NASDAQ: ISPC

Series C convertible preferred stock, $0.0001 par value 50,000,000 shares authorized, 6,875 issued and outstanding at December 31, 2025 and Nil issued and outstanding as at December 31, 2024
1
—

Additional
paid-in capital
85,437,703
75,173,627

Treasury stock, 1,550 shares at December 31, 2025 and 2024, at cost
(172)
(172)

Accumulated
other comprehensive income
—
—

Accumulated
deficit
(82,350,149)
(71,862,617)

Total
stockholders’ equity
3,088,231
3,311,008

Total
liabilities and stockholders’ equity
$9,531,410
$9,350,230

See
accompanying notes to these financial statements.

Reflects
retroactive effect of a 1-for-20 reverse stock split on September 13, 2024.

F-3

iSpecimen Inc.

Statements
of Operations and Comprehensive Loss

Years Ended December 31,

2025
2024

Revenue
$1,928,998
$9,291,115

Operating
expenses:

Cost of revenue
1,904,888
5,302,712

Technology
2,159,815
3,530,291

Sales
and marketing
2,295,501
4,945,269

Supply
development
246,979
537,888

Fulfillment
827,501
1,635,724

General
and administrative
3,472,233
6,067,276

Total
operating expenses
10,906,917
22,019,160

Loss
from operations
(8,977,919)
(12,728,045)

Other
income (expense), net

Interest
expense
(1,949)
(173,771)

Interest
income
3,748
44,133

Interest
and penalties on sales tax liability
(7,969)
(46,303)

Other
income (expense), net
(1,503,443)
406,181

Total
other income, net
(1,509,613)
230,240

Net
loss
$(10,487,532)
$(12,497,805)

Other
comprehensive loss:

Net
loss
$(10,487,532)
$(12,497,805)

Unrealized
loss on available-for-sale securities
—
(840)

Total
other comprehensive loss
—
(840)

Comprehensive
loss
$(10,487,532)
$(12,498,645)

Net
loss per share - basic and diluted
$(2.28)
$(17.58)

Weighted
average shares of common stock outstanding - basic and diluted
4,602,461
710,852

See
accompanying notes to these financial statements.

Reflects
retroactive effect of a 1-for-20 reverse stock split on September 13, 2024.

F-4

iSpecimen
Inc.

Statements
of Changes in Stockholders’ Equity

Year
Ended December 31, 2025

Accumulated

Additional
Other

Total

Preferred
Stock
Common Stock
Treasury
Stock
Paid-In
Comprehensive
Accumulated
Stockholders’

Shares
Amount
Shares
Amount
Shares
Amount
Capital
Income
Deficit
Equity

Balance
at December 31, 2023
—
$—
454,169
$45
1,550
$(172)
$69,105,176
$840
$(59,364,812)
$9,741,077

Stock-based
compensation expense
—
—
—
—
—
—
101,844
—
—
101,844

Vesting
of restricted stock
—
—
1,958
—
—
—
147,831
—
—
147,831

Repurchase
of common stock exercisable under PIPE Warrants
—
—
—
—
—
—
(52,500)
—
—
(52,500)

Issuance
of common stock
—
—
132,814
13
—
—
398,429
—
—
398,442)

Issuance
of common stock in connection with At The Market Offering Agreement
—
—
199,004
$20
—
—
$1,494,394
—
$—
$1,494,414

Issuance
of common stock through exercise of warrants
—
—
734,221
74
—
—
4,599,948
—
—
4,600,022)

Offering
costs in connection with At The Market Offering Agreement
—
—
—
—
—
—
(255,288)
—
—
(255,288)

Offering
costs in connection with issuance of common shares and warrants
—
—
—
—
—
—
(366,189)
—
—
(366,189)

Unrealized
loss on available-for-sale securities
—
—
—
—
—
—
—
(840)
—
(840)

Reverse
stock split adjustment
—
—
174,738
18
—
—
(18)
—
—
—

Net
loss
—
—
—
—
—
—
—
—
(12,497,805)
(12,497,805)

