iSpecimen Inc.

Previous wording

On July 31, 2025, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company agreed to issue and sell, in a private placement (the “Private Placement”), an aggregate of 38,996 securities, comprised of (i) 6,684 shares of Common Stock at a purchase price of $44.88 per Share, and (ii) pre-funded warrants to purchase up to 32,311 shares of Common Stock at a purchase price of $44.88 per Share, for aggregate gross proceeds of $1,749,998, before deducting placement agent fees and other offering expenses. The pre-funded warrants are immediately exercisable until such time as the pre-funded warrants are exercised in full. The Private Placement closed on August 4, 2025.

Current wording

On July 31, 2025, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company agreed to issue and sell, in a private placement (the “Private Placement”), an aggregate of 38,997 securities, comprised of (i) 6,685 shares of Common Stock at a purchase price of $44.88 per Share, and (ii) pre-funded warrants to purchase up to 32,312 shares of Common Stock at a purchase price of $44.88 per Share, for aggregate gross proceeds of $1,749,998, before deducting placement agent fees and other offering expenses. The pre-funded warrants are immediately exercisable until such time as the pre-funded warrants are exercised in full. The Private Placement closed on August 4, 2025.

Previous wording

On May 8, 2026, the Company entered into the Purchase Agreement with certain Investors, pursuant to which the Company agreed to issue and sell 488,281 Shares, at a purchase price of $5.12 per Share. In lieu of Shares that would otherwise result in a purchaser’s beneficial ownership exceeding 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of such Shares, certain purchasers may elect to receive Pre-Funded Warrants at a purchase price of $5.1199 per Pre-Funded Warrant (equal to the per Share purchase price less $0.0001). Each Pre-Funded Warrant is exercisable immediately upon issuance for one share of Common Stock at an exercise price of $0.0001 per share and will remain exercisable until exercised in full. The offering closed on May 11, 2026.

Current wording

On May 8, 2026, the Company entered into the securities purchase agreement with certain accredited investors, pursuant to which the Company agreed to issue and sell, in a private placement, an aggregate of 488,281 securities, comprised of (i) 85,202 shares of Common Stock at a purchase price of $5.12 per Share, and (ii) 403,088 pre-funded warrants to purchase up to 403,088 shares of Common Stock at a purchase price of $5.1199 per Pre-Funded Warrant (equal to the per Share purchase price less $0.0001), for aggregate gross proceeds of $2,500,000, before deducting placement agent fees and other offering expenses. Each Pre-Funded Warrant is exercisable immediately upon issuance for one share of Common Stock at an exercise price of $0.0001 per share and will remain exercisable until exercised in full. The offering closed on May 11, 2026.

Previous wording

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. The Reverse Stock Split combined each 20 shares of our outstanding common stock and treasury shares into one share of common stock without any change in the par value per share, and the Reverse Stock Split correspondingly adjusted, among other things, the exercise rate of our warrants and options into our common stock. No fractional shares were issued in connection with the Reverse Stock Split, and any fractional shares resulting from the Reverse Stock Split were rounded up to the nearest whole share.

Current wording

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-40 as if they had occurred at the beginning of the earliest period presented. The Reverse Stock Split combined each 40 shares of our outstanding common stock and treasury shares into one share of common stock without any change in the par value per share, and the Reverse Stock Split correspondingly adjusted, among other things, the exercise rate of our warrants and options into our common stock. No fractional shares were issued in connection with the Reverse Stock Split, and any fractional shares resulting from the Reverse Stock Split were rounded up to the nearest whole share.

Previous wording

On July 23, 2025, the Company entered into an underwriting agreement with WestPark (the “Underwriter”), pursuant to which the Company agreed to issue and sell, in an underwritten public offering, an aggregate of 142,857 securities, consisting of (i) 37,066 shares of Common Stock, and (ii) pre-funded warrants to purchase up to 105,791 shares of Common Stock, at an exercise price of $0.004 per share. The securities were sold at a public offering price of $28 per share (or $27.99 per pre-funded warrant), for gross proceeds of $3,999,574, before deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. The pre-funded warrants are immediately exercisable until such time as the pre-funded warrants are exercised in full. The offering closed on July 25, 2025.

Current wording

On July 23, 2025, the Company entered into an underwriting agreement with WestPark (the “Underwriter”), pursuant to which the Company agreed to issue and sell, in an underwritten public offering, an aggregate of 142,862 securities, consisting of (i) 37,067 shares of Common Stock, and (ii) pre-funded warrants to purchase up to 105,795 shares of Common Stock, at an exercise price of $0.004 per share. The securities were sold at a public offering price of $28 per share (or $27.99 per pre-funded warrant), for gross proceeds of $3,999,574, before deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. The pre-funded warrants are immediately exercisable until such time as the pre-funded warrants are exercised in full. The offering closed on July 25, 2025.

