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iSpecimen (ISPC) - 2024 Q4 - Annual Report
ISPCiSpecimen (ISPC)2025-04-14 21:24

Financial Performance - The company reported net losses of 12,497,805and12,497,805 and 11,099,488 for the years ended December 31, 2024 and 2023, respectively, with an accumulated deficit of 71,862,617asofDecember31,2024[99].−Thecompanyanticipatescontinuedlossesintheforeseeablefutureasitinvestsinbusinessgrowth,withfuturenetlossesdependentontherateofexpensegrowthandrevenuegeneration[100].−Thecompany′srevenueistransactionalandnotrecurring,makingitdifficulttopredictfuturerevenuetrends[112].−Thecompanyhasincurredlossesfromsalestaxobligationsduetofailuretocollecttaxesontaxablesalesinprioryears,whichcouldmateriallyaffectitsfinancialcondition[171].−Thecompanymayneedtoraiseadditionalfundssoonerthanexpected,potentiallythroughequityofferingsordebtfinancings,whichcouldresultindilutiontoexistingstockholders[217].−Thecompany′squarterlyrevenuehashistoricallyfluctuated,makingitdifficulttoforecastandmeetinvestorexpectations[219].−Thestockpricehasbeenvolatile,tradingbetween71,862,617 as of December 31, 2024[99]. - The company anticipates continued losses in the foreseeable future as it invests in business growth, with future net losses dependent on the rate of expense growth and revenue generation[100]. - The company's revenue is transactional and not recurring, making it difficult to predict future revenue trends[112]. - The company has incurred losses from sales tax obligations due to failure to collect taxes on taxable sales in prior years, which could materially affect its financial condition[171]. - The company may need to raise additional funds sooner than expected, potentially through equity offerings or debt financings, which could result in dilution to existing stockholders[217]. - The company's quarterly revenue has historically fluctuated, making it difficult to forecast and meet investor expectations[219]. - The stock price has been volatile, trading between 2.17 and 579.60sincetheIPO,whichmayaffectinvestors′abilitytosellsharesatorabovethepurchaseprice[221].CustomerandRevenueConcentration−Onecustomeraccountedforapproximately29579.60 since the IPO, which may affect investors' ability to sell shares at or above the purchase price[221]. Customer and Revenue Concentration - One customer accounted for approximately 29% of the company's revenue in 2024, highlighting significant revenue concentration risks[112]. - During the year ended December 31, 2024, one customer represented 29% of the company's revenues, while in 2023, one customer represented 25% of revenue[133]. - Approximately 52% of revenue in 2024 was derived from specimens procured from existing sample inventories, which may become obsolete due to regulatory changes or shifts in researcher requirements[153]. Operational Challenges - The company identified a material weakness in internal control over financial reporting, which could lead to misstatements in financial statements if not remediated[103]. - The company has initiated several remediation measures to address the identified material weakness in internal controls, including engaging external tax advisors and implementing a sales tax software platform[106]. - The lengthy adoption cycle for technology solutions at healthcare provider supply partners can take up to 18 months, potentially hindering rapid revenue growth[147]. - The company may face significant challenges in managing growth, which could strain financial, technical, and operational resources[170]. International Operations and Compliance - As of December 31, 2024, the company had customers in 23 countries and supply sites in 11 countries, indicating ongoing international expansion efforts[114]. - The company faces risks associated with international operations, including compliance with varying laws and regulations, which could adversely affect its business[114]. - Non-compliance with international laws related to biohazards and imports/exports may lead to significant legal expenses and reputational risks[190]. - Compliance with export and import regulations is critical, as violations could lead to substantial civil or criminal penalties[194]. Technology and Development - The company is investing in technology development for the iSpecimen Marketplace, but there is no assurance that these investments will yield significant revenues or profits[122]. - The iSpecimen Marketplace currently requires assistance from sales personnel for specimen requests, limiting scalability and profitability[134]. - In fiscal year 2024, the company incurred 3,530,291 in technology expenses and capitalized 653,288forinternallydevelopedsoftware[120].RisksandLiabilities−Thecompanyfacessignificantrisksrelatedtocybersecuritythreats,whichcouldimpactitsfinancialresultsandreputation[125].−Thecompanybearscreditriskwithcustomers,asitmayprovideproductsandserviceswithoutguaranteedpayment[131].−Thecompanymayfacelegalandfinancialexposureduetopotentialbreachesofsecuritymeasures,impactingcustomertrustandbusinessoperations[124].−Thecompanyfacesrisksrelatedtoproductsafetyandliabilityduetothehazardousnatureofspecimenshandled[197].−Changesindemandforthecompany′sproductsandservicescouldadverselyaffectprofitability,particularlyduetoeconomicdownturnsorchangesinthediseaselandscape[130].RegulatoryandComplianceCosts−Thecompanyissubjecttosignificantlegalandfinancialcompliancecostsduetopubliccompanyregulations,whichmaystrainresourcesanddivertmanagement′sattention[226].−Thecompanymustcomplywithdataprotectionregulations,includingHIPAAandGDPR,whichcouldresultinfinesandoperationalchallengesifnotadheredto[185][186].−Thecompanymustmaintaincompliancewithvariousfederal,state,andlocallawstoavoidoperationaldisruptionsandlegalchallenges[193].CapitalStructureandFinancing−Thecompanyhasfederalnetoperatinglosscarryforwards(NOLs)ofapproximately653,288 for internally developed software[120]. Risks and Liabilities - The company faces significant risks related to cybersecurity threats, which could impact its financial results and reputation[125]. - The company bears credit risk with customers, as it may provide products and services without guaranteed payment[131]. - The company may face legal and financial exposure due to potential breaches of security measures, impacting customer trust and business operations[124]. - The company faces risks related to product safety and liability due to the hazardous nature of specimens handled[197]. - Changes in demand for the company's products and services could adversely affect profitability, particularly due to economic downturns or changes in the disease landscape[130]. Regulatory and Compliance Costs - The company is subject to significant legal and financial compliance costs due to public company regulations, which may strain resources and divert management's attention[226]. - The company must comply with data protection regulations, including HIPAA and GDPR, which could result in fines and operational challenges if not adhered to[185][186]. - The company must maintain compliance with various federal, state, and local laws to avoid operational disruptions and legal challenges[193]. Capital Structure and Financing - The company has federal net operating loss carryforwards (NOLs) of approximately 62.40 million, with 13millionexpiringthrough2037and13 million expiring through 2037 and 49.40 million available for indefinite carryforward[172]. - The company has no limit on the amount of debt it may incur, which could increase financial risk and leverage[175]. - The company may issue shares to finance acquisitions, potentially diluting stockholder ownership, especially if stock prices are low or volatile[174]. - The company is subject to various restrictive covenants in financing arrangements, which could limit operational flexibility and lead to defaults if not complied with[178]. Governance and Ownership - The concentration of ownership among directors and principal stockholders may delay or prevent changes in control, potentially affecting stockholder interests[208]. - The company’s certificate of incorporation allows the board to issue up to 50,000,000 shares of preferred stock, which could complicate third-party control attempts[209]. - The company may face challenges in attracting and retaining qualified directors and officers due to increased compliance costs and regulatory requirements[232].