Balance
at December 31, 2024
—
$

1,696,904
$170
1,550
$(172)
$75,173,627
$—
$(71,862,617)
$3,311,008

Stock-based
compensation expense
—
—
—
—
—
—
1,338
—
—
1,338

Vesting
of restricted stock
—
—
400
—
—
—
19,928
—
—
19,928

Issuance
of common stock in connection with Underwritten financing
—
—
1,482,644
148
—
—
1,037,702
—
—
1,037,850

Issuance
of common stock in connection with PIPE financing
—
—
267,379
27
—
—
299,972
—
—
299,999

Issuance
of common stock through exercise of prefunded warrants
—
—
6,323,719
632
—
—
4,411,091
—
—
4,411,723

Issuance
of Series C convertible preferred stock in connection with PIPE financing
6,875
1
—
—
—
—
5,499,999
—
—
5,500,000

Offering
costs in connection with the completion of financings
—
—
—
—
—
—
(1,006,083)
—
—
(1,006,083)

Reversal
of issued common stock through exercise of prefunded warrants due to error on issuance
—
—
(1,292,449)
(129)
—
—
129
—
—
—

Net
loss
—
—
—
—
—
—
—
—
(10,487,532)
(10,487,532)

Balance
at December 31, 2025
6,875
$1
8,478,597
$848
1,550
$(172)
$85,437,703
$—
$
(82,350,149
)
$3,088,231

See
accompanying notes to these financial statements.

Reflects
retroactive effect of a 1-for-20 reverse stock split on September 13, 2024.

F-5

iSpecimen Inc.

Statements
of Cash Flows

Years
Ended December 31,

2025
2024

CASH FLOWS FROM OPERATING
ACTIVITIES:

Net
loss
$(10,487,532)
$(12,497,805)

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

Stock-based
compensation expense
21,266
249,675

Amortization
of internally developed software
1,470,873
2,036,981

Amortization
of other intangible assets
191,555
191,555

Depreciation
of property and equipment
68,474
65,712

Bad
debt expense
59,863
705,724

Write-off
of other intangible assets
525,145
—

Write-off
of accounts receivable – unbilled
—
1,187,964

Write-off
of accounts payable
(75,000)
—

Write-off
of internally developed software
1,871,064
327,387

Non-cash
interest income related to accretion of discount on available-for-sale securities
—
(28,976)

Loss
from sales of available-for-sale securities
—
680

Loss
on disposal of property and equipment
—
58

Change
in operating assets and liabilities:

Accounts
receivable – unbilled
—
505,931

Accounts
receivable
1,336,475
(903,329)

Inventory
45,110
—

Prepaid
expenses and other current assets
194,325
27,187

Operating
lease right-of-use asset
58,817
127,006

Security
deposit
—
15,501

Accounts
payable
1,240,043
272,123

Accrued
expenses
(549,544)
(371,821)

Operating
lease liability
(43,369)
(120,203)

Deferred
revenue
(168,173)
(55,063)

Net
cash used in operating activities
(4,240,608)
(8,263,713)

CASH
FLOWS FROM INVESTING ACTIVITIES:

Capitalization
of intangible asset under development
(1,000,000)
(653,288)

Purchase
of property and equipment
(454)
(31,546)

Purchase
of leasehold improvements included in operating lease right-of-use asset
—
(25,000)

Purchase
of available-for-sale securities
—
(460,932)

Proceeds
from sales and maturities of available-for-sale securities
—
3,150,320

Net
cash provided by (used in) investing activities
(1,000,454)
1,979,554

CASH
FLOWS FROM FINANCING ACTIVITIES:

Proceeds
from issuance of common stock in connection with At the Market Offering Agreement
—
1,494,414

Proceeds
from issuance of common stock in with Securities Purchase Agreement
3,999,574
398,442

Proceeds
from pre-funded warrants
—
4,600,022

Proceeds
from issuance of common stock in connection with private placement
1,749,998
—

