BullFrog AI Holdings, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures We are transitioning to and will maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and timely reported as provided in SEC rules and forms and that such information is accumulated and communicated to our management, as appropriate, to allow for timely decisions regarding required disclosure. We will periodically review the design and effectiveness of our disclosure controls and procedures, including compliance with various laws and regulations that apply to our operations. We will make modifications to improve the design and effectiveness of our disclosure controls and procedures and may take other corrective action if our reviews identify a need for such modifications or actions. In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and we will apply judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a control system, misstatements due to error or fraud may occur and not be detected. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal year ended December 31, 2023 which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management’s Report on Internal Control over Financial Reporting This Annual Report does not include a report of management’s assessment regarding internal control over financial reporting due to a transition period established by the rules of the SEC for newly public companies. Attestation Report of Independent Registered Public Accounting Firm This Annual Report does not include an attestation report of our registered independent public accounting firm regarding internal control over financial reporting due to an exemption established by the JOBS Act for “emerging growth companies.” ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 31 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE Executive Officers and Directors The following table sets forth the name, age and position of each of our executive officers, key employees and directors. Name Age Position(s) Executive Officers: Vin Singh 55 Chief Executive Officer and Director Dane Saglio 66 Chief Financial Officer Non-Executive Directors: Don Elsey 70 Director and Chair Audit Committee William Enright 60 Director and Chair of Compensation Committee Jason Hanson 54 Director and Chair of Nominating and Corporate Governance Committee Vininder (Vin) Singh is the Founder, Chairman, and CEO of BullFrog AI Holdings, Inc. since its inception in August 2017. Over the past five years, he has built the Company from scratch and during that time he led strategy, built a highly experienced team of leaders, spear headed the acquisition and development of BullFrog’s core AI technology and drug assets, secured the first revenue, and raised approximately $2M in financing. In February of 2020, he formed BullFrog AI Holdings, Inc. and BullFrog AI Inc. became a wholly owned subsidiary designated as the holder of core intellectual property. Vin is a serial entrepreneur and experienced executive with 25 years of experience in the life sciences and biotechnology industries. He has extensive start-up experience having founded and built several pioneering investor backed companies including BullFrog AI, which uses machine learning/AI to enable drug development, Next Healthcare Inc., a personalized diagnostics and adult cell banking service, and MaxCyte Inc. (MXCT), a cell therapy company. He was also an executive at GlobalStem Inc. and ThermoFisher Scientific, leading their global cell therapy services business. Vin has a BS in Electrical Engineering from Rutgers University, an MS in Biomedical Engineering from Rensselaer Polytechnic Institute, and an MBA from Johns Hopkins University. We believe that Mr. Singh is qualified to serve as a member of our board of directors due to the perspective and experience that he brings as our Founder and Chief Executive Officer, his extensive experience in the science and biotechnology industries and in the management of startup companies. Dane Saglio joined BullFrog Holdings AI, Inc. as Chief Financial Officer in September 2021. Mr. Saglio brings more than 40 years of financial management experience in both public and private companies across a number of business sectors. Previously, Mr. Saglio has served as CFO at Seneca Biopharma, RegeneRx Biopharmaceuticals since 2011, New Generation Biofuels 2010 until 2011, and EntreMed from 2000 until 2008, all public companies in the biotechnology arena. Prior to joining the Company, Mr. Saglio was the CFO of Seneca Biopharma, initially as a consultant in August 2019 and then as an employee in April 2020 until the Company merged with Leading Bio Sciences, forming Palisades Bio, Inc. in April 2021. He previously served as CFO at Celios Corporation from October 2017 until July 2019 and Helomics Corporation, a personalized medicine company in cancer from October 2014 through July 2017. He began his career at Informatics Corp, now Computer Associates International and then at Bressler & Reiner, a DC-based real estate developer and homebuilder. Dane has a BS from the University of Maryland is a licensed CPA in Maryland (inactive). R. Don Elsey has been a director and chair of the Audit Committee of our board since February 14, 2023. Currently, Mr. Elsey is the Audit Chair of OpGen, Inc., a precision medicine company. Mr. Elsey was the CFO of Lyra until his retirement in December 2020. Previously, from February 2015 to February 2019, Mr. Elsey served as Chief Financial Officer at Senseonics, Inc., a medical device company. From May 2014 until February 2015, Mr. Elsey served as Chief Financial Officer of Regado Biosciences, Inc., a biopharmaceutical company. From December 2012 to February 2014, Mr. Elsey served as Chief Financial Officer of LifeCell Corporation, a privately held regenerative medicine company. Mr. Elsey holds a B.A. in economics and an M.B.A. in finance from Michigan State University. We believe that Mr. Esley is qualified to serve as a member of our board of directors because of his extensive professional experience in science and biotechnology companies. 