Bullfrog AI Announces Pricing of Registered Direct Offering and Concurrent Private Placement for Aggregate Gross Proceeds of $3.13 Million

Rhea-AI Summary

BullFrog AI Holdings, Inc. (NASDAQ:BFRG; BFRGW) has announced a registered direct offering and concurrent private placement for aggregate gross proceeds of $3.13 million. The offering includes:

- 1,565,000 shares of common stock (or equivalents)
- Common warrants to purchase up to 1,565,000 shares
- Combined purchase price of $2.00
- Warrant exercise price of $2.00 per share

The warrants will be initially exercisable six months from issuance and expire five years from the initial exercise date. The offering is expected to close around October 21, 2024. WallachBeth Capital, is acting as the sole placement agent for the offering.

Positive

• Raised $3.13 million in gross proceeds through a registered direct offering and private placement
• Offering price of $2.00 per share, which is the same as the warrant exercise price
• Warrants have a 5-year term, providing long-term potential for additional capital

Negative

• Potential dilution for existing shareholders due to the issuance of new shares and warrants
• The offering price may be at a discount to the current market price, potentially impacting stock value

Insights

Financial Analyst

Bullfrog AI's latest financing move raises some concerns. The company is issuing 1,565,000 shares at $2.00 per share, a significant discount to its current market price. This dilution, representing about 15% of the company's market cap, could pressure the stock in the short term.

The inclusion of warrants with a $2.00 exercise price, exercisable after six months, adds potential for further dilution. While the $3.13 million gross proceeds will bolster the balance sheet, it's a relatively small amount for a biotech company, suggesting ongoing capital needs.

The use of both a registered direct offering and a private placement indicates a complex financing structure, possibly to navigate regulatory requirements or attract specific investors. Overall, this financing, while providing needed capital, comes at a cost to existing shareholders and may signal challenges in securing more favorable terms.

Legal Expert

The structure of this offering presents interesting legal considerations. By combining a registered direct offering with a concurrent private placement, Bullfrog AI is leveraging different regulatory frameworks to maximize its fundraising flexibility.

The registered direct offering, conducted under an effective shelf registration (Form S-3), provides a streamlined process for issuing publicly tradable securities. However, the inclusion of a private placement for warrants under Regulation D exemptions indicates a strategic approach to bypass certain registration requirements.

Investors should note the six-month delay in warrant exercisability, likely designed to comply with SEC holding period requirements for restricted securities. This structure, while complex, allows the company to access capital markets efficiently while potentially limiting immediate dilution. However, it also creates a layered capitalization structure that could complicate future financing efforts or corporate actions.

GAITHERSBURG, Md., Oct. 18, 2024 (GLOBE NEWSWIRE) -- BullFrog AI Holdings, Inc. (NASDAQ:BFRG; BFRGW) ("Bullfrog AI" or the "Company"), a technology-enabled drug development company using artificial intelligence (AI) and machine learning to enable the successful development of pharmaceuticals and biologics, announced today it has entered into a definitive agreement for the purchase and sale of an aggregate of 1,565,000 shares of common stock (or common stock equivalents in lieu thereof) in a registered direct offering and, in a concurrent private placement, common warrants to purchase up to 1,565,000 shares of common stock (together with the registered direct offering) at a combined purchase price of $2.00. The warrants will have an exercise price of $2.00 per share, are initially exercisable on the date that is six months from the date of issuance and will expire five years from such initial exercise date.

The closing of the offering is expected to occur on or about October 21, 2024, subject to the satisfaction of customary closing conditions. The gross proceeds to from the offering are expected to be approximately $3.13 million, excluding any proceeds that may be received upon exercise of the warrants and before deducting the placement agent’s fees and other offering expenses payable by the Company.

WallachBeth Capital, LLC is acting as sole placement agent for the registered direct offering and private placement.