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 $369 as of March 31, 2026 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 the first quarter of 2026 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 decreased our allowance for doubtful accounts in accounts receivable by $11,275 as of June 30, 2026 due to certain customers that either lack liquidity or have filed for bankruptcy. We have enhanced procedures related to our credit check process for new and existing customers in the second quarter of 2026 to mitigate the risk to future collectability of receivables.

Previous wording

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

Current wording

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

Previous wording

During the three months ended March 31, 2026, 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 reductions 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 39% during the year December 31, 2025 when compared to the year ended December 31, 2024. During the first quarter of 2026, the reductions in workforce resulted in an estimated reduction in monthly compensation costs of approximately 70% and technology costs of approximately 36% during the three months ended March 31, 2026, when compared to the three months ended March 31, 2025.

Current wording

During the six months ended June 30, 2026, 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 reductions 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 39% during the year ended December 31, 2025 when compared to the year ended December 31, 2024. During the second quarter of 2026, the reductions in workforce resulted in an estimated reduction in monthly compensation costs of approximately 17% when compared to the six months ended June 30, 2025. Technology costs increased approximately 455% during the six months ended June 30, 2026 when compared to the six months ended June 30, 2025 as a result of the development and improvement of the Company’s internally developed software.

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 and up to the first quarter of 2026, 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.

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 up to the second quarter of 2026, as evidenced by increased conversion ratios of quotes to purchase orders of 43%. 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 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 three months ended March 31, 2026 and 2025, we capitalized approximately $1,700,000 and $0, respectively, of internally developed software costs, of which $1,000,000 was reclassified from 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.

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 six months ended June 30, 2026 and 2025, we capitalized approximately $1,700,000 and $0, respectively, of internally developed software costs, of which $1,000,000 was reclassified from 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

Financial Operations Overview and Analysis for the Three Months Ended March 31, 2026 and 2025 (Unaudited)

Current wording

Financial Operations Overview and Analysis for the Three and Six Months Ended June 30, 2026 and 2025 (Unaudited)

Previous wording

Revenue decreased by approximately $902,000, or 85%, from approximately $1,058,000 for the three months ended March 31, 2025 to approximately $156,000 for the three months ended March 31, 2026. This was primarily due to the decrease of 1,419, or approximately 61%, in specimen count from 2,309 specimens in the three months ended March 31, 2025 to 890 specimens in the three months ended March 31, 2026.

Current wording

Revenue decreased by approximately $561,000, or 79%, from approximately $713,000 for the three months ended June 30, 2025 to approximately $152,000 for the three months ended June 30, 2026. This was primarily due to the decrease of 2,198, or approximately 87%, in specimen count from 2,533 specimens in the three months ended June 30, 2025 to 335 specimens in the three months ended June 30, 2026.

Previous wording

The effect of the decrease in specimen count also caused the average selling price per specimen to decrease by $283, or 62%, from approximately $458 during the three months ended March 31, 2025 to $175 during the three months ended March 31, 2026. The significant decline in revenue was mainly due to decrease in customers’ orders and procurement during the three months ended March 31, 2026.

Current wording

The effect of the decrease in specimen count also caused the average selling price per specimen to increase by $172, or 61%, from approximately $282 during the three months ended June 30, 2025 to $454 during the three months ended June 30, 2026. The significant decline in revenue was mainly due to decrease in customers’ orders and procurement during the three months ended June 30, 2026.

Previous wording

Cost of revenue decreased by approximately $573,000, or 87%, from approximately $657,000 for the three months ended March 31, 2025 to approximately $84,000 for the three months ended March 31, 2026, which was attributable to an approximately 62% decrease in the number of specimens delivered for the current period as compared to the accessioned specimens in the same period in the prior year, and an approximately $190, or 67%, decrease in the average cost per specimen.

Current wording

Cost of revenue decreased by approximately $361,000, or 81%, from approximately $444,000 for the three months ended June 30, 2025 to approximately $83,000 for the three months ended June 30, 2026, which was attributable to an approximately 87% decrease in the number of specimens delivered for the current period as compared to the same period in the prior year, offset by an approximately $73, or 42%, increase in the average cost per specimen.

