iSpecimen Inc
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
ISPC$0.81+0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001558370-24-010936
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001558370-24-014743
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 111 previous paragraphs and 126 current paragraphs.
62 unchanged; 43 reworded; 17 added; 3 removed; 3 previous and 4 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
Reverse Stock Split
Current report
On October 9, 2023, we received a notification from Nasdaq that our Common Stock failed to maintain a minimum bid price of $1.00 over the previous 30 consecutive business days as required by the Listing Rules of The Nasdaq Stock Market.
Current report
On July 19, 2024, our stockholders approved a proposal to amend our Fourth Amended and Restated Certificate of Incorporation to effect a reverse stock split of our issued and outstanding shares of common stock, as well as any shares of common stock held by the Company in treasury, at a ratio in the range from 1-for-10 to 1-for-20.
Current report
On August 19, 2024, our board of directors approved a one-for-twenty (1:20) reverse stock split of our issued and outstanding shares of common stock. On September 13, 2024, we filed with the Secretary of State of the State of Delaware a Certificate of Amendment to our Certificate of Incorporation to effect the Reverse Stock Split. The Reverse Stock Split became effective on September 13, 2024, and our common stock began trading on a split-adjusted basis on Nasdaq on September 16, 2024.
Current report
On October 1, 2024, we received a notification from Nasdaq that the Staff has determined that for the last 11 consecutive business days, from September 16, 2024 to September 30, 2024, the closing bid price of our Common Stock was $1.00 per share or greater. Accordingly, we regained compliance with Listing Rule 5559(a)(2).
Current report
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
Current report
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 report
Debt Financing
Current report
On September 19, 2024, we entered into a Note Purchase Agreement with the Lender. Pursuant to the provisions of the Purchase Agreement, the Lender agreed to provide a loan to us in the amount of $1,000,000 and we agreed to issue to the Lender a promissory note in the principal amount of $1,000,000 payable within 12 months after the date of issuance, with interest accruing and payable at a rate of 18% per annum. The Purchase Agreement contains customary representations and warranties and obligates the Lender to provide an additional loan to us, in the form of a revolving line of credit of up to $1,000,000, upon our initial filing of a Registration Statement for an underwritten or best-efforts public offering for gross proceeds of at least $5,000,000. On September 25, 2024, we and the Lender closed the transactions described in the Purchase Agreement, the Lender provided funds to the Company in the net amount of $959,980 and we issued the Note to the Lender in the principal amount of $1,000,000. WestPark served as the placement agent in connection with the Loan and was paid a placement agent fee in the amount of $40,020 for its services.
Current report
On October 31, 2024, we paid off the outstanding principal balance of $1,000,000 and accrued interest of $18,000 on the Note.
Current report
Securities Offering on Form S-1
Current report
On October 29, 2024, we entered into a placement agency agreement (the “Placement Agency Agreement”) with WestPark Capital, Inc. (the “Placement Agent”), and a securities purchase agreement (the “Purchase Agreement”) with investors pursuant to which we agreed to issue and sell, in a “reasonable best efforts” public offering (the “Offering”) (i) 132,814 shares (the “Shares”) of our common stock, par value $0.0001 per share (the “Common Stock”) at an offering price of $2.999 per share, and (ii) pre-funded warrants to purchase up to 1,533,852 shares of Common Stock (the “Pre-Funded Warrants”) at an offering price of $3.00 per Share, less $0.0001 per Pre-Funded Warrant, for aggregate gross proceeds of $4,998,464 (or $4,999,998 assuming the full exercise of the Pre-Funded Warrants), before deducting placement agent fees and other offering expenses. As part of its compensation for acting as Placement Agent for the Offering, we paid the Placement Agent a cash fee of 4.0% of the aggregate gross proceeds plus reimbursement of certain expenses and legal fees. We intend to use the net proceeds of the offering for repayment of outstanding debt, potential acquisitions of assets or investments in businesses, products and technologies, and for marketing and advertising services. The remainder of the net proceeds will be used for working capital purposes.
Current report
The Offering closed on October 31, 2024. The securities sold in the Offering were offered and sold pursuant to a registration statement on Form S-1 (File No. 333-282736), which was filed with the Securities and Exchange Commission (the “Commission”) on October 18, 2024, and subsequently declared effective by the Commission on October 29, 2024.
Current report
Comparison of the Nine Months Ended September 30, 2024 and 2023
Current report
Product development and technology expense that were not eligible for capitalization decreased by approximately $20,000, or 1%, from approximately $2,599,000 for the nine months ended September 30, 2023 to approximately $2,579,000 for the nine months ended
Current report
September 30, 2024. The period over period decrease was related to decreases in payroll and related expenses of approximately $136,000 and professional fees of approximately $9,000, partially offset by an increase in amortization of approximately $125,000.
Current report
Other Income, net
Removed paragraphs (3)
Previous report
Comparison of the Six Months Ended June 30, 2024 and 2023
Previous report
Product development and technology expense that were not eligible for capitalization increased by approximately $146,000, or 9%, from approximately $1,678,000 for the six months ended June 30, 2023 to approximately $1,824,000 for the six months ended June 30, 2024. The period over period increase was related to increases in amortization of approximately $141,000 and professional fees of approximately $78,000, which were partially offset by a decrease in payroll and related expenses of approximately $73,000.