The shares of common stock, the pre-funded warrants and the shares of common stock underlying the pre-funded warrants (but not the common warrants or the shares of common stock underlying the common warrants) will be issued in a registered direct offering pursuant to an effective shelf registration statement on Form S-3 (File No. 333-281341) previously filed with the U.S. Securities and Exchange Commission (“SEC”), under the Securities Act of 1933, as amended (the “Securities Act”), and declared effective by the SEC on August 21, 2024. The common warrants to be issued in the concurrent private placement and the shares issuable upon exercise of such common warrants were offered pursuant to an exemption from the registration requirements of the Securities Act under Section 4(a)(2) thereof and Regulation D promulgated thereunder and have not been registered under the Securities Act or applicable state securities laws. The offering of the shares of common stock and pre-funded warrants is made only by means of a prospectus, including a prospectus supplement, forming a part of the effective registration statement. A prospectus supplement describing the terms of the proposed registered direct offering will be filed with the SEC and available on the SEC’s website located at http://www.sec.gov. Electronic copies of the prospectus supplements may be obtained, when available, from WallachBeth Capital, LLC, via email at cap-mkts@wallachbeth.com, by calling +1 (646) 237-8585, or by standard mail at WallachBeth Capital LLC, Attn: Capital Markets, 185 Hudson St., Suite 1410, Jersey City, NJ 07311, USA. This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About BullFrog AI:

BullFrog AI is a technology-enabled drug development company using Artificial Intelligence and machine learning to enable the successful development of pharmaceuticals and biologics. Through its collaborations with leading research institutions, BullFrog AI is at the forefront of AI-driven drug development using its proprietary bfLEAP(TM) artificial intelligence platform to create and analyze networks of biological, clinical, and real-world data spanning from early discovery to late-stage clinical trials. BullFrog AI is deploying bfLEAP(TM) for use at several critical stages of development with the intention of streamlining data analytics in therapeutics development, decreasing the overall development costs by decreasing failure rates for new therapeutics.

For more information visit BullFrog AI at:

Website: www.bullfrogai.com

LinkedIn: https://www.linkedin.com/company/bullfrogai/

Safe Harbor Statement

This press release contains forward-looking statements. We base these forward-looking statements on our expectations and projections about future events, which we derive from the information currently available to us. Such forward-looking statements relate to future events or our future performance, including: our financial performance and projections; our growth in revenue and earnings; and our business prospects and opportunities. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as "may," "should," "expects," "anticipates," "contemplates," "estimates," "believes," "plans," "projected," "predicts, " "potential," or "hopes" or the negative of these or similar terms. In evaluating these forward-looking statements, you should consider various factors, including: our ability to change the direction of the Company; our ability to keep pace with new technology and changing market needs; and the competitive environment of our business. These and other factors may cause our actual results to differ materially from any forward-looking statement. Forward-looking statements are only predictions. The forward-looking events discussed in this press release and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties, and assumptions about us. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to risks and uncertainties included under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other reports filed with the SEC from time to time. We are not obligated to publicly update or revise any forward-looking statement, whether as a result of uncertainties and assumptions, the forward-looking events discussed in this press release and other statements made from time to time by us or our representatives might not occur.

Contact:

Dave Gentry
RedChip Companies, Inc.
1-407-644-4256
BFRG@redchip.com

FAQ

What is the purpose of BullFrog AI's (BFRG) recent offering?

BullFrog AI (BFRG) is conducting a registered direct offering and concurrent private placement to raise approximately $3.13 million in gross proceeds, which will likely be used for general corporate purposes and to support the company's AI-driven drug development initiatives.

How many shares and warrants are being offered by BullFrog AI (BFRG)?

BullFrog AI (BFRG) is offering 1,565,000 shares of common stock (or equivalents) and common warrants to purchase up to 1,565,000 additional shares.

What is the pricing of BullFrog AI's (BFRG) offering announced on October 18, 2024?

The combined purchase price for BullFrog AI's (BFRG) offering is $2.00 per share, with warrants also having an exercise price of $2.00 per share.

When will the warrants from BullFrog AI's (BFRG) offering be exercisable?

The warrants from BullFrog AI's (BFRG) offering will be initially exercisable six months from the date of issuance and will expire five years from the initial exercise date.