iSpecimen Inc.

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

Business

iSpecimen Inc. (“iSpecimen” or the “Company”) was incorporated in 2009 under the laws of the state of Delaware. The Company has developed and launched a proprietary online marketplace platform that connects medical researchers who need access to subjects, samples, and data, with hospitals, laboratories, and other organizations who have access to them. iSpecimen is a technology-driven company founded to address a critical challenge: how to connect life science researchers who need human biofluids, tissues, and living cells (“biospecimens”) for their research, with biospecimens available (but not easily accessible) in healthcare provider organizations worldwide. The iSpecimen Marketplace platform was designed to solve this problem and transform the biospecimen procurement process to accelerate medical discovery. The Company is headquartered in Woburn, Massachusetts and its principal market is North America. The Company operates asone operating and reporting segment.

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) as determined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) for interim financial information, and, pursuant to the rules and regulations of Article 10 of Regulation S-X of the Securities Act of 1933, as amended (the “Securities Act”), published by the Securities and Exchange Commission (“SEC”) for interim financial statements. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results of operations for the periods presented. They may not include all of the information and footnotes required by GAAP for complete financial statements. Therefore, these unaudited condensed financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

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

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

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

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

On April 9, 2026, the Company’s board of directors approved a one-for-forty (1:40) reverse stock split of the Company’s issued and outstanding shares of common stock. The Reverse Stock Split became effective on April 27, 2026, and the Company’s common stock began trading on a split-adjusted basis on Nasdaq on April 28, 2026.

Except as otherwise indicated, all references to the Company’s common stock, share data, per share data and related information has been adjusted for the Reverse Stock Split ratio of 1-for-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 the Company’s common stock. No fractional shares were issued in connection with the Reverse Stock Split, and any fractional shares resulting from the Reverse Stock Split were rounded up to the nearest whole share.

Going Concern Uncertainty and Management’s Plan

The Company has recognized recurring losses since inception. As of June 30, 2026, the Company had negative working capital of $992,538, an accumulated deficit of $85,988,181, cash and cash equivalents of $4,414,364, and accounts payable and accrued expenses of $5,291,222. Since inception, the Company has relied upon raising capital and its revenues to finance operations.

The future success of the Company is dependent on its ability to successfully obtain additional working capital and/or to ultimately attain profitable operations. During the 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.

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

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

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

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company’s significant accounting policies and recent accounting standards are summarized in Note 2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. There were no significant changes to these accounting policies during the six months ended June 30, 2026.

Use of Estimates

The preparation of the Company’s unaudited condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company utilizes certain estimates in the determination of the deferred tax valuation allowances, revenue recognition, stock-based compensation, allowance for doubtful accounts, accrued expenses, and the useful lives of internally developed software and sequenced data. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results could differ from such estimates.

Concentrations of Credit Risk - Suppliers

For the six months ended June 30, 2026, one supplier (Supplier A) accounted for approximately 33.93% of the Company’s total purchases (cost of revenues). For the six months ended June 30, 2025, no supplier accounted for 10% or more of the Company’s total purchases (cost of revenues). One other supplier (Supplier B) accounted for 10% or more of total purchases (cost of revenues) in 2026 for approximately 10.54%.

The Company sources certain specimen types and related services from a limited number of suppliers. The loss of any of the significant suppliers described above, or a disruption or reduction in the volume of specimens or services they provide, could adversely affect the Company’s ability to fulfill customer orders on a timely basis and could have a material adverse effect on the Company’s business, financial condition, and results of operations.

Investments

The Company’s investments are considered to be available-for-sale and are recorded at fair value. Unrealized gains and losses are included in accumulated other comprehensive income. Purchases and sales of securities are reflected on a trade-date basis. Realized gains or losses are released from accumulated other comprehensive income and into earnings on the statement of operations, and amortization of premiums and accretion of discounts on the U.S treasury bills are recorded in interest expense or income, respectively.

The Company continually monitors the difference between its cost basis and the estimated fair value of its investments. The Company’s accounting policy for impairment recognition requires other-than-temporary impairment charges to be recorded when it determines that it is more likely than not that it will be unable to collect all amounts due according to the contractual terms of the fixed maturity security or that the anticipated recovery in fair value of the equity security will not occur in a reasonable amount of time. Impairment charges on investments are recorded based on the fair value of the investments at the measurement date or based on the value calculated using a discounted cash flow model. Credit-related impairments on fixed maturity securities that the Company does not plan to sell, and for which it is not more likely than not to be required to sell, are recognized in net income. Any non-credit related impairment is recognized as a component of other comprehensive income. Factors considered in evaluating whether a decline in value include: the length of time and the extent to which the fair value has been less than cost; the financial condition and near-term prospects of the issuer; and the likelihood that it will be required to sell the investment.

