Bullfrog AI Holdings, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; comparisons are with FY2021. Bullfrog is an early-stage AI/ML-enabled drug-development company. Its bfLEAP platform analyzes biomedical data; the company also licenses drug candidates and aims to develop or rescue assets with partners, then divest them. It reported no commercialized drug products and only its first service revenue in 2022.
Financial performance and position
| Metric | FY2022 / Dec. 31, 2022 | FY2021 / Dec. 31, 2021 |
|---|---|---|
| Revenue | $10,000 | $0 |
| Gross profit | $9,200; 92% gross margin on this initial revenue | $0 |
| Operating expenses | $2.465 million | $555,000 |
| Loss from operations | $2.456 million | $555,000 |
| Net loss | $2.802 million | $586,000 |
| Cash used in operating activities | $911,000 | $382,000 |
| Cash at year-end | $57,670 | $10,014 |
| Total assets | $80,369 | $10,014 |
| Total liabilities | $3.138 million | $1.019 million |
| Stockholders’ deficit | $3.057 million | $1.009 million |
The 2022 revenue was a milestone payment for service work; it was not the $185,000 contract value. The company also reported $32,000 of deferred revenue at year-end. Interest expense was $347,000, versus $40,000 in 2021. Financing activities provided $967,000 in 2022, principally from convertible bridge notes. No cash dividends were paid.
Year-end current assets of $72,670 were substantially below current liabilities of $3.138 million. Current liabilities included $1.324 million of convertible notes and $255,000 of related-party convertible notes. Accounts payable and accrued expenses, including related-party accruals, totaled approximately $1.527 million. The filing reports no off-balance-sheet arrangements.
Changes, outlook and material developments
- Revenue began in late 2022 after none in 2021; losses and operating cash use increased materially as the company expanded staffing, professional services, technology licensing and drug-development activity.
- Research and development expense rose to $609,000 from $25,000, mainly reflecting technology and drug-asset license costs. General and administrative expense was $1.308 million, compared with $327,000.
- After year-end, the February 2023 IPO generated approximately $8.4 million gross and $7.3 million net proceeds. Convertible bridge notes and accrued interest through November 30, 2022 converted into shares and warrants in connection with the IPO. The company reported using approximately $1.9 million of IPO proceeds by March 31, 2023; this is subsequent-period information, not year-end cash.
- Management said that, absent 2023 revenue, available capital was expected to fund planned operations for substantially longer than 12 months from the filing date. It forecast approximately $2.1 million of spending over the next 24 months on service offerings, preclinical/IND-enabling work and R&D. No revenue or profitability guidance was provided.
- The company had accumulated losses and negative operating cash flows since inception. The auditor noted that substantial doubt about going concern had been raised in the prior year; management said the IPO proceeds and debt conversions alleviated that doubt, while acknowledging future funding may be needed. The auditor’s opinion on the financial statements was unqualified.
Business risks, contingencies and unusual items
- bfLEAP has not yet supported development of a drug approved for commercialization, and the company has not conducted clinical trials on its own drug candidates. Revenue remains minimal and depends on obtaining and completing service engagements or partnering arrangements.
- Drug development involves substantial clinical, regulatory, financing and execution risk. The company depends on third parties for clinical trials, drug supply and development support, and competes with companies that may have substantially greater resources.
- License agreements require royalties, maintenance or minimum annual payments, patent-cost reimbursements and, in some cases, sizable development and commercial milestones. Failure to meet payment or development obligations could put licenses at risk.
- The company reported no current legal proceedings and management did not believe known loss contingencies would materially affect its financial position. It had no owned real estate and its employees worked remotely.
- Management’s report on internal control over financial reporting and the auditor’s attestation were omitted under applicable transition-period and emerging-growth-company exemptions. The filing also states that the company had not filed all required Exchange Act reports during the preceding 12 months.
Investor facts to verify
- Whether post-IPO cash and subsequent warrant-exercise proceeds are sufficient for the planned operating and development budget, and how quickly cash is being used.
- Whether service contracts convert into recurring revenue, including progress and recognized revenue under the Sapu Biosciences engagement and the rare-disease organization contract.
- Clinical, regulatory and partnering milestones for the licensed mebendazole and siRNA assets, and the associated upcoming license fees, minimums and contingent payments.
- Current debt, accrued expenses and related-party obligations after the IPO conversions, plus dilution from outstanding and subsequently issued warrants and equity awards.
- Whether internal-control and reporting processes strengthen as the company transitions to public-company requirements.