iSpecimen Inc.

Previous wording

On October 29, 2024, we entered into a placement agency agreement (the “Placement Agency Agreement”) with WestPark. (the “Placement Agent”), and a securities purchase agreement (the “Securities Purchase Agreement”) with investors pursuant to which we agreed to issue and sell, in a “reasonable best efforts” public offering (the “Offering”) (i) 132,814 shares (the “Shares”) of our common stock, par value $0.0001 per share (the “Common Stock”) at an offering price of $2.999 per share, and (ii) pre-funded warrants to purchase up to 1,533,852 shares of Common Stock (the “Pre-Funded Warrants”) at an offering price of $3.00 per Share, less $0.0001 per Pre-Funded Warrant, for aggregate gross proceeds of $4,998,464 (or $4,999,998 assuming the full exercise of the Pre-Funded Warrants), before deducting placement agent fees and other offering expenses. As part of its compensation for acting as Placement Agent for the Offering, we paid the Placement Agent a cash fee of 4.0% of the aggregate gross proceeds plus reimbursement of certain expenses and legal fees. We intend to use the net proceeds of the offering for repayment of outstanding debt, potential acquisitions of assets or investments in businesses, products and technologies, and for marketing and advertising services. The remainder of the net proceeds will be used for working capital purposes.

Current wording

On October 29, 2024, we entered into a placement agency agreement (the “Placement Agency Agreement”) with WestPark. (the “Placement Agent”), and a securities purchase agreement (the “Securities Purchase Agreement”) with investors pursuant to which we agreed to issue and sell, in a “reasonable best efforts” public offering (the “Offering”) (i) 132,814 shares (the “Shares”) of our common stock, par value $0.0001 per share (the “Common Stock”) at an offering price of $2.999 per share, and (ii) pre-funded warrants to purchase up to 1,533,852 shares of Common Stock (the “Pre-Funded Warrants”) at an offering price of $3.00 per Share, less $0.0001 per Pre-Funded Warrant, for aggregate gross proceeds of $4,998,464 (or $4,999,998 assuming the full exercise of the Pre-Funded Warrants), before deducting placement agent fees and other offering expenses. The Offering closed on October 31, 2024.

Previous wording

The Offering closed on October 31, 2024. The securities sold in the Offering were offered and sold pursuant to a registration statement on Form S-1 (File No. 333-282736), which was filed with the Securities and Exchange Commission (the “Commission”) on October 18, 2024, and subsequently declared effective by the Commission on October 29, 2024.

Current wording

The securities sold in the Offering were offered and sold pursuant to a registration statement on Form S-1 (File No. 333-282736), which was filed with the Securities and Exchange Commission (the “Commission”) on October 18, 2024, and subsequently declared effective by the Commission on October 29, 2024.

Previous wording

The Company’s financial performance is subject to global economic conditions and their impact on levels of spending by our customer research organizations, particularly discretionary spending for procurement of specimens used for research. Economic recessions may have adverse consequences across industries, including the health and biospecimen industries, which may adversely affect our business and financial condition. We increased our allowance for doubtful accounts in accounts receivables by $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.

Current wording

The Company’s financial performance is subject to global economic conditions and their impact on levels of spending by our customer research organizations, particularly discretionary spending for procurement of specimens used for research. Economic recessions may have adverse consequences across industries, including the health and biospecimen industries, which may adversely affect our business and financial condition. We increased our allowance for doubtful accounts in accounts receivables by $25,634 as of December 31, 2025 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 2025 to mitigate the risk to future collectability of receivables.

Previous wording

Throughout the years ended December 31, 2024 and 2023, we have initiated efforts to decrease our capital and operational expenditures by cutting costs and right sizing the Company through reductions in our workforce while streamlining operations and rationalizing our resources to focus on key market opportunities. As a result, we began to experience significant decreases in expenditures starting in the second half of 2023. The reductions in workforce since January 1, 2023 through the end of December 31, 2024 has resulted in an estimated reduction in compensation costs of approximately 146% and technology costs of approximately 64% during the year ended December 31, 2024 when compared to the year ended December 31, 2023.