Previous report
Other Income (Expense), net
Reworded paragraphs (43)
Previous wording
The iSpecimen Marketplace is composed of four major functional areas: search, workflow, data, and administrative reporting. As capital is made available to do so, we continue to invest in the evolution of these areas to improve engagement with the platform and liquidity across it. Our core business objective is to retain and grow both researcher and supplier usage of our platform to support biospecimen procurement, as well as to position our Company to explore other adjacent business opportunities that can benefit from the use of the iSpecimen Marketplace.
Current wording
The iSpecimen Marketplace is composed of four major functional areas: search, workflow, data, and administrative reporting. As capital is made available to do so, we continue to invest in the evolution of these areas to improve engagement with the platform and liquidity across it. Our core business objective is to retain and grow both researcher and supplier usage of our platform to support biospecimen
Previous wording
On December 1, 2021, we closed on a private placement offering (“PIPE”) for gross proceeds of approximately $21 million, before deducting approximately $1.4 million for underwriting discounts and commissions and estimated offering expenses, for (i) an aggregate of 1,749,999 shares of common stock and (ii) warrants, which are exercisable for an aggregate of up to 1,312,500 shares of common stock, all of which were repurchased by us on February 13, 2024, and are no longer outstanding.
Current wording
On December 1, 2021, we closed on a private placement offering (“PIPE”) for gross proceeds of approximately $21 million, before deducting approximately $1.4 million for underwriting discounts and commissions and estimated offering expenses, for (i) an aggregate of 87,500 shares of common stock and (ii) warrants, which are exercisable for an aggregate of up to 65,625 shares of common stock, all of which were repurchased by us on February 13, 2024, and are no longer outstanding.
Previous wording
On March 5, 2024, we entered into an At the Market Offering Agreement (the “ATM Agreement”) with Rodman & Renshaw LLC as agent (the “Sales Agent”) pursuant to which we may issue and sell shares of our common stock, having an aggregate offering price of up to $1,500,000 (the “ATM Shares”), from time to time through the Sales Agent (the “ATM Offering”). The ATM Shares, when issued, will be registered pursuant to our shelf registration statement on Form S-3 (File No 333-265976), which became effective on July 12, 2022. We intend to sell the ATM Shares, from time to time, pursuant to the ATM Agreement, in transactions that are “at the market offerings” as defined in Rule 415(a)(4) promulgated under the Securities Act. During the six months ended June 30, 2024, we issued 3,980,075 shares of common stock for gross proceeds of approximately $1,494,000 under the ATM Agreement. In connection with the ATM Offering, we incurred offering costs of approximately $255,000, resulting in net proceeds of approximately $1,239,000.
Current wording
On March 5, 2024, we entered into an At the Market Offering Agreement (the “ATM Agreement”) with Rodman & Renshaw LLC as agent (the “Sales Agent”) pursuant to which we may issue and sell shares of our common stock, having an aggregate offering price of up to $1,500,000 (the “ATM Shares”), from time to time through the Sales Agent (the “ATM Offering”). The ATM Shares, when issued, were registered pursuant to our shelf registration statement on Form S-3 (File No 333-265976), which became effective on July 12, 2022. We sold the ATM Shares, from time to time, pursuant to the ATM Agreement, in transactions that were “at the market offerings” as defined in Rule 415(a)(4) promulgated under the Securities Act. During the nine months ended September 30, 2024, we issued 199,004 shares of common stock for gross proceeds of approximately $1,494,000 under the ATM Agreement. In connection with the ATM Offering, we incurred offering costs of approximately $255,000, resulting in net proceeds of approximately $1,239,000.
Previous wording
To further address the current market conditions, we have taken steps, which include but are not limited to, reevaluating our pricing in order to be more competitive, creating campaigns to highlight and fast-track high demand items, enhancing internal team communications to accelerate the sales cycle, moving to a new line of business structure organized by our internal categorization of biospecimen suppliers capabilities to increase efficiency in operations, implementation of next day quotes to increase conversion ratios of quotes to purchase orders, and initiation of efforts to decrease expenditures through reductions in our workforce.
Current wording
communications to accelerate the sales cycle, moving to a new line of business structure organized by our internal categorization of biospecimen suppliers capabilities to increase efficiency in operations, implementation of next day quotes to increase conversion ratios of quotes to purchase orders, and initiation of efforts to decrease expenditures through reductions in our workforce.
Previous wording
Throughout the year ended December 31, 2023 and in the first half of 2024, we initiated efforts to decrease our capital and operational expenditures by cutting costs and right sizing the Company through reductions in our workforce while streamlining operations and rationalizing our resources to focus on key market opportunities. As a result, we began to experience significant decreases in expenditures starting in the second half of 2023. The reductions in workforce since January 1, 2023 through the end of June 30, 2024 has resulted in an estimated reduction in compensation costs of approximately 45% and technology costs of approximately 66% by the end of June 30, 2024 when compared to January 1, 2023.
Current wording
Throughout the year ended December 31, 2023 through the nine months ended September 30, 2024, we have initiated efforts to decrease our capital and operational expenditures by cutting costs and right sizing the Company through reductions in our workforce while streamlining operations and rationalizing our resources to focus on key market opportunities. As a result, we began to experience significant decreases in expenditures starting in the second half of 2023. The reductions in workforce since January 1, 2023 through the end of September 30, 2024 has resulted in an estimated reduction in compensation costs of approximately 70% and technology costs of approximately 70% by the end of September 30, 2024 when compared to January 1, 2023.
