collected for clinical care.
These specimens contributed to approximately 11% and 13% of our revenue in 2024 and 2023, respectively. Ø Remnant tissue — These leftover anatomic pathology samples are procured from our pathology lab partners and typically are available years after they were first collected for clinical care.
These specimens contributed to approximately 47% and 43% of our revenue in 2023 and 2022, respectively. Ø Research use only hematopoietic stem and immune cells — Research use only hematopoietic stem and immune cells includes bone marrow, cord blood, whole blood, or their cellular components, which are collected from subjects with their consent and under an IRB (or equivalent) protocol.
These specimens contributed to approximately 39% and 47% of our revenue in 2024 and 2023, respectively. 5 Ø Research use only hematopoietic stem and immune cells — Research use only hematopoietic stem and immune cells includes bone marrow, cord blood, whole blood, or their cellular components, which are collected from subjects with their consent and under an IRB (or equivalent) protocol.
As of December 31, 2023, approximately three of our healthcare supply sites provided us with access to remnant tissue or cells originating in pathology labs; Ø Biorepositories — These organizations typically reside within larger healthcare systems or commercial organizations. Generally, they collect and store specimens for unspecified future research purposes.
As of December 31, 2024, approximately two (2) of our healthcare supply sites provided us with access to remnant tissue or cells originating in pathology labs; Ø Biorepositories — These organizations typically reside within larger healthcare systems or commercial organizations. Generally, they collect and store specimens for unspecified future research purposes.
As of December 31, 2023, approximately 34 of our supply sites provided us with access to specimens stored in biorepositories; Ø Blood donor centers — These organizations typically collect large volumes of blood and derivatives for therapeutic or research purposes.
As of December 31, 2024, approximately 16 of our supply sites provided us with access to specimens stored in biorepositories; Ø Blood donor centers — These organizations typically collect large volumes of blood and derivatives for therapeutic or research purposes.
Subjects may be approached and consented to provide specimens when they are in for healthcare appointments (i.e. patient encounters) or may be called in to specifically participate in research projects. As of December 31, 2023, approximately 153 of our healthcare supply sites provided us with access to patients directly from over 1,000 hospitals and thousands of clinics and practice groups.
Subjects may be approached and consented to provide specimens when they are in for healthcare appointments (i.e. patient encounters) or may be called in to specifically participate in research projects. As of December 31, 2024, approximately 44 of our healthcare supply sites provided us with access to patients directly from over thousands hospitals and thousands of clinics and practice groups.
As of December 31, 2023, eight of our supply sites provided us with access to large volume blood products; Ø Cadaveric donation centers — These organizations receive whole cadavers and provide access to cadaveric tissues, biofluids, and stem cells, specifically for research purposes.
As of December 31, 2024, two (2) of our supply sites provided us with access to large volume blood products; Ø Cadaveric donation centers — These organizations receive whole cadavers and provide access to cadaveric tissues, biofluids, and stem cells, specifically for research purposes.
As of December 31, 2023, we had delivered more than 210,000 specimens in support of nearly 3,000 unique projects since inception. Ø Data. We power search and orchestrate the procurement workflow through our ability to acquire, ingest, generate, and use big data from our healthcare provider partners.
As of December 31, 2024, we had delivered more than 212,000 specimens in support of more than 3,400 unique projects since inception. Ø Data. We power search and orchestrate the procurement workflow through our ability to acquire, ingest, generate, and use big data from our healthcare provider partners.
Employees As of December 31, 2023, we had fifty-three employees (not including co-ops or summer interns), ten of whom were engaged in research and development activities, eleven of whom were engaged in sales and marketing activities, eighteen of whom were engaged in operations and fulfillment activities, five of whom were engaged in supply development and management activities, and nine of whom were engaged in general and administrative functions.
As of December 31, 2023, we had fifty-three (23) employees (not including co-ops or summer interns), ten (10) of whom were engaged in research and development activities, eleven (11) of whom were engaged in sales and marketing activities, eighteen (18) of whom were engaged in operations and fulfillment activities, five (5) of whom were engaged in supply development and management activities, and nine (9) of whom were engaged in general and administrative functions.
As of December 31, 2023, we had distributed our specimens to approximately 709 customers, such as the Centers for Disease Control and Prevention. Since entering the regenerative medicine market late 2019, we have acquired 33 customers representing 4% of our total revenue in 2022, and 0.7% in 2023.
As of December 31, 2024, we had distributed our specimens to approximately 765 customers, such as the Centers for Disease Control and Prevention. Since entering the regenerative medicine market late 2019, we have acquired 33 customers representing 0.7% of our total revenue both in 2023 and in 2024.
Our core business objective is to retain and grow both researcher and supplier engagement with iSpecimen and 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. 7 Table of Contents Ø Search .
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. 2 Ø Search .
As of December 31, 2023, two of our supply sites provided us with cadaveric tissues and biofluids; and 11 Table of Contents Ø Clinical research centers — These organizations generally reside within healthcare facilities such as hospitals or clinics, or they operate as standalone entities providing access to subjects for research programs.
As of December 31, 2024, one (1) of our supply sites provided us with cadaveric tissues and biofluids; and 6 Ø Clinical research centers — These organizations generally reside within healthcare facilities such as hospitals or clinics, or they operate as standalone entities providing access to subjects for research programs.
Our suppliers are located in 19 countries across the Americas, Europe, and Asia and our cost of revenue for the years ended December 31, 2023 and 2022, break out as follows geographically: ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2023 2022 Americas ​ 64.87 % 90.52 % Europe, Middle East and Africa ​ 23.08 % 6.91 % Asia Pacific ​ 12.05 % 2.57 % ​ There was one supplier that accounted for 12.7% of our total cost of revenue during the year ended December 31, 2023.
Our suppliers are located in eleven (11) countries across the Americas, Europe, and Asia and our cost of revenue for the years ended December 31, 2024 and 2023, break out as follows geographically: December 31, 2024 2023 Americas 66.19 % 64.87 % Europe, Middle East and Africa 27.24 % 23.08 % Asia Pacific 6.57 % 12.05 % There was one supplier that accounted for 11.3% of our total cost of revenue during the year ended December 31, 2024.
From our inception through December 31, 2023, we had distributed more than 210,000 specimens to 23 countries and our geographical revenues distribution for the years ended December 31, 2023 and 2022 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2023 2022 Americas ​ 89.93 % 89.54 % Europe, Middle East and Africa ​ 9.10 % 7.68 % Asia Pacific ​ 0.97 % 2.78 % ​ During the year ended December 31, 2023, there was one customer that accounted for approximately 25% of our total revenue generated.
From our inception through December 31, 2024, we had distributed more than 240,000 specimens to 23 countries and our geographical revenues distribution for the years ended December 31, 2024 and 2023 were as follows: December 31, 2024 2023 Americas 85.13 % 89.93 % Europe, Middle East and Africa 12.71 % 9.10 % Asia Pacific 2.16 % 0.97 % During the year ended December 31, 2024, there was one customer that accounted for approximately 29% of our total revenue generated.
During the year ended December 31, 2022, there were two customers that accounted for approximately 14% and 12% of our total revenue generated, respectively. We continuously engage with all customers when we receive inbound requests from them, whether they are within or outside of the Americas.
During the year ended December 31, 2023, there were one customer that accounted for approximately 25% of our total revenue generated. We continuously engage with all customers when we receive inbound requests from them, whether they are within or outside of the Americas.
Using our own proprietary algorithms, we enable researchers to explore both what is currently available and what is likely to be available based on historic statistical analysis of data. This allows researchers to quickly and easily determine how we can fulfill their requirements, which is especially useful for project planning and budgeting.
Using our own proprietary algorithms, we enable researchers to explore both biospecimens that are currently available and view projections of those that are likely to become available in the future based on historic statistical analysis of data. This allows researchers to quickly and easily determine how we can fulfill their requirements, which is especially useful for project planning and budgeting.
Our iSpecimen Marketplace platform has compiled de-identified healthcare data provided by our healthcare supply partners’ approximately 18 million patient records, 101 million clinical specimen records, 1.3 million banked specimen records, 730 million laboratory test results, and 1,100,000 medical conditions as of December 31, 2023 — to allow researchers to easily search for and select research subjects, specimens, and associated data they need to drive their research programs.
Our iSpecimen Marketplace platform has compiled de-identified healthcare data provided by our healthcare supply partners’ approximately 19 million patient records, 105 million clinical specimen records, 1.4 million banked specimen records, and 1.2 million medical conditions as of December 31, 2024 — to allow researchers to easily search for and select research subjects, specimens, and associated data they need to drive their research programs.
As of December 31, 2023, the iSpecimen Marketplace had ingested and harmonized data on approximately 18 million patients, 101 million clinical specimens, 1.3 million banked specimens, 730,000 million laboratory test results, and 1.1 million medical conditions. 8 Table of Contents In addition, our platform gathers usage data that enables us to granularly understand supply and demand as well as provide value-added insights to our business partners.
As of December 31, 2024, the iSpecimen Marketplace had ingested and harmonized data on approximately 19 million patients, 105 million clinical specimens, 1.4 million banked specimens, and 1.2 million medical conditions. 3 In addition, our platform gathers usage data that enables us to granularly understand supply and demand as well as provide value-added insights to our business partners.
There was one supplier that accounted for 12.3% of our total cost of revenue during the year ended December 31, 2022. ​ Each supplier organization may give us access to one or more of the following environments within their organization where specimens may be obtained: ​ Ø Clinical labs — This environment provides access to remnant biofluids and is typically found in hospitals, commercial laboratories, clinics, and private practice groups.
Each supplier organization may give us access to one or more of the following environments within their organization where specimens may be obtained: Ø Clinical labs — This environment provides access to remnant biofluids and is typically found in hospitals, commercial laboratories, clinics, and private practice groups.
Regardless, our customer retention rates are high, with 22 of our top 25 customers (88%) in the year ended December 31, 2022 also procuring specimens in the year ended December 31, 2023.
During the year, our customer retention rates are moderate, with 16 of our top 25 customers (64%) in the year ended December 31, 2023 also procuring specimens in the year ended December 31, 2024.
We believe factors such as the technological and creative skills of our people; our existing and evolving partnerships; the creation of new features, functionality, and services; and the frequent enhancements to our platform have helped us to establish and will help us maintain our technology leadership position.
We believe factors such as the technological and creative skills of our people; our existing and evolving partnerships; the creation of new features, functionality, and services; and the frequent enhancements to our platform have helped us to establish and will help us maintain our technology leadership position. 8 Regulations iSpecimen works with the healthcare industry and with clinical researchers, both highly regulated environments in the United States and other countries.
Overview iSpecimen is technology-driven company founded to address a critical challenge: how to connect life science researchers who need human biospecimens for their research, with the billions of biospecimens available (but not easily accessible) in healthcare provider organizations worldwide. Our ground-breaking iSpecimen Marketplace platform was designed to solve this problem and transform the biospecimen procurement process to accelerate medical discovery.
Overview iSpecimen is 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 the billions of biospecimens available (but not easily accessible) in healthcare provider organizations worldwide.
