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

Rhea-AI Summary

WallachBeth Capital announced the closing of BullFrog AI Holdings, Inc. (NASDAQ:BFRG; BFRGW) registered direct offering and concurrent private placement. The offering included:

• 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
• Gross proceeds of approximately $3.13 million

The warrants have an exercise price of $2.00 per share, are exercisable after six months, and expire five years from the initial exercise date. WallachBeth Capital, acted as sole placement agent for the offering.

Positive

• Raised approximately $3.13 million in gross proceeds
• Successful closing of registered direct offering and private placement

Negative

• Potential dilution for existing shareholders due to new share issuance
• Warrants may lead to further dilution if exercised in the future

Insights

Financial Analyst

BullFrog AI Holdings has successfully closed a registered direct offering and concurrent private placement, raising $3.13 million in gross proceeds. This capital infusion is significant for a small-cap company with a market capitalization of about $17 million. The offering structure, combining common stock (or equivalents) with warrants, is a common approach for biotech companies to attract investors.

The pricing at $2.00 per share and the warrant exercise price at the same level suggest a neutral market sentiment. However, the six-month delay in warrant exercisability and the five-year expiration provide a long-term upside potential for investors while limiting immediate dilution for existing shareholders.

This funding round is important for BullFrog AI's operations, likely supporting their AI-driven drug development platform. The company's focus on using AI in pharmaceuticals aligns with current industry trends, potentially attracting investor interest. However, the need for additional capital also indicates ongoing cash burn, which is typical for early-stage biotech companies but requires careful monitoring of future financial health and potential for further dilution.

Legal Expert

The structure of this offering demonstrates careful compliance with securities regulations. The registered direct offering for common stock and pre-funded warrants utilizes an effective shelf registration (Form S-3), providing a streamlined process for raising capital. This approach offers flexibility and efficiency for the company.

Concurrently, the private placement of common warrants under Section 4(a)(2) and Regulation D exemptions allows BullFrog AI to include these instruments without the full registration process. This hybrid approach balances regulatory compliance with capital raising efficiency.

The clear disclosure of the offering's terms, including the filing of a prospectus supplement, adheres to SEC transparency requirements. However, investors should note that the privately placed warrants are not registered, potentially affecting their liquidity. The company's use of a placement agent and legal counsel indicates a structured approach to ensure regulatory compliance throughout the process.

JERSEY CITY, N.J., Oct. 21, 2024 /PRNewswire/ -- WallachBeth Capital LLC, a leading provider of capital markets and institutional execution services, announced that -- 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 closed its previously announced 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 gross proceeds 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 acted as sole placement agent for the registered direct offering and private placement. Sheppard, Mullin, Richter & Hampton LLP acted as counsel to the placement agent.

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 WallachBeth Capital LLC:

WallachBeth Capital offers a robust range of capital markets and investment banking services to the healthcare community, connecting corporate clients with leading institutions. The firm's experience includes initial public offerings, follow-on issues, PIPE offerings, private transactions and ATM's.

Forward-Looking Statements
This press release contains forward-looking statements, including statements regarding the anticipated use of proceeds from the Company's offering of securities and the expected closing of the offering. Forward-looking statements can be identified by words such as "believes," "expects," "estimates," "intends," "may," "plans," "will" and similar expressions, or the negative of these words. Such forward-looking statements are based on facts and conditions as they exist at the time such statements are made and predictions as to future facts and conditions and include the intended use of proceeds. Readers of this press release are cautioned not to place undue reliance on any forward-looking statements. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Company's control. 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 for the fiscal year ended December 31, 2023, subsequent Quarterly Reports on Form 10-Q filed by the Company and other reports filed with the SEC from time to time. The Company does not undertake any obligation to update any forward-looking statement relating to matters discussed in this press release, except as may be required by applicable securities laws. 

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SOURCE WallachBeth Capital LLC

FAQ

What was the combined purchase price for BullFrog AI's (BFRG) offering?

The combined purchase price for BullFrog AI's (BFRG) offering was $2.00 per share.

How much did BullFrog AI (BFRG) raise in gross proceeds from the offering?

BullFrog AI (BFRG) raised approximately $3.13 million in gross proceeds from the offering.

What is the exercise price of the warrants issued by BullFrog AI (BFRG)?

The warrants issued by BullFrog AI (BFRG) have an exercise price of $2.00 per share.

When do the warrants issued by BullFrog AI (BFRG) expire?

The warrants issued by BullFrog AI (BFRG) expire five years from the initial exercise date, which is six months after the issuance date.