Previous wording
We completed the implementation of a next day quote system in the third quarter of 2023 and we continue to see positive results in 2024, as evidenced by increased conversion ratios of quotes to purchase orders of 62%, which contributed to the increased revenue results for the six months ended June 30, 2024 compared to June 30, 2023. Previously, it took an extended number of days to complete a feasibility study in order to provide a customer quote, which negatively impacted the time to convert a quote to a purchase order.
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, as evidenced by increased conversion ratios of quotes to purchase orders of 41%. Previously, it took an extended number of days to complete a feasibility study in order to provide a customer quote, which negatively impacted the time to convert a quote to a purchase order.
Previous wording
While we are committed to developing our technology, we are investing at a significantly lower level in 2024 when compared to 2023 and prior years, while we focus on growing our revenues through key market opportunities and assessing our capital raise prospects. During the six months ended June 30, 2024 and 2023, we capitalized approximately $448,000 and $2,732,000, respectively, of internally developed software costs. These investments have resulted in multiple process improvements, streamlining workflows and providing deeper insights into orders for all users of our marketplace.
Current wording
While we are committed to developing our technology, we are investing at a significantly lower level in 2024 when compared to 2023 and prior years, while we focus on growing our revenues through key market opportunities and assessing our capital raise prospects. During the nine months ended September 30, 2024 and 2023, we capitalized approximately $588,000 and $3,501,000, respectively, of internally developed software costs. These investments have resulted in multiple process improvements, streamlining workflows and providing deeper insights into orders for all users of our marketplace.
Previous wording
We have shifted our focus from high volume to high value suppliers that meet our newly defined costs, quality and speed requirements. We established business criteria that focus on supplier capabilities and revenue growth strategies as well as technology criteria for integrating onto our iSpecimen Marketplace platform and participating with us. In the first quarter of 2024, we terminated over 100 supplier agreements and are in the final stages of what we call our “supplier network refresh project”. This has resulted in fewer key suppliers, supported by our lean workforce and processes more effectively. We have been reengaging our suppliers in a more meaningful
Current wording
We have shifted our focus from high volume to high value suppliers that meet our newly defined costs, quality and speed requirements. We established business criteria that focus on supplier capabilities and revenue growth strategies as well as technology criteria for integrating onto our iSpecimen Marketplace platform and participating with us. In the nine months ended September 30, 2024, we terminated 155 supplier agreements and are in the final stages of what we call our “supplier network refresh project”. This has resulted in fewer key suppliers, supported by our lean workforce and processes more effectively. We have been reengaging our suppliers in a more meaningful manner which assisted us in the implementation of our next day quote system. We now have a key supplier program whereby we proactively engage with the suppliers to promote our business through marketing campaigns and supplier organizations’ offerings.
Previous wording
We recognize revenue over time, as we have created an asset with no alternative use and we have an enforceable right to payment for performance completed to date. At contract inception, we review a contract and related order upon receipt to determine if the specimen ordered has an alternative use to us. Generally, specimens ordered do not have an alternative future use to us and our performance obligation is satisfied when the related specimens are accessioned. We use an output method to recognize revenue for specimens with no alternative future use. The output is measured based on the number of specimens accessioned.
Current wording
We recognize revenue over time, as we have created an asset with no alternative use and we have an enforceable right to payment for performance completed to date. At contract inception, we review a contract and related order upon receipt to determine if the specimen ordered has an alternative use to us. Generally, specimens ordered do not have an alternative future use to us and our performance
Previous wording
Financial Operations Overview and Analysis for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)
Current wording
Financial Operations Overview and Analysis for the Three and Nine Months Ended September 30, 2024 and 2023 (Unaudited)
Previous wording
Revenue increased by approximately $579,000, or 13%, from approximately $4,575,000 for the six months ended June 30, 2023 to approximately $5,154,000 for the six months ended June 30, 2024. This was primarily due to an increase in average selling price per specimen of $119, or 34%, from approximately $343 in the six months ended June 30, 2023 to $462 in the six months ended June 30, 2024. The increase in average selling price per specimen was offset by a decrease of 2,152, or 16%, in specimen count from 13,311 specimens in the six months ended June 30, 2023 to 11,159 specimens in the six months ended June 30, 2024.
Current wording
Revenue decreased by approximately $116,000, or 4%, from approximately $2,778,000 for the three months ended September 30, 2023 to approximately $2,662,000 for the three months ended September 30, 2024. This was primarily due to a decrease in average selling price per specimen of $203, or 39%, from approximately $518 in the three months ended September 30, 2023 to approximately $315 in the three months ended September 30, 2024. The decrease in the average selling price per specimen was offset by an increase of 3,094, or 58%, in specimen count from 5,367 specimens in the three months ended September 30, 2023 to 8,461 specimens in the three months ended September 30, 2024.
Previous wording
Cost of revenue increased by approximately $570,000, or 67%, from approximately $854,000 for the three months ended June 30, 2023 to approximately $1,424,000 for the three months ended June 30, 2024, which was attributable to an approximately 26% increase in the number of specimens accessioned for the current period compared to the same period in the prior year and an approximately $58, or 32%, increase in the average cost per specimen.