32 William “Bill” Enright has been a director and chair of the Compensation Committee of our board since February 14, 2023. He is a seasoned biotech executive with more than thirty-four years of experience in building and financing both privately held and publicly held companies and He is currently the CEO and a Director of Barinthus Biotherapurtics plc (NASDAQ: BRNS), which he helped to take public in April 2021. Prior to Barinthus, Bill spent more than ten years at Altimmune (NASDAQ: ALT) as a Director, President & CEO, moving multiple programs into clinical testing, completing several acquisitions, and eventually taking the company public. Prior to joining Altimmune, Bill spent six years with GenVec, Inc. (acquired by Precigen) with increasing responsibilities, culminating as Head of Business Development. Bill brings a breadth of experiences in a variety of positions within the life science/biotech industry, including time as a consultant, a bench scientist and 12 years with Life Technologies, Inc. (acquired by Thermo-Fisher), working in various senior level licensing, business management, manufacturing and research roles. Bill received a Master of Arts in Molecular Biology from SUNY at Buffalo and a Master of Science in Business Management from Johns Hopkins University. We believe that Mr. Enright is qualified to serve as a member of our board of directors because of his extensive professional experience in life science/biotech companies and in the management of public companies. Jason Hanson has served as a director and chair of the Nominating and Corporate Governance Committee since February 14, 2023. Mr. Hanson has served as Chief Executive Officer and as a Director of enGene Inc. since July 2018. He also served as President of enGene Inc. from July 2018 to December 2022. Mr. Hanson effectively re-launched enGene from a small private company working in the GI discovery space into a clinical stage gene therapy oncology company trading on Nasdaq, implementing a new scientific, technical and strategic vision for the Company. From August 2016 to November, 2017, Mr. Hanson served as President and Chief Executive Officer of Ohana Biosciences, a biotechnology company based in Cambridge, MA, and as member of the Ohana Board of Directors and consultant to Ohana from November 2017 to June 2018. Mr. Hanson previously served as Executive Vice President and Chief Strategy Officer for NuVasive, Inc. from November 2015 to August 2016. Mr. Hanson served as Corporate Vice President of General Electric Company and member of the senior executive team of GE Healthcare, a global pharmaceutical, medical device and healthcare services business from May 2014 to October 2015. In January 2013, Mr. Hanson served as Company Group Chairman and Executive Vice President of Valeant Pharmaceuticals International, Inc. (now Bausch Health Companies Inc.). Previously, he served in various roles at Medicis Pharmaceutical Corporation, including as Executive Vice President and Chief Operating Officer between July 2006 and December 2012. Mr. Hanson also served in numerous roles at GE Healthcare, including General Counsel roles, from April 1999 to July 2006. Mr. Hanson holds a B.S. from Cornell University and a J.D. from Duke University School of Law. Board Diversity The table below provides certain information regarding the diversity of our board of directors as the date of this annual report. Board Diversity Matrix Country of Principal Executive Offices: United States Foreign Private Issuer No Disclosure Prohibited under Home Country Law N/A Total Number of Directors 4 Female Male Non-Binary Did Not Disclose Gender Part I: Gender Identity Directors 0 4 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction N/A LGBTQ+ [*] Did Not Disclose Demographic Background [*] 33 Our Board seeks members from diverse professional backgrounds who combine a solid professional reputation and knowledge of our business and industry with a reputation for integrity. Our Board does not have a formal policy concerning diversity and inclusion but is in the process of establishing a policy on diversity. Diversity of experience, expertise, and viewpoints is one of many factors the Nominating and Corporate Governance Committee considers when recommending director nominees to our Board. Further, our Board is committed to actively seeking highly qualified women and individuals from minority groups and the LGBTQ+ community to include in the pool from which new candidates are selected. Our Board also seeks members that have experience in positions with a high degree of responsibility or are, or have been, leaders in the companies or institutions with which they are, or were, affiliated, but may seek other members with different backgrounds, based upon the contributions they can make to our Company. While the Board has continued its efforts to identify candidates that have such experience, they have currently been unable to identify any such candidates which fulfill the diversity requirement with the requisite professional experience. Role of Board of Directors in Risk Oversight Process The board of directors has extensive involvement in the oversight of risk management related to us and our business and accomplishes this oversight through the regular reporting by the Audit Committee. The information set forth in Item 1C is incorporated herein by reference. Director Independence Messrs. Elsey, Enright and Hanson, three members of our Board of Directors, are independent using the definition of independence under Nasdaq Listing Rule 5605(a)(2) and the standards established by the SEC. Committees of our Board Audit Committee Our audit committee consists of Don Elsey, William Enright and Jason Hanson, with Mr. Elsey serving as chair. Our board of directors has affirmatively determined that each meets the definition of “independent director” under the rules of The Nasdaq Capital Market, and that they meet the independence standards under Rule 10A-3. Each member of our audit committee meets the financial literacy requirements of Nasdaq rules, and qualify as a financial expert within the meaning of SEC regulations and meets the financial sophistication requirements of the pertinent listing standards of Nasdaq, as in effect from time to time. In making this determination, our