PR Newswire | Nov 4, 2021 07:02AM EDT

11/04 06:00 CDT

iSpecimen Reports Third Quarter 2021 Financial Results-Record Nine-Month Revenue of $8.6 Million Surpassing Full-Year Revenue for 2020- LEXINGTON, Mass., Nov. 4, 2021

LEXINGTON, Mass., Nov. 4, 2021 /PRNewswire/ -- iSpecimen Inc. (Nasdaq: ISPC) ("iSpecimen" or the "Company"), an online marketplace for human biospecimens, today reported its financial results for the three and nine-month periods ended September 30, 2021.

"In the third quarter of 2021, we continued to achieve strong growth in our core biospecimen business, while simultaneously expanding our market penetration through increased sales and marketing initiatives," said Christopher Ianelli, MD, PhD, CEO and President of iSpecimen. "These efforts contributed to nine-month 2021 revenue results that have already surpassed our full-year revenue for 2020. At the same time, we increased our number of supplier organizations under agreement to nearly 200 while growing our registered users on the iSpecimen Marketplace."

Dr. Ianelli added, "iSpecimen continues to execute its strategic initiatives to broaden our service offerings and expand our number of supplier organizations under agreement to grow our procurement reach and data assets. At the same time, we are assessing potential investments that can further enhance our technology and expand our capabilities. We believe these efforts will allow us to increase our value proposition for users and suppliers, increase our sales momentum and drive long-term revenue growth and shareholder value."

Q3 2021 Financial & Operational Highlights

* Revenue increased 21% to $2.7 million for the third quarter of 2021, compared to $2.3 million for the same period in 2020. * Revenue increased 57% to $8.6 million for the first nine months of 2021, compared to $5.5 million for the same period in 2020. * Unique supplier organizations under agreement were 197 as of September 30, 2021, up from 190 organizations at the end of the second quarter of 2021. * Unique customer organizations with purchases totaled 398 as of September 30, 2021, an increase from 378 as of June 30, 2021. * iSpecimen Marketplace had approximately 4,900 registered research and supplier users as of September 30, 2021, up 30% year-over-year. * As of September 30, 2021, iSpecimen received $12.8 million in purchase orders year-to-date, up 30% year-over-year.

Recent Corporate Updates

* Launched an Enhanced Custom Biofluids Collection Service to offer U.S. researchers and life sciences organizations a new rapid delivery option. The new offering significantly improves specimen availability for organizations involved in cancer research and development including basic research, the development of new treatments, such as molecular and genomic-targeted therapies and immunotherapies, and the development of new diagnostic tests, including liquid biopsies. * Expanded network with a new wave of suppliers to offer increasingly comprehensive selections of annotated cancer tissue, biofluids, and cells through iSpecimen Marketplace. In addition, launched a partnership with a new European healthcare organization offering 17 forms of biofluids, solid tissue, and stem and immune cells from cancer patients, as well as healthy controls. The specimens represent more than 30 categories of cancer. * Enhanced global biospecimen supplier network to offer increasingly comprehensive selections of whole blood, plasma and other biofluids to help accelerate the development of liquid biopsies. In connection with the development of liquid biopsies, iSpecimen is working closely with another U.S.-based organization with numerous blood donation centers across the country and access to tens of thousands of donors registered to provide blood for research. * Joined the Russell Microcap(r) Index in late September, as part of the 2021 Russell indexes reconstitution. Membership in the Russell Microcap(r) Index, which remains in place for one year, means automatic inclusion in the appropriate growth and value style indexes. * Appointed Erik Uribe as Director of Global Implementations. Uribe joined from Discovery Life Sciences, where he led all global system implementation projects. Uribe will be responsible for advancing the development of the iSpecimen Marketplace(tm) and tightening its integration with customer and supplier workflows and systems to ensure a continuously streamlined experience

Financial Results for the Third Quarter of 2021

Revenue for the third quarter of 2021 increased 21% to $2.7 million, compared to approximately $2.3 million for the same period in 2020. This increase was primarily driven by the success of its maturing sales team, continued demand for specimens from patients with known COVID-19 test results, and an increasing demand for specimens in non-COVID-19 research areas. For the third quarter of 2021, COVID-19 related revenue accounted for approximately 34% of total revenue, compared to 63% for the third quarter of 2020. COVID-19 related revenue is expected to continue to decline, while being replaced by increased demand for specimens in non-COVID-19 research areas.