Current wording
Cost of revenue increased by approximately $162,000, or 12%, from approximately $1,393,000 for the three months ended September 30, 2023 to approximately $1,554,000 for the three months ended September 30, 2024, which was attributable to an approximately 58% increase in the number of specimens accessioned for the current period compared to the same period in the prior year, offset by an approximately $76, or 29%, decrease in the average cost per specimen.
Previous wording
Total technology expenditures decreased by approximately $951,000, or 47%, from approximately $2,035,000 for the three months ended June 30, 2023 to approximately $1,084,000 for the three months ended June 30, 2024. Technology expenditures are either capitalized as internally developed software or expensed in the period incurred.
Current wording
Total technology expenditures decreased by approximately $796,000, or 47%, from approximately $1,691,000 for the three months ended September 30, 2023 to approximately $895,000 for the three months ended September 30, 2024. Technology expenditures are either capitalized as internally developed software or expensed in the period incurred.
Previous wording
Technology expenditure capitalized as internally developed software costs decreased by approximately $1,020,000, or 86%, from approximately $1,192,000 for the three months ended June 30, 2023 to approximately $172,000 for the three months ended June 30, 2024 due to reductions in workforce stemming from our decision to invest in the software at a significantly lower level in 2024 when compared to 2023 and prior years.
Current wording
Technology expenditures capitalized as internally developed software costs decreased by approximately $630,000, or 82%, from approximately $769,000 for the three months ended September 30, 2023 to approximately $140,000 for the three months ended September 30, 2024 due to reductions in workforce stemming from our decision to invest in the software at a significantly lower level in 2024 when compared to 2023 and prior years.
Previous wording
Product development and technology expense that were not eligible for capitalization increased by approximately $69,000, or 8%, from approximately $843,000 for the three months ended June 30, 2023 to approximately $912,000 for the three months ended June 30, 2024. The increase was related to increases in professional fees of approximately $68,000, and amortization of internally developed software
Current wording
Product development and technology expense that were not eligible for capitalization decreased by approximately $167,000, or 18%, from approximately $922,000 for the three months ended September 30, 2023 to approximately $755,000 for the three months ended September 30, 2024. The decrease was related to decreases in professional fees of approximately $88,000, decreases in headcount and payroll and related expenses of approximately $63,000, and amortization of internally developed software of approximately $16,000.
Previous wording
Sales and marketing expenses increased by approximately $105,000, or 11%, from approximately $978,000 for the three months ended June 30, 2023 to approximately $1,083,000 for the three months ended June 30, 2024. The increase was primarily attributable to increases in payroll and related expenses of approximately $123,000, and advertising and promotions expense of approximately $100,000, which were partially offset by decreases in external marketing expense of approximately $96,000, and general operating expenses related to sales and marketing of approximately $22,000.
Current wording
Sales and marketing expenses decreased by approximately $266,000, or 30%, from approximately $898,000 for the three months ended September 30, 2023 to approximately $632,000 for the three months ended September 30, 2024. The decrease was primarily attributable to decreases in payroll and related expenses of approximately $205,000, external marketing expense of approximately $84,000, and general operating expenses related to sales and marketing of approximately $11,000, partially offset by an increase in advertising and promotions expense of approximately $34,000.
Previous wording
Supply development expenses decreased by approximately $153,000, or 53%, from approximately $291,000 for the three months ended June 30, 2023 to approximately $138,000 for the three months ended June 30, 2024. The decrease was primarily attributable to decreases in professional fees of approximately $104,000, payroll and related expenses of approximately $42,000, and general supply development expenses of approximately $7,000.
Current wording
Supply development expenses decreased by approximately $101,000, or 54%, from approximately $186,000 for the three months ended September 30, 2023 to approximately $85,000 for the three months ended September 30, 2024. The decrease was primarily attributable to decreases in payroll and related expenses of approximately $62,000, professional fees of approximately $34,000, and general supply development expenses of approximately $5,000.
Previous wording
Fulfillment costs decreased by approximately $30,000, or 6%, from approximately $463,000 for the three months ended June 30, 2023 to approximately $433,000 for the three months ended June 30, 2024. The decrease was primarily attributable to decreases in general operating expenses related to fulfillment of approximately $17,000, and payroll and related expenses of approximately $16,000 for personnel engaged in pre-sales feasibility assessments and order fulfillment, which were partially offset by an increase in professional fees of approximately $3,000.
Current wording
Fulfillment costs decreased by approximately $23,000, or 5%, from approximately $472,000 for the three months ended September 30, 2023 to approximately $449,000 for the three months ended September 30, 2024. The decrease was primarily attributable to decreases in professional fees of approximately $99,000 and general operating expenses related to fulfillment of approximately $10,000, partially offset by an increase in payroll and related expenses of approximately $86,000 for personnel engaged in pre-sales feasibility assessments and order fulfillment.
Previous wording
General and administrative expenses decreased by approximately $703,000, or 40%, from approximately $1,758,000 for the three months ended June 30, 2023 to approximately $1,055,000 for the three months ended June 30, 2024. The decrease was attributable to decreases in compensation costs of approximately $183,000, taxes and insurance of approximately $176,000, professional fees of approximately $165,000, bad debt expense of approximately $102,000, general operating expenses of approximately $51,000, depreciation and amortization of approximately $21,000, and utilities and facilities expenses of approximately $5,000.