The iSpecimen Marketplace brings new capabilities to a highly fragmented and inefficient biospecimen procurement market. Our technology consolidates the biospecimen buying experience in a single, online marketplace that brings together healthcare providers who have biospecimens and researchers across industry, academia, and government institutions who need them. We are seeking to be transformative in the world of biospecimen procurement.
Our technology consolidates the biospecimen buying experience in a single, online marketplace that brings together healthcare providers who have biospecimens and researchers across industry, academia, and government institutions who need them. We are seeking to transform the world of biospecimen procurement much like the way travel websites changed the consumer buying process for flights, hotels, and rental cars.
For international specimen collection sites, we rely on those sites to ensure they are collecting specimens in accordance with the laws in their own jurisdictions, in addition to following basic U.S. rules related to Human Subjects Research.
For international specimen collection sites, we rely on those sites to ensure they are collecting specimens in accordance with the laws in their own jurisdictions, in addition to following basic U.S. rules related to Human Subjects Research. 9 Finally, iSpecimen participates in Non-Human Subject Research, specifically when we collect clinical remnant samples (i.e., those specimens that were collected originally as part of clinical care).
We contract once with each participating customer and with each supplier organization and a single agreement then enables all users in that 6 Table of Contents organization to instantly connect and work with all other organizations in the iSpecimen network.
We contract once with each participating customer and with each supplier organization and a single agreement then enables all users in that organization to instantly connect and work with all other organizations in the iSpecimen network. We also audit our suppliers to confirm they have proper Institutional Review Board (“IRB”) (or equivalent) protocols in place where required by law.
Collectively, these users logged into the iSpecimen Marketplace more than 161,565 times and performed nearly 18,700 specimen searches yielding more than 2,475 quote requests since its launch.
As of December 31, 2024, we had more than 7,925 external registered users on the iSpecimen Marketplace platform, representing more than 3,006 unique internet domains. Collectively, these users logged into the iSpecimen Marketplace more than 162,252 times and performed nearly 19,295 specimen searches yielding more than 3,098 quote requests since its launch.
Removed
We also audit our suppliers to confirm they have proper Institutional Review Board (“IRB”) (or equivalent) protocols in place where required by law. As of December 31, 2023, we had more than 7,428 external registered users on the iSpecimen Marketplace platform, representing more than 2,817 unique internet domains.
Added
Our ground-breaking iSpecimen Marketplace platform was designed to solve this problem and transform the biospecimen procurement process to accelerate medical discovery. The iSpecimen Marketplace brings new capabilities to a highly fragmented and inefficient biospecimen procurement market.
Removed
We believe our approach offers many advantages over a more traditional inventory-based supplier business model where biorepositories take inventory risks, and where turnover and cash conversion cycles can be lengthy, depending on market demand for certain specimen types.
Added
Our iSpecimen Marketplace technology makes it as easy to find specimens for research as it is to find flights on a travel website.
Removed
Regulations iSpecimen works with the healthcare industry and with clinical researchers, both highly regulated environments in the United States and other countries.
Added
There was one supplier that accounted for 12.7% of our total cost of revenue during the year ended December 31, 2023.
Removed
Finally, iSpecimen participates in Non-Human Subject Research, specifically when we collect clinical remnant samples (i.e., those specimens that were collected originally as part of clinical care).
Added
Employees As of December 31, 2024, we had twenty-four (24) employees, one (1) of whom was engaged in research and development activities, nine (9) of whom were engaged in sales and marketing activities, eleven (11) of whom were engaged in operations and fulfillment activities, and three (3) of whom were engaged in supply development and management activities.
Added
Our employees are primarily located in Woburn, Massachusetts with fifteen (15) remote sales, marketing, and supply development personnel located elsewhere in the U.S.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. ​ As described elsewhere in this Annual Report, we identified a material weakness in our internal control over financial reporting related to a failure to 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 . ​ We initiated and implemented several remediation measures including, but not limited to, (i) engaging 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, (ii) 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, (iii) implementing a sales tax software platform solution for the calculation, communication, collection, and remittance of sales tax for all non-exempt future sales, and assisting with the collection and tracking of Voluntary Disclosure Agreements received from states where a potential sales tax liability may exist, (iv) designing and implementing enhanced policies, procedures and controls related to the calculation, communication, collection, and remittance of sales tax to relevant jurisdictions, and (v) 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 believe the measures described above should address the material weakness identified and strengthen our internal control over financial reporting.
Biggest changeWe initiated and implemented several remediation measures including, but not limited to, (i) engaging 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, (ii) 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, (iii) implementing a sales tax software platform solution for the calculation, communication, collection, and remittance of sales tax for all non-exempt future sales, and assisting with the collection and tracking of Voluntary Disclosure Agreements received from states where a potential sales tax liability may exist, (iv) designing and implementing enhanced policies, procedures and controls related to the calculation, communication, collection, and remittance of sales tax to relevant jurisdictions, and (v) 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.
New industry standards, the availability of alternative products, and evolving life science research needs could render our products and services obsolete and/or new third-party marketplace technology may be introduced that makes it easier for our competitors to create their own marketplace platforms.
New industry standards, the availability of alternative products, and evolving life science research needs could render our products and services obsolete and/or new third-party marketplace technology may be introduced that makes it easier for our competitors to create their own marketplace platforms.
To comply with our regulatory and contractual obligations, which may change over time, we may have to reorganize processes and invest in new technologies. We also are required to train personnel regarding data protection requirements.
To comply with our regulatory and contractual obligations, which may change over time, we may have to reorganize processes and invest in new technologies. We are also required to train personnel regarding data protection requirements.
Any action brought against us for violations of these laws or regulations, even if successfully defended, could cause us to incur significant legal expenses, reputational risks, and divert our management’s attention from the operation of our business. In addition, compliance with future legislation could impose additional requirements on us which may be costly .
Any action brought against us for violations of these laws or regulations, even if successfully defended, could cause us to incur significant legal expenses, reputational risks, and divert our management’s attention from the operation of our business. In addition, compliance with future legislation could impose additional requirements on us which may be costly .
The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various risk factors, including the following: Ø changes in our industry; Ø ability to enhance our platform or to add new functionality; Ø regulatory changes; Ø competitive pricing or other pressures; Ø failures of our suppliers to deliver product on time; Ø loss of supply partners; Ø additions or departures of key personnel; Ø sales of our common stock; Ø our ability to execute our business plan; Ø operating results that fall below expectations; Ø loss of any strategic relationship including customers, suppliers and channel partners; and/or Ø economic and other external factors.
The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various risk factors, including the following: Ø changes in our industry; Ø ability to enhance our platform or to add new functionality; Ø regulatory changes; Ø competitive pricing or other pressures; Ø failures of our suppliers to deliver product on time; Ø loss of supply partners; Ø additions or departures of key personnel; 34 Ø sales of our common stock; Ø our ability to execute our business plan; Ø operating results that fall below expectations; Ø loss of any strategic relationship including customers, suppliers and channel partners; and/or Ø economic and other external factors.
Additionally, overall customer demand could decrease if we fail to: Ø provide high quality products and services; Ø provide products and services at a competitive price; Ø deliver products and services in a reasonable amount of time; Ø offer high levels of customer service; Ø offer adjacent services that researchers want to procure along with our existing products and services; Ø adequately invest in sales and marketing programs and teams to drive demand or operational support to fulfill requests; Ø develop a large and diverse supply network to satisfy demand; or Ø provide a technology solution that simplifies the biospecimen procurement process for researchers and specimen providers alike.
Additionally, overall customer demand could decrease if we fail to: Ø provide high quality products and services; Ø provide products and services at a competitive price; 19 Ø deliver products and services in a reasonable amount of time; Ø offer high levels of customer service; Ø offer adjacent services that researchers want to procure along with our existing products and services; Ø adequately invest in sales and marketing programs and teams to drive demand or operational support to fulfill requests; Ø develop a large and diverse supply network to satisfy demand; or Ø provide a technology solution that simplifies the biospecimen procurement process for researchers and specimen providers alike.
Despite our implementation of network security measures and internal information security policies, data stored on personnel computer systems is also vulnerable to similar security breaches, unauthorized tampering or human error. Many governments and other regulatory bodies including the SEC have enacted laws requiring companies to provide notice of data security incidents involving certain types of data, including personal data.
Despite our implementation of network security measures and internal information security policies, data stored on personnel computer systems is also vulnerable to similar security breaches, unauthorized tampering or human error. 18 Many governments and other regulatory bodies including the SEC have enacted laws requiring companies to provide notice of data security incidents involving certain types of data, including personal data.
We may experience losses related to these investments, which could have a material adverse effect on our results of operations. Our growth strategy involves a number of risks and uncertainties, including: Ø We may not successfully enter into contracts with healthcare providers to gain access to specimens, subjects, and data on terms favorable to us or at all.
We may experience losses related to these investments, which could have a material adverse effect on our results of operations. 15 Our growth strategy involves a number of risks and uncertainties, including: Ø We may not successfully enter into contracts with healthcare providers to gain access to specimens, subjects, and data on terms favorable to us or at all.
If required, we may not be able to obtain such royalty or license agreements or obtain them on terms acceptable to us. We do not have any patents protecting our intellectual property and if we are unable to protect the confidentiality of our trade secrets, know-how and other proprietary and internally developed technology, our business could be adversely affected.
If required, we may not be able to obtain such royalty or license agreements or obtain them on terms acceptable to us. 27 We do not have any patents protecting our intellectual property and if we are unable to protect the confidentiality of our trade secrets, know-how and other proprietary and internally developed technology, our business could be adversely affected.
As a result, our failure to satisfy the requirements of Section 404 on a timely basis could result in the loss of investor confidence in the reliability of our financial statements, which in turn could cause the market value of our common stock to decline. Public company compliance may make it more difficult to attract and retain officers and directors.
As a result, our failure to satisfy the requirements of Section 404 on a timely basis could result in the loss of investor confidence in the reliability of our financial statements, which in turn could cause the market value of our common stock to decline. 35 Public company compliance may make it more difficult to attract and retain officers and directors.
Any decreased use of our products and services or limitation on our ability to export or sell our products and services could adversely affect our business, financial condition and results of operations. Product safety and product liability, including bio-hazard risks, could provide exposure to claims and litigation. Specimens may have hazardous properties and may carry transmissible infectious agents.
Any decreased use of our products and services or limitation on our ability to export or sell our products and services could adversely affect our business, financial condition and results of operations. 30 Product safety and product liability, including bio-hazard risks, could provide exposure to claims and litigation. Specimens may have hazardous properties and may carry transmissible infectious agents.
If we are unable to deliver our specimens in a timely matter and without damage, our revenue could be negatively impacted and our reputation with our customers could suffer, resulting in material harm to our business. The Company’s business was negatively impacted during the first half of 2022 by the ongoing war between Russia and Ukraine.
If we are unable to deliver our specimens in a timely matter and without damage, our revenue could be negatively impacted and our reputation with our customers could suffer, resulting in material harm to our business. 23 The Company’s business was negatively impacted during the first half of 2022 by the ongoing war between Russia and Ukraine.