Proceeds
from issuance of Series C convertible preferred stock in connection with PIPE financing
5,500,000
—

Payment
of offering costs in connection with the issuance of common stock in connection with At the Market Offering Agreement
—
(255,288)

Payment
of offering costs in connection with the issuance of common stock in connection with pre-funded warrants and common shares
(1,006,083)
(366,189)

Repurchase
of common stock purchase warrants exercisable under PIPE warrants
—
(52,500)

Net
cash provided by financing activities
10,243,489
5,818,901

Net increase
(decrease) in cash and cash equivalents
5,002,427
(465,258)

Cash
and cash equivalents at beginning of year
1,878,408
2,343,666

Cash
and cash equivalents at end of year
$6,880,835
$1,878,408

Supplemental
disclosure of cash flow information:

Cash
paid for interest
$1,948
$14,358

Supplemental
disclosure of non-cash investing and financing activities:

Non-cash
amounts of lease liabilities reducing from terminating right-of-use assets
$—
$321,805

Non-cash
adjustment to reduce lease liabilities and right-of-use assets due to lease termination
$—
$85,679

Stock
issuance costs included in accounts payable and accrued expenses
$—
$7,023

See
accompanying notes to these financial statements.

F-6

iSpecimen Inc.

Notes to
Financial Statements

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 as one operating
and reporting segment.

Basis
of Presentation

The
Company’s financial statements have been prepared in conformity with generally accepted accounting principles in the United States
of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found
in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting
Standards Board (“FASB”).

Reverse
Stock Split

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).

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-20 as if they had occurred at the beginning of the earliest period presented. The
Reverse Stock Split combined each 20 shares of our outstanding common stock and treasury shares into one share of common stock without
any change in the par value per share, and the Reverse Stock Split correspondingly adjusted, among other things, the exercise rate of
our warrants and options into 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.

F-7

iSpecimen Inc.

Notes to
Financial Statements

Going
Concern Uncertainty and Management’s Plan

The
Company has recognized recurring losses since inception. As of December 31, 2025, the Company had positive working capital of $723,284,
an accumulated deficit of $82,350,149, cash and cash equivalents of $6,880,835, and accounts payable and accrued expenses of $5,981,846.
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 year ended December 31, 2025, the Company continued its efforts, which had begun in 2023, to decrease
its capital and operational expenditures by cutting costs and right sizing the Company through a reduction in workforce while streamlining
operations and rationalizing resources to focus on key market opportunities. The reductions in workforce since January 1, 2024 through
December 31, 2025, cumulatively resulted in an estimated reduction in monthly compensation costs of approximately 67% and technology
costs of approximately 39% during the year December 31, 2025 when compared to the year ended December 31, 2024. While the Company plans
to improve its sales and revenues, the Company is taking steps to significantly reduce and manage expenditures to improve its financial
position and ensure continued funding of operations. However, as certain elements of the Company’s operating plan are not within
the Company’s control, the Company is unable to assess their probability of success. During the year ended December 31, 2025, the
Company engaged in raising capital through equity financing as discussed in Note 10.

The
Company may be unsuccessful in increasing its revenues or contain 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 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 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 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.

F-8

iSpecimen Inc.

Notes to
Financial Statements

2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES

Use
of Estimates

The
preparation of the Company’s 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 year ended December 31, 2025, no supplier accounted for 10% of the Company’s total purchases (cost of revenues). For the year
ended December 31, 2024, one supplier (Supplier B) accounted for approximately 11.32% of the Company’s total purchases (cost of
revenues). No other supplier accounted for 10% or more of total purchases (cost of revenues) in either 2025 or 2024.

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:

●
Level 1 — Valuations
based on quoted prices for identical assets and liabilities in active markets.

●
Level 2 — Valuations
based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities
in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs
that are observable or can be corroborated by observable market data.

●
Level 3 — Valuations
based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made
by other market participants. These valuations require significant judgment.

For
certain financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable, the carrying amounts approximate
their fair values as of December 31, 2025 and 2024, respectively, because of their short-term nature.