Fair Value Measurements

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

For certain financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable, the carrying amounts approximate their fair values as of June 30, 2026 and December 31, 2025, respectively, because of their short-term nature.

Revenue Recognition and Accounts Receivable

The Company recognizes revenue using the five-step approach as follows: (1) identify the contract with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the Company satisfies the performance obligations.

The Company generates revenue by procuring various specimens from hospitals, laboratories, and other supply sites, for the Company’s customers using the Company’s proprietary software, the iSpecimen Marketplace, to identify, locate, and ultimately validate the required specimens to the Company’s customers’ requested specifications. The Company’s performance obligation is to procure a specimen meeting the customer’s specification(s) from a supplier, on a “best efforts” basis, for the Company’s customer at the agreed price per specimen as indicated in the customer’s contract with the Company. The Company does not currently charge suppliers or customers for the use of the Company’s proprietary software. Each customer will execute a material and data use agreement with the Company or agree to online purchase terms, each of which includes terms such as specimen and data use, shipment terms, payment, and cancellation terms. These are then supplemented by purchase orders that specify specimen requirements including detailed inclusion/exclusion criteria, quantities to be collected, and pricing. Collectively, these customer agreements represent the Company’s contracts with its customers. Generally, contracts have fixed unit pricing. For certain specimen orders, a refundable customer deposit may be required prior to order fulfillment depending on project set-up requirements, which is presented as deferred revenue. The Company expects to recognize the deferred revenue as revenue when the Company performs its service obligation.

Specimen collections occur at supply sites within the Company’s network. “Collection” is when the specimen has been removed, or “collected” from the patient or donor. A specimen is often collected specifically for a particular Company order. Once collected, the specimen is assigned by the supplier to the Company and control of the specimen passes to the Company. “Accession” is the process whereby a collected specimen and associated data are registered and assigned in the iSpecimen Marketplace to a particular customer order, which can occur while a specimen is at the supplier site or while at the Company site and it is when control of the specimen passes to the customer. Suppliers may ship specimens to the Company or directly to the customer if specimens must be delivered within a short time period (less than 24 hours after collection) or shipping to the Company is not practical.

The Company has evaluated principal versus agent considerations as part of the Company’s revenue recognition policy. The Company has concluded that it acts as principal in the arrangement as it manages the procurement process from beginning to end and determines which suppliers will be used to fulfill an order, usually takes physical possession of the specimens, sets prices for the specimens, and bears the responsibility for customer credit risk.

The Company recognizes revenue over time, as the Company has created an asset with no alternative use to the Company, which has an enforceable right to payment for performance completed to date. At contract inception, the Company reviews a contract and related order upon receipt, to determine if the specimen ordered has an alternative use by the Company. Generally, specimens ordered do not have an alternative future use to the Company and the performance obligation is satisfied when the related specimens are delivered. In the rare circumstances where specimens do have an alternative future use, the Company’s performance obligation is satisfied at the time of shipment.

Customers are generally invoiced upon shipment. Depending on the quantity of specimens ordered, it may take several accounting periods to completely fulfill a purchase order. In other words, there can be multiple invoices issued for a single purchase order, reflecting the specimens being delivered over time.

Once a specimen that has no alternative future use and for which the Company has an enforceable right to payment, has been accessioned, the Company records the offset to revenue in accounts receivable – unbilled. Once the specimen has been shipped and invoiced, a reclassification is made from accounts receivable - unbilled to accounts receivable.

Customers are generally given fourteen days from the receipt of specimens to inspect the specimens to ensure compliance with specifications set forth in the purchase order documentation. Customers are entitled to either receive replacement specimens or receive reimbursement of payments made for such specimens. The Company has a nominal history of returns for nonacceptance of specimens delivered. When this occurs, the Company gives the customer a credit for the returns. The Company has not recorded a returns allowance.