Previous wording

Technology expenses decreased by approximately $298,000, or 55%, from approximately $545,000 for the three months ended March 31, 2025 to approximately $248,000 for the three months ended March 31, 2026. The decrease was related to decrease in amortization expense of internally developed software of approximately $234,000 and payroll and related expenses of approximately $81,000, which was partially offset by the increase in professional fees of approximately $17,000.

Current wording

Technology expenses decreased by approximately $246,000, or 46%, from approximately $536,000 for the three months ended June 30, 2025 to approximately $290,000 for the three months ended June 30, 2026. The decrease was related to decrease in amortization expense of internally developed software of approximately $168,000, payroll and related expenses of approximately $23,000, and professional fees of approximately $55,000.

Previous wording

Sales and marketing expenses increased by approximately $1,195,000, or 344%, from approximately $347,000 for the three months ended March 31, 2025 to approximately $1,542,000 for the three months ended March 31, 2026. The increase was primarily attributable to increases in external marketing expense of approximately $1,501,000, which was partially offset by the decrease in payroll and related expenses of approximately $259,000 and advertising and promotions expense of approximately $45,000.

Current wording

Sales and marketing expenses increased by approximately $286,000, or 111%, from approximately $258,000 for the three months ended June 30, 2025 to approximately $544,000 for the three months ended June 30, 2026. The increase was primarily attributable to increase in advertising and promotions expense of approximately $468,000, which was partially offset by decrease in payroll and related expenses of approximately $166,000, external marketing expense of approximately $13,000 and general operating expenses related to sales and marketing of approximately $3,000.

Previous wording

Supply development expenses decreased by approximately $60,000, or 64%, from approximately $94,000 for the three months ended March 31, 2025 to approximately $34,000 for the three months ended March 31, 2026. The decrease was primarily attributable to a decrease in payroll and related expenses of approximately $60,000.

Current wording

Supply development expenses decreased by approximately $62,000, or 62%, from approximately $99,000 for the three months ended June 30, 2025 to approximately $37,000 for the three months ended June 30, 2026. The decrease was primarily attributable to a decrease in payroll and related expenses of approximately $10,000 and professional fees of approximately $52,000.

Previous wording

General and administrative expenses decreased by approximately $78,000, or 10%, from approximately $759,000 for the three months ended March 31, 2025 to approximately $680,000 for the three months ended March 31, 2026. The decrease was attributable to a decrease in professional fees of approximately $91,000, utilities and facilities expenses of approximately $2,000, doubtful account expense of approximately $111,000, amortization and depreciation of approximately $15,000, taxes and insurance of approximately $95,000, and franchise tax of $20,000, which were partially offset by the increase in compensation costs of approximately $253,000 and general operating expenses of approximately $3,000.

Current wording

General and administrative expenses decreased by approximately $506,000, or 53%, from approximately $948,000 for the three months ended June 30, 2025 to approximately $442,000 for the three months ended June 30, 2026. The decrease was attributable to a decrease in compensation costs of approximately $349,000, professional fees of approximately $138,000, utilities and facilities expenses of approximately $1,000, taxes and insurance of approximately $47,000, depreciation and amortization of approximately $15,000 and franchise tax of approximately $63,000, which was partially offset by the increase in doubtful account expense of approximately $90,000 and general operating expenses of approximately $17,000.

Previous wording

Other income, net, increased by approximately $283,000, or 1,415%, from an income of approximately $20,000 for the three months ended March 31, 2025 to approximately $263,000 for the three months ended March 31, 2026. The decrease in other income, net, was attributable to the increase of other income of approximately $266,000, decrease in interest income of approximately $2,000, decrease in recovery of interest and penalties on sales tax liability of approximately $17,000 and increase in interest expense of approximately $2,000.

Current wording

Other income, net, decreased by approximately $774,000, or 100%, from an income of approximately $774,000 for the three months ended June 30, 2025 to approximately $175 for the three months ended June 30, 2026. The decrease in other income, net, was attributable to the decrease of other income of approximately $764,000, interest and penalties on sales tax liability of approximately $10,000 and decrease in interest income of approximately $0.

Previous wording

Technology expenditures capitalized as internally developed software costs increased by approximately $700,000, or 100%, from approximately $0 for the three months ended March 31, 2025 to $700,000 for the three months ended March 31, 2026 due to installation of a new platform to modernize the Company’s internally developed software, as part of the digital transformation program in 2025 when compared to the reductions in workforce stemming from our decision to invest in the software at a significantly lower level in 2025 and 2024.

Current wording

Technology expenditures capitalized as internally developed software costs increased by approximately $700,000, or 100%, from approximately $0 for the six months ended June 30, 2025 to $700,000 for the six months ended June 30, 2026 due to installation of a new platform to modernize the Company’s internally developed software, as part of the digital transformation program in 2025 when compared to the reductions in workforce stemming from our decision to invest in the software at a significantly lower level in 2025 and 2024.