F-9

iSpecimen Inc.

Notes to
Financial Statements

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 year ended December 31, 2025, one customer (Customer A) accounted for approximately 19.57% of the Company’s total revenues.
For the year ended December 31, 2024, one customer (Customer B) accounted for approximately 21.64% of the Company’s total revenues.
No other customer accounted for 10% or more of total revenues in either 2025 or 2024.

As
of December 31, 2025, one customer accounted for 28.16% or more of gross accounts receivable. As of December 31, 2024, one accounted
for approximately 17.01% of gross accounts receivable. No other customer accounted for 10% or more of gross accounts receivable at that
date.

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.

F-10

iSpecimen Inc.

Notes to
Financial Statements

The
following table summarizes the Company’s revenue for the years ended December 31, 2025 and 2024:

Years
ended December 31,

2025
2024

Specimens - contracts with customers
$1,735,000
$9,104,950

Shipping and other
193,998
186,165

Revenue
$1,928,998
$9,291,115

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
December 31, 2025 and 2024, the Company had an allowance for doubtful accounts of $646,067 and $620,433, 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 of five 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 develop 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 during the year for the completion of milestone 1. The amount was recognized as intangible asset under development and
is not in use. The Company recognized $Nil 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 its carrying value
may not be recoverable, and an impairment loss shall be recognized if the carrying amount of the intangible assets are not recoverable
and its carrying amount exceeds its 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 of five 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 years ended December 31, 2025
and 2024.

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.

F-11

iSpecimen Inc.

Notes to
Financial Statements

As
at December 31, 2024, the inventory consists 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 performs 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 for the impairment as 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 year, 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
year, 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.

F-12

iSpecimen
Inc.

Notes
to Financial Statements

The
table below provides information on shares of the Company’s common stock issuable upon vesting and exercise, as of December 31:

2025
2024

Shares
issuable upon vesting of RSUs
25
822

Shares issuable upon exercise
of stock options
2,901
8,460

Shares
issuable upon exercise of pre-funded warrants to purchase common stock
1,292,449
—

Shares
issuable upon exercise of Lender Warrant (defined below) to purchase common stock
625
625

Shares
issuable upon exercise of Underwriter Warrant (defined below) to purchase common stock
4,500
4,500

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 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.
AVAILABLE-FOR-SALE SECURITIES

The
Company’s U.S. Treasury bills that were classified as available-for-sale securities fully matured during the year ended December
31, 2024. There were no available securities as of December 31, 2025 and 2024.

The
Company recorded $680 of realized losses in the year ended December 31, 2024.

F-13

iSpecimen
Inc.

Notes
to Financial Statements

4.
PROPERTY AND EQUIPMENT, NET

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

December 31,
December 31,

2025
2024

Website
$285,377
$285,377

Computer
equipment and purchased software
91,786
91,332

Equipment
19,291
19,291

Furniture
and fixtures
26,982
26,982

Leasehold
improvements
12,646
12,646

Total
property and equipment
436,082
435,628

Accumulated
depreciation
(410,539)
(342,065)

Total
property and equipment, net
$25,543
$93,563

Depreciation
expense for property and equipment was $68,474 and $65,712 for the years ended December 31, 2025 and 2024, respectively.

5. INTERNALLY
DEVELOPED SOFTWARE, NET

During
the year ended December 31, 2024, the Company capitalized $653,288 of internally developed software costs in connection with the
development and continued enhancement of the technology platform and web interfaces. Capitalized costs primarily consist of payroll and
payroll-related costs for the Company’s employees.

During
the year ended December 31, 2025, the Company capitalized $1,000,000 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 installation of a new platform
to modernize the Company’s infrastructure, the first phase of its digital transformation program.

The
Company recognized $1,470,873 and $2,036,981 of amortization expense associated with capitalized internally developed software costs
during the years ended December 31, 2025 and 2024, respectively. Accumulated amortization associated with capitalized internally developed
software costs as of December 31, 2025 and 2024 was $10,472,608 and $9,001,736, respectively.