Cost of revenue was $0.9 million for the third quarter of 2021, consistent with the prior year. This was attributable to a 14% increase in the average cost per specimen impacted by the specimen mix, offset by a decrease of 12% in the number of specimens accessioned for the current period compared to the same period in 2020.

General and administrative expenses were $1.7 million for the third quarter of 2021, compared to $0.8 million for the third quarter of 2020. The year-over-year increase was primarily attributable to an increase in costs related to iSpecimen becoming a public company in the second quarter of this year, including increases in legal and accounting expenses, an increase in other general and administrative expenses related to amortization of internally developed software, associated software licenses, human resource related expenses, insurance costs and facility expenses, an increase in director and officer insurance, and an increase in payroll-related costs.

Net loss was approximately $1.1 million for the third quarter of 2021, compared to net loss of over $1.2 million for the same period in 2020.

Cash was approximately $9.8 million as of September 30, 2021.

Conference Call and Webcast Information

The Company will host a conference call and audio webcast today, Thursday, November 4th at 8:30 a.m. Eastern Time featuring remarks by Christopher Ianelli, MD, PhD, CEO and President, Tracy Curley, CFO, and Jill Mullan, COO.

Event: iSpecimen Third Quarter 2021 Results Conference Call

Date: Thursday, November 4, 2021

Time: 8:30 a.m. Eastern Time

Live Call: +1-855-327-6838 (Toll Free) or + 1-604-235-2082 (International)

Webcast: https://themediaframe.com/mediaframe/webcast.html?webcastid=ReKRVin0

For interested individuals unable to join the conference call, a replay will be available through November 18, 2021, at +1-844-512-2921 (U.S. Toll Free) or +1-412-317-6671 (International). Participants must use the following code to access the replay of the call: 10016869. An archived version of the webcast will also be available on iSpecimen's Investor Relations site: https://ispecimen.irpass.com/.

About iSpecimeniSpecimen offers an online marketplace for human biospecimens, connecting life scientists in commercial and non-profit organizations with healthcare providers that have access to patients and specimens needed for medical discovery. Proprietary, cloud-based technology enables scientists to intuitively search for specimens and patients across a federated partner network of hospitals, labs, biobanks, blood centers, and other healthcare organizations. For more information about iSpecimen, please visit www.ispecimen.com.

Forward Looking StatementsThis press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are characterized by future or conditional verbs such as "may," "will," "expect," "intend," "anticipate," believe," "estimate" and "continue" or similar words. You should read statements that contain these words carefully because they discuss future expectations and plans, which contain projections of future results of operations or financial condition or state other forward-looking information.

Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to the risks factors contained in the Company's filings with the Securities and Exchange Commission, which are available for review at www.sec.gov. Forward-looking statements speak only as of the date they are made. New risks and uncertainties arise over time, and it is not possible for the Company to predict those events or how they may affect the Company. If a change to the events and circumstances reflected in the Company's forward-looking statements occurs, the Company's business, financial condition and operating results may vary materially from those expressed in the Company's forward-looking statements.

Readers are cautioned not to put undue reliance on forward-looking statements, and the Company assumes no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

For further information, please contact:

Investor ContactKCSA Strategic Communications Allison Soss / Scott EcksteiniSpecimen@kcsa.com

Media ContactKaitlynn CooneyFor iSpecimen kcooney@brodeur.com617.587.2811

iSpecimen Inc.