Current wording
General and administrative expenses decreased by approximately $209,000, or 19%, from approximately $1,102,000 for the three months ended September 30, 2023 to approximately $893,000 for the three months ended September 30, 2024. The decrease was attributable to decreases in compensation costs of approximately $172,000, general operating expenses of approximately $71,000, professional fees of approximately $20,000, utilities and facilities expenses of approximately $16,000, and depreciation and amortization of approximately $7,000, partially offset by increases in taxes and insurance of approximately $57,000 and bad debt expense of approximately $20,000.
Previous wording
Other income, net, decreased by approximately $5,000, or 7%, from approximately $78,000 for the three months ended June 30, 2023 to approximately $73,000 for the three months ended June 30, 2024. The decrease in other income, net, was attributable to a decrease in interest income of approximately $102,000 and an increase in interest expense of approximately $1,000, partially offset by an increase in other income (expense) of approximately $97,000.
Current wording
Other income, net, increased by approximately $183,000, or 220%, from approximately $83,000 for the three months ended September 30, 2023 to approximately $266,000 for the three months ended September 30, 2024. The increase in other income, net, was attributable to an increase in other income of approximately $252,000 which mainly consisted of noncash effect of a reversal of sales tax liability recognized in the prior year, partially offset by a decrease in interest income of approximately $66,000 and an increase in interest expense of approximately $3,000.
Previous wording
Revenue increased by approximately $1,239,000, or 76%, from approximately $1,625,000 for the three months ended June 30, 2023 to approximately $2,864,000 for the three months ended June 30, 2024. This was primarily due to an increase of 1,236, or approximately 26%, in specimen count from 4,682 specimens in the three months ended June 30, 2023 to 5,918 specimens in the three months ended June 30, 2024. The average selling price per specimen also increased by approximately $137, or 39%, from approximately $347 in the three months ended June 30, 2023 to approximately $484 in the three months ended June 30, 2024.
Current wording
Revenue increased by approximately $463,000, or 6%, from approximately $7,353,000 for the nine months ended September 30, 2023 to approximately $7,816,000 for the nine months ended September 30, 2024. This was primarily due to an increase of 942, or 5% in specimen count from 18,678 specimens in the nine months ended September 30, 2023 to 19,620 specimens in the nine months ended September 30, 2024. The average selling price per specimen also increased by approximately $4, or 1%, from approximately $394 in the nine months ended September 30, 2023 to $398 in the nine months ended September 30, 2024.
Previous wording
Cost of revenue increased by approximately $423,000, or 21%, from approximately $2,001,000 for the six months ended June 30, 2023 to approximately $2,424,000 for the six months ended June 30, 2024, which was attributable to a 45% increase in the average cost per specimen impacted by the specimen mix during the six months ended June 30, 2024 over the same period in 2023, offset by a 16% decrease in the number of specimens accessioned during the six months ended June 30, 2024 over the same period in the prior year.
Current wording
Cost of revenue increased by approximately $586,000, or 17%, from approximately $3,393,000 for the nine months ended September 30, 2023 to approximately $3,979,000 for the nine months ended September 30, 2024, which was attributable to a $21, or 12%, increase in the average cost per specimen and a 5% increase in the number of specimens accessioned during the nine months ended September 30, 2024 over the same period in the prior year.
Previous wording
Total technology expenditure decreased by approximately $2,137,000, or 48%, from approximately $4,409,000 for the six months ended June 30, 2023 to approximately $2,272,000 for the six months ended June 30, 2024. Technology expenditures are either capitalized as internally developed software or expensed in the period incurred.
Current wording
Total technology expenditure decreased by approximately $2,933,000, or 48%, from approximately $6,100,000 for the nine months ended September 30, 2023 to approximately $3,167,000 for the nine months ended September 30, 2024. Technology expenditures are either capitalized as internally developed software or expensed in the period incurred.
Previous wording
Technology expenditures capitalized as internally developed software costs decreased by approximately $2,284,000, or 84%, from approximately $2,732,000 for the six months ended June 30, 2023 to approximately $448,000 for the six months ended June 30, 2024 due to reductions in workforce stemming from our decision to invest in the software at a significantly lower level in 2024 when compared to 2023 and prior years.
Current wording
Technology expenditures capitalized as internally developed software costs decreased by approximately $2,913,000, or 83%, from approximately $3,501,000 for the nine months ended September 30, 2023 to approximately $588,000 for the nine months ended September 30, 2024 due to reductions in workforce stemming from our decision to invest in the software at a significantly lower level in 2024 when compared to 2023 and prior years.
Previous wording
Sales and marketing expenses decreased approximately $276,000, or 14%, from approximately $2,025,000 for the six months ended June 30, 2023 to approximately $1,749,000 for the six months ended June 30, 2024. The period over period decrease was primarily attributable to decreases in external marketing expense of approximately $191,000, payroll and related expenses of approximately $179,000, and general operating expenses related to sales and marketing of approximately $42,000, which were partially offset by increases in advertising and promotions expense of approximately $136,000.
Current wording
Sales and marketing expenses decreased approximately $592,000, or 20%, from approximately $2,973,000 for the nine months ended September 30, 2023 to approximately $2,381,000 for the nine months ended September 30, 2024. The period over period decrease was primarily attributable to decreases in payroll and related expenses of approximately $434,000, external marketing expense of approximately $275,000, and general operating expenses related to sales and marketing of approximately $53,000, which were partially offset by increases in advertising and promotions expense of approximately $170,000.