During
the year ended December 31, 2025, the Company capitalized $1,000,000 in connection to internal software under development.

6.
OTHER INTANGIBLE ASSETS, NET

During
the year ended December 31, 2024, the Company did not sequence any FFPE blocks and therefore did not capitalize any sequenced data as
other intangible assets. The Company licenses to its customers, at an additional cost, the sequenced data associated with the sequenced
FFPE blocks with the sale of said FFPE blocks. The sequenced data is also organized to form a database of research content that is available
for sale to the Company’s customers through a subscription model.

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 write-off the net value of other intangible assets of approximately $525,000.

F-14

iSpecimen
Inc.

Notes
to Financial Statements

7.
DEBT FINANCING

On
September 19, 2024, the Company entered into a note purchase agreement (the “Note Purchase Agreement”) with a lender (the
“Lender”). Pursuant to the provisions of the Purchase Agreement, the Lender agreed to provide a loan to the Company in the
amount of $1,000,000 (the “Loan”) and the Company 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
“Note”). The Note Purchase Agreement contains customary representations and warranties and obligates the Lender to provide
an additional loan to the Company, 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, the Company
and the Lender closed the transactions described in the Note Purchase Agreement, the Lender provided funds to the Company in the net
amount of $959,980 and the Company issued the Note to the Lender in the principal amount of $1,000,000. WestPark Capital, Inc. (“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.

Debt
issuance costs related to the Note totaled $140,020 which comprised of placement agent fee of $40,020 and legal costs of $100,000.
The debt issuance cost will be amortized over the loan term of 12 months. The amortization expense which is included in interest expense
on the statement of operations, totaled $140,020 for the year ended December 31, 2024.

On
October 31, 2024, the Company paid off the outstanding principal balance of $1,000,000 and accrued interest of $18,000 on the Note.

8.
FAIR VALUE MEASUREMENTS

As
of December 31, 2025 and 2024, the Company did not have any assets or liabilities measured at fair value on a recurring basis.

9. 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 was no sublease rental income for the year ended December 31, 2025, 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 year ended December
31, 2025:

Operating lease expense
$82,121

Short-term lease expense
—

Total
lease cost
$82,121

F-15

iSpecimen
Inc.

Notes
to Financial Statements

Lease
Position as of December 31, 2025

Right-of-use
lease assets and lease liabilities for the Company’s operating lease as of December 31, 2025 were recorded in the balance sheet
as follows:

Assets

Operating
lease right-of-use assets
$269,160

Total
lease assets
$269,160

Liabilities

Current liabilities:

Operating lease liability
– current portion
$56,925

Non-current liabilities:

Operating
lease liability – net of current portion
211,873

Total
lease liability
$268,798

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 December 31, 2025:

Weighted average remaining lease term (in years) – operating lease 3.83

Weighted average discount rate – operating lease 8.00%

Undiscounted
Cash Flows

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

2026
$76,372

2027
80,190

2028
84,200

Thereafter
73,675

Total future minimum lease payments
314,437

Less
effect of discounting
(45,639)

Present value of future
minimum lease payments
$268,798

Rent
expense for the years ended December 31, 2025 and 2024 amounted to $85,513 and $156,591, respectively.

Cash
Flows

Supplemental
cash flow information related to the operating lease for the year ended December 31, 2025 was as follows:

Non-cash operating lease expense
(operating cash flow)

$
58,817

Change in operating lease liabilities (operating cash
flow)

$
(43,369
)

F-16

iSpecimen
Inc.

Notes
to Financial Statements

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 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 December 31, 2025, the Company recovered approximately $546,000 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 year ended December 31, 2025.

F-17

iSpecimen
Inc.

Notes
to Financial Statements

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 December 31, 2025, there were legal disputes filed
against the Company.

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 meirut basis
amongst other things. The Company believes that EGS’ claims are without legal or factual basis, and intends to vigorously
defend these claims.

Subsequent
to year ended December 31, 2025, the Company settled this legal matter and the parties agreed to a $200,000 settlement pursuant to a
settlement agreement executed on February 15, 2026 (Note 14).