This indemnification policy could result in substantial expenditures, which we may be unable to recoup. If these expenditures are significant or involve issues which result in significant liability for our key personnel, we may be unable to continue operating as a going concern. We do not expect to pay dividends in the foreseeable future.
This indemnification policy could result in substantial expenditures, which we may be unable to recoup. If these expenditures are significant or involve issues which result in significant liability for our key personnel, we may be unable to continue operating as a going concern. 33 We do not expect to pay dividends in the foreseeable future.
As of December 31, 2023, the Company’s supply sites in Russia that had not been under sanctions were now accessible and the Company’s supply sites in Ukraine had mostly reopened. However, due to the uncertainty caused by the ongoing war, Ukraine suppliers may again become inaccessible to the Company.
As of December 31, 2023 and 2024, the Company’s supply sites in Russia that had not been under sanctions were now accessible and the Company’s supply sites in Ukraine had mostly reopened. However, due to the uncertainty caused by the ongoing war, Ukraine suppliers may again become inaccessible to the Company.
In addition, EU member states may make their own further laws and regulations limiting the processing of personal data, including biometric, genetic or health data. The GDPR covers areas where we may not have expertise and the GDPR and the regulatory guidance enforcing GDPR may be actively evolving.
In addition, EU member states may make their own further laws and regulations limiting the processing of personal data, including biometric, genetic or health data. 28 The GDPR covers areas where we may not have expertise and the GDPR and the regulatory guidance enforcing GDPR may be actively evolving.
If our customers or suppliers do not perceive this platform to be of high value and quality, we may not be able to retain them or acquire new customers or suppliers. Our platform may become technologically obsolete or commoditized.
If our customers or suppliers do not perceive this platform to be of high value and quality, we may not be able to retain them or acquire new customers or suppliers. 17 Our platform may become technologically obsolete or commoditized.
Our failure to implement and maintain effective internal control over financial reporting could result in errors in our financial statements that may lead to a restatement of our financial statements or cause us to fail to meet our reporting obligations for the year ended December 31, 2023, any of which could diminish investor confidence in us and cause a decline in our stock price. ​ We may identify future material weaknesses in our internal controls over financial reporting or fail to meet the demands that will be placed upon us as a public company, including the requirements of the Sarbanes-Oxley Act, and we may be unable to accurately report our financial results, or report them within the timeframes required by law or stock exchange regulations.
Our failure to implement and maintain effective internal control over financial reporting could result in errors in our financial statements that may lead to a restatement of our financial statements or cause us to fail to meet our reporting obligations for the year ended December 31, 2024, any of which could diminish investor confidence in us and cause a decline in our stock price. 14 We may identify future material weaknesses in our internal controls over financial reporting or fail to meet the demands that will be placed upon us as a public company, including the requirements of the Sarbanes-Oxley Act, and we may be unable to accurately report our financial results, or report them within the timeframes required by law or stock exchange regulations.
Our supply partners’ inventories may become obsolete, which could have a material adverse effect upon our ability to generate revenue. During the year ended December 31, 2023, approximately 52% of our revenue was derived from specimens that were procured from our supply partners’ existing sample inventories in their biobanks.
Our supply partners’ inventories may become obsolete, which could have a material adverse effect upon our ability to generate revenue. During the year ended December 31, 2024, approximately 52% of our revenue was derived from specimens that were procured from our supply partners’ existing sample inventories in their biobanks.
We have no experience with acquiring other companies and limited experience with forming strategic alliances and joint ventures. We may not be able to find suitable partners or acquisition candidates, and we may not be able to complete such transactions on favorable terms, if at all.
We have limited experience with acquiring other companies or assets, with forming strategic alliances and joint ventures. We may not be able to find suitable partners or acquisition candidates, and we may not be able to complete such transactions on favorable terms, if at all.
This concentration of ownership may have the effect of delaying or preventing a change of control, impeding a merger, consolidation or other business combination transaction involving us and discouraging a potential 38 Table of Contents acquiror from making a tender offer or otherwise attempting to obtain control of the Company and might adversely affect the market price of our common stock.
This concentration of ownership may have the effect of delaying or preventing a change of control, impeding a merger, consolidation or other business combination transaction involving us and discouraging a potential acquiror from making a tender offer or otherwise attempting to obtain control of the Company and might adversely affect the market price of our common stock.
Our security measures may be breached due to the actions of outside parties, employee 23 Table of Contents error, malfeasance, security flaws in the third party hosting service that we rely upon, or any number of other reasons and, as a result, an unauthorized party may obtain access to our suppliers’ or customers’ data.
Our security measures may be breached due to the actions of outside parties, employee error, malfeasance, security flaws in the third party hosting service that we rely upon, or any number of other reasons and, as a result, an unauthorized party may obtain access to our suppliers’ or customers’ data.
Quarterly revenue has been difficult to predict, has historically fluctuated, and may vary from quarter to quarter due to a variety of factors, many of which are beyond our control. Accordingly, comparing our operating results on a period-to-period basis may not be 40 Table of Contents meaningful.
Quarterly revenue has been difficult to predict, has historically fluctuated, and may vary from quarter to quarter due to a variety of factors, many of which are beyond our control. Accordingly, comparing our operating results on a period- to-period basis may not be meaningful.
In addition, changes in our products and services or changes in applicable export or import laws and regulations may create delays in the introduction and sale of our products and services to international markets, prevent our customers from procuring our products and 36 Table of Contents services or, in some cases, prevent the export or import of our products and services to certain countries, governments or persons altogether.
In addition, changes in our products and services or changes in applicable export or import laws and regulations may create delays in the introduction and sale of our products and services to international markets, prevent our customers from procuring our products and services or, in some cases, prevent the export or import of our products and services to certain countries, governments or persons altogether.
International expansion exposes us to additional risks, including: Ø changes in local political, economic, social, and labor conditions, which may adversely affect our business; Ø risks associated with trade restrictions and foreign import requirements, including the importation and exportation of our solutions, as well as changes in trade, tariffs, restrictions or requirements; Ø heightened risks of unethical, unfair or corrupt business practices, actual or claimed, in certain geographies; 21 Table of Contents Ø fluctuations in currency exchange rates, which may make doing business with us less appealing as our contracts are generally denominated in U.S. dollars; Ø greater difficulty in enforcing contracts; Ø lack of brand awareness that can make commercializing our products more difficult and expensive; Ø management communication and integration problems resulting from cultural differences and geographic dispersion; Ø the uncertainty and limitation of protection for intellectual property rights in some countries; Ø increased financial accounting and reporting burdens and complexities as a result of being a public company; Ø lack of familiarity with local laws, customs and practices, and laws and business practices favoring local competitors or partners; Ø potentially different pricing environments, longer payment cycles in some countries, increased credit risk, and higher levels of payment fraud; Ø uncertainty regarding liability for products and services, including uncertainty as a result of local laws and lack of legal precedent; Ø different employee/employer relationships, existence of workers’ councils and labor unions, and other challenges caused by distance, language, and cultural differences, making it harder to do business in certain jurisdictions; Ø compliance with complex foreign and U.S. laws and regulations applicable to international operations may increase the cost of doing business in international jurisdictions.
As of December 31, 2024, we had customers in 23 countries and supply sites in 11 countries, International expansion exposes us to additional risks, including: Ø changes in local political, economic, social, and labor conditions, which may adversely affect our business; Ø risks associated with trade restrictions and foreign import requirements, including the importation and exportation of our solutions, as well as changes in trade, tariffs, restrictions or requirements; Ø heightened risks of unethical, unfair or corrupt business practices, actual or claimed, in certain geographies; Ø fluctuations in currency exchange rates, which may make doing business with us less appealing as our contracts are generally denominated in U.S. dollars; Ø greater difficulty in enforcing contracts; Ø lack of brand awareness that can make commercializing our products more difficult and expensive; Ø management communication and integration problems resulting from cultural differences and geographic dispersion; Ø the uncertainty and limitation of protection for intellectual property rights in some countries; Ø increased financial accounting and reporting burdens and complexities as a result of being a public company; Ø lack of familiarity with local laws, customs and practices, and laws and business practices favoring local competitors or partners; Ø potentially different pricing environments, longer payment cycles in some countries, increased credit risk, and higher levels of payment fraud; 16 Ø uncertainty regarding liability for products and services, including uncertainty as a result of local laws and lack of legal precedent; Ø different employee/employer relationships, existence of workers’ councils and labor unions, and other challenges caused by distance, language, and cultural differences, making it harder to do business in certain jurisdictions; Ø compliance with complex foreign and U.S. laws and regulations applicable to international operations may increase the cost of doing business in international jurisdictions.
These claims could result in litigation that could be expensive to defend or result 29 Table of Contents in judgements that exceed our resources and our insurance coverage. Any such litigations and judgement could adversely affect our business, financial condition, and results of operations.
These claims could result in litigation that could be expensive to defend or result in judgements that exceed our resources and our insurance coverage. Any such litigations and judgement could adversely affect our business, financial condition, and results of operations.
We may continue to invest in software which may never provide a return on its investment and diverts resources from the development of software that drives other parts of our procurement workflow. 26 Table of Contents Our business may be materially and adversely impacted by the reduction, delay or cancellation of orders from our customers.
We may continue to invest in software which may never provide a return on its investment and diverts resources from the development of software that drives other parts of our procurement workflow. 20 Our business may be materially and adversely impacted by the reduction, delay or cancellation of orders from our customers.
Failure of our Company or our suppliers to comply with international, federal, state, and local laws and regulations could subject us to denial of the right to conduct business, fines, criminal penalties, and/or other enforcement actions which could have a material adverse effect on our business. 35 Table of Contents Our failure to comply with other laws and regulations related to our business operations also have a material adverse effect upon our business.
Failure of our Company or our suppliers to comply with international, federal, state, and local laws and regulations could subject us to denial of the right to conduct business, fines, criminal penalties, and/or other enforcement actions which could have a material adverse effect on our business. 29 Our failure to comply with other laws and regulations related to our business operations also have a material adverse effect upon our business.
Risks Related to the Our Securities If we are not able to comply with the applicable continued listing requirements or standards of The Nasdaq Stock Market LLC, our common stock could be delisted from Nasdaq. Our common stock is currently listed on Nasdaq.
If we are not able to comply with the applicable continued listing requirements or standards of The Nasdaq Stock Market LLC, our common stock could be delisted from Nasdaq. Our common stock is currently listed on Nasdaq.
For orders received in 2023 and 2022, we fulfilled approximately 77% and 76%, respectively, of the total value of these orders. These percentages do not take into consideration long term or open-ended projects that are not intended to be completely fulfilled at year end.
For orders received in 2024 and 2023, we fulfilled approximately 69% and 77%, , respectively, of the total value of these orders. These percentages do not take into consideration long term or open- ended projects that are not intended to be completely fulfilled at year end.
We entered into contracts with U.S. government agencies and contractors, representing approximately 1.0% and 8.3% of our total revenue for 2023 and 2022, respectively , that may contain unfavorable termination provisions and are subject to audit and modification by the government at its sole discretion, which subjects us to additional risks.