CONDENSED BALANCE SHEETS

September 30, 2021 December 31, 2020

ASSETS

Current assets:

Cash $ 9,790,732 $ 695,909

Accounts receivable - unbilled 1,750,744 652,761

Accounts receivable, net of allowance for doubtful accounts of $141,952 2,718,682 1,526,392and $108,096 at September 30, 2021 and December 31, 2020, respectively

Inventory - -

Prepaid expenses and other current assets 459,321 417,929

Tax credit receivable, current portion 179,376 179,376

Total current assets 14,898,855 3,472,367

Property and equipment, net $ 44,749 75,589

Internally developed software, net $ 2,650,867 2,634,139

Tax credit receivable, net of current portion - -

Security deposits $ 27,601 27,601

Total assets $ 17,622,072 $ 6,209,696

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:

Accounts payable $ 351,424 $ 1,792,432

Accrued expenses 1,025,136 810,910

Accrued interest 7,510 3,696,944

Convertible notes payable, related parties, net of unamortized debt discount - 5,490,811and debt issuance costs

Derivative liability for embedded conversion features on convertible notes - 2,373,000payable

Bridge notes payable, net of debt issuance costs - 4,589,228

Bridge notes payable, related parties - 1,905,000

Derivative liability for embedded conversion feature on bridge notes payable - -and bridge notes, related parties

Note payable, non-current portion -

Note payable, current portion - 604,109

Deferred revenue 718,723 873,254

Total current liabilities 2,102,793 22,135,688

Note payable, net of current portion - 178,899

Term loan 3,428,380 -

Total liabilities 5,531,173 22,314,587

Commitments and contingencies

Series B convertible preferred stock, $0.0001 par value, 3,200,000 sharesauthorized, - 7,999,9970 and 572,465 shares issued and outstanding at September 30, 2021 and December31, 2020, respectively

Series A-1 convertible preferred stock, $0.0001 par value, 556,550 sharesauthorized, - 561,0410 and 100,365 issued and outstanding at September 30, 2021 and December 31,2020, respectively

Series A convertible preferred stock, $0.0001 par value, 3,427,871 sharesauthorized, - 2,612,0380 and 618,182 issued and outstanding at September 30, 2021 and December 31,2020, respectively

Total convertible preferred stock - 11,173,076

Stockholders' equity (deficit)

Common stock, $0.0001 par value, 200,000,000 shares authorized, 6,996,758issued,and 6,965,758 outstanding at September 30, 2021, and 16,000,000 shares 697 94authorized,967,213 issued and 936,213 outstanding at December 31, 2020

Additional paid-in capital 48,059,389 1,779,698

Treasury stock, 31,000 shares at September 30, 2021 and December 31, 2020, at (172) (172)cost

Accumulated deficit (35,969,015) (29,057,587)

Total stockholders' equity (deficit) 12,090,899 (27,277,967)

Total liabilities, convertible preferred stock and stockholders' equity $ 17,622,072 $ 6,209,696(deficit)

iSpecimen Inc.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

Three months ended September 30, Nine months ended September 30,

2021 2020 2021 2020

Revenue $ 2,718,534 $ 2,250,147 $ 8,586,217 $ 5,466,375

Operating expenses:

Cost of revenue 913,833 903,862 4,026,680 2,032,111

Technology 543,581 413,381 1,315,331 1,131,695

Sales and marketing 513,107 506,641 1,690,085 1,305,897

Supply development 171,595 133,007 383,864 395,200

Fulfillment 399,145 241,785 955,516 642,140

General and administrative 1,636,346 774,550 4,144,989 1,431,262

Total operating expenses 4,177,607 2,973,226 12,516,465 6,938,305

Loss from operations (1,459,073) (723,079) (3,930,248) (1,471,930)

Other expense, net

Interest expense (75,922) (469,477) (2,062,548) (1,517,697)

Change in fair value of derivative liability on convertible notes - (54,000) (271,000) (76,000)

Change in fair value of derivative liability on bridge notes and bridge notes, - - 1,582,700 -related parties

Gain (loss) on extinguishment of bridge notes and bridge notes, related parties - - (2,740,425) -

Loss on extinguishment of convertible notes and convertible notes, related - - (260,185) -parties