board of directors has considered the members’ formal education and previous and current experience in financial roles. Our board of directors has adopted a written charter for the audit committee, which can be found on our website at https://ir.bullfrogai.com/corporate-governance/governance-documents . The audit committee is appointed by the board of directors to assist the board of directors in its duty to oversee the Company’s accounting, financial reporting, and internal control functions and the audit of the Company’s financial statements. The role of the audit committee is to oversee management in the performance of its responsibility for the integrity of the Company’s accounting and financial reporting and its systems of internal controls, the performance and qualifications of the Company’s independent auditor, including the independent auditor’s independence, the performance of the Company’s internal audit function; and the Company’s compliance with legal and regulatory requirements. The Audit Committee met four times in 2023. 34 Compensation Committee Our compensation committee consists of William Enright, Don Elsey and Jason Hanson, with Mr. Enright serving as chair. Our board of directors has adopted a written charter for the compensation committee, which can be found on our website at https://ir.bullfrogai.com/corporate-governance/governance-documents . The compensation committee is responsible for reviewing and recommending, among other things: ● the adequacy and form of compensation of the board; ● the compensation of Chief Executive Officer, including base salary, incentive bonus, stock option and other grant, award and benefits upon hiring and on an annual basis; ● the compensation of other senior management upon hiring and on an annual basis; and ● the Company’s incentive compensation and other equity-based plans and recommending changes to such plans to our board of directors, when necessary. Nominating & Corporate Governance Committee Our nominating and corporate governance committee consists of Jason Hanson, William Enright and Don Elsey, with Mr. Hanson serving as chair. Our board of directors has adopted a written charter for the nominating and corporate governance committee, which can be found on our website at https://ir.bullfrogai.com/corporategovernance/governance-documents . The nominating committee is responsible for, among other things: ● developing criteria for membership on the board of directors and committees; ● identifying individuals qualified to become members of the board of directors; ● recommending persons to be nominated for election as directors and to each committee of the board of directors; ● annually reviewing our corporate governance guidelines; and ● monitoring and evaluating the performance of the board of directors and leading the board in an annual self-assessment of its practices and effectiveness. Term of office All directors hold office until the next annual meeting of the stockholders of the company and until their successors have been duly elected and qualified. Officers are elected by and serve at the discretion of our Board. Code of Business Conduct and Ethics We have adopted a Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, employees or persons performing similar functions. Our code of ethics can be found at https://ir.bullfrogai.com/corporate-governance/governance-documents . Clawback Policy On December 1, 2023, the Board adopted the BullFrog AI Clawback Policy (the “Clawback Policy”), effective December 1, 2023, providing for the recovery of certain incentive-based compensation from current and former executive officers of the Company in the event the Company is required to restate any of its financial statements filed with the SEC under the Exchange Act in order to correct an error that is material to the previously-issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. Adoption of the Clawback Policy was mandated by new Nasdaq listing standards introduced pursuant to Exchange Act Rule 10D-1. The Clawback Policy is in addition to Section 304 of the Sarbanes-Oxley Act of 2002 which permits the SEC to order the disgorgement of bonuses and incentive-based compensation earned by a registrant issuer’s chief executive officer and chief financial officer in the year following the filing of any financial statement that the issuer is required to restate because of misconduct, and the reimbursement of those funds to the issuer. A copy of the Clawback Policy has been filed herewith, and can also be found at www.bullfrogai.com. 35 Family Relationships There are no family relationships among and between the issuer’s directors, officers, persons nominated or chosen by the issuer to become directors or officers, or beneficial owners of more than ten percent of any class of the issuer’s equity securities. Involvement in Certain Legal Proceedings Our directors and executive officers have not been involved in any of the following events during the past ten years: 1. any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; 2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); 3. being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities; 4. being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; 5. being subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or 6. being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. Section 16(a) Beneficial Ownership Compliance Based solely upon a review of copies of such forms filed on Forms 3, 4 and 5, and amendments thereto furnished to us, we believe that as of the date of this Report, our executive officers, directors and greater than 10 percent beneficial owners have complied on a timely basis with all Section 16(a) filing requirements, except Messrs. Elsey, Enright and Hanson did not file Form 3s upon their appointment to the Board. Nomination Process As of December 31, 2023, we did not affect any material changes to the procedures by which stockholders may recommend nominees to the Board of Directors. Insider Trading Policies We have adopted an insider trading policy governing the purchase, sale, and other dispositions of our securities by directors, senior management, and employees. A copy of the insider trading policy is attached as an exhibit to this annual report. 