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.

F-18

iSpecimen
Inc.

Notes
to Financial Statements

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 basis amongst 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 current, 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.

10. 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.

Reverse
Stock Split

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. 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.

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.

At
the Market Offering

On
March 5, 2024, the Company put in place an at the market offering agreement (the “ATM Agreement”) which allowed the Company
to issue and sell shares of its 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”). During the year ended December 31, 2024, the Company sold 199,004 ATM
Shares for gross proceeds of approximately $1,494,000 under the ATM Agreement. The Company incurred offering costs of approximately
$255,000, resulting in net proceeds of approximately $1,239,000.

Securities
Offering on Form S-1

On
October 29, 2024, the Company entered into a placement agency agreement (the “Placement Agency Agreement”) with WestPark
(the “Placement Agent”), and a securities purchase agreement (the “Securities Purchase Agreement”) with investors
pursuant to which the Company agreed to issue and sell (i) 132,814 shares of the Company’s 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 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. The offering closed on October 31, 2024.

F-19

iSpecimen
Inc.

Notes
to Financial Statements

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. The Company incurred offering costs of approximately
$366,189, resulting in net proceeds of approximately $4,632,275.

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 5,714,283 securities, consisting of (i) 1,482,644
shares of Common Stock, and (ii) pre-funded warrants to purchase up to 4,231,639 shares of Common Stock, at an exercise price of $0.0001
per share. The securities were sold at a public offering price of $0.70 per share (or $0.6999 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 1,559,828 securities, comprised
of (i) 267,379 shares of Common Stock at a purchase price of $1.122 per Share, and (ii) pre-funded warrants to purchase up to 1,292,449
shares of Common Stock at a purchase price of $1.1219 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 $1,749,998.

Stock
Options

There
were no options exercised during the years ended December 31, 2025 and 2024.

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 4,500 shares
of common stock to several affiliates of ThinkEquity (the “Underwriter Warrants”). The Underwriter Warrants are exercisable
at a per share exercise price of $200.00 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 December 31, 2025, the Underwriter
Warrants had not been exercised and had a weighted average exercise price of $200.00 per share and a remaining weighted average
time to expiration of 0.46 year.

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 625 shares of common stock of the Company. The
Lender Warrant is exercisable at a per share exercise price of $160.00 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 December 31, 2025, the Lender Warrant
had not been exercised and had a weighted average exercise price of $160.00 per share and a remaining weighted average time to expiration
of 5.62 years.

F-20

iSpecimen
Inc.

Notes
to Financial Statements

PIPE
Warrants

On
December 1, 2021, the Company completed a private placement (the “PIPE”) in which the Company issued warrants (the “PIPE
Warrants”) to purchase up to an aggregate of 65,625 shares of common stock. These PIPE Warrants have an exercise price of $260.00
per share and are immediately exercisable upon issuance and will expire on the five and one-half-year
anniversary of the issuance date.

On
February 13, 2024, the Company entered into certain warrant repurchase and termination agreements with the holders of the PIPE Warrants
to repurchase the PIPE Warrants for a purchase price equal to $0.80 multiplied by the number of shares of common stock issuable
pursuant to such PIPE Warrants. In connection with such repurchases, all past, current and future obligations of the Company relating
to the PIPE Warrants were released, discharged and are of no further force or effect.

A summary
of total warrant activity during the year ended December 31, 2025 is as follows:

Weighted

Weighted Average

Remaining

Warrants

Outstanding Average

Exercise

Price Contractual

Term

in Years

Balance at December 31, 2023 70,750 $255.30 3.47

Granted 799,631 3.00 —

Exercised — — —

Repurchased (65,625) 0.80 —

Balance at December 31, 2024 804,756 4.22 2.09

Granted 1,292,449 1.12 —

Exercised (799,631) 3.00 —

Balance at December 31, 2025 1,297,574 $1.89 1.09

11. 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 30,400 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 30,400 shares of common stock to 93,475 shares of common stock.