We entered into contracts with U.S. government agencies and contractors, representing approximately 0.2% and 1.0% of our total revenue for 2024 and 2023, respectively, that may contain unfavorable termination provisions and are subject to audit and modification by the government at its sole discretion, which subjects us to additional risks.
We do not currently charge our customer or supply chain for access to the iSpecimen Marketplace; Ø Our revenue is significantly concentrated and varies by customer year-over-year. There was one customer that accounted for approximately 25% of our revenue in 2023.
We do not currently charge our customer or supply chain for access to the iSpecimen Marketplace; Ø Our revenue is significantly concentrated and varies by customer year-over-year. There was one customer that accounted for approximately 29% of our revenue in 2024.
Additionally, the number of shares of common stock that are outstanding after our IPO also includes up to an aggregate of 1,312,500 shares of common stock underlying the warrants to be offered and sold by the selling stockholders of the Company, all of which were subsequently repurchased by us on February 13, 2024, and are no longer outstanding.
Additionally, the number of shares of common stock that are outstanding after our IPO also includes up to an aggregate of 65,625 shares of common stock underlying the warrants to be offered and sold by the selling stockholders of the Company, all of which were subsequently repurchased by us on February 13, 2024, and are no longer outstanding.
We have reserved 1,869,500 shares to issue stock options, restricted stock or other awards under our 2021 Stock Incentive Plan (as defined below). Sales of a substantial number of shares of our common stock could cause the price of our common stock to fall and could impair our ability to raise capital by selling additional securities.
We have reserved 93,475 shares to issue stock options, restricted stock or other awards under our 2021 Stock Incentive Plan (as defined below). Sales of a substantial number of shares of our common stock could cause the price of our common stock to fall and could impair our ability to raise capital by selling additional securities.
If the Federal Forum Provision is found to be unenforceable, we may incur additional costs associated with resolving 39 Table of Contents such matters. The Federal Forum Provision may also impose additional litigation costs on stockholders who assert that the provision is not enforceable or invalid.
If the Federal Forum Provision is found to be unenforceable, we may incur additional costs associated with resolving such matters. The Federal Forum Provision may also impose additional litigation costs on stockholders who assert that the provision is not enforceable or invalid.
As a result, it may be more difficult and costly for us to attract and retain qualified persons to serve on our Board or as executive officers. 42 Table of Contents Item 1B. Unresolved Staff Comments Not Applicable.
As a result, it may be more difficult and costly for us to attract and retain qualified persons to serve on our Board or as executive officers. Item 1B. Unresolved Staff Comments Not Applicable.
We can give no assurance 19 Table of Contents that these measures will remediate the deficiencies in internal control or that additional material weaknesses or significant deficiencies in our internal control over financial reporting will not be identified in the future.
We can give no assurance that these measures will remediate the deficiencies in internal control or that additional material weaknesses or significant deficiencies in our internal control over financial reporting will not be identified in the future.
Our directors, officers and principal stockholders have significant voting power and may take actions that may not be in the best interests of our other stockholders. As of December 31, 2023, our officers, directors and principal stockholders each holding more than 5% of our common stock collectively controlled approximately 33.7% of our outstanding common stock.
Our directors, officers and principal stockholders have significant voting power and may take actions that may not be in the best interests of our other stockholders. As of December 31, 2024, our officers, directors and principal stockholders each holding more than 5% of our common stock collectively controlled approximately 0.002% of our outstanding common stock.
In the event that our common stock is delisted from Nasdaq and is not eligible for quotation on another market or exchange, trading of our common stock could be conducted in the over-the-counter market or on an electronic bulletin board established for unlisted securities, such as the Pink Sheets or the OTC Markets.
In the event that our common stock is delisted from Nasdaq and is not eligible for quotation on another market or exchange, trading of our common stock could be conducted in the over-the-counter market established for unlisted securities, such as the OTC Markets.
Although we have not identified such an opportunity, as part of our business strategy, we may, in the future, pursue acquisitions of businesses and assets or pursue strategic alliances and joint ventures that leverage our core technology and industry experience to expand our offerings, increase our customer base, or increase our supply base.
As part of our business strategy, we may, in the future, pursue acquisitions of businesses and assets or pursue strategic alliances and joint ventures that leverage our core technology and industry experience to expand our offerings, increase our customer base, or increase our supply base.
There is substantial doubt about our ability to continue as a going concern. Our audited financial statements included in this Annual Report include an explanatory paragraph that indicates that they were prepared assuming that we would continue as a going concern. We have suffered recurring net losses and accumulated deficits as of December 31, 2023.
Our audited financial statements included in this Annual Report include an explanatory paragraph that indicates that they were prepared assuming that we would continue as a going concern. We have suffered recurring net losses and accumulated deficits as of December 31, 2024. These conditions raise substantial doubts about our ability to continue as a going concern.
Our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting until our first annual report required to be filed with the SEC, following the later of the date we are deemed to be an “accelerated filer” or a “large accelerated filer,” each as defined in the Exchange Act, or the date we are no longer an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
Our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting until our first annual report required to be filed with the SEC, following the later of the date we are deemed to be an “accelerated filer” or a “large accelerated filer,” each as defined in the Exchange Act.
As of December 31, 2023, we had federal net operating loss carryforwards (“NOLs”) of approximately $50.8 million for federal income tax purposes of which approximately $13 million expires at various periods through 2037 and approximately $37.8 million can be carried forward indefinitely.
As of December 31, 2024, we had federal net operating loss carryforwards (“NOLs”) of approximately $62.40 million for federal income tax purposes of which approximately $13 million expires at various periods through 2037 and approximately $49.40 million can be carried forward indefinitely.
These measures are expected to result in future costs for us. While we continue the process to implement our plan to remediate the material weakness, we cannot predict the success of such plan or the outcome of our assessment of this plan until the remediation initiatives have been completed and have been operating effectively for a sufficient period of time.
While we continue the process to implement our plan to remediate the material weakness, we cannot predict the success of such plan or the outcome of our assessment of this plan until the remediation initiatives have been completed and have been operating effectively for a sufficient period of time.
However, we have not gained access to deeper medical record data sets from a broad set of healthcare providers to support custom specimen collections, clinical trial recruitment, or data licensing.
Currently, we have gained access to laboratory data to support the distribution of clinical lab specimens as well as biorepository data to support the distribution of banked specimens. However, we have not gained access to deeper medical record data sets from a broad set of healthcare providers to support custom specimen collections, clinical trial recruitment, or data licensing.
Additional provisions that may discourage unsolicited takeover proposals include (i) board vacancies may be filled by a majority of the remaining board members, (ii) the board may adopt, repeal, rescind, alter or amend our bylaws without stockholder approval, (iii) stockholders holding more than 15% of the outstanding shares may call a special meeting, (iv) a director may be removed from office only by the affirmative vote of a majority of the issued and outstanding stock entitled to vote; and (v) no cumulative voting in the election of directors, which would allow holders of less than a majority of the stock to elect some directors.
Additional provisions that may discourage unsolicited takeover proposals include (i) board vacancies may be filled by a majority of the remaining board members, (ii) the board may adopt, repeal, rescind, alter or amend our bylaws without stockholder approval, (iii) stockholders holding more than 15% of the outstanding shares may call a special meeting, (iv) a director may be removed from office only by the affirmative vote of a majority of the issued and outstanding stock entitled to vote; and (v) no cumulative voting in the election of directors, which would allow holders of less than a majority of the stock to elect some directors. 32 Our bylaws, as amended, designate certain courts as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
These conditions raise substantial doubts about our ability to continue as a going concern. Our plan for continuing as a going concern included improving our profitability and obtaining additional financing, including public and private placements of capital stock for additional funding to meet our operating needs.
Our plan for continuing as a going concern includes improving our profitability and obtaining additional financing, including public and private placements of capital stock for additional funding to meet our operating needs.
The failure to obtain or maintain meaningful trade secret protection could adversely affect our competitive position. Risks Related to Regulatory Environment Failure to comply with federal and state data protection regulations could result in fines, penalties, and litigation, and have a material adverse effect upon our business.
Risks Related to Regulatory Environment Failure to comply with federal and state data protection regulations could result in fines, penalties, and litigation, and have a material adverse effect upon our business.
For the years ended December 31, 2023 and 2022, we reported net losses of $11,099,488 and $10,245,922, respectively. We had an accumulated deficit of $59,364,812 as of December 31, 2023. We expect to continue to incur losses for the foreseeable future, and we expect these losses to increase as we continue to invest in the growth of our business.
For the years ended December 31, 2024 and 2023, we reported net losses of $12,497,805 and $11,099,488, respectively. We had an accumulated deficit of $71,862,617 as of December 31, 2024. We expect to continue to incur losses for the foreseeable future, and we expect these losses to increase as we continue to invest in the growth of our business.
Even if we achieve profitability in a future period, we may not be able to sustain 18 Table of Contents profitability in subsequent periods. Our prior losses and expected future losses have had and will continue to have adverse effects on our stockholders’ equity (deficit) and working capital.
Even if we achieve profitability in a future period, we may not be able to sustain profitability in subsequent periods. Our prior losses and expected future losses have had and will continue to have adverse effects on our stockholders’ equity (deficit) and working capital. 13 There is substantial doubt about our ability to continue as a going concern.
Any significant claims would have a material adverse effect on our business, financial condition, and results of operations. In addition, our limited directors’ and officers’ liability insurance may affect our ability to attract and retain directors and officers. The requirements of being a U.S. public company may strain our resources and divert management’s attention.
In addition, our limited directors’ and officers’ liability insurance may affect our ability to attract and retain directors and officers. The requirements of being a U.S. public company may strain our resources and divert management’s attention.
Any action brought against us for violations of this law, even if successfully defended, could cause us to incur significant legal expenses, reputational risks, and divert our management’s attention from the operation of our business.
Any action brought against us for violations of this law, even if successfully defended, could cause us to incur significant legal expenses, reputational risks, and divert our management’s attention from the operation of our business. In addition, compliance with future legislation could impose additional requirements on the Company, which may be costly .
During the year ended December 31, 2023, one customer represented 25% of the Company’s revenues, and during the year ended December 31, 2022, two customers represented 14% and 12% of our revenue, respectively.
During the year ended December 31, 2024, one customer represented 29% of the Company’s revenues, and during the year ended December 31, 2023, one customer represented 25% of our revenue.
We may face pricing pressure from competitors who may lower prices to reduce biorepository inventories or because they have more favorable specimen acquisition costs. Many competitors invest in biorepositories of specimens and data.
We have lost and will continue to lose business to competitors when they can provide samples more quickly than we can from our supply network. 24 We may face pricing pressure from competitors who may lower prices to reduce biorepository inventories or because they have more favorable specimen acquisition costs. Many competitors invest in biorepositories of specimens and data.
Many of these are outside of our control and all of which may change from time to time. Our historical revenue results should not be taken as predictive of future performance.
Many of these are outside of our control and all of which may change from time to time. Our historical revenue results should not be taken as predictive of future performance. There are many risks that could impact future performance resulting in variations in expected results which could lead to a negative business impact.
Our customers generally place orders for our products and services using a purchase order and we invoice our customers after they have received the products or services from us.