Significant customers

For the six months ended June 30, 2026, one customer (Customer A) accounted for approximately 28.37% of the Company’s total revenues. For the six months ended June 30, 2025, one customer (Customer B) accounted for approximately 16.29% of the Company’s total revenues. Two other customers (Customer C and Customer D, respectively) accounted for 10% or more of total revenues in 2026 for approximately 14.64% and 11.44%, respectively, and one additional customer (Customer E) accounted for 10% or more of total revenues in 2025 for approximately 13.28%.

As of June 30, 2026, one customer accounted for 50.18% of total accounts receivable. As of December 31, 2025, one customer accounted for approximately 28.16% of total accounts receivable. Three other customers accounted for 10% or more of total accounts receivable as of June 30, 2026, each for approximately 13.50%. No other customer accounted for 10% or more of total accounts receivable as of December 31, 2025.

The loss of any of the customers described above, a significant reduction in their purchases, or difficulties collecting outstanding amounts due from these customers could have a material adverse effect on the Company’s business, financial condition, and results of operations.

The following table summarizes the Company’s revenue for the three and six months ended June 30, 2026 and 2025:

The Company carries its accounts receivable at the invoiced amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable to determine if an allowance for doubtful accounts is necessary, based on the current expected credit loss model. Receivables are written off when deemed uncollectible, with any future recoveries recorded as income when received. As of June 30, 2026 and December 31, 2025, the Company had an allowance for doubtful accounts of $642,489 and $646,067, respectively.

The Company applies the practical expedient to account for shipping and handling activities as fulfillment cost rather than as a separate performance obligation. Shipping and handling costs incurred are included in cost of revenue.

Since 2024, the Company recognized its revenue when the related specimens are delivered.

Internally Developed Software, Net

The Company capitalizes certain internal and external costs incurred during the application development stage of internal-use software projects until the software is ready for its intended use. Amortization of the asset commences when the software is complete and placed into service and is recorded in operating expenses. The Company amortizes completed internal-use software over its estimated useful life offive years on a straight-line basis. Costs incurred during the planning, training and post-implementation stages of the software development life cycle are classified as technology costs and are expensed to operations as incurred.

Intangible assets under development

During the year 2025, the Company internally developed its AI-powered Inventory Agent, a purpose-built tool designed to help accelerate the process of reviewing incoming biospecimen requests and matching them with available inventory across its global supplier network. The Company paid $1,000,000 in 2025 for the completion of milestone 1 and $700,000 in 2026 for the completion of milestone 2. In March 2026, the new platform was launched. The costs have been capitalized to internally developed software during the six months ended June 30, 2026, and the Company recognized $104,194 of amortization in relation to the new platform.

The Company performs the impairment test on an annual basis, or when events or changes in circumstances indicate that the carrying value may not be recoverable, and an impairment loss is recognized if the carrying amount of the intangible assets is not recoverable and exceeds fair value.

Other Intangible Assets, Net

The Company procures data generated from sequencing of Formalin-Fixed Paraffin-Embedded (“FFPE”) blocks from a third-party sequencer which the Company licenses to its customers with the sale of FFPE blocks at an additional cost. The sequenced data is also organized to form a database of research content that is available for sale through a subscription model. The Company has determined that the sequenced data is an intangible asset and capitalizes the cost to procure the sequenced data. The sequenced data is amortized to cost of revenue over an estimated useful life offive years on a straight-line basis. The costs paid to the third-party sequencer are the only costs capitalized and all other related costs are expensed to operations as incurred.

Impairment of Long-Lived Assets

Management reviews long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable. An impairment loss is recognized when expected cash flows are less than the asset’s carrying value. Long-lived assets consist of property and equipment, internal-use software and other intangible assets. No impairment charges were recorded for the six months ended June 30, 2026 and 2025.

Inventory

The Company does not speculatively purchase and bank samples in anticipation of future, unspecified needs. The Company procures specimens from its suppliers and distributes specimens to its Customers after they obtain an order for specimens from a research client. Therefore, the Company does not take possession of or inspect the quality of the specimens, given that they are shipped directly from the supply site. For this reason, the Company does not have a substantive inventory risk. However, whenever delivered specimens do not meet the specifications required by the Customers, these specimens are returned as per the Company’s return policy or discarded for replacement. The Company capitalizes the costs of all returned and rejected specimens that were not requested for replacements.

As of December 31, 2024, the inventory consisted of several types of human biospecimens – biofluids (plasma/serum) and solid tissues (blocks/curls). During the year ended December 31, 2025, the Company capitalized net additional costs of approximately $42,000 of returned specimens and recognized inventory obsolescence and write-off for a total of approximately $6,000.