During
the years ended December 31, 2025 and 2024, Nil and 5,521 equity awards were granted under the 2021 Plan, respectively.
As of December 31, 2025, there were 73,180 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 85,679.

No equity
awards were granted under the 2013 Plan during the years ended December 31, 2025 and 2024. 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 of ten
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.

F-21

iSpecimen
Inc.

Notes
to Financial Statements

Stock
Options

The
following assumptions were used to estimate the fair value of stock options granted using the Black-Scholes-Merton option pricing model
during the years ended December 31:

2025

2024

Assumptions:

Risk-free
interest rate

—

3.49% – 4.56%

Expected
term (in years)

—

0.27 – 4.00

Expected
volatility

—

57.28% – 58.71%

Expected
dividend yield

—

—

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

Weighted

Average

Options

Outstanding Weighted

Average

Exercise

Price Remaining

Contractual

Term

in Years Aggregate

Intrinsic

Value

Balance at December 31, 2024 8,460 33.20 5.20 —

Granted — — — —

Exercised — — — —

Cancelled/forfeited (5,559) 24.27 — —

Balance at December 31, 2025 2,901 $50.31 6.93 $—

Options exercisable at December 31, 2025 2,777 $51.96 6.87 $—

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 years
ended December 31, 2025 and 2024.

No
stock options granted during the year ended December 31, 2025. The weighted average grant date fair value of stock options issued in
the year ended December 31, 2024 was $7.30. The following table sets forth the recorded stock options compensation expense of the Company
during the years ended December 31, 2025 and 2024:

Years
Ended December 31,

Operating expenses:
2025
2024

Technology
$—
$2,639

Sales and marketing (recovery)
(39)
1,168

Supply development
84
1,904

Fulfillment
1,158
1,976

General and administrative
—
41,807

Total
stock options expense
$1,203
$49,494

As
of December 31, 2025 and 2024, a total of $696 and $10,094 unamortized compensation expense is being recognized over the remaining requisite
service period of 2.50 and 2.72 years, respectively.

F-22

iSpecimen
Inc.

Notes
to Financial Statements

Restricted
Stock Units

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

Weighted

RSUs

Outstanding
Average
Grant

Date Fair Value

Unvested Balance at December 31, 2024
822
$132.34

Granted
—
—

Vested
(400)
112.99

Forfeited
(397)
108.87

Unvested Balance at December 31, 2025
25
$97.20

The
Company recorded RSUs compensation expense during the years ended December 31, 2025 and 2024 as follows:

Years
Ended December 31,

Operating expenses:
2025
2024

Technology
$2,691
$57,073

Sales and marketing
9,126
46,744

Supply development
—
399

Fulfillment
11,866
38,666

General and administrative
(recovery)
(3,620)
57,299

Total
RSU expense
$20,063
$200,181

As
of December 31, 2025 and 2024, the total unrecognized stock-based compensation expense related to unvested RSUs was $875 and $83,804,
and it is expected to be recognized on a straight-line basis over a weighted average period of approximately 0.25 and 0.96
year, respectively.

12. INCOME
TAXES

There
was no provision for income taxes for the years ended December 31, 2025 and 2024 due to the Company’s operating losses and a full
valuation allowance on deferred tax assets.

The
Company completed research and development studies covering all tax years currently under the applicable statute of limitations.

Significant
components of the Company’s deferred tax assets and liabilities as of December 31 are as follows:

2025
2024

Deferred tax assets:

Operating
loss carryforwards
$17,786,885
$15,387,300

Research and development
tax credit
2,220,972
2,155,100

Other
892,216
868,700

Total
deferred tax assets
20,900,073
18,411,100

Deferred tax liability:

Other
(73,500)
(80,500)

Intangibles
(59,400)
(124,800)

Total
deferred tax liabilities
(132,900)
(205,300)

Net deferred tax assets
before valuation allowance
20,767,173
18,205,800

Valuation allowance
(20,767,173)
(18,205,800)

Net deferred tax asset
$—
$—

F-23

iSpecimen
Inc.

