Bullfrog AI Holdings, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. Unaudited consolidated financial statements. Bullfrog develops AI/ML tools for medicine and drug development, including its bfLEAP platform; it is pre-revenue for the periods reported.
Financial performance and liquidity
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Operating expenses | $1.537 million | $682,000 | $2.728 million | $1.232 million |
| Net loss | $1.480 million | $776,000 | $2.806 million | $1.342 million |
| Basic and diluted loss per share | $0.24 | $0.17 | $0.51 | $0.29 |
| Operating cash used | — | $3.590 million | $612,000 |
With no revenue or cost of goods sold, gross margin is not meaningful. Q2 R&D expense was $274,000 and G&A was $1.263 million; six-month amounts were $644,000 and $2.084 million, respectively. The filing attributes expense growth principally to staffing and consulting, public-company costs, business development and R&D activity.
At June 30, cash and cash equivalents were $5.460 million, current assets $6.035 million, and current liabilities $1.142 million. Current liabilities included $423,000 of short-term insurance financing; convertible notes were zero, following conversion or repayment. The company reported $6.042 million in total assets and $4.900 million in stockholders’ equity. Accumulated deficit was $7.205 million.
Financing provided $8.991 million in the first half, including $7.294 million of net IPO proceeds and $1.495 million from warrant exercises. The company used $3.590 million in operating activities; investing cash flow was zero. Cash increased by $5.402 million from year-end 2022.
Material changes and business developments
- Operating expenses rose year over year: Q2 by $855,000 and the first half by $1.495 million. G&A was the largest component of the increase.
- The February 2023 IPO raised approximately $8.4 million gross. Convertible debt converted into common shares, and the company repaid certain notes.
- In Q2, warrant exercises issued 436,533 common shares for approximately $1.495 million. Common shares outstanding were 6,094,644 at June 30, compared with 4,021,935 at December 31, 2022.
- The company amended its JHU-APL license in May 2023 for additional technology, with payments totaling $275,000; the first $75,000 payment was due in July 2023. The amendment reduced the 2023 minimum annual royalty to $60,000.
Outlook, risks and other notable items
- Management expects available capital to fund planned operations for approximately 12 months from the filing date, despite the absence of significant 2023 revenue. The company has incurred losses and negative operating cash flows since inception.
- The company expects to spend approximately $2.1 million over the next 24 months on service offerings, preclinical IND-enabling work and R&D. It anticipates higher R&D and public-company expenses. No specific revenue or earnings guidance is provided.
- Management describes plans for biopharma service partnerships and drug-asset development, but those plans depend on customer adoption, partners, financing, clinical development and access to drug supply and other third-party services.
- Potentially dilutive securities were substantial: 3,796,147 warrants and 448,717 options were excluded from diluted loss per share as anti-dilutive. At June 30, 520,500 equity-plan awards remained authorized but unissued.
- The CEO adopted a Rule 10b5-1 plan permitting sales of up to 1,000,000 shares through September 30, 2024, or until the limit is reached.
- The company said it was transitioning accounting and financial-reporting processes and controls, including moving day-to-day accounting to an external firm and an enterprise platform. It did not state a clear conclusion in the supplied text on control effectiveness. The cover page indicates the company had not filed all required reports during the preceding 12 months.
- The company reported no material legal proceedings and no unregistered equity sales during Q2. Risk-factor disclosure was omitted under the smaller-reporting-company exemption.
Key facts for investors to verify
- Whether the company can convert its service relationships and drug-development programs into revenue before its stated cash runway expires.
- Cash burn, spending against the approximately $2.1 million planned 24-month program, and any financing needs or changes in management’s runway estimate.
- Progress and payment obligations under the JHU-APL, Johns Hopkins and George Washington University licenses, including royalties, milestones and development costs.
- Potential dilution from outstanding warrants, options and the CEO’s sales plan.
- Whether required SEC filings are current and whether the accounting-system transition strengthens reporting controls.