Gain on extinguishment of note payable - - 788,156 -

Other expense, net (21,687) - (21,756) 6,691

Interest income 3,659 87 3,878 396

Other expense, net (93,950) (523,390) (2,981,180) (1,586,610)

Income (loss) before benefit from income taxes (1,553,023) (1,246,469) (6,911,428) (3,058,540)

Benefit from income taxes - - - -

Net income (loss) $(1,553,023) $(1,246,469) $(6,911,428) $(3,058,540)

Net income (loss) per share

Basic and diluted $ (0.22) $ (1.33) $ (2.17) $ (3.27)

Weighted average common shares outstanding

Basic and diluted 6,960,330 936,213 3,190,060 936,213

iSpecimen Inc.

CONDENSED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK ANDSTOCKHOLDERS' DEFICIT

(Unaudited)

Series B Convertible Preferred Stock Series A-1 Convertible Preferred Stock Series A Convertible Preferred Stock Common Stock Treasury Stock

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Additional Paid-In Capital Accumulated Deficit Total Stockholders' Equity (Deficit)

Balance at December 31, 2020 572,465 $7,999,997 100,365 $561,041 618,182 $2,612,038 936,213 $ 94 31,000 $ (172) $ 1,779,698 $ (29,057,587) $ (27,277,967)

Share-based compensation expense - - - - - - - - - - 22,036 - 22,036

Net loss - - - - - - - - - - - (3,963,491) (3,963,491)

Balance at March 31, 2021 (unaudited) 572,465 $7,999,997 100,365 $561,041 618,182 $2,612,038 936,213 $ 94 31,000 $ (172) $ 1,801,734 $ (33,021,078) $ (31,219,422)

Conversion of redeemable convertible preferred stock into common stock (572,465) (7,999,997) (100,365) (561,041) (618,182) (2,612,038) 1,291,012 129 - - 11,172,947 - 11,173,076upon initial public offering

Conversion of principal and accrued interest of convertible notes and bridgenotes into - - - - - - 2,049,043 205 - - 16,392,139 16,392,344common stock upon initial public offering

Issuance of common stock in connection with public offering - - - - - - 2,250,000 225 - - 17,999,775 - 18,000,000

Offering costs in connection with public offering - - - - - - - - - - -2,339,816 - (2,339,816)

Issuance of common stock through exercise of stock options - - - - - - 39,461 4 - - 39,629 - 39,633

Share-based compensation expense - - - - - - - - - - 28,374 - 28,374

Net loss - - - - - - - - - - - (1,394,914) (1,394,914)

Balance at June 30, 2021 (unaudited) - $ - - $ - - $ - 6,565,729 $ 657 31,000 $ (172) $ 45,094,782 $ (34,415,992) $ 10,679,275

Issuance of common stock in connection with public offering over-allotment - - - - - - 337,500 34 - - 2,497,467 - 2,497,501option exercise

Issuance of commoon stock in exchange for services - - - - - - 2,000 - - - 12,500 - 12,500

Issuance of common stock through exercise of stock options - - - - - - 4,761 - - - 4,761 - 4,761

Issuance of common stock through exercise of warrants - - - - - - 17,889 2 - - 990 - 992

Vesting of restricted stock units - - - - - - 37,879 4 (4) -

Share-based compensation expense - - - - - - - - - - 399,821 - 399,821

Issuance of warrants in connection with debt - - - - - - - - - - 49,072 - 49,072

Net loss - - - - - - - - - - - (1,553,023) (1,553,023)

Balance at September 30, 2021 (unaudited) - $ - - $ - - $ - 6,965,758 $ 697 31,000 $ (172) $ 48,059,389 $ (35,969,015) $ 12,090,899

Series B Convertible Preferred Stock Series A-1 Convertible Preferred Stock Series A Convertible Preferred Stock Common Stock Treasury Stock

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Additional Paid-In Capital Accumulated Deficit Total Stockholders' Deficit

Balance at December 31, 2019 572,465 $7,999,997 100,365 $561,041 618,182 $2,612,038 936,213 $ 94 31,000 $ (172) $ 1,686,832 $ (24,405,503) (22,718,749)