Current wording

During the year ended December 31, 2025, the Company continued its efforts, which had begun in 2023, to decrease its capital and operational expenditures by cutting costs and right sizing the Company through a reduction in workforce while streamlining operations and rationalizing resources to focus on key market opportunities. The reduction in workforce since January 1, 2024 through December 31, 2025, cumulatively resulted in an estimated reduction in monthly compensation costs of approximately 67% and technology costs of approximately 25% during the year ended December 31, 2025 when compared to year ended December 31, 2024.

Previous wording

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%. Previously, it took an extended number of days to complete a feasibility study in order to provide a customer quote, which negatively impacted the time to convert a quote to a purchase order.

Current wording

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 and 2025, as evidenced by increased conversion ratios of quotes to purchase orders of 44%. Previously, it took an extended number of days to complete a feasibility study in order to provide a customer quote, which negatively impacted the time to convert a quote to a purchase order.

Previous wording

While we are committed to developing our technology, we are investing at a significantly lower level in 2024 when compared to 2023 and prior years, while we focus on growing our revenues through key market opportunities and assessing our capital raise prospects. During the years ended December 31, 2024 and 2023, we capitalized approximately $653,000 and $3,767,000, respectively, of internally developed software costs. These investments have resulted in multiple process improvements, streamlining workflows and providing deeper insights into orders for all users of our marketplace.

Current wording

While we are committed to developing our technology, we are investing at a significantly lower level in 2025 when compared to 2024 and prior years, while we focus on growing our revenues through key market opportunities and assessing our capital raise prospects. During the years ended December 31, 2025 and 2024, we capitalized approximately $Nil and $653,000, respectively, of internally developed software costs and $1,000,000 and $Nil, respectively, of software under development. These investments have resulted in multiple process improvements, streamlining workflows and providing deeper insights into orders for all users of our marketplace.

Previous wording

We have shifted our focus from high volume to high value suppliers that meet our newly defined costs, quality and speed requirements. We established business criteria that focus on supplier capabilities and revenue growth strategies as well as technology criteria for integrating onto our iSpecimen Marketplace platform and participating with us. In the years ended December 31, 2024, we terminated 180 supplier agreements and are in the final stages of what we call our “supplier network refresh project”. This has resulted in fewer key suppliers, supported by our lean workforce and processes more effectively. We have been reengaging our suppliers in more meaningful manner which assisted us in the implementation of our next day quote system. We now have a key supplier program whereby we proactively engage with the suppliers to promote our business through marketing campaigns and supplier organizations’ offerings.

Current wording

We have shifted our focus from high volume to high value suppliers that meet our newly defined costs, quality and speed requirements. We established business criteria that focus on supplier capabilities and revenue growth strategies as well as technology criteria for integrating onto our iSpecimen Marketplace platform and participating with us. In the year ended December 31, 2024, we terminated 180 supplier agreements and are in the final stages of what we call our “supplier network refresh project”. This has resulted in fewer key suppliers, supported by our lean workforce and processes more effectively. We have been reengaging our suppliers in more meaningful manner which assisted us in the implementation of our next day quote system. We now have a key supplier program whereby we proactively engage with the suppliers to promote our business through marketing campaigns and supplier organizations’ offerings.

Previous wording

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. 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. 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.

Current wording

Revenue decreased by approximately $7,362,000, or 79%, from approximately $9,291,000 for the year ended December 31, 2024 to approximately $1,929,000 for the year ended December 31, 2025. This was primarily due to the decrease of 17,714, or approximately 77%, in specimen count from 23,139 specimens in fiscal 2024 to 5,425 specimens in fiscal 2025. The effect of the decrease in specimen count also caused the average selling price per specimen to decrease by $46, or 11%, from approximately $402 during the year ended December 31, 2024 to $356 during the year ended December 31, 2025. The significant decline in revenue was mainly due to decrease in customers’ orders and procurement during the year ended December 31, 2025.

Previous wording

Cost of revenue increased by approximately $482,000, or 10%, from approximately $4,820,000 for the year ended December 31, 2023 to approximately $5,303,000 for the year ended December 31, 2024. 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.

Current wording

Cost of revenue decreased by approximately $3,398,000, or 64%, from approximately $5,303,000 for the year ended December 31, 2024 to approximately $1,905,000 for the year ended December 31, 2025 which was attributable to an approximately 64% decrease in the number of specimens delivered for the current year as compared to the accessioned specimens in the prior year, offset by an approximately $47, or 21%, increase in the average cost per specimen.