We incur credit risk with our customers, and we may provide them with products and services for which we do not get paid. Our customers generally place orders for our products and services using a purchase order and we invoice our customers after they have received the products or services from us.
Significant growth in the size and scope of our operations could place a strain on our financial, technical, operational, and management resources.
We may have difficulty managing growth in our business, which could adversely affect our financial condition and results of operations. Significant growth in the size and scope of our operations could place a strain on our financial, technical, operational, and management resources.
In 2022, the percent of specimens that met specifications was 99% for clinical remnant specimens, 99% for banked research specimens and 99% for custom research collections. Percentage of specimens that met specifications decreased year over year from 2022.
In 2024, the percent of specimens that met specifications was 99% for clinical remnant specimens, 89% for banked research specimens and 99% for custom research collections. In 2023, the percent of specimens that met specifications was 99% for clinical remnant specimens, 97% for banked research specimens and 99% for custom research collections.
Also, it may be difficult for us to raise additional capital if we are not listed on a major exchange. 37 Table of Contents In the event that our common stock is delisted from Nasdaq, U.S. broker-dealers may be discouraged from effecting transactions in shares of our common stock because it may be considered a penny stock and thus be subject to the penny stock rules.
In the event that our common stock is delisted from Nasdaq, U.S. broker-dealers may be discouraged from effecting transactions in shares of our common stock because it may be considered a penny stock and thus be subject to the penny stock rules.
Reliance on relatively few supply partners for significant supplies and services could affect our ability to operate and grow. We have derived, and believe that we may continue to derive, a significant portion of our revenues from products we procure from a limited number of supply sites.
We have derived, and believe that we may continue to derive, a significant portion of our revenues from products we procure from a limited number of supply sites.
In addition, compliance with future legislation could impose additional requirements on the Company which may be costly . 34 Table of Contents Failure to comply with federal and state laws around environmental, health and safety, biohazards and dangerous goods, and imports/exports could result in fines, penalties, and litigation, and have a material adverse effect upon our business.
Failure to comply with federal and state laws around environmental, health and safety, biohazards and dangerous goods, and imports/exports could result in fines, penalties, and litigation, and have a material adverse effect upon our business.
In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans.
We may finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements, or other sources. In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans.
Any change that either reduces the demand for our services or changes the composition of the demand could adversely impact our financial results. 24 Table of Contents Overall customer demand could change for many reasons outside of our control, reducing demand or making it more difficult to match up to our supply chain’s capabilities.
Overall customer demand could change for many reasons outside of our control, reducing demand or making it more difficult to match up to our supply chain’s capabilities.
In 2022, there were two customers that represented approximately 14% and 12% of our revenue, respectively; Ø Researcher needs may change over the lifetime of a project, based on the stage of the project.
In 2023, there was one customer that represented approximately 25% of our revenue; Ø Researcher needs may change over the lifetime of a project, based on the stage of the project.
For the year ended December 31, 2022, there were two suppliers who each accounted for 12% of our total cost of revenue and two other suppliers who, together, accounted for an additional 16% of our total cost of revenue.
For the year ended December 31, 2024, there was one supplier who accounted for 11% of our total cost of revenue and three other suppliers who, together, accounted for an additional 17% of our total cost of revenue.
For example, we procure specimens from sites outside of the United States and we also distribute samples to organizations located around the world. As of December 31, 2023, we had customers in 23 countries, supply sites in 19 countries, and two international distributors.
For example, we procure specimens from sites outside of the United States and we also distribute samples to organizations located around the world.
When we receive products from our supply sites, we perform a visual inspection of the products, but we do not perform an in-depth quality control check to ensure that products meet all specifications. 28 Table of Contents Instead, we rely upon our customers to perform quality checks themselves and offer refunds or replacements for products that do not meet specification.
In certain situations, products are shipped directly from the supply sites to our customers. When we receive products from our supply sites, we perform a visual inspection of the products, but we do not perform an in-depth quality control check to ensure that products meet all specifications.
However, if inflation continues, it may have an adverse impact on the costs of our samples in the future. ​ Our timely fulfillment of customer orders may be adversely impacted due to constraints in the supply chain. ​ Our operations are heavily reliant on specimen availability and delays or shortages in obtaining specimens caused by constraints in the supply chain, may adversely impact the timing and extent of our ability to fulfill our customer orders which could adversely impact our results of operations and financial condition. ​ 31 Table of Contents We may have difficulty managing growth in our business, which could adversely affect our financial condition and results of operations.
Our operations are heavily reliant on specimen availability and delays or shortages in obtaining specimens caused by constraints in the supply chain, may adversely impact the timing and extent of our ability to fulfill our customer orders which could adversely impact our results of operations and financial condition.
We are fundamentally a matchmaking service provider between researchers who have needs for access to subjects, samples, and data, and healthcare providers and other organizations that have them.
We are fundamentally a matchmaking service provider between researchers who have needs for access to subjects, samples, and data, and healthcare providers and other organizations that have them. Any change that either reduces the demand for our services or changes the composition of the demand could adversely impact our financial results.
Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in 41 Table of Contents our industry.
Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. If we are unable to raise additional capital as and when we need it, our financial condition and results of operations may be materially and adversely affected.
These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. ​ During the year ended December 31, 2023, we identified a material weakness in our internal control over financial reporting that may cause us to fail to meet our reporting obligations or result in material misstatements of our financial statements.
These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
In fiscal year 2023, we incurred $5,386,165 in technology expenses, and capitalized $3,767,332 for internally developed software.
In fiscal year 2024, we incurred $3,530,291 in technology expenses, and capitalized $653,288 for internally developed software.
They may also be developing their own technology solution that could be better or less costly to develop than our own iSpecimen Marketplace, thereby eliminating one of our key competitive advantages.
These organizations are currently acquiring smaller biospecimen businesses and have larger customer bases, their own collection centers, biospecimen inventories, larger marketing and sales budgets, and an international presence. They may also be developing their own technology solution that could be better or less costly to develop than our own iSpecimen Marketplace, thereby eliminating one of our key competitive advantages.
A U.S. broker-dealer is also required to disclose commissions payable to the U.S. broker-dealer and the registered representative and current quotations for the securities. Finally, a U.S. broker-dealer is required to submit monthly statements disclosing recent price information with respect to any “penny stock” held in a customer’s account and information with respect to the limited market in “penny stocks”.
Finally, a U.S. broker-dealer is required to submit monthly statements disclosing recent price information with respect to any “penny stock” held in a customer’s account and information with respect to the limited market in “penny stocks”. 31 You should be aware that, according to the SEC, the market for “penny stocks” has suffered in recent years from patterns of fraud and abuse.
Claims by third parties against us may exceed policy amounts and we may not have amounts to cover these claims. Also, due to high self-insured retention costs and deductibles, we may incur significant costs from any claim made against us before insurance policies provide coverage.
Also, due to high self-insured retention costs and deductibles, we may incur significant costs from any claim made against us before insurance policies provide coverage. Any significant claims would have a material adverse effect on our business, financial condition, and results of operations.
Additionally, some competitors have their own collection facilities and direct access to eligible research subjects which also provides a time-to-delivery advantage. We have lost and will continue to lose business to competitors when they can provide samples more quickly than we can from our supply network.
Additionally, some competitors have their own collection facilities and direct access to eligible research subjects, which also provides a time-to-delivery advantage.
Although we have business continuity plans in place, including an emergency succession plan, there is no guarantee that our plans can be successfully implemented.
Although we have business continuity plans in place, including an emergency succession plan, there is no guarantee that our plans can be successfully implemented. Even if we were to successfully implement our continuity plans, we may incur substantial expenses and there is no guarantee that our business, financial condition, and results of operations will not be materially impacted.
It takes a larger network of subjects, samples, and data to access a wide enough population of subjects to meet a growing number of requests with more stringent criteria. Delays, difficulties, or unanticipated costs in developing our supply network capabilities necessary to successfully procure products and services could adversely affect revenue and profitability.
It takes a larger network of subjects, samples, and data to access a wide enough population of subjects to meet a growing number of requests with more stringent criteria.
Alternatively, it may be necessary for us to raise additional funds for acquisitions through public or private financings. Additional funds may not be available on terms that are favorable to us, or at all. 32 Table of Contents Risks Related to Intellectual Property We use third-party technology licenses as part of our technology solution.
Alternatively, it may be necessary for us to raise additional funds for acquisitions through public or private financings. Additional funds may not be available on terms that are favorable to us, or at all. We may incur significant debt, and our governing documents contain no limit on the amount of debt we may incur.
Inflation is causing the cost of employee salaries to rise and our salaries account for a significant portion of our overall operating costs.
We have experienced negative effects from inflation in certain areas of our business due to the recent high rates of inflation in the U.S. and around the world. Inflation is causing the cost of employee salaries to rise and our salaries account for a significant portion of our overall operating costs.
Although we continue to allocate resources to supply development and commensurately grow our supply network capabilities to keep pace with demand, this supply-demand imbalance could increase in the future if we do not continue or increase our investment in this area. 27 Table of Contents ​ Additionally, demand for specimens we receive is becoming more specific, requiring access to a greater population of subjects, samples, and data to find those that meet a researcher’s inclusion and exclusion criteria.
Although we continue to allocate resources to supply development and commensurately grow our supply network capabilities to keep pace with demand, this supply-demand imbalance could increase in the future if we do not continue or increase our investment in this area.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThis reporting includes information on the current external cybersecurity risk landscape, specific threat categories driving this risk, how iSpecimen is working to manage these risks, relevant metrics, and details on annual improvements to the program. The CISO has served in various roles in information technology and information security over the last three decades including serving as CISO for several organizations.
Biggest changeThis reporting includes information on the current external cybersecurity risk landscape, specific threat categories driving this risk, how iSpecimen is working to manage these risks, relevant metrics, and details on annual improvements to the program.
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The CISO has served in various roles in information technology and information security over the last three decades including serving as CISO for several organizations. 36

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our principal executive office is located in 450 Bedford Street, Lexington, Massachusetts. We occupy approximately 8,835 square feet of office and laboratory space in Lexington, Massachusetts under a lease that expires on February 28, 2025.
Biggest changeItem 2. Properties Our principal executive office is located in 8 Cabot Road, Woburn, Massachusetts. We occupy approximately 2,273 square feet of office and laboratory space in Woburn, Massachusetts under a lease that expires on October 30, 2029.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe may in the future institute additional, legal proceedings to enforce our rights and seek remedies, such as monetary damages, injunctive relief and declaratory relief.
Biggest changeWe may from time to time be involved in various legal proceedings and other matters arising in the normal course of business. We may in the future institute additional legal proceedings to enforce our rights and seek remedies, such as monetary damages, injunctive relief and declaratory relief.
We cannot predict the results of any such disputes, and despite the potential outcomes, the existence thereof may have an adverse material impact on us because of diversion of management time and attention as well as the financial costs related to resolving such disputes. 43 Table of Contents Item 4. Mine Safety Disclosures Not Applicable. PART II
We cannot predict the results of any such disputes, and despite the potential outcomes, the existence thereof may have an adverse material impact on us because of diversion of management time and attention as well as the financial costs related to resolving such disputes. On December 9, 2024, Focus Technologies, Inc.