36 ITEM 11. EXECUTIVE COMPENSATION Summary Compensation Table The following table sets forth all plan and non-plan compensation for the last two fiscal years paid to individuals who served as the Company’s principal executive officers and the Company’s two other most highly compensated executive officers serving as executive officers at the end of the last completed fiscal year, as required by Item 402(m)(2) of Regulation S-K of the Securities Act. We refer to these individuals collectively as our “named executive officers.” Name and Principal Position Year Salary Bonus Stock Awards Option Awards All Other Compensation Nonequity Incentive Plan Compensation Nonqualified Deferred Compensation Earnings Total Compensation Vininder Singh 2023 $ 707,666 $ - $ - $ - $ - $ - $ - $ 707,666 Chief Executive Officer and Director 2022 $ 179,000 $ - $ - $ - $ - $ - $ - $ 179,000 Dane Saglio 2023 $ 310,000 $ 50,000 $ - $ 147,000 $ - $ - $ - $ 507,000 Chief Financial Officer 2022 $ 30,000 $ - $ - $ - $ - $ - $ - $ 30,000 Employment Agreements On May 16, 2022, we entered into an employment agreement with Vininder Singh, pursuant to which he will receive received an annual base salary of $400,000, which is subject to bi-annual review by the Company. Mr. Singh will also be eligible for an annual bonus based on the achievement of certain goals and performance criteria established by the Board. Mr. Singh’s target annual bonus for the fiscal years ended 2022 through 2025 will be a minimum of twenty (20%) percent of the current base salary, with a maximum payout of up to one-hundred (100%) percent based on target achievement. For 2023, the criteria to determine Mr. Singh’s bonus will include the following: (i) the Company achieves $500,000 in sales; (ii) the filing of an Investigational New Drug (IND) Application with the FDA for mebendazole; (iii) the Company enters into two (2) strategic partnerships; and (iv) the Company commences partner negotiations with a third party for HSV-1, bf-114 or bf-222. Mr. Singh will also be eligible to participate in the Company’s stock incentive plan, subject to Board approval. The agreement with Mr. Singh shall continue until either his resignation, termination for cause by the Company, or death or disability of Mr. Singh. Director Compensation The following table summarizes the compensation paid to our executive and non-executive directors during the year ended December 31, 2023. Name Fees Earned or Paid in Cash ( 1) Stock Awards Option Awards (2) All Other Compensation Nonequity Incentive Plan Compensation Nonqualified Deferred Compensation Earnings Total Compensation Vininder Singh (3) $ - $ - $ - $ - $ - $ - $ - Don Elsey $ 39,375 $ - $ 197,200 $ - $ - $ - $ 236,575 William Enright $ 39,375 $ - $ 197,200 $ - $ - $ - $ 236,575 Jason Hanson $ 39,375 $ - $ 197,200 $ - $ - $ - $ 236,575 (1) Represents cash compensation for service as a director and as chair of a board committee during the fiscal year 2023. (2) Represents annual value of stock options issued during fiscal year 2023 under our 2022 Equity Incentive Plan. (3) Mr. Singh did not receive additional compensation for his service as a director of our Company during the fiscal year 2023. 37 Pension, Retirement or Similar Benefit Plans There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit-sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board or a committee thereof. Indebtedness of Directors, Senior Officers, Executive Officers and Other Management None of our directors, executive officers or any associate or affiliate of our Company during the last two fiscal years is or has been indebted to our Company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding. Equity Compensation Plans On November 30, 2022, our Board of Directors and shareholders adopted the 2022 Equity Incentive Plan (the “Plan”). Pursuant to the Plan, we are authorized to grant options and other equity awards to officers, directors, employees and consultants. The exercise price of each share of common stock purchasable under an award issued pursuant to the Plan, shall be determined by our compensation committee, in its sole discretion, at the time of grant, but shall not be less than 100% of the fair market of such share of common stock on the date the award is granted, subject to adjustment and conditions further described in the Plan. Our compensation committee shall also have sole authority to set the terms of all awards at the time of grant. As of December 31, 2023, there are 441,500 shares available under the Plan. Outstanding Equity Awards at Fiscal Year-End The following table summarizes the outstanding equity awards held by each named executive officer as of December 31, 2023. This table includes unexercised and unvested options and equity awards. Outstanding Equity Awards as of December 31, 2023 Option Awards Name Date of Grant Number of securities underlying unexercised options (#) exercisable Number of securities underlying unexercised options (#) unexerciseable Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) Option exercise price ($) Option expiration date Dane Saglio March 17, 2023 43,750 31,250 - $ 2.80 March 17, 2033 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth certain information regarding the beneficial ownership of our common stock as of March 27, 2024 by: ● each of our named executive officers; ● each of our directors; ● all of our current directors and named executive officers as a group; and ● each stockholder known by us to own beneficially more than 5% of our common stock. 