Previous wording
Supply development expenses decreased approximately $280,000, or 45%, from approximately $615,000 for the six months ended June 30, 2023 to approximately $335,000 for the six months ended June 30, 2024. The period over period decrease was primarily attributable to decreases in professional fees of approximately $183,000, payroll and related expenses of approximately $80,000, and general supply development expenses of approximately $17,000.
Current wording
Supply development expenses decreased approximately $381,000, or 48%, from approximately $801,000 for the nine months ended September 30, 2023 to approximately $420,000 for the nine months ended September 30, 2024. The period over period decrease was primarily attributable to decreases in professional fees of approximately $218,000, payroll and related expenses of approximately $141,000, and general supply development expenses of approximately $22,000.
Previous wording
Fulfillment costs decreased approximately $48,000, or 5%, from approximately $892,000 for the six months ended June 30, 2023 to approximately $844,000 for the six months ended June 30, 2024. The decrease was primarily attributable to decreases in payroll and related expenses of approximately $26,000 for personnel engaged in pre-sales feasibility assessments and order fulfillment, general operating expenses related to fulfillment of approximately $24,000, which were partially offset by an increase in professional fees of approximately $2,000.
Current wording
Fulfillment costs decreased approximately $70,000, or 5%, from approximately $1,363,000 for the nine months ended September 30, 2023 to approximately $1,293,000 for the nine months ended September 30, 2024. The decrease was primarily attributable to decreases in professional fees of approximately $97,000 and general operating expenses related to fulfillment of approximately $34,000, which were partially offset by an increase in payroll and related expenses of approximately $61,000 for personnel engaged in pre-sales feasibility assessments and order fulfillment.
Previous wording
General and administrative expenses decreased approximately $311,000, or 9%, from approximately $3,470,000 for the six months ended June 30, 2023 to approximately $3,159,000 for the six months ended June 30, 2024. The period over period decrease was attributable to decreases in compensation costs of approximately $348,000, general operating expenses of approximately $105,000, bad debt expense of approximately $57,000, depreciation and amortization of approximately $44,000, utilities and facilities expenses of approximately $9,000, which were partially offset by increases in professional fees of approximately $161,000 and taxes and insurance of approximately $91,000.
Current wording
General and administrative expenses decreased approximately $470,000, or 10%, from approximately $4,522,000 for the nine months ended September 30, 2023 to approximately $4,052,000 for the nine months ended September 30, 2024. The period over period decrease was attributable to decreases in compensation costs of approximately $470,000, general operating expenses of approximately $175,000, depreciation and amortization of approximately $51,000, bad debt expense of approximately $37,000, utilities and facilities expenses of approximately $26,000, which were partially offset by increases in taxes and insurance of approximately $148,000 and professional fees of approximately $141,000.
Previous wording
Other income (expense), net, decreased by approximately $18,000, or 9%, from approximately $189,000 for the six months ended June 30, 2023 to approximately $171,000 for the six months ended June 30, 2024. The decrease in other income, net, was attributable to a decrease in interest income of approximately $185,000 and an increase in interest expense of approximately $2,000, offset by an increase in other income (expense) of approximately $170,000.
Current wording
Other income, net, increased by approximately $165,000, or 61%, from approximately $272,000 for the nine months ended September 30, 2023 to approximately $437,000 for the nine months ended September 30, 2024. The increase in other income, net, was attributable to an increase in other income (expense) of approximately $421,000 which mainly consisted of noncash effect of a reversal of sales tax liability recognized in the prior year, offset by a decrease in interest income of approximately $252,000 and an increase in interest expense of approximately $5,000.
Previous wording
We have had recurring losses since inception. As of June 30, 2024, our available cash and available-for-sale securities totaled approximately $2,151,000, which represented a decrease of approximately $2,855,000 from approximately $5,006,000, as of December 31, 2023. We had negative working capital of approximately $577,000, an accumulated deficit of approximately $64,376,000, cash and cash equivalents and short-term investments of approximately $2,151,000, and accounts payable and accrued expenses of approximately $5,525,000. Our continued viability is dependent on the ability to successfully obtain additional working capital and/or ultimately attain profitable operations. During the year ended December 31, 2023, we began initiating efforts to decrease our capital and operational expenditures by cutting costs and right sizing the Company through reductions in workforce while streamlining operations and rationalizing resources to focus on key market opportunities. The reduction in workforce since January 1, 2023 through June 30, 2024, cumulatively resulted in an estimated reduction in monthly compensation costs of approximately 45% and technology costs of approximately 66% by the end of June 30, 2024 when compared to January 1, 2023. We plan to add additional customers to increase and add additional revenues through our new revenue enhancement projects as well as to reduce and manage expenditures to improve our financial position and ensure continued funding of operations. However, as certain elements of our operating plan are not within our control, we are unable to assess their probability. We may also seek to fund our operations through public equity or debt financing, as well as other sources but it has not currently identified any other specific source of funding except for the ATM Agreement.