Item 3. Legal Proceedings To the knowledge of our management team, there is no material litigation, arbitration or governmental proceeding currently pending against us or any members of our management team in their capacity as such. We may from time to time be involved in various legal proceedings and other matters arising in the normal course of business.
Item 3. Legal Proceedings To the knowledge of our management team, there is no material litigation, arbitration or governmental proceeding currently pending against us or any members of our management team in their capacity as such, other than the matter described below.
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(“Focus”) filed a complaint against the Company in the Superior Court of Suffolk County, Massachusetts, alleging non-payment under agreements dated July 29, 2022, related to the provision of information technology services. Focus is seeking approximately $489,572 in damages, plus interest and attorneys’ fees.
Added
Following the filing, Focus disabled the Company’s web-based commerce platform on January 24, 2025, resulting in a shutdown of the iSpecimen Marketplace from January 25, 2025, through February 12, 2025.
Added
To restore service, the parties entered into a settlement agreement on February 11, 2025 (the “Settlement Agreement”), under which the Company agreed to pay $500,000 in nine monthly installments in exchange for the restoration of its platform. The Company made an initial payment of $50,000 on February 12, 2025.
Added
However, Focus failed to fully restore the platform, requiring the Company to engage a third-party developer to complete the work in early March 2025. On February 28, 2025, the Company notified Focus that it was in breach of the Settlement Agreement and has since withheld further payments.
Added
Focus has sought to amend its complaint to enforce the Settlement Agreement and has requested pre-judgment security in the amount of $450,000. The Company is opposing these efforts and intends to assert counterclaims against Focus for consequential damages arising from the service disruption and failure to perform under the agreements.
Added
While the outcome of this matter cannot be predicted with certainty, the Company does not believe that this litigation will have a material adverse effect on its business, financial condition, or results of operations at this time. On April 10, 2025, the Court partially granted Focus’ Motion for Pre-Judgment Security.
Added
The Company is required to open a dedicated bank account by April 20, 2025 and deposit 15% of revenue starting one month after the account opening up to $420,000. The Company will continue to seek relief from the pre-judgment security, and its counterclaim against Focus is still pending, which could ultimately exceed the value of Focus’ claims. Item 4.
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Mine Safety Disclosures Not Applicable. 37 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMarket for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information ​ Our common stock trades on the Nasdaq Capital Market under the symbol “ISPC.” Trading commenced on the Nasdaq on June 17, 2021. ​ Holders ​ On March 11, 2024, there were 63 holders of record of our common stock. ​ Dividends ​ We currently intend to retain all available funds and any future earnings to fund the development, commercialization, and growth of our business, and therefore we do not anticipate declaring or paying any cash dividends on any class of our common stock in the foreseeable future.
Biggest changeDividends We currently intend to retain all available funds and any future earnings to fund the development, commercialization, and growth of our business, and therefore we do not anticipate declaring or paying any cash dividends on any class of our common stock in the foreseeable future.
Any such determination will also depend upon our business prospects, results of operations, financial condition, cash requirements and availability, and other factors that our Board may deem relevant. ​ Securities Authorized for Issuance under Equity Compensation Plans ​ The information required by Item 201(d) of Regulation S-K is set forth in Part III of this Annual Report on Form 10-K and is incorporated herein. ​ Purchases of Equity Securities by the Issuer and Affiliated Parties None. ​ Item 6.
Securities Authorized for Issuance under Equity Compensation Plans The information required by Item 201(d) of Regulation S-K is set forth in Part III of this Annual Report on Form 10-K and is incorporated herein. Purchases of Equity Securities by the Issuer and Affiliated Parties None. Item 6. Reserved
Added
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the Nasdaq Capital Market under the symbol “ISPC.” Trading commenced on the Nasdaq on June 17, 2021. Holders On April 14, 2025, there were 59 holders of record of our common stock.
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Any such determination will also depend upon our business prospects, results of operations, financial condition, cash requirements and availability, and other factors that our Board may deem relevant.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAs 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 year ended December 31, 2023, net cash used in operating activities was approximately $5,808,000, which consisted of a net loss of approximately $11,099,000 offset by non-cash charges of approximately $2,703,000, which included approximately $1,948,000 related to amortization of internally developed software, approximately $460,000 in stock-based compensation, approximately $305,000 in bad debt expense, approximately $118,000 related to depreciation of property and equipment, and approximately $50,000 related to amortization of other intangible assets, which were offset by approximately $177,000 of accretion of discount on available-for-sale securities. ​ Total changes in assets and liabilities of approximately $2,589,000 were attributable to an approximately $1,466,000 increase in accounts payable, an approximately $564,000 decrease in accounts receivable, an approximately $283,000 increase in deferred revenue, an approximately $157,000 increase in operating lease right-of-use asset, an approximately $141,000 decrease in tax credit receivable, an approximately $115,000 decrease in accounts receivable-unbilled, an approximately $9,000 increase in accrued expenses, and an 51 Table of Contents approximately $8,000 decrease in prepaid expenses and other current assets, offset by an approximately $156,000 decrease in operating lease liability. ​ For the year ended December 31, 2022, net cash used in operating activities was approximately $5,818,000, which consisted of a net loss of approximately $10,246,000 offset by non-cash charges of approximately $2,074,000 which included approximately $1,183,000 related to amortization of internally developed software, approximately $679,000 in stock-based compensation, approximately $107,000 in bad debt expense, approximately $22,000 related to depreciation of property and equipment, approximately $77,000 of amortization of debt issuance costs on the Term Loan, and approximately $6,000 of proceeds from issuance of common stock in exchange for services. ​ Total changes in assets and liabilities of approximately $2,354,000 were primarily driven by an approximately $1,298,000 decrease in accounts receivable, an approximately $148,000 decrease in operating lease right-of-use asset, an approximately $27,000 decrease in prepaid expenses and other current assets, an approximately $1,626,000 increase in accounts payable, an approximately $521,000 increase in accrued expenses, offset by an approximately $589,000 increase in accounts receivable-unbilled, an approximately $522,000 decrease in deferred revenue, an approximately $147,000 decrease in operating lease liability and an approximately $8,000 decrease in accrued interest. ​ Investing Activities ​ During the year ended December 31, 2023, we invested approximately $3.8 million of cash in further developing our iSpecimen Marketplace technology with plans to invest at a lower level in 2024.
Biggest changeAs 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. 46 Cash Flows Operating Activities For the year ended December 31, 2024, net cash used in operating activities was approximately $8,264,000, which consisted of a net loss of approximately $12,498,000 offset by non-cash charges of approximately $3,549,000, which included approximately $2,037,000 related to amortization of internally developed software, approximately $250,000 in stock-based compensation, approximately $706,000 in bad debt expense, approximately $66,000 related to depreciation of property and equipment, approximately $700 for loss from sales of available-for-sale securities, approximately $60 for loss on disposal of property and equipment, approximately $327,000 of write-off of internally developed software, an approximately $1,188,000 increase in write-off of accounts receivable-unbilled and approximately $192,000 related to amortization of other intangible assets, which were offset by approximately $29,000 of accretion of discount on available-for-sale securities.
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.
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. 41 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.
The costs paid to the third party sequencer are the only costs capitalized and all other costs are expensed as incurred. ​ Stock-based Compensation We record stock-based compensation for options granted to employees, non-employees, and to members of the Board for their services on the Board 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.
The costs paid to the third party sequencer are the only costs capitalized and all other costs are expensed as incurred. 48 Stock-based Compensation We record stock-based compensation for options granted to employees, non-employees, and to members of the Board for their services on the Board 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.
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 7A.
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.
Additionally, key resources were diverted from operations to resolving the re-fulfillment issues caused by the conflict. ​ As of December 31, 2023, our supply sites in Russia that had not been under sanctions were accessible and our supply sites in Ukraine were mostly reopened.
Additionally, key resources were diverted from operations to resolving the re-fulfillment issues caused by the conflict. As of December 31, 2024, our supply sites in Russia that had not been under sanctions were accessible and our supply sites in Ukraine were mostly reopened.
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. 48 Table of Contents 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.
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. 43 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.
As of December 31, 2023, no Bridge Notes remained outstanding. ​ 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 subsequently 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.
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 87,500 shares of common stock and (ii) warrants, which are exercisable for an aggregate of up to 65,625 shares of common stock, all of which were repurchased by us on February 13, 2024, and are no longer outstanding. 39 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 platform taps into healthcare provider data to gain insights into the 44 Table of Contents available samples in biobanks or laboratories, or to gain insights into the patient populations to support specimen collections directly from research subjects.
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 decrease was primarily attributable to a decrease in payroll and related expenses of approximately $369,000 for personnel engaged in pre-sales feasibility assessments and order fulfillment, which was partially offset by increases in professional fees of approximately $143,000 and general operating expenses related to fulfillment of approximately $19,000.
The decrease was primarily attributable to a decrease in professional fees of approximately $183,000 and general operating expenses related to fulfillment of approximately $39,000, which was partially offset by increases in payroll and related expenses of approximately $69,000 for personnel engaged in pre-sales feasibility assessments and order fulfillment.
We intend to continue to use our existing cash to grow our supply network, increase our marketing and sales presence, scale our operations, and for working capital and general corporate purposes. Net cash used in investing activities was approximately $7,228,000 and $3,191,000 for the years ended December 31, 2023 and 2022, respectively.
We intend to continue to use our existing cash to grow our supply network, increase our marketing and sales presence, scale our operations, and for working capital and general corporate purposes. Net cash provided by investing activities was approximately $1,980,000 and net cash used in investing activities was approximately $7,228,000 for the years ended December 31, 2024 and 2023, respectively.
The sequenced data is a new product, and its anticipated future gross revenues are currently yet to be fully quantifiable.
Sequenced Data Cost We capitalize the purchase cost of sequenced data. The sequenced data is a new product, and its anticipated future gross revenues are currently yet to be fully quantifiable.
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. ​ The iSpecimen Marketplace currently supports the supply chain management and bioprocurement process for specimens and associated data.
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.
During the year ended December 31, 2023, we have had ongoing operational process improvement activities to increase collaboration within and between departments. In the second quarter of 2023, 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.
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.
Although there was an 11% decrease in the number of specimens accessioned during the year ended December 31, 2023, over the same prior year period, the average cost per specimen increased by 13% from $173 for the year ended December 31, 2022 to $196 for the year ended December 31, 2023.
Although there was a 0.7% decrease in the number of specimens delivered during the year ended December 31, 2024, over the same prior year period, the average cost per specimen increased by 11% from $196 for the year ended December 31, 2023 to $217 for the year ended December 31, 2024.
We continue to invest in the evolution of these areas to improve engagement with the platform and liquidity across it.
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.
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.
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 have not paid, and do not anticipate paying, cash dividends on shares of our common stock. There were no material changes to our estimates as of December 31, 2023. 53 Table of Contents Recent Accounting Standards For information on recent accounting standards, see Note 2 to our financial statements.