38 Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. Shares of common stock that may be acquired by an individual or group within 60 days of March 27, 2024, pursuant to the exercise of options or warrants, vesting of common stock or conversion of convertible debt, are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Percentage of ownership is based on 7,850,550 shares of common stock issued and outstanding as of March 27, 2024. Except as otherwise indicated, all shares are owned directly. Unless otherwise indicated, the address of each of the persons shown is c/o Bullfrog AI Holdings, Inc., 325 Ellington Blvd., Unit 317, Gaithersburg, MD 20878. Name of Beneficial Owner Common Stock Beneficially Owned Percentage of Common Stock Directors and Officers: Vininder Singh Chief Executive Officer and Director (1) 2,618,779 33.25 % Dane Saglio Chief Financial Officer(2) 112,818 1.43 % R. Don Elsey (3) 23,332 - William Enright (3) 23,332 - Jason Hanson (3) 23,332 - All officers and directors as a group (5 persons) 2,801,593 34.97 % Beneficial owners of more than 5% Tivoli Trust (4) 904,391 10.40 % ● Less than 1% (1) Comprised of 2,592,446 shares of Common Stock and 26,333 Stock Options exercisable within 60 days. (2) Comprised of 47,142 shares of Common Stock and 65,676 Stock Options exercisable within 60 days. Comprised of 23,332 Stock Options exercisable within 60 days. (4) Comprised of 73,449 shares of non-voting Series A Preferred Stock, 115,185 warrants exercisable at $2.50 per shares and 54,714 shares of Common Stock. Assumes the conversion of all Series A Preferred Stock into common stock in an amount equal to ten shares of common stock for each one share of Series A Preferred Stock. Securities Authorized for Issuance under Equity Compensation Plans General . In November 2022, our Board of Directors adopted our 2022 Equity Incentive Plan (the “2022 Plan”) and the 2022 Plan was submitted to our stockholders for approval. Our 2022 Plan became effective immediately on adoption. Our 2022 Plan replaces our previous incentive plan. However, awards outstanding under our previous incentive plan will continue to be governed by their existing terms. 39 Share Reserve . The number of shares of our common stock available for issuance under our 2022 Plan is 900,000 shares. Notwithstanding the number of shares available for issuance, on the first day of each month commencing January 1, 2023, or the first business day of the calendar year if the first day of the calendar year falls on a Saturday or Sunday, the number of shares eligible for awards under the 2022 Plan will automatically increase in an amount equal to 15% of the total number of shares of common stock outstanding as of December 31st of the preceding fiscal year. Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted-average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) Equity compensation plans approved by security holders $ Equity compensation plans not approved by security holders 69,217 $ 3.06 $ Total 69,217 $ 3.06 $ ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Other than as set forth below and compensation arrangements, including employment, and indemnification arrangements, discussed, there have been no transactions since January 1, 2021, in which the amount involved in the transaction exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets as at the year-end for the last two completed fiscal years, and to which any of our directors, executive officers or beneficial holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest. On July 8, 2021, the Company entered into a Simple Agreement for Future Equity (SAFE), with a related party, Tivoli Trust, our second largest shareholder (the “Investor”), with an amount of $150,000, with 0% interest. Under the SAFE agreement, if there is an Equity Financing before the termination of this SAFE, on the initial closing of such Equity Financing, this SAFE will automatically convert into the number of shares of SAFE Preferred Stock equal to the Purchase Amount divided by the Conversion Price, which means either: (1) the Safe Price (the price per share equal to the Post-Money Valuation Cap divided by the Company Capitalization) or (2) the Discount Price (the price per share of the Standard Preferred Stock sold in the Equity Financing multiplied by the Discount Rate), whichever calculation results in a greater number of shares of Safe Preferred Stock. If there is a Liquidity Event before the termination of this SAFE, this SAFE will automatically be entitled (subject to the liquidation priority set forth in Section 1(d) below) to receive a portion of Proceeds, due and payable to the Investor immediately prior to, or concurrent with, the consummation of such Liquidity Event, equal to the greater of (i) the Purchase Amount (the “Cash-Out Amount”) or (ii) the amount payable on the number of shares of Common Stock equal to the Purchase Amount divided by the Liquidity Price (the “Conversion Amount”). If any of the Company’s securityholders are given a choice as to the form and amount of Proceeds to be received in a Liquidity Event, the Investor will be given the same choice, provided that the Investor may not choose to receive a form of consideration that the Investor would be ineligible to receive as a result of the Investor’s failure to satisfy any requirement or limitation generally applicable to the Company’s securityholders, or under any applicable laws. This SAFE will automatically terminate (without relieving the Company of any obligations arising from a prior breach of or non-compliance with this SAFE) immediately following the earliest to occur of: (i) the issuance of Capital Stock to the Investor pursuant to the automatic conversion of this SAFE under agreement; or (ii) the payment, or setting aside for payment, of amounts due the Investor pursuant to the agreement. 