Current wording
We have had recurring losses since inception. As of September 30, 2024, our available cash and cash equivalents and available-for-sale securities totaled approximately $1,752,000, which represented a decrease of approximately $3,254,000 from approximately $5,006,000, as of December 31, 2023. We had negative working capital of approximately $1,610,000, an accumulated deficit of approximately $65,816,000, cash and cash equivalents of approximately $1,752,000, and accounts payable and accrued expenses of approximately $5,078,000. Our continued viability is dependent on the ability to successfully obtain additional working capital and/or ultimately attain profitable operations. During the year ended December 31, 2023, we began initiating efforts to decrease our capital and operational expenditures by cutting costs and right sizing the Company through reductions in workforce while streamlining operations and rationalizing resources to focus on key market opportunities. The reduction in workforce since January 1, 2023 through September 30, 2024, cumulatively resulted in an estimated reduction in monthly compensation costs of approximately 70% and technology costs of approximately 70% by the end of September 30, 2024 when compared to January 1, 2023. While we plan to improve our sales and revenues, we are taking steps to significantly reduce and manage expenditures to improve our financial position and ensure continued funding of operations. However, as certain elements of our operating plan are not within our control, we are unable to assess their probability. In the nine months ended September 30, 2024, we engaged in raising capital through debt financing as discussed in Note 7 and subsequently, through public equity as discussed in Note 13.
Previous wording
We may be unsuccessful in increasing our revenues from our new enhancement project or contain our operating expenses, or we may be unable to raise additional capital on commercially favorable terms. Our failure to generate additional revenues or contain operating costs would have a negative impact on our business, results of operations and financial condition and our ability to continue as a going concern. If we do not generate enough revenue to provide an adequate level of working capital, our business plan will be scaled down further.
Current 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.
Previous wording
These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of one year after the date of this Quarterly Report. Management’s plan to mitigate the conditions that raise substantial doubt includes generating additional revenues through its revenue enhancement projects, deferring certain projects and capital expenditures and eliminating certain future operating expenses for us to continue as a going concern. However, there can be no assurance that we will be successful in completing any of these options. As a result, management’s plans cannot be considered probable and thus do not alleviate substantial doubt about our ability to continue as a going concern.
Current wording
These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of one year after the date of this Quarterly Report. Management’s plan to mitigate the conditions that raise substantial doubt includes generating additional revenues, deferring certain projects and capital expenditures and eliminating certain future operating expenses for us to continue as a going concern. However, there can be no assurance that we will be successful in completing any of these options. As a result, management’s plans cannot be considered probable and thus do not alleviate substantial doubt about our ability to continue as a going concern.
Previous wording
For the six months ended June 30, 2024, net cash used in operating activities was approximately $3,612,000, which consisted of a net loss of approximately $5,011,000 offset by non-cash charges of approximately $1,553,000, which included approximately $1,076,000 related to amortization of internally developed software, approximately $205,000 in bad debt expense, approximately $174,000 in stock-based compensation, approximately $96,000 related to amortization of other intangible assets, approximately $32,000 related to depreciation of property and equipment, and approximately $1,000 of losses from sales of available-for-sale securities, which were offset by approximately $29,000 of accretion of discount on available-for-sale securities.
Current wording
For the nine months ended September 30, 2024, net cash used in operating activities was approximately $4,691,000, which consisted of a net loss of approximately $6,451,000 offset by non-cash charges of approximately $2,167,000, which included approximately $1,554,000 related to amortization of internally developed software, approximately $239,000 in stock-based compensation, approximately $206,000 in bad debt expense, approximately $144,000 related to amortization of other intangible assets, approximately $49,000 related to depreciation of property and equipment, approximately $4,000 related to amortization of discount and debt issuance costs on the senior note payable, and approximately $1,000 of losses from sales of available-for-sale securities, which were partially offset by approximately $29,000 of accretion of discount on available-for-sale securities.
Previous wording
approximately $81,000 decrease in lease liability, offset by an approximately $280,000 increase in accounts payable, an approximately $259,000 decrease in accounts receivable-unbilled, an approximately $82,000 decrease in operating lease right-of-use asset, and an approximately $55,000 decrease in prepaid expenses and other current assets.
Current wording
Total changes in assets and liabilities of approximately $407,000 were attributable to an approximately $518,000 decrease in accrued expense, an approximately $452,000 increase in accounts receivable, an approximately $132,000 decrease in deferred revenue, an approximately $108,000 decrease in lease liability, and an approximately $12,000 increase in security deposits, offset by an approximately $558,000 decrease in accounts receivable-unbilled, an approximately $130,000 increase in accounts payable, an approximately $113,000 decrease in operating lease right-of-use asset, and an approximately $14,000 decrease in prepaid expenses and other current assets.
Previous wording
For the six months ended June 30, 2023, net cash used in operating activities was approximately $4,519,000, which consisted of a net loss of approximately $5,915,000 offset by non-cash charges of approximately $1,420,000, which included approximately $935,000 related to amortization of internally developed software, approximately $262,000 in bad debt expense, approximately $245,000 in stock-based compensation, and approximately $76,000 related to depreciation of property and equipment, offset by $98,000 of amortization of discount on available-for-sale securities.
Current wording
For the nine months ended September 30, 2023, net cash used in operating activities was approximately $6,153,000, which consisted of a net loss of approximately $8,027,000 offset by non-cash charges of approximately $1,982,000, which included approximately $1,436,000 related to amortization of internally developed software, approximately $352,000 in stock-based compensation, approximately $243,000 in bad debt expense, and approximately $99,000 related to depreciation of property and equipment, offset by $147,000 of accretion of discount on available-for-sale securities.