We have not paid, and do not anticipate paying, cash dividends on shares of our common stock. There were no material changes to our estimates as of December 31, 2024. Recent Accounting Standards For information on recent accounting standards, see Note 2 to our financial statements. JOBS Act Transition Period On April 5, 2012, the JOBS Act was enacted.
Specimen providers 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 administration and reporting.
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 administration and reporting.
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.
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.
Fulfillment Fulfillment costs decreased by approximately $207,000, or 10%, from approximately $1,996,000 for the year ended December 31, 2022 to approximately $1,789,000 for the year ended December 31, 2023.
Fulfillment Fulfillment costs decreased by approximately $153,000, or 9%, from approximately $1,789,000 for the year ended December 31, 2023 to approximately $1,636,000 for the year ended December 31, 2024.
General and Administrative Expenses General and administrative expenses decreased by approximately $998,000, or 14%, from approximately $6,933,000 for the year ended December 31, 2022 to approximately $5,935,000 for the year ended December 31, 2023.
General and Administrative Expenses General and administrative expenses increased by approximately $132,000, or 2%, from approximately $5,935,000 for the year ended December 31, 2023 to approximately $6,067,000 for the year ended December 31, 2024.
Other Income (Expense), net Other income (expense), net, increased by approximately $130,000, or 217%, from approximately $60,000 of other expense, net, for the year ended December 31, 2022 to approximately $70,000 of other income, net, for the year ended December 31, 2023.
Other Income, net Other income, net, increased by approximately $160,000, or 230%, from approximately $70,000 for the year ended December 31, 2023 to approximately $230,000, for the year ended December 31, 2024.
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 following accounting policies involve estimates that are considered critical due to the level of subjectivity and judgment involved, as well as the impact on our financial position and results of operations.
The following accounting policies involve estimates that are considered critical due to the level of subjectivity and judgment involved, as well as the impact on our financial position and results of operations.
We plan to add additional customers and suppliers 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.
While we plan to improve our sales and revenues, we are taking steps to significantly 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.
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.
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.
Due to the small size of the packages that we ship, our carriers were able to continue making timely deliveries during the year ended December 31, 2023.
Due to the small size of the packages that we ship, our carriers were able to continue making timely deliveries during the year ended December 31, 2024. However, there had been an increase in our shipping costs period over period during the year ended December 31, 2024.
JOBS Act Transition Period On April 5, 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.
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.
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. ​ 52 Table of Contents 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.
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.
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. ​ We have initiated efforts to decrease our capital and operational expenditures by cutting costs and right sizing the Company through reductions in our workforce.
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.
The increase was related to increases in amortization expense of internally developed software of approximately $765,000, payroll and related expenses of approximately $81,000, and professional fees of approximately $67,000, which were partially offset by a decrease in general operating expenses of approximately $2,000. 49 Table of Contents Sales and Marketing Expenses Sales and marketing expenses increased by approximately $511,000, or 15%, from approximately $3,445,000 for the year ended December 31, 2022 to approximately $3,956,000 for the year ended December 31, 2023.
The decrease was related to professional fees of approximately $2,040,000. which were partially offset by an increases in amortization expense of internally developed software of approximately $89,000 and payroll and related expenses of approximately $1,918,000. 44 Sales and Marketing Expenses Sales and marketing expenses increased by approximately $989,000, or 25%, from approximately $3,956,000 for the year ended December 31, 2023 to approximately $4,945,000 for the year ended December 31, 2024.
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.
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.
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.
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.
Technology Technology expenses increased by approximately $911,000, or 34%, from approximately $2,656,000 for the year ended December 31, 2022 to approximately $3,567,000 for the year ended December 31, 2023.
Technology Technology expenses decreased by approximately $37,000, or 1%, from approximately $3,567,000 for the year ended December 31, 2023 to approximately $3,530,000 for the year ended December 31, 2024.
The increase was primarily attributable to increases in payroll and related expenses of approximately $345,000, external marketing expense of approximately $201,000, and general operating expenses related to sales and marketing of approximately $6,000, which were partially offset by a decrease in advertising and promotions expense of approximately $41,000. ​ Supply Development Supply development expenses increased by approximately $229,000, or 29%, from approximately $801,000 for the year ended December 31, 2022 to approximately $1,030,000 for the year ended December 31, 2023.
The increase was primarily attributable to increases in external marketing expense of approximately $1,618,000 and advertising and promotions expense of approximately $201,000, which were partially offset by a decrease in payroll and related expenses of approximately $773,000 and general operating expenses related to sales and marketing of approximately $57,000.
We generate revenue by procuring various specimens from hospitals, laboratories, and other supply sites comprising our network, and delivering them to its medical research customers using its proprietary software to identify and locate the required specimens. Costs paid to acquire specimens from hospitals and laboratories generally varies depending upon the sample type, collection requirements, and data provided.
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.
Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. ​ 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 that connects researchers to subjects, specimens, and associated data.
Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. 38 Overview We were incorporated in 2009 under the laws of the state of Delaware.
Net cash used in investing activities for the year ended December 31, 2023 consisted of approximately $13,040,000 of purchases of available-for-sale securities, approximately $3,767,000 of capitalization of internally developed software, approximately $958,000 of capitalization of other intangible assets and approximately $19,000 of purchases of property and equipment, which were offset by $10,556,000 of proceeds from sale and maturities of available-for-sale securities. ​ Net cash used in investing activities for the year ended December 31, 2022 consisted of approximately $2,976,000 of capitalization of internally developed software and approximately $216,000 for purchase of property and equipment. ​ Financing Activities ​ Net cash provided by financing activities was approximately $71,000 for the year ended December 31, 2023, which consisted of approximately $71,000 received from the exercise of stock options. ​ Net cash used in financing activities was approximately $3,421,000 for the year ended December 31, 2022, which consisted of $3,500,000 for the payoff of the Term Loan, which was offset by approximately $79,000 of proceeds 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.
Net cash provided by financing activities was approximately $71,000 for the year ended December 31, 2023, which consisted of approximately $71,000 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.
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.
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 sold 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.
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 Annual Report.
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 Annual Report.
We completed the implementation of a next day quote system in the third quarter and we have already started to see positive results, as evidenced by increased conversion ratios of quotes to purchase orders which has contributed to the increased revenue results for the second half of 2023. ​ During the first half of 2023, technology projects were green-lighted to accelerate development timelines.
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 41%.
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 fulfilment.
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.
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.
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 are committed to investing in and developing our technology. During the year ended December 31, 2023, we capitalized approximately $3,767,000 of internally developed software costs with plans to invest at significantly lower levels in 2024.
Investing Activities During the year ended December 31, 2024, we invested approximately $653,000 in further developing our iSpecimen Marketplace technology with plans to invest at a much lower level in 2025, in comparison to the cash invested during the year ended December 31, 2023 of approximately $3,767,000.
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. ​ 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.
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. 42 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.
We have 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. We have been reengaging our suppliers in a more meaningful manner which assisted us in the implementation of our next day quote system.
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.
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.
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.
This was primarily due to a decrease of 2,938, or 11%, in specimen count from 27,503 specimens during the year ended December 31, 2022 to 24,565 specimens during the year ended December 31, 2023.
The increase in the average selling price per specimen was offset by a decrease of 168, or 0.7%, in specimen count from 24,565 specimens during the year ended December 31, 2023 to 24,397 specimens during the year ended December 31, 2024.
This inflation is affecting employee salaries, which account for a significant portion of our operating costs.
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.
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. ​ Term Loan ​ On August 13, 2021, we entered into a loan agreement (the “Term Loan”) and as a result, received proceeds of $3,500,000.
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.
We performed an impairment analysis of our internally developed software as of the measurement date of December 31, 2023 and concluded that the net book value of the asset is recoverable. There has been no material changes to our estimates as of December 31, 2023. Sequenced Data Cost ​ We capitalize the purchase cost of sequenced data.
We performed an impairment analysis of our internally developed software as of the measurement date of December 31, 2024 and concluded that a small portion the net book value of the asset is not recoverable. During the year ended December 31, 2024, such portion were written off and reduced the net book value estimates by $327,000.
The decrease was attributable to decreases in severance costs of former executives of approximately $782,000, compensation costs of approximately $248,000, general operating expenses of approximately $156,000, professional fees of $69,000, and utilities and facilities expenses of approximately $47,000, which were partially offset by increases in bad debt expense of approximately $198,000, depreciation and amortization of approximately $95,000, and taxes and insurance of approximately $11,000.
The increase was attributable to an increase in professional fees of $381,000, franchise tax of $511,000, doubtful account expense of approximately $401,000, and write-off of IDS $327,000, which were partially offset by decreases in compensation costs of approximately $570,000, general operating expenses of approximately $139,000, depreciation and amortization of approximately $52,000, utilities and facilities expenses of approximately $40,000 and taxes and insurance of approximately $687,000.
However, 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.
In the year ended December 31, 2024, we engaged in raising capital through debt financing as discussed in Note 7 and through public equity as discussed in Note 10. We may be unsuccessful in increasing our revenues or contain our operating expenses, or we may be unable to raise additional capital on commercially favorable terms.
The effect of the decrease in specimen count was partially offset by a change in the specimen mix which caused the average selling price per specimen to increase by $26, or 7%, from approximately $378 during the year ended December 31, 2022 to $404 during the year ended December 31, 2023. ​ Cost of Revenue Cost of revenue increased by approximately $63,000, or 1%, from approximately $4,757,000 for the year ended December 31, 2022 to approximately $4,820,000 for the year ended December 31, 2023.
This was primarily due to write off of unbilled revenue offset by increase in average selling price per specimen by $4, or 1%, from approximately $404 in the year ended December 31, 2023 to approximately $408 in the year ended December 31, 2024.
We had working capital of approximately $2,190,000, an accumulated deficit of approximately $59,365,000, cash and cash equivalents and short-term investments of approximately $5,006,000 and accounts payable and accrued expenses of approximately $5,466,000. Our continued viability is dependent on the ability to successfully obtain additional working capital and/or ultimately attain profitable operations.
Our continued viability is dependent on the ability to successfully obtain additional working capital and/or ultimately attain profitable operations.
We have enhanced procedures related to our credit check process for new and existing customers in fiscal year 2023 to mitigate the risk to future collectability of receivables. ​ 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. ​ 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.
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 apply these accounting policies in a consistent manner. Our significant accounting policies are discussed in Note 2 of our financial statements. 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.
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 of our financial statements.