40 As of December 31, 2021, the $150,000 received from SAFE was recorded at 6% imputed interest. The maturity date of the loan is defined by the SAFE agreement as discussed above. The SAFE was converted into 32,967 shares of common stock (post reverse stock split) upon the Company’s IPO in February 2023. On August 19, 2021, the company entered into a convertible loan agreement with a related party, with a principal balance of $99,900 at 9% interest. The noteholder has the right to convert the principal and interest into common shares of the Company. This loan included an original issuance discount of 5% and included 99,900 Warrants at an exercise price of $1, exercisable for 5 years from the issue date on the face of the Warrant. The maturity date of the loan was February 19, 2022. In May 2022, the Company and the note holder agreed to cancel and void previous warrants and entered into a new agreement for 115,185 warrants with an exercise price of $2.50. As of December 31, 2022, the $99,900 principal and the $4,950 overpayment of the note remained outstanding and had accrued interest of $12,463. The warrants discussed above were initially discounted against the notes, subsequent to year end December 31, 2021, they were deemed voided and new warrants in accordance with the new terms were issued. We assessed the differences in fair value and determined that they were de minimis and expensed the full value of the new warrants. The noteholder elected to convert the loan into 21,747 shares of common stock (post reverse stock split) upon the Company’s IPO in February 2023. On June 15, 2021, the company entered into a unsecured short term loan agreement with the Investor for an aggregate principal balance of $34,000, with a one-year maturity date, accruing interest at 5% and imputing an additional 1% interest. On November 19, 2021, 2021, the company entered into an unsecured short term loan agreement with the Investor for an aggregate principal balance of $5,000, with a one-year maturity date, accruing interest at 5% and imputing an additional 1% interest. On December 13, 2021, the company entered into an unsecured short term loan agreement with the Investor for an aggregate principal balance of $10,000, with a one-year maturity date, accruing interest at 5% and imputing an additional 1% interest. On October 5, 2022, the Company entered into an exchange agreement with the Investor whereby all of his common stock, 734,493 shares of common stock (post reverse split shares), were exchanged into 73,449 shares of Series A Convertible Preferred Stock that converts to common at a rate of 10 common for one preferred. The Series A Preferred Stock is the economic equivalent of the common stock but has no voting rights and is subject to a blocker which prohibits the conversion into common stock if it would result in the Investor owning more than 4.99% of the Company’s outstanding common stock at such time. For a description of the rights and preferences of the Series A Preferred Stock, see “Description of Securities- Series A Convertible Preferred Stock”. Other Transactions None. Director Independence Messrs. Elsey, Enright and Hanson, three members of our Board of Directors, are independent using the definition of independence under Nasdaq Listing Rule 5605(a)(2) and the standards established by the SEC. Policies and Procedures for Related Party Transactions For purposes of our policy only, a related person transaction is a transaction, arrangement or relationship, or any series of similar transactions, arrangements, or relationships, in which we and any related person are, were or will be participants in which the amount involved exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end. Transactions involving compensation for services provided to us as an employee or director are not covered by this policy. A related person is any executive officer, director, or beneficial owner of more than 5% of any class of our voting securities, including any of their immediate family members and any entity owned or controlled by such persons. 41 Under the policy, if a transaction has been identified as a related person transaction, including any transaction that was not a related person transaction when originally consummated or any transaction that was not initially identified as a related person transaction prior to consummation, our management must present information regarding the related person transaction to our audit committee, or, if audit committee approval would be inappropriate, to another independent body of our Board of Directors, for review, consideration and approval or ratification. The presentation must include a description of, among other things, the material facts, the interests, direct and indirect, of the related persons, the benefits to us of the transaction and whether the transaction is on terms that are comparable to the terms available to or from, as the case may be, an unrelated third party or to or from employees generally. Under the policy, we will collect information that we deem reasonably necessary from each director, executive officer and, to the extent feasible, significant stockholder to enable us to identify any existing or potential related-person transactions and to effectuate the terms of the policy. In addition, under our code of business conduct and ethics, our employees and directors will have an affirmative responsibility to disclose any transaction or relationship that reasonably could be expected to give rise to a conflict of interest. In considering related person transactions, our audit committee, or other independent body of our Board of Directors, will take into account the relevant available facts and circumstances including, but not limited to: ● the risks, costs and benefits to us; ● the impact on a director’s independence in the event that the related person is a director, immediate family member of a director or an entity with which a director is affiliated; ● the availability of other sources for comparable services or products; and ● the terms available to or from, as the case may be, unrelated third parties or to or from employees generally. The policy requires that, in determining whether to approve, ratify or reject a related person transaction, our audit committee, or other independent body of our Board of Directors, must consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, our best interests and those of our stockholders, as our audit committee, or other independent body of our Board of Directors, determines in the good faith exercise of its discretion. Item 14. Principal Accounting Fees and Services The following table summarizes the fees billed by M&K CPAs for the fiscal years ended December 31, 2023 and 2022, inclusive of out-of-pocket expenses. Pre-Approval Policy Our audit committee was formed upon the consummation of our initial public offering. As a result, the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee, and on a going-forward basis, the audit committee has and will pre-approve all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit). Year Ended December 31, Fee Category 2023 2022 Audit fees (1) $ 35,200 $ 52,450 Audit-related fees (2) 36,550 12,150 Tax fees (3) - - All other fees (4) - - Total fees $ 71,750 $ 64,600 (1) Audit fees consist of fees for professional services rendered in connection with the annual audit of our consolidated financial statements, the review of our quarterly condensed consolidated financial statements and consultations on accounting matters directly related to the audit. (2) Audit-related fees consist of fees for professional services rendered in connection with the submission of our Registration Statement on Form S-1 in connection with our initial public offering. (3) Tax fees consist of fees for professional services for tax compliance, tax advice and tax planning. (4) All other fees consist of fees related to engagement administration. 