Notes
to Financial Statements

The
Company has provided a valuation allowance against the deferred tax assets as it has incurred significant losses since its inception.
Management currently believes that it is more likely than not that the deferred tax assets will not be realized in the future. The change
in the valuation allowance during 2024 was an increase of $3,044,600.

As
of December 31, 2025 and December 31, 2024, the Company had federal net operating loss carryforwards of approximately $72,600,000 and
$62,300,000, respectively, of which approximately $13,000,000 expires at various periods through 2037 and approximately $59,600,000 can
be carried forward indefinitely. As of December 31, 2025 and December 31, 2024, the Company had state net operating loss carryforwards
of approximately $39,767,000 and $35,600,000, respectively, that expire at various periods through 2045, respectively. At December 31,
2025 and December 31, 2024, the Company had federal and state tax credits of approximately $2,221,000 and $2,031,000, 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.

The
Company applies the standards on uncertainty in income taxes. The Company did not have any significant unrecognized tax benefits during
the year ended December 31, 2025. The Company’s U.S. federal operating losses have occurred since its inception and as such, tax
years subject to potential tax examination could apply from that date because the utilization of net operating losses from prior years
opens the relevant year to audit by the IRS and/or state taxing authorities.

The
Company’s income tax provision was computed using the federal statutory rate and average state statutory rates, net of related
federal benefit. The following represents a reconciliation of the statutory income tax rates to the effective rates at December 31:

2025
2024

Reconciliation to statutory rates

Expected federal
income taxes benefit at statutory rates
(21.0)%
(21.0)%

Expected state tax benefit
at statutory rates, net of federal benefit
(6.4)
(6.4)

Change
in valuation allowance
27.4
27.4

Income tax expense (benefit)
—%
—%

13.
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 within one 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 has one reportable segment – biospecimens. The Company derive 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 December 31, 2025 and 2024 and profit or loss from each segment for the
year ended December 31, 2025 and 2024.

December 31,

2025
December 31,

2024

Financial statement line item:

Reportable segment assets
$9,531,410
$9,350,230

Reportable segment liabilities
6,443,179
6,039,222

F-24

iSpecimen
Inc.

Notes
to Financial Statements

Year
Ended

December 31,

2025
2024

Financial statement line item:

Revenues
from external customers
$1,928,998
$9,291,115

Less:

Cost
of revenue, excluding amortization
1,713,333
5,111,157

Technology
expenses, excluding amortization
688,942
1,493,310

Sales
and marketing expenses
2,295,501
4,945,269

Supply
development expenses
246,979
537,888

Fulfillment
expenses
827,501
1,635,724

Other
segment items (a)
4,907,202
5,595,383

Depreciation
& amortization expense
1,730,902
2,294,248

Interest
expense
1,949
173,771

Interest
income
(3,748)
(44,133)

Interest
and penalties on sales tax liability
7,969
46,303

Income
tax expense
—
—

Reportable
segment income (loss)
$(10,487,532)
$(12,497,805)

(a)Other segment items included in reportable segment net loss consists mainly of general and administrative expenses for corporate functions, such as insurance expenses, associated software licenses, other payroll and related expenses for human resources, legal, finance and executive teams, other consulting and professional fees for corporate services rendered, other marketing expenses, franchise tax, other gains and losses, and other overhead expense.

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

●
Americas

●
Europe

●
Middle East/Africa

●
Asia Pacific

The
following table represents the percentage of total revenue by geographic area, based on the location of the customer for the years ended
December 31, 2025 and 2024, respectively.

2025

2024

Americas

94.74
%

85.13
%

Europe, Middle East and Africa

2.88
%

12.71
%

Asia Pacific

2.38
%

2.16
%

14.
SUBSEQUENT EVENT

On February 15, 2026, the Company signed a settlement
agreement pursuant to the existing legal matter with 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. Per Agreement, the parties
agreed to a $200,000 settlement in full satisfaction of all claims.

F-25