Management reviews inventory assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable. During the year ended December 31, 2025, the Company performed the impairment test and concluded that an impairment loss must be recognized because most of the remaining specimens are obsolete and that those returned specimens are very difficult to sell to other customers and are deemed no longer recoverable. The Company recorded the impairment as an inventory reserve.

Debt Issuance Costs

Debt issuance costs are recorded net against the related debt and amortized to interest expense over the life of the related debt.

Stock-Based Compensation

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

The Company uses the Black-Scholes-Merton option pricing model to determine the fair value of stock options. The use of the Black-Scholes-Merton option pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock. The Company has concluded that its historical share option exercise experience does not provide a reasonable basis upon which to estimate expected term. Therefore, the expected term was determined according to the simplified method, which is the average of the vesting tranche dates and the contractual term.

Due to the lack of Company-specific historical and implied volatility data, the estimate of expected volatility is primarily based on the historical volatility of a group of similar companies that are publicly traded. For these analyses, companies with comparable characteristics are selected, including enterprise value and position within the industry, and with historical share price information sufficient to meet the expected life of the stock-based awards. The Company computes the historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of its stock-based awards.

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

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

Restricted Stock Units (“RSUs”)

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

Common Stock Warrants

The Company accounts for common stock warrants as either equity instruments or liabilities, depending on the specific terms of the warrant agreement. The warrants shall be classified as a liability if (1) the underlying shares are classified as liabilities or (2) the entity can be required under any circumstances to settle the warrant by transferring cash or other assets. The measurement of equity-classified non-employee stock-based payments is generally fixed on the grant date and are considered compensatory. For additional discussion on warrants, see Note 10.

Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss applicable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting the weighted-average number of shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. Therefore, basic and diluted net loss per share applicable to common stockholders were the same for all periods presented.

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

Recently Adopted Accounting Standards

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

In November 2023, the FASB issued ASU No. 2023-07,Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which provides amendments to improve reportable segment disclosures requirements. ASU 2023-07 expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements under ASU 2023-07 are also required for public entities with a single reportable segment. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company adopted ASU 2023-07 effective January 1, 2024. The adoption of this guidance did not have a material impact on the Company’s related disclosures.

3. PROPERTY AND EQUIPMENT, NET

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

Depreciation expense for property and equipment was $2,123, and $17,125 for the three months ended June 30, 2026 and 2025, respectively, and $4,532 and $34,228 for the six months ended June 30, 2026 and 2025, respectively.

4. INTERNALLY DEVELOPED SOFTWARE, NET

During the year ended December 31, 2025, the Company capitalized $1,000,000 of its new platform, which was initially recorded under intangible asset under development, in connection with the digital transformation of the technology platform and web interfaces. Capitalized costs consist of fees paid for the installation of a new platform to modernize the Company’s infrastructure, the first phase of its digital transformation program. As of June 30, 2026, this cost has been reclassified to internally developed software in connection with the launch and use of the new platform in March 2026.

During the six months ended June 30, 2026, the Company capitalized $700,000 of its internally developed software in connection with the digital transformation of the technology platform and web interfaces. Capitalized costs consist of fees paid for the system integration and marketplace activation of the new platform, the second phase of its digital transformation program.

The Company recognized $332,879 and $735,436 of amortization expense associated with capitalized internally developed software costs during the six months ended June 30, 2026 and 2025, respectively. Accumulated amortization associated with capitalized internally developed software costs as of June 30, 2026, and December 31, 2025, was $7,668,858 and $10,472,608, respectively.

5. OTHER INTANGIBLE ASSETS, NET

During the year ended December 31, 2025, the Company did not sequence any FFPE blocks and therefore did not capitalize any sequenced data as other intangible assets. The Company recognized $191,555 of amortization expense associated with the capitalized sequenced data during the years ended December 31, 2025 and 2024. Accumulated amortization associated with the capitalized sequenced data was $432,630 as of December 31, 2025 and $241,075 as of December 31, 2024.

During the year ended December 31, 2025, the Company wrote off the net value of other intangible assets of approximately $525,000.

6. FAIR VALUE MEASUREMENTS

As of June 30, 2026 and December 31, 2025, the Company didnot have any assets or liabilities measured at fair value on a recurring basis.