42 PART IV Item 15. Exhibits, Financial Statement Schedules a) Financial Statements For a list of the consolidated financial statements included herein, see Index to Consolidated Financial Statements on page F-1 of this Annual Report, which is incorporated into this Item by reference. b) Exhibits Exhibit No. Description 1.1 Underwriting Agreement between the Company and WallachBeth Capital LLC dated February 14, 2023, incorporated by reference to Exhibit 1.1 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on February 21, 2023. 3.1 Amended and Restated Articles of Incorporation of Bullfrog AI Holdings, Inc. incorporated by reference to Exhibit 3.1 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-267951) filed with the Securities and Exchange Commission on February 13, 2023. 3.2 Bylaws of Bullfrog AI Holdings, Inc. incorporated by reference to Exhibit 3.2 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-267951) filed with the Securities and Exchange Commission on February 13, 2023. 10.1 Acquisition Agreement with Bullfrog AI, Inc. incorporated by reference to Exhibit 10.1 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-267951) filed with the Securities and Exchange Commission on February 13, 2023. 10.2 Advisor Agreement between the Company and Greentree Financial Group, Inc. incorporated by reference to Exhibit 10.2 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-267951) filed with the Securities and Exchange Commission on February 13, 2023. 10.3 Consulting Agreement between the Company and Garrett Newman incorporated by reference to Exhibit 10.3 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-267951) filed with the Securities and Exchange Commission on February 13, 2023. 10.4 Employment Agreement with Vininder Singh incorporated by reference to Exhibit 10.4 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-267951) filed with the Securities and Exchange Commission on February 13, 2023. 10.5 Patent License Agreement between the Company and George Washington University, dated January 14, 2022 incorporated by reference to Exhibit 10.6 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-267951) filed with the Securities and Exchange Commission on February 13, 2023. 10.6 Exclusive License Agreement between the Company and Johns Hopkins University, dated February 22, 2022 incorporated by reference to Exhibit 10.7 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-267951) filed with the Securities and Exchange Commission on February 13, 2023. 10.7 License Agreement between the Company and Johns Hopkins Applied Physics Laboratory LLC, dated July 8, 2022 incorporated by reference to Exhibit 10.8 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-267951) filed with the Securities and Exchange Commission on February 13, 2023. 10.8 License Agreement between the Company and Johns Hopkins Applied Physics Laboratory LLC, dated February 7, 2018 incorporated by reference to Exhibit 10.5 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-267951) filed with the Securities and Exchange Commission on February 13, 2023. 10.9 License Agreement between the Company and Johns Hopkins University (JHU) and the Institute of Organic Chemistry and Biochemistry (IOCB) of the Czech Academy of Sciences, dated October 13, 2022 incorporated by reference to Exhibit 10.9 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-267951) filed with the Securities and Exchange Commission on February 13, 2023. 10.10 2022 Equity Compensation Plan, incorporated by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 25, 2023. 14 ● Code of Ethics 19 ● Insider Trading Policy 21.1 List of significant subsidiaries of Bullfrog AI Holdings, Inc., incorporated by reference to Exhibit 21.1 to the Company’s Amendment to the Registration Statement on Form S-1 (No. 333-267951) filed with the Securities and Exchange Commission on February 13, 2023. 23.1 Consent of M&K CPAS PLLC, an independent registered public accounting firm 31.1 Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended. 31.2 Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act, as amended. 32.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rules 13a-14(b) or 15d-14(b) of the Securities Exchange Act, as amended, and 18 U.S.C. Section 1350. 97 ● Clawback Policy 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) ● Filed herewith. ITEM 16. FORM 10-K SUMMARY None. 43 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. March 29, 2024 Bullfrog AI Holdings, Inc. By: /s/ Vininder Singh Vininder Singh Chief Executive Officer and Director (Principal Executive Officer) By: /s/ Dane Saglio Dane Saglio Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date By: /s/ Vininder Singh Chief Executive Officer and Chairman March 29, 2024 Vininder Singh (Principal Executive Officer) By: /s/ Dane Saglio Chief Financial Officer March 29, 2024 Dane Saglio (Principal Financial and Accounting Officer) By: /s/ Don Elsey Director March 29, 2024 R. Don Elsey By: /s/ William Enright Director March 29, 2024 William Enright By: /s/ Jason Hanson Director March 29, 2024 Jason Hanson 44 BULLFROG AI HOLDINGS, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm PCAOB ID: 2738 F-2 Consolidated Balance Sheets as of December 31, 2023 and 2022 F-3 Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022 