Previous wording

Fulfillment costs decreased by approximately $188,000, or 64%, from approximately $294,000 for the three months ended March 31, 2025 to approximately $106,000 for the three months ended March 31, 2026. The decrease was primarily attributable to a decrease in payroll and related expenses of approximately $185,000 for personnel engaged in order fulfillment and general operating expenses related to fulfillment of approximately $3,000.

Current wording

Fulfillment costs decreased by approximately $319,000, or 59%, from approximately $542,000 for the six months ended June 30, 2025 to approximately $223,000 for the six months ended June 30, 2026. The decrease was primarily attributable to a decrease in professional fees of approximately $1,000, payroll and related expenses of approximately $315,000 for personnel engaged in pre-sales feasibility assessments and order fulfillment and general operating expenses related to fulfillment of approximately $3,000.

Previous wording

We have recurring losses since inception. As of March 31, 2026, our available cash and cash equivalents totaled approximately $2,818,989, which represented a decrease of approximately $4,062,000 from approximately $6,881,000, as of December 31, 2025. We had working capital deficit of approximately $2,116,000, an accumulated deficit of approximately $84,625,000, cash and cash equivalents of approximately $2,819,000 and accounts payable and accrued expenses of approximately $5,351,000. Our continued viability is dependent on the ability to successfully obtain additional working capital and/or ultimately attain profitable operations. During the three months ended March 31, 2026, 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 reductions 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 39% during the year December 31, 2025 when compared to the year ended December 31, 2024. During the first quarter of 2026, the reductions in workforce resulted in an estimated reduction in monthly compensation costs of approximately 70% and technology costs of approximately 36% during the three months ended March 31, 2026, when compared to the three months ended March 31, 2025. While the Company plans to improve its sales and revenues, the Company is taking steps to significantly reduce and manage expenditures to improve its financial position and ensure continued funding of operations. However, as certain elements of the Company’s operating plan are not within the Company’s control, the Company is unable to assess their probability of success. During the year ended December 31, 2025, the Company engaged in raising capital through equity financing as discussed in Note 10.

Current wording

We have recurring losses since inception. As of June 30, 2026, our available cash and cash equivalents totaled approximately $4,414,000, which represented a decrease of approximately $2,466,000 from approximately $6,881,000 as of December 31, 2025. We had a working capital deficit of approximately $993,000, an accumulated deficit of approximately $85,988,000, cash and cash equivalents of approximately $4,414,000, and accounts payable and accrued expenses of approximately $5,291,000. Our continued viability is dependent on the ability to successfully obtain additional working capital and/or ultimately attain profitable operations. During the six months ended June 30, 2026, 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 reductions 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 39% during the year ended December 31, 2025 when compared to the year ended December 31, 2024. During the second quarter of 2026, the reductions in workforce resulted in an estimated reduction in monthly compensation costs of approximately 17% during the six months ended June 30, 2026 when compared to the six months ended June 30, 2025. Technology costs increased approximately 450% during the six months ended June 30, 2026 when compared to the six months ended June 30, 2025 as a result of the development and improvement of the Company’s internally developed software. While the Company plans to improve its sales and revenues, the Company is taking steps to significantly reduce and manage expenditures to improve its financial position and ensure continued funding of operations. However, as certain elements of the Company’s operating plan are not within the Company’s control, the Company is unable to assess their probability of success. During the year ended December 31, 2025, the Company engaged in raising capital through equity financing as discussed in Note 8.

Previous wording

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. 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.

Current wording

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

Previous wording

For the three months ended March 31, 2025, net cash used in operating activities was approximately $1,096,000, which consisted of a net loss of approximately $1,584,000 offset by non-cash charges of approximately $486,000, which included approximately of $368,000 related to amortization of internally developed software, approximately $16,000 in stock-based compensation, approximately $37,000 in bad debt expense, approximately $17,000 related to depreciation of property and equipment, and approximately $48,000 related to amortization of other intangible assets.

Current wording

For the six months ended June 30, 2026, net cash used in operating activities was approximately $4,051,000, which consisted of a net loss of approximately $3,638,000 offset by non-cash charges of approximately $73,000, which included approximately $333,000 related to amortization of internally developed software, approximately $1,000 in stock-based compensation, approximately $4,000 in bad debt recovery, approximately $5,000 related to depreciation of property and equipment, and approximately $262,000 related to gain on debt settlement.