7. COMMITMENTS AND CONTINGENCIES

Leases

On July 2, 2024, the Company entered into a new operating lease (the “Woburn Lease”) of office space in Woburn, Massachusetts (the “Woburn Premises”) for a term of five years and two months, commencing on September 1, 2024, and terminating on October 30, 2029. The Company has a one-time option to extend the term of the Woburn Lease for one additional term of five years, provided that the Company is not in arrears in any payment of rent, the payment of any outstanding invoice, or otherwise in default. On June 28, 2024, the Company exercised a termination option included in the lease agreement of its former office space in Lexington, Massachusetts, and terminated the lease effective August 31, 2024.

Right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. The Company used the interest rate of 8% stated in the lease agreement to discount its real estate lease liabilities.

There are no material residual guarantees associated with any of the Company’s leases, and there are no significant restrictions or covenants included in the Company’s lease agreements. There wasno sublease rental income for the six months ended June 30, 2026, and the Company is not the lessor in any lease arrangement, and there were no related-party lease agreements.

Lease Costs

The table below presents certain information related to the lease costs for the Company’s operating lease for the six months ended June 30, 2026:

Lease Position as of June 30, 2026

Right-of-use lease assets and lease liabilities for the Company’s operating lease as of June 30, 2026 were recorded in the balance sheet as follows:

Lease Terms and Discount Rate

The table below presents certain information related to the weighted average remaining lease term and the weighted average discount rate for the Company’s operating lease as of June 30, 2026:

Undiscounted Cash Flows

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

Rent expense for the three months ended June 30, 2026 and 2025 amounted to $22,070 and $20,531, respectively. Rent expense for the six months ended June 30, 2026 and 2025 amounted to $42,711 and $41,061, respectively.

Cash Flows

Supplemental cash flow information related to the operating lease for the six months ended June 30, 2026 was as follows:

Sales Tax Payable

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

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

From the Company’s inception through the filing date of this Quarterly Report, the Company now believes that an obligation to collect and remit sales tax existed for certain of its sales of products to certain of its customers. The Company has analyzed its product sales, on an invoice-by-invoice and customer-by-customer basis, to determine which products are subject to sales tax in each jurisdiction, and determining which of its customers are exempt from sales tax, and which customers who were not exempt from sales tax have already paid compensating use tax to the appropriate jurisdiction. Part of this process includes requesting and obtaining exemption letters or representations from its customers or proof of payment of their compensating use tax. As the Company continues to make progress on this project, certain customers have notified the Company that they are not exempt from the payment of sales tax and have not remitted use tax and the Company has started to invoice such customers for past sales tax due.

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

During the year ended December 31, 2024, the Company received additional sales tax exemption letters or representations from customers. In addition to this, the Company received confirmation from certain tax jurisdictions in which it had previously accrued a potential tax liability that its specimens are exempt from tax in those jurisdictions, therefore, the Company reversed the accrued liability associated with those jurisdictions. The Company also registered in certain states and commenced the filing and remittance of sales taxes. These factors contributed to the reduction of the sales tax liability to approximately $405,000 and the related interests and penalties to approximately $119,000 as of December 31, 2024. During the year ended December 31, 2024, the Company had recovered approximately $512,000 of prior taxes from certain customers who do not have a sales tax exemption. The Company commenced VDA filings with certain tax jurisdictions in the year ended December 31, 2024, during which it started remitting its sales tax obligations.

During the year ended December 31, 2025, the Company received additional sales tax certificates from customers. As of December 31, 2025, the Company has a sales tax liability of approximately $319,000 and related interests and penalties of approximately $8,000.

As of June 30, 2026, the Company has a sales tax liability of approximately $233,000 and related interests and penalties of approximately $55,000.

As of June 30, 2026, the Company had recovered approximately $551,000 of prior taxes from certain customers who do not have a sales tax exemption. The Company did not recognize any additional loss in its statement of operations and comprehensive loss related to the sales tax liability during the six months ended June 30, 2026.

Legal Proceedings

From time to time the Company is involved in litigation, claims, and other proceedings arising in the ordinary course of business. Such litigation and other proceedings may include, but are not limited to, actions relating to employment law and misclassification, intellectual property, commercial or contractual claims, or other consumer protection statutes. Litigation and other disputes are inherently unpredictable and subject to substantial uncertainties and unfavorable resolutions could occur. As of June 30, 2026, there were legal disputes pending against the Company, as described below.