Share-based compensation expense - - - - - - - - - - 22,045 - 22,045

Net loss - - - - - - - - - - - (1,637,979) (1,637,979)

Balance at March 31, 2020 (unaudited) 572,465 $7,999,997 100,365 $561,041 618,182 $2,612,038 936,213 $ 94 31,000 $ (172) $ 1,708,877 $ (26,043,482) $ (24,334,683)

Share-based compensation expense - - - - - - - - - - 29,287 - 29,287

Net loss - - - - - - - - - - - (174,092) (174,092)

Balance at June 30, 2020 (unaudited) 572,465 $7,999,997 100,365 $561,041 618,182 $2,612,038 936,213 $ 94 31,000 $ (172) $ 1,738,164 $ (26,217,574) $ (24,479,488)

Share-based compensation expense 29,266 29,266

Net loss (1,246,469) (1,246,469)

Balance at September 30, 2020 (unaudited) 572,465 7,999,997 100,365 561,041 618,182 2,612,038 936,213 94 31,000 (172) 1,767,430 (27,464,043) (25,696,691)

iSpecimen Inc.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine months ended September 30,

2021 2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ (6,911,428) $(3,058,540)

Adjustments to reconcile net loss to net cash used in operating activities:

Share-based compensation 450,231 80,598

Common shares issued in exchange for services 12,500 -

Amortization of internally developed software 714,444 599,425

Depreciation of property and equipment 33,390 33,563

Bad debt expense 33,856 -

Amortization of debt issuance costs on note payable 3,277 -

Amortization of discount and debt issuance costs on convertible notes 1,088 141,628

Amortization of discount on bridge notes 869,600 -

Change in fair value of derivative liabilities (1,311,700) 76,000

Loss on extinguishment on bridge notes 2,740,425 -

Loss on extinguishment of convertible notes 260,185 -

Gain on extinguishment on note payable (788,156) -

Change in operating assets and liabilities:

Accounts receivable (1,226,146) (924,827)

Accounts receivable - unbilled (1,097,983) 130,813

Inventory - -

Prepaid expenses and other current assets (41,392) (6,970)

Tax credit receivable - 104,624

Accounts payable (1,441,008) 474,263

Accrued expenses 214,226 129,644

Accrued interest (1,709,575) 1,374,139

Deferred revenue (154,531) 581,912

Net cash used in operating activities (9,348,697) (263,728)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment (2,550) (1,006)

Capitalization of internally developed software (731,172) (864,921)

Net cash used in investing activities (733,722) (865,927)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of bridge notes payable 500,000 1,250,000

Proceeds from issuance of note payable 3,500,000 783,008

Proceeds from exercise of stock options 44,390 -

Proceeds from exercise of warrants 992 -

Proceeds from issuance of over-allotment shares of common stock , 2,497,501 -net of transaction costs of $202,499

Proceeds from issuance of common stock in connection with public offering 18,000,000 -

Payment of debt issuance costs in connection with note payable (25,825) -

Payment of offering costs in connection with the issuance of common (2,339,816) -stock in connection with public offering

Payment of principal to bridge note holders (3,000,000) -

Net cash provided by financing activities 19,177,242 2,033,008

Net increase in cash 9,094,823 903,353

Cash at beginning of period 695,909 53,893

Cash at end of period $ 9,790,732 $ 957,246

Supplemental disclosure of cash flow information:

Cash paid for interest $ 2,824,032 $ -

Income taxes paid $ - $ -

Supplemental disclosure of non-cash investing and financing activities:

Conversion of redeemable convertible preferred stock into common stock $11,173,076 $ -

Conversion of convertible notes and accrued interest into common stock $ 6,748,729 $ -

Conversion of bridge notes and accrued interest into common stock $ 4,717,646 $ -

Issuance of common stock warrants as offering costs in connection $ 374,400 $ -with public offering of common stock

Issuance of common stock warrants in connection with Term Loan $ 49,072 $ -

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SOURCE iSpecimen Inc.