Previous wording

Total changes in assets and liabilities of approximately $942,000 were attributable to an approximately $85,000 increase in accounts receivable, an approximately $15,000 decrease in operating lease right-of-use asset and an approximately $374,000 decrease in accounts payable, offset by an approximately $507,000 increase in prepaid expenses, an approximately $24,000 decrease in accrued expenses, an approximately $14,000 decrease in operating lease liability and an approximately $3,000 decrease in deferred revenue.

Current wording

Total changes in assets and liabilities of approximately $487,000 were attributable to an approximately $31,000 decrease in accounts receivable, an approximately $31,000 decrease in operating lease right-of-use asset and an approximately $429,000 decrease in accounts payable, offset by an approximately $23,000 increase in prepaid expenses, an approximately $28 increase in accrued expenses, an approximately $28,000 decrease in operating lease liability and an approximately $68,000 decrease in deferred revenue.

Previous wording

For the three months ended March 31, 2026, net cash used in operating activities was approximately $3,362,000, which consisted of a net loss of approximately $2,295,000 offset by non-cash charges of approximately $124,000, which included approximately of $134,000 related to amortization of internally developed software, approximately $1,000 in stock-based compensation, approximately $400 in bad debt expense, approximately $2,000 related to depreciation of property and equipment, and approximately $0 related to amortization of other intangible assets.

Current wording

For the six months ended June 30, 2025, net cash used in operating activities was approximately $1,288,000, which consisted of a net loss of approximately $2,706,000 offset by non-cash charges of approximately $901,000, which included approximately of $735,000 related to amortization of internally developed software, approximately $18,000 in stock-based compensation, approximately $18,000 in bad debt expense, approximately $34,000 related to depreciation of property and equipment, and approximately $96,000 related to amortization of other intangible assets.

Previous wording

Total changes in assets and liabilities of approximately $3,000 were attributable to an approximately $752,000 decrease in accounts receivable, an approximately $101,000 decrease in prepaid expenses, an approximately $14,000 decrease in operating lease right-of-use asset, and an approximately $90,000 decrease in deferred revenue, offset by an approximately $411,000 decrease in accounts payable, an approximately $351,000 decrease in accrued expenses and an approximately $12,000 decrease in operating lease liability.

Current wording

Total changes in assets and liabilities of approximately $517,000 were attributable to an approximately $1,055,000 decrease in accounts receivable, an approximately $60,000 decrease in prepaid expenses, an approximately $29,000 decrease in operating lease right-of-use asset, and an approximately $197,000 decrease in deferred revenue, offset by an approximately $117,000, increase in accounts payable, an approximately $523,000 decrease in accrued expenses and an approximately $24,000 decrease in operating lease liability.

Previous wording

Net cash used in investing activities was approximately $700,000 for the three months ended March 31, 2026, which consisted of approximately $700,000 of capitalization of intangible assets under development. 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 $700,000 for the six months ended June 30, 2026, which consisted of approximately $700,000 of capitalization of internally developed software. 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

The application of critical accounting policies requires that we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. These estimates and assumptions are based on historical experience and other market-specific or other relevant assumptions that we believe to be reasonable under the circumstances. We evaluate these estimates and assumptions on an ongoing basis. If actual results ultimately differ from previous estimates, the revisions are included in results of operations in the period in which the actual amounts become known. The critical accounting policies that involve the most significant management judgments and estimates used in preparation of our unaudited condensed financial statements or are the most sensitive to change from outside factors, are discussed in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes in our critical accounting policies and procedures during the three months ended March 31, 2026.

Current wording

The application of critical accounting policies requires that we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. These estimates and assumptions are based on historical experience and other market-specific or other relevant assumptions that we believe to be reasonable under the circumstances. We evaluate these estimates and assumptions on an ongoing basis. If actual results ultimately differ from previous estimates, the revisions are included in results of operations in the period in which the actual amounts become known. The critical accounting policies that involve the most significant management judgments and estimates used in preparation of our unaudited condensed financial statements or are the most sensitive to change from outside factors, are discussed in “Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. There have been no material changes in our critical accounting policies and procedures during the six months ended June 30, 2026.

Previous wording

We are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we intend to rely on certain of these exemptions, including without limitation, (i) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) complying with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (ii) December 31, 2026; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

Current wording

We are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we intend to rely on certain of these exemptions, including without limitation, (i) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) complying with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (ii) December 31, 2026; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC. Based on the foregoing, the Company expects to cease to qualify as an emerging growth company on December 31, 2026, and should prepare for compliance with all applicable requirements for non-emerging growth companies beginning with its Annual Report on Form 10-K for the year ending December 31, 2026.