Resignation of Chief Information Officer and Filing of Demand for Arbitration

On July 25, 2024, Benjamin Bielak, the Company’s Chief Information Officer until his resignation on July 14, 2024, initiated a Demand for Arbitration against the Company with the American Arbitration Association, pursuant to the dispute resolution provisions contained in Mr. Bielak’s employment agreement. The terms and conditions of Mr. Bielak’s employment with the Company were governed by his employment agreement.

In his Demand for Arbitration, Mr. Bielak claims that the Company failed to provide him with certain bonus payments allegedly due to him for work performed in 2023 and 2024. Mr. Bielak also claims that the Company failed to provide him with severance payments allegedly due pursuant to the provisions of his employment agreement. The total amount of Mr. Bielak’s claim for alleged damages is $586,800 plus attorneys’ fees and interest.

During the year ended December 31, 2025, the Company settled this legal matter and the parties agreed to a $215,000 settlement pursuant to a settlement agreement executed on January 30, 2025.

EGS- Ellenoff Grossman & Schole LLP (“EGS”)

On or around November 14, 2024, EGS initiated a claim against the Company for $425,684 arising from a breach of contract, and compensation on a quantum meruit basis amongst other things. The Company believes that EGS’ claims are without legal or factual basis, and intends to vigorously defend these claims.

On February 15, 2026, the Company signed a settlement agreement pursuant to the existing legal matter with EGS. Per agreement, the parties agreed to a $200,000 settlement in full satisfaction of all claims. During the six months ended June 30, 2026, the Company paid the agreed amount and settled this legal matter.

Settlement Agreement with Focus Technology Solutions, LLC

On December 9, 2024, Focus Technologies, Inc. (“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. 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.

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. 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.

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. 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. 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.

On September 3, 2025, Focus reduced their global settlement demand to $100,000, and on September 9, 2025, the Company increased their offer to $30,000, which figure was rejected by Focus. Focus filed a Motion for Judgment on the Pleadings on September 12, 2025, which the Company opposed, and which was denied by the Court on September 28, 2025 without a hearing. On December 17, 2025, the Court clarified its April Order to adopt the Company’s interpretation of the pre-judgment security deposit requirement, which now allows the Company to not make any deposits when net monthly revenue is negative.

The Company will continue to seek relief from the pre-judgment security, and its counterclaim against Focus is still pending.

Azenta US, Inc. (“Azenta”)

On or around January 15, 2025, Azenta initiated a claim against the Company for $651,262 arising from a breach of contract, and unjust enrichment, among other things. The Company believes that Azenta’s claims are without legal or factual basis. Discovery has closed in this case, and the Company expects Azenta to move for summary judgment, which the Company will defend vigorously. As of the filing date of this Quarterly Report, the Company has made an offer of $125,000 to settle this case, but no response has been received from Azenta.

Krisbio, LLC (“Krisbio”)

On or about September 23, 2025 the Company was served with a Summons and Complaint in the matter of Krisbio, LLC v. iSpecimen, Inc. 1:25-CV-12409-JCB in the U.S. District Court for the District of Massachusetts seeking collection of $266,380, alleging breach of contract and other quasi-contractual claims relating to a purported “Participation Agreement” dated July 20, 2021, and subsequent agreements for payments for goods and services under said Participation Agreement. The Company has answered the Complaint, and discovery has not yet begun.

8. STOCKHOLDERS’ EQUITY

The Company’s authorized capital is 250,000,000 shares, of which (1)200,000,000 shares are common stock, par value $0.0001 per share and (2)50,000,000 shares are preferred stock, par value $0.0001 per share, which may, at the sole discretion of the Company’s board of directors, be issued in one or more series.

On April 9, 2026, the Company’s board of directors approved a one-for-forty (1:40) reverse stock split of the Company’s issued and outstanding shares of common stock. The Reverse Stock Split became effective on April 27, 2026, and the Company’s common stock began trading on a split-adjusted basis on Nasdaq on April 28, 2026.

Preferred Stock

On December 30, 2025, the Company and the Purchasers have entered into the Agreement pursuant to which the Purchasers have agreed to purchase an aggregate of 6,875 shares of Series C Convertible Preferred Stock of the Company (the “Series C Preferred Shares”) for an aggregate purchase price of $800 per Series C Preferred Share for aggregate gross proceeds of $5,500,000.00. The Series C Preferred Shares are convertible into shares of common stock, par value $0.0001 per share (the “Common Stock”).