Previous wording

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 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.

Current wording

Technology expenses decreased by approximately $1,370,000, or 39%, from approximately $3,530,000 for the year ended December 31, 2024 to approximately $2,160,000 for the year ended December 31, 2025. The decrease was related to decrease in amortization expense of internally developed software of approximately $491,000, payroll and related expenses of approximately $887,000 and general operating expenses related to technology expenses of approximately $1,000, which was partially offset by the increase in professional fees of approximately $9,000.

Previous wording

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. 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.

Current wording

Sales and marketing expenses decreased by approximately $2,650,000, or 54%, from approximately $4,945,000 for the year ended December 31, 2024 to approximately $2,296,000 for the year ended December 31, 2025. The decrease was primarily attributable to decrease in payroll and related expenses of approximately $1,713,000, advertising and promotions expense of approximately $296,000 and external marketing expense of approximately $649,000, which was partially offset by the increase in general operating expenses related to sales and marketing of approximately $3,000.

Previous wording

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.

Current wording

Supply development expenses decreased by approximately $291,000, or 54%, from approximately $538,000 for the year ended December 31, 2024 to approximately $247,000 for the year ended December 31, 2025. The decrease was primarily attributable to a decrease in professional fees of approximately $119,000 and payroll and related expenses of approximately $172,000.

Previous wording

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. 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.

Current wording

Fulfillment costs decreased by approximately $808,000, or 49%, from approximately $1,636,000 for the year ended December 31, 2024 to approximately $828,000 for the year ended December 31, 2025. The decrease was primarily attributable to a decrease in professional fees of approximately $19,000 and payroll and related expenses of approximately $821,000 for personnel engaged in pre-sales feasibility assessments and order fulfillment, which was partially offset by the general operating expenses related to fulfillment of approximately $32,000.

Previous wording

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. 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.

Current wording

General and administrative expenses decreased by approximately $2,595,000, or 43%, from approximately $6,067,000 for the year ended December 31, 2024 to approximately $3,472,000 for the year ended December 31, 2025. The decrease was attributable to a decrease in compensation costs of approximately $647,000, professional fees of approximately $133,000 and utilities and facilities expenses of approximately $93,000, doubtful account expense of approximately $646,000, taxes and insurance of approximately $388,000 and franchise tax of approximately $310,000, which was partially offset by the increase in general operating expenses of approximately $120,000, amortization of approximately $3,000, and write-off of IDS of approximately $274,000.

Previous wording

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. 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.

Current wording

Other income (expense), net, increased by approximately $1,740,000, or 756%, from approximately $1,510,000 other income for the year ended December 31, 2024 to approximately other expense, net of $240,000, for the year ended December 31, 2025. The increase in other income (expense), net, was attributable to a decrease of other income of approximately $1,503,000, decrease in interest and penalties on sales tax liability of approximately $38,000, decrease in interest expense of approximately $172,000, partially offset by a decrease in interest income of approximately $40,000.

Previous wording

We have recurring losses since inception. 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. Our continued viability is dependent on the ability to successfully obtain additional working capital and/or ultimately attain profitable operations. During the year ended December 31, 2023, we began initiating efforts to decrease our capital and operational expenditures by cutting costs and right sizing the Company through reductions in workforce while streamlining operations and rationalizing resources to focus on key market opportunities. The reduction in workforce since January 1, 2023 through December 31, 2024, cumulatively resulted in an estimated reduction in monthly compensation costs of approximately 146% and technology costs of approximately 64% during the year ended December 31, 2024 when compared to year ended December 31, 2023. 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. 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.

Current wording

We have recurring losses since inception. As of December 31, 2025, our available cash totaled approximately $6,881,000, which represented an increase of approximately $5,002,000 from approximately $1,878,000, as of December 31, 2024. We had working capital of approximately $723,000, an accumulated deficit of approximately $82,350,000, cash and cash equivalents of approximately $6,881,000 and accounts payable and accrued expenses of approximately $5,982,000. Our continued viability is dependent on the ability to successfully obtain additional working capital and/or ultimately attain profitable operations. During the year ended December 31, 2025, the Company continued its efforts, which had begun in 2023, to decrease its capital and operational expenditures by cutting costs and right sizing the Company through a reduction in workforce while streamlining operations and rationalizing resources to focus on key market opportunities. The reduction in workforce since January 1, 2024 through December 31, 2025, cumulatively resulted in an estimated reduction in monthly compensation costs of approximately 67% and technology costs of approximately 25% during the year ended December 31, 2025 when compared to year ended December 31, 2024. 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. In the year ended December 31, 2025, we engaged in raising capital through equity financing as discussed in Note 10.