F-4 Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Years Ended December 31, 2023 and 2022 F-5 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022 F-6 Notes to Consolidated Financial Statements F-7 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Bullfrog AI Holdings, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Bullfrog AI Holdings, Inc. (the Company) as of December 31, 2023 and 2022, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the years ended December 31, 2023 and 2022, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022 and the results of its operations and its cash flows for flows for the two-year period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate. As discussed in Note 2, the Company had a going concern disclosure in the previous year due to continued net losses from operations and negative cash flows in operations. Auditing management’s evaluation of a going concern can be a significant judgment given the fact that the Company uses management estimates on future revenues and expenses, which are difficult to substantiate. We evaluated the appropriateness of the removal of the going concern, we examined and evaluated the financial information along with management’s plans to mitigate the going concern and management’s disclosure on going concern. /s/ M&K CPAS, PLLC We have served as the Company’s auditor since 2021. Houston, Texas March 29, 2024 F- 2 BULLFROG AI HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS 2023 2022 December 31, 2023 2022 Assets Current assets: Cash and cash equivalents $ 2,624,730 $ 57,670 Prepaid expenses 145,882 15,000 Total current assets 2,770,612 72,670 Property and equipment, net 5,974 7,699 Total assets $ 2,776,586 $ 80,369 Liabilities and Stockholders’ Equity (Deficit) Current liabilities: Accounts payable $ 103,656 $ 543,993 Accrued expenses 80,694 982,988 Deferred revenue - 32,000 Convertible notes - 1,323,890 Convertible notes - related party - 254,850 Convertible notes - 254,850 Total current liabilities 184,350 3,137,721 Total liabilities $ 184,350 $ 3,137,721 Stockholders’ equity (deficit): Series A Convertible Preferred stock, $ 0.00001 par value, 5,500,000 shares authorized; 73,449 shares issued and outstanding, as of December 31, 2023 and 2022. 1 1 Common stock, $ 0.00001 par value, 100,000,000 shares authorized; 6,094,644 and 4,021,935 shares issued and outstanding as of December 31, 2023 and 2022, respectively. 61 40 Additional paid-in capital 12,347,098 1,341,662 Accumulated deficit ( 9,754,924 ) ( 4,399,055 ) Total stockholders’ equity (deficit) 2,592,236 ( 3,057,352 ) Total liabilities and stockholders’ equity (deficit) $ 2,776,586 $ 80,369 The accompanying notes are an integral part of these consolidated financial statements. F- 3 BULLFROG AI HOLDINGS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS 2023 2022 Year Ended December 31, 2023 2022 Revenue: Revenue, net Revenue $ 65,000 $ 10,000 Total revenue 65,000 10,000 Cost of goods sold: Cost of goods sold 5,200 800 Total cost of goods sold 5,200 800 Gross profit 59,800 9,200 Operating expenses: Research and development 1,432,614 609,270 General and administrative 3,994,710 1,855,731 Total operating expenses 5,427,324 2,465,001 Loss from operations ( 5,367,524 ) ( 2,455,801 ) Other income (expense), net Interest expense, net ( 79,089 ) ( 347,145 ) Loss on conversion of notes ( 92,959 ) - Interest income 183,703 459 Total other income (expense), net 11,655 ( 346,686 ) Net loss $ ( 5,355,869 ) $ ( 2,802,487 ) Net loss per common share attributable to common stockholders - basic and diluted $ ( 0.89 ) $ ( 0.70 ) Weighted average number of shares outstanding - basic and diluted 6,049,819 4,009,852 The accompanying notes are an integral part of these consolidated financial statements. F- 4 BULLFROG AI HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 Shares Amount Shares Amount Capital Deficit Deficit Series A Preferred Stock Common Stock Additional Paid-in Accumulated Total Stockholders’ Equity Shares Amount Shares Amount Capital Deficit ( Deficit) Balance at December 31, 2021 - $ - 4,622,789 $ 46 $ 587,415 $ ( 1,596,568 ) ( 1,009,107 ) Imputed interest - - - - 9,221 - 9,221 Stock-based compensation - - - - 340,152 - 340,152 Reclassification of warrant - - - - ( 11,097 ) - ( 11,097 ) Conversion of convertible notes - - 205,984 2 226,136 - 226,138 Shares cancellation ( 112,225 ) ( 1 ) 1 - - Shares issuance for license - - 39,879 - 189,828 - 189,828 Common stock converted to Series A Preferred Stock 73,449 1 ( 734,492 ) ( 7 ) 6 - - Net loss - - - - - ( 2,802,487 ) ( 2,802,487 ) Balance at December 31, 2022 73,449 1 4,021,935 40 1,341,662 ( 4,399,055 ) ( 3,057,352 ) Balance 73,449 1 4,021,935 40 1,341,662 ( 4,399,055 ) ( 3,057,352 ) Stock-based compensation - - - - 631,533 - 631,533 Issuance of common stock (initial public offering), net of issuance costs - - 1,297,318 13 7,293,638 - 7,293,651 Issuance of common stock for services - - 7,692 1 49,999 - 50,000 Conversion of convertible debt to common stock - - 331,166 3 1,535,612 - 1,535,615 Issuance of common stock pursuant to warrant exercises - - 436,533 4 1,494,654 - 1,494,658 Net loss - - - - - ( 5,355,869 ) ( 5,355,869 ) Balance at December 31, 2023 73,449 $ 1 6,094,644 $ 61 $ 12,347,098 $ ( 9,754,924 ) $ 2,592,236 Balance 73,449 $ 1 6,094,644 $ 61 $ 12,347,098 $ ( 9,754,924 ) $ 2,592,236 The accompanying notes are an integral part of these consolidated financial statements. F- 5 BULLFROG AI HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS 2023 2022 Year Ended December 31, 2023 2022 Cash flows from operating activities: Net loss $ ( 5,355,869 ) $ ( 2,802,487 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 1,725 1,045 Stock-based compensation 631,533 340,152 Shares issued for license - 189,828 Shares issued for services 50,000 - Loss on conversion of notes 92,959 - Amortization of debt discount 20,000 214,429 Imputed interest - 9,221 Changes in operating assets and liabilities: Prepaid expense ( 130,882 ) ( 15,000 ) Accounts payable ( 440,337 ) 475,399 Accrued expenses ( 838,428 ) 373,273 Accrued expenses - related party - 281,250 Deferred revenue ( 32,000 ) 22,