Financial Operations Overview and Analysis for the Years Ended December 31, 2023 and 2022 Comparison of the Years Ended December 31, 2023 and 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change ​ ​ 2023 ​ 2022 ​ Dollars ​ Percentage Revenue $ 9,928,184 $ 10,402,303 $ (474,119) (5) % Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of revenue ​ 4,820,268 ​ 4,756,965 ​ 63,303 1 % Technology ​ 3,566,917 ​ 2,656,287 ​ 910,630 34 % Sales and marketing ​ 3,955,974 ​ 3,445,344 ​ 510,630 15 % Supply development ​ 1,030,403 ​ 801,125 ​ 229,278 29 % Fulfillment ​ 1,788,879 ​ 1,995,937 ​ (207,058) (10) % General and administrative ​ 5,935,092 ​ 6,932,727 ​ (997,635) (14) % Total operating expenses ​ 21,097,533 ​ 20,588,385 ​ 509,148 2 % Loss from operations ​ (11,169,349) ​ (10,186,082) ​ 983,267 10 % Other (income) expense, net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ (16,001) ​ (238,963) ​ 222,962 93 % Interest income ​ ​ 339,750 ​ ​ 169,345 ​ ​ 170,405 ​ 101 % Interest and penalties on sales tax liability ​ ​ (214,784) ​ ​ — ​ ​ (214,784) ​ (100) % Other income (expense), net ​ ​ (39,104) ​ ​ 9,778 ​ ​ (48,882) ​ (500) % Total other income (expense), net ​ 69,861 ​ (59,840) ​ 129,701 217 % Net loss ​ $ (11,099,488) ​ $ (10,245,922) ​ ​ (853,566) (8) % ​ Revenue Revenue decreased by approximately $474,000, or 5%, from approximately $10,402,000 for the year ended December 31, 2022 to approximately $9,928,000 for the year ended December 31, 2023.
Financial Operations Overview and Analysis for the Years Ended December 31, 2024 and 2023 Comparison of the Years Ended December 31, 2024 and 2023 Change 2024 2023 Dollars Percentage Revenue $ 9,291,115 $ 9,928,184 $ (637,069 ) (6 )% Operating expenses: Cost of revenue 5,302,712 4,820,268 482,444 10 % Technology 3,530,291 3,566,917 (36,626 ) (1 )% Sales and marketing 4,945,269 3,955,974 989,295 25 % Supply development 537,888 1,030,403 (492,515 ) (48 )% Fulfillment 1,635,724 1,788,879 (153,155 ) (9 )% General and administrative 6,067,276 5,935,092 132,184 2 % Total operating expenses 22,019,160 21,097,533 921,627 4 % Loss from operations (12,728,045 ) (11,169,349 ) 1,558,696 14 % Other (income) expense, net Interest expense (173,771 ) (16,001 ) (157,770 ) 986 % Interest income 44,133 339,750 (295,617 ) (87 )% Interest and penalties on sales tax liability (46,303 ) (214,784 ) 168,481 (78 )% Other income (expense), net 406,181 (39,104 ) 445,285 (1,139 )% Total other income, net 230,240 69,861 160,379 (230 )% Net loss $ (12,497,805 ) $ (11,099,488 ) (1,398,317 ) 13 % Revenue Revenue decreased by approximately $637,000, or 6%, from approximately $9,928,000 for the year ended December 31, 2023 to approximately $9,291,000 for the year ended December 31, 2024.
As of December 31, 2023, our available cash and available-for-sale securities totaled approximately $5,006,000, which represented a decrease of approximately $10,303,000 from approximately $15,309,000, as of December 31, 2022.
As of December 31, 2024, our available cash and available-for-sale securities totaled approximately $1,878,000, which represented a decrease of approximately $465,000 from approximately $2,344,000, as of December 31, 2023. We had working capital deficit of approximately $2,182,000, an accumulated deficit of approximately $71,863,000, cash and cash equivalents of approximately $1,878,000 and accounts payable and accrued expenses of approximately $5,366,000.
Liquidity and Capital Resources ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change ​ ​ ​ December 31, 2023 ​ December 31, 2022 ​ Dollars ​ Percentage ​ Balance Sheet Data: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 2,343,666 ​ $ 15,308,710 ​ $ (12,965,044) ​ (85) % Available-for-sale securities ​ ​ 2,661,932 ​ ​ — ​ ​ 2,661,932 ​ 100 % Working capital ​ ​ 2,189,673 ​ ​ 15,394,634 ​ ​ (13,204,961) ​ (86) % Total assets ​ ​ 15,819,137 ​ ​ 24,617,653 ​ ​ (8,798,516) ​ (36) % Total stockholders' equity ​ ​ 9,741,077 ​ ​ 20,309,170 ​ ​ (10,568,093) ​ (52) % 50 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2023 2022 Dollars Percentage Statement of Cash Flow Data: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash flows used in operating activities ​ $ (5,807,550) ​ $ (5,817,720) ​ $ 10,170 ​ (0) % Net cash flows used in investing activities ​ (7,228,383) ​ (3,191,190) ​ (4,037,193) 127 % Net cash flows provided by financing activities ​ 70,889 ​ (3,421,359) ​ 3,492,248 (102) % Net decrease in cash and cash equivalents ​ $ (12,965,044) ​ $ (12,430,269) ​ $ (534,775) ​ ​ ​ ​ Capital Resources We have had recurring losses since inception.
The increase in other income (expense), net, was attributable to an increase of other income of approximately $445,000 and decrease in interest and penalties on sales tax liability of approximately $168,000, partially offset by increase in interest expense of approximately $157,000, and a decrease in interest income of approximately $296,000. 45 Liquidity and Capital Resources December 31, December 31, Change 2024 2023 Dollars Percentage Balance Sheet Data: Cash and cash equivalents $ 1,878,408 $ 2,343,666 $ (465,258 ) (20 )% Available-for-sale securities - 2,661,932 (2,661,932 ) 100 % Working capital (deficiency) (2,182,488 ) 2,189,673 (4,372,161 ) (200 )% Total assets 10,019,551 15,819,137 (5,799,586 ) (37 )% Total stockholders’ equity 3,980,329 9,741,077 (5,760,748 ) (59 )% Years Ended December 31, Change 2024 2023 Dollars Percentage Statement of Cash Flow Data: Net cash flows used in operating activities $ (8,263,713 ) $ (5,807,550 ) $ (2,456,163 ) 42 % Net cash flows provided by (used in) investing activities 1,979,554 (7,228,383 ) (9,207,937 ) (127 )% Net cash flows provided by financing activities 5,818,901 70,889 5,748,012 8,108 % Net decrease in cash and cash equivalents $ (465,258 ) $ (12,965,044 ) $ 12,499,786 Capital Resources We have recurring losses since inception.
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 as of December 31, 2023 due to certain boutique life sciences customers either lack liquidity or have filed for bankruptcy.
We increased our allowance for doubtful accounts in accounts receivables by $99,536 as of December 31, 2024 due to certain customers either lack liquidity or have filed for bankruptcy. We have enhanced procedures related to our credit check process for new and existing customers in fiscal year 2024 to mitigate the risk to future collectability of receivables.
We intend to sell Shares, from time to time, pursuant to the ATM Agreement, in transactions that are “at the market offerings” as defined in Rule 415(a)(4) promulgated under the Securities Act. ​ 45 Table of Contents 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.
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.
The increase was primarily attributable to an increase in professional fees of approximately $372,000, which was partially offset by decreases in payroll and related expenses of approximately $141,000 and general supply development expenses of approximately $2,000.
Supply Development Supply development expenses decreased by approximately $492,000, or 48%, from approximately $1,030,000 for the year ended December 31, 2023 to approximately $538,000 for the year ended December 31, 2024. The decrease was primarily attributable to a decrease in professional fees of approximately $278,000, payroll and related expenses of approximately $189,000 and general supply development expenses of approximately $25,000.
Removed
This funding was used to settle the remaining balance of $3,000,000 on the then outstanding bridge notes, as amended (“the Bridge Notes”). On November 3, 2022, the Company settled in cash the remaining principal balance plus accrued and unpaid interest of the Term Loan in the amount of $3.4 million.
Added
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 Woburn, Massachusetts. We operate as one operating and reporting segment.
Removed
Upon repayment of the Term Loan, the Loan Facility was terminated and the security interest in the assets of the Company was released.
Added
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.
Removed
Throughout the year of 2023 and primarily on September 6, 2023, we executed a reduction in workforce, 46 Table of Contents resulting in an estimated reduction in monthly compensation costs of 29% and additional expenditure reductions estimated to be over 50% of monthly expenditures for the remainder of the year, after streamlining operations and rationalizing resources to focus on key market opportunities.
Added
During the year ended December 31, 2024, we issued 199,004 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.
Removed
As a result, we experienced a significant decrease in expenditures during the second half of 2023 compared to the first half of 2023. One of our key new revenue enhancement initiatives is to identify, through sequencing, high value cancer patients which possess specific mutations in donor Formalin-Fixed Paraffin-Embedded (“FFPE”) blocks.
Added
Reverse Stock Split On October 9, 2023, we received a notification from Nasdaq that our Common Stock failed to maintain a minimum bid price of $1.00 over the previous 30 consecutive business days as required by the Listing Rules of The Nasdaq Stock Market.
Removed
We have invested in active repetitive screening to create a virtual inventory of availability for our research customers in areas of high value. This initiative is extremely valuable, not only to our business, but we believe, for the entire industry.
Added
On July 19, 2024, our stockholders approved a proposal to amend our Fourth Amended and Restated Certificate of Incorporation to effect a reverse stock split of our issued and outstanding shares of common stock, as well as any shares of common stock held by the Company in treasury, at a ratio in the range from 1-for-10 to 1-for-20.
Removed
We have entered into contracts with qualified suppliers to provide specific high value FFPE blocks which, we believe, could result in significant revenue share options. The power of our supplier network makes this initiative possible and when paired with the search functionality of our proprietary iSpecimen Marketplace, it provides an easier solution than what currently exists in our industry.
Added
On August 19, 2024, the Board approved a one-for-twenty (1:20) reverse stock split of our issued and outstanding shares of common stock. On September 13, 2024, we filed with the Secretary of State of the State of Delaware a Certificate of Amendment to our Certificate of Incorporation to effect the Reverse Stock Split.
Removed
We formally launched this initiative towards the end of the third quarter of 2023 and have recognized a modest level of revenue since then. We now have opportunities and purchase orders, most of which are expected to be fulfilled in 2024.
Added
The Reverse Stock Split became effective on September 13, 2024, and our common stock began trading on a split-adjusted basis on Nasdaq on September 16, 2024.
Removed
We own the data generated from sequencing of the FFPE blocks, and we are now creating a database of research content of our specific high value sequenced data that, we believe, will generate additional reiterative revenue by selling to researchers access to the database. ​ Our iSpecimen Marketplace Onsite Program, which offers additional support to our biospecimen supplier partners, is underway and we have begun to appoint iSpecimen Marketplace Onsite coordinators, whose responsibility is to field all requests made by the supplier partner and submit proposals on behalf of the supplier partner, resulting in the acceleration of fulfillment with streamlined sample-related management and reduced strain on existing supplier staff and product pipelines.
Added
On October 1, 2024, we received a notification from Nasdaq that the Staff has determined that for the last 11 consecutive business days, from September 16, 2024 to September 30, 2024, the closing bid price of our Common Stock was $1.00 per share or greater. Accordingly, we regained compliance with Listing Rule 5559(a)(2).
Removed
These investments have already resulted in meaningful progress which includes an updated search functionality, improved user interface, increased automation, and an enhanced matchmaking function of the iSpecimen Marketplace platform.
Added
Except as otherwise indicated, all references to our common stock, share data, per share data and related information have been adjusted for the Reverse Stock Split ratio of 1-for-20 as if they had occurred at the beginning of the earliest period presented.

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