Previous wording

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.

Current wording

For the year ended December 31, 2025, net cash used in operating activities was approximately $4,241,000, which consisted of a net loss of approximately $10,488,000 offset by non-cash charges of approximately $4,133,000, which included approximately $1,471,000 related to amortization of internally developed software, approximately $21,000 in stock-based compensation, approximately $60,000 in bad debt expense, approximately $68,000 related to depreciation of property and equipment, approximately $192,000 related to amortization of other intangible assets, approximately $1,871,000 related to write-off of internally developed software, approximately $525,000 related to write-off of other intangible assets which were offset by approximately $75,000 of write-off of accounts payable.

Previous wording

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 approximately $8,000 decrease in prepaid expenses and other current assets, offset by an approximately $156,000 decrease in operating lease liability.

Current wording

Total changes in assets and liabilities of approximately $2,114,000 were attributable to an approximately $1,336,000 decrease in accounts receivable, an approximately $45,000 increase in inventory, an approximately $194,000 decrease in prepaid expenses, an approximately $59,000 decrease in operating lease right-of-use asset, and an approximately $1,240,000 increase in accounts payable, offset by an approximately $550,000 decrease in accrued expenses, an approximately $43,000 decrease in operating lease liability, and an approximately $168,000 decrease in deferred revenue.

Previous wording

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.

Current wording

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 $4,737,000, 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.

Previous wording

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 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.

Current wording

Net cash used in investing activities was approximately $1,000,000 for the year ended December 31, 2025, which consisted of approximately $1,000,000 of capitalization of intangible assets under development and $454 purchase of property and equipment. 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.

Previous wording

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. Net cash provided by investing activities for the year ended December 31, 2024 consisted of approximately $3,150,000 of proceeds from sale and maturities of available-for-sale securities, which were offset by approximately $461,000 of purchases of available-for-sale securities, approximately $653,000 of capitalization of internally developed software, approximately $25,000 of purchases of leasehold improvements and approximately $32,000 of purchases of property and equipment.

Current wording

Net cash provided by investing activities was approximately $1,980,000 for the year ended December 31, 2024 consisted of approximately $3,150,000 of proceeds from sale and maturities of available-for-sale securities, which were offset by approximately $461,000 of purchases of available-for-sale securities, approximately $653,000 of capitalization of internally developed software, approximately $25,000 of purchases of leasehold improvements and approximately $32,000 of purchases of property and equipment.

Previous wording

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

Current wording

Our operations are heavily reliant on specimen availability, and as a result, we often receive more requests than we can fulfill. While the Company is subject to these types of supply chain constraints that are specific to the specimen industry, we have not been materially affected by the more common supply chain issues currently affecting the economy, specifically surrounding transportation.

Previous wording

We capitalize certain internal and external costs incurred during the application development stage of internal use software projects until the software is ready for its intended use. Amortization of the asset commences when the software is complete and placed into service and is recorded in operating expenses. We amortize completed internal-use software over its estimated useful life of five years on a straight-line basis. Costs incurred during the planning, training and post-implementation stages of the software development life cycle are classified as technology and expensed to operations as incurred. Costs that do not meet the capitalization criteria are expensed as incurred. 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.

Current wording

We capitalize certain internal and external costs incurred during the application development stage of internal use software projects until the software is ready for its intended use. Amortization of the asset commences when the software is complete and placed into service and is recorded in operating expenses. We amortize completed internal-use software over its estimated useful life of five years on a straight-line basis. Costs incurred during the planning, training and post-implementation stages of the software development life cycle are classified as technology and expensed to operations as incurred. Costs that do not meet the capitalization criteria are expensed as incurred. 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, 2025, such portion were written off and reduced the net book value estimates by $1,871,000 (2024 - $327,000).