Previous wording
Total changes in assets and liabilities of approximately $23,000 were attributable to an approximately $679,000 decrease in accounts payable, an approximately $649,000 decrease in accrued expenses, an approximately $123,000 increase in accounts receivable, an approximately $78,000 decrease in operating lease liability, and an approximately $43,000 decrease in deferred revenue, offset by an approximately $1,229,000 decrease in accounts receivable-unbilled, an approximately $129,000 decrease in tax credit receivable, an approximately $113,000 decrease in prepaid expenses and other current assets, and an approximately $78,000 decrease in operating lease right-of-use asset.
Current wording
Total changes in assets and liabilities of approximately $108,000 were attributable to an approximately $503,000 decrease in accrued expenses, an approximately $351,000 increase in accounts receivable, an approximately $179,000 decrease in accounts payable, an approximately $85,000 decrease in deferred revenue, an approximately $49,000 increase in operating lease right-of-use asset, and an approximately $20,000 increase in prepaid expenses and other current assets, offset by an approximately $902,000 decrease in accounts receivable-unbilled, an approximately $129,000 decrease in tax credit receivable, and an approximately $48,000 increase in operating lease liability.
Previous wording
Net cash provided by investing activities was approximately $2,233,000 for the six months ended June 30, 2024, which consisted of approximately $3,150,000 of proceeds from sales and maturities of available-for-sale securities, which were offset by approximately $461,000 of purchases of available-for-sale securities, approximately $448,000 of capitalization of internally developed software, and approximately $9,000 of purchase of property and equipment.
Current wording
Net cash provided by investing activities was approximately $2,053,000 for the nine months ended September 30, 2024, which consisted of approximately $3,150,000 of proceeds from sales and maturities of available-for-sale securities, which were offset by approximately $588,000 of capitalization of internally developed software, approximately $461,000 of purchases of available-for-sale securities, approximately $25,000 of purchase of leasehold improvements, and approximately $24,000 of purchase of property and equipment.
Previous wording
Net cash used in investing activities was approximately $8,856,000 for the six months ended June 30, 2023, which consisted of approximately $7,643,000 of purchase of available-for-sale securities, approximately $2,732,000 of capitalization of internally developed software, and approximately $14,000 of purchase of property and equipment, offset by approximately $1,532,000 of proceeds from sale and maturities of available-for-sale securities.
Current wording
Net cash used in investing activities was approximately $6,505,000 for the nine months ended September 30, 2023, which consisted of approximately $10,143,000 of purchase of available-for-sale securities, approximately $3,693,000 of capitalization of internally developed software, and approximately $19,000 of purchase of property and equipment, offset by approximately $7,350,000 of proceeds from sale and maturities of available-for-sale securities.
Previous wording
Net cash provided by financing activities was approximately $1,187,000 for the six months ended June 30, 2024, which consisted of approximately $1,494,000 of proceeds received from the issuance of common stock in connection with the ATM Offering, offset by approximately $255,000 for the payment of offering costs in connection with the issuance of common stock in connection with the ATM Offering and approximately $53,000 for the repurchase of common stock exercisable under PIPE Warrants.
Current wording
Net cash provided by financing activities was approximately $2,047,000 for the nine months ended September 30, 2024, which consisted of approximately $1,494,000 of proceeds received from the issuance of common stock in connection with the ATM Offering, and $1,000,000 of proceeds received from the issuance of the senior note payable, offset by approximately $255,000 for the payment of offering costs in connection with the issuance of common stock in connection with the ATM Offering, approximately $140,000 for the payment of debt issuance costs in connection with the senior note payable, and approximately $53,000 for the repurchase of common stock exercisable under PIPE Warrants.
Previous wording
Net cash provided by financing activities was approximately $71,000 for the six months ended June 30, 2023, due to proceeds received from the exercise of stock options.
Current wording
Net cash provided by financing activities was approximately $71,000 for the nine months ended September 30, 2023, due to proceeds received from the exercise of stock options.
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Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
procurement, as well as to position our Company to explore other adjacent business opportunities that can benefit from the use of the iSpecimen Marketplace.
Current report — wording carried from elsewhere
To further address the current market conditions, we have taken steps, which include but are not limited to, reevaluating our pricing in order to be more competitive, creating campaigns to highlight and fast-track high demand items, enhancing internal team
Current report — wording carried from elsewhere
obligation is satisfied when the related specimens are accessioned. We use an output method to recognize revenue for specimens with no alternative future use. The output is measured based on the number of specimens accessioned.
Current report — wording carried from elsewhere
We are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we intend to rely on certain of these exemptions, including without limitation, (i)providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 and (ii) complying with any requirement that may be
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
manner which assisted us in the implementation of our next day quote system. We now have a key supplier program whereby we proactively engage with the suppliers to promote our business through marketing campaigns and supplier organizations’ offerings.
Previous report — wording carried elsewhere
of approximately $41,000, which were partially offset by decreases in headcount and payroll and related expenses of approximately $40,000.
Previous report — wording carried elsewhere
Total changes in assets and liabilities of approximately $154,000 were attributable to an approximately $369,000 increase in accounts receivable, an approximately $221,000 decrease in accrued expense, an approximately $157,000 decrease in deferred revenue, and an