Pursuant to that certain Placement Agency Agreement, dated as of December 30, 2025, by and between the Company and E.F. Hutton & Co. (“EF Hutton”), the Company paid EF Hutton a cash fee of 4.0% of the aggregate gross proceeds plus reimbursement of certain expenses and legal fees. The Company incurred offering costs of approximately $415,000, resulting in net proceeds of approximately $5,085,000.

During the six months ended June 30, 2026, all Series C Preferred Shares were converted to 1,192,819 common shares pursuant to the terms of conversion. As at June 30, 2026, there were no Series C Preferred Shares available for future conversion.

Underwritten Offering

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.

As part of its compensation for acting as Underwriter for the offering, the Company paid the Underwriter a cash fee of 4.0% of the aggregate gross proceeds plus reimbursement of certain expenses and legal fees. The Company incurred offering costs of approximately $419,983 and settled non-offering related legal fees of approximately $93,837, resulting in net proceeds of approximately $3,485,754.

Private Placement Offering

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. The Company incurred offering costs of approximately $100,000, resulting in net proceeds of approximately $1,649,998.

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.

Stock Options

There wereno options exercised during the six months ended June 30, 2026 and the year ended December 31, 2025.

Warrants

Underwriter Warrants

In connection with the Company’s underwriting agreement with ThinkEquity, a division of Fordham Financial Management, Inc. (“ThinkEquity”) and the representative of the Company’s IPO underwriters, the Company entered into a warrant agreement to purchase up to 113 shares of common stock to several affiliates of ThinkEquity (the “Underwriter Warrants”). The Underwriter Warrants are exercisable at a per share exercise price of $8,000.00 and are exercisable at any time and from time to time, in whole or in part, during the four- and one-half year period commencing 180 days from the effective date of the IPO registration statement. The Underwriter Warrants became exercisable on or after December 16, 2021 (six months from the effective date of the offering) and expire on June 15, 2026. Upon issuance of the Underwriter Warrants, as partial compensation for its services as an underwriter, the fair value of approximately $0.4 million was recorded as equity issuance costs in the year ended December 31, 2021. As of June 30, 2026, the Underwriter Warrants that had a weighted average exercise price of $8,000.00 per share have expired unexercised.

Lender Warrant

In connection with the loan agreement entered into with Western Alliance Bank (the “Lender”) on August 13, 2021, the Company issued a warrant (the “Lender Warrant”) to the Lender to purchase 16 shares of common stock of the Company. The Lender Warrant is exercisable at a per share exercise price of $6,400.00 and is exercisable at any time on or after August 13, 2021 through August 12, 2031. The Company determined that the Lender Warrant was equity classified. As of June 30, 2026, the Lender Warrant had not been exercised, and had a weighted average exercise price of $6,400.00 per share and a remaining weighted average time to expiration of 5.12 years.

A summary of total warrant activity during the six months ended June 30, 2026 is as follows:

9. STOCK-BASED COMPENSATION

Stock Incentive Plans

2021 Plan

In March 2021, the Company adopted the iSpecimen Inc. 2021 Stock Incentive Plan, which was subsequently amended in June 2021 and then on May 25, 2022 (the “2021 Plan”). The 2021 Plan was adopted to enhance the Company’s ability to attract, retain and motivate employees, officers, directors, consultants, and advisors by providing such persons with equity ownership opportunities and performance-based incentives. The 2021 Plan authorizes options, restricted stock, RSUs and other stock-based awards. The Company’s board of directors, or any committee to which the board of directors delegates such authority, has the sole discretion in administering, interpreting, amending, or accelerating the 2021 Plan. Awards may be made under the 2021 Plan for up to 760 shares of the Company’s common stock, and the 2021 Plan was made effective with the completion of the IPO.

On May 24, 2023, at the Company’s annual meeting of stockholders, the stockholders approved an amendment to the 2021 Plan to increase the number of shares under the 2021 Plan from 760 shares of common stock to 2,337 shares of common stock.

No equity awards were granted under the 2021 Plan during the three and six months ended June 30, 2026 and 2025. As of June 30, 2026, there were 1,830 shares of common stock available for future grants under the 2021 Plan.

2013 Plan

The iSpecimen Inc. 2013 Stock Incentive Plan (the “2013 Plan”) was adopted on April 12, 2013 and subsequently amended on July 29, 2015. The aggregate number of shares of common stock that may be issued pursuant to the 2013 Plan was 2,142.

No equity awards were granted under the 2013 Plan during the six months ended June 30, 2026 and 2025. According to the 2013 Plan, which was adopted by the Company’s board of directors on April 12, 2013, no awards shall be granted under the 2013 Plan after the completion often years from the date on which the 2013 Plan was adopted by the Company’s board of directors. Therefore, as of April 13, 2023, no further shares had been granted under the 2013 Plan.

Stock Options

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

The aggregate intrinsic value in the table above represents the difference between the Company’s stock price as of the balance sheet date and the exercise price of each in-the-money option on the last day of the period. No stock options were exercised during the six months ended June 30, 2026 and 2025.

No stock options granted during the six months ended June 30, 2026 and 2025. The following table sets forth the recorded stock options compensation expense of the Company during the three and six months ended June 30, 2026 and 2025:

As of June 30, 2026 and 2025, a total of $390 and $2,696 of unamortized compensation expense is being recognized over the remaining requisite service period of 2.00 and 3.25 years, respectively.

Restricted Stock Units

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

The Company recorded RSUs compensation expense during the three and six months ended June 30, 2026 and 2025 as follows:

As of June 30, 2026 and 2025, the total unrecognized stock-based compensation expense related to unvested RSUs was $0 and $6,912, and it is expected to be recognized on a straight-line basis over a weighted average period of approximately 0 and 0.75 year, respectively.

10. INCOME TAXES

As of June 30, 2026 and December 31, 2025, the Company had federal net operating loss carryforwards of approximately $74,385,000 and $70,205,000, respectively, of which approximately $13,000,000 expires at various periods through 2037 and approximately $61,385,000 can be carried forward indefinitely. As of June 30, 2026 and December 31, 2025, the Company had state net operating loss carryforwards of approximately $40,807,000 and $38,884,000, respectively, that expire at various periods through 2045, respectively. At June 30, 2026 and December 31, 2025, the Company had federal and state tax credits of approximately $2,025,000 and $2,025,000, respectively, available for future periods that expire at various periods through 2045. The Company has recorded a full valuation allowance against net deferred income tax assets due to a history of losses generated since inception.

Due to changes in ownership provisions of the Internal Revenue Code, the availability of the Company's NOL carryforwards may be subject to annual limitations under Section 382 of the Internal Revenue Code against taxable income in the future period, which could substantially limit the eventual utilization of such carryforwards.

11. SEGMENT AND GEOGRAPHIC INFORMATION

Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, which is our Chief Executive Officer, in deciding how to allocate resources and in assessing performance. We manage our business globally withinone operating segment in accordance with ASC Topic 280, Segment Reporting (“ASC 280”). Segment information is consistent with how management reviews the business, makes investing and resource allocation decisions and assesses operating performance.

The Company hasone reportable segment – biospecimens. The Company derives its revenue by procuring specimens from its healthcare provider network and then distributing these annotated biospecimens to its research client base.

Set out below is information about the assets and liabilities as at June 30, 2026 and December 31, 2025 and profit or loss from each segment for the six months ended June 30, 2026 and 2025.

The Company’s reportable business segment sell their goods in four geographic locations:

The following table represents the percentage of total revenue by geographic area, based on the location of the customer for the six months ended June 30, 2026 and 2025, respectively.

12. SUBSEQUENT EVENT

On August 5, 2026, the Company entered into a placement agency agreement (the “Placement Agency Agreement”) with E.F. Hutton & Co. (the “Placement Agent”), and a securities purchase agreement (the “Purchase Agreement”) with investors in connection with which the Company agreed to issue and sell, in a “reasonable best efforts” public offering (the “Offering”) (i)996,231 shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), and (ii) pre-funded warrants to purchase up to 2,849,923 shares of Common Stock (the “Pre-Funded Warrants”) for an aggregate purchase price of $5,000,000 (or $5,000,285 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, the Company paid the Placement Agent a cash fee of 4.0% of the aggregate gross proceeds plus reimbursement of certain expenses and legal fees and a 1% non-accountable expense allowance. The Company intends to use the proceeds of the offering for repayment of outstanding liabilities, potential acquisitions of assets or investments in businesses, products and technologies, and for marketing and advertising services. The remainder of the proceeds will be used for working capital purposes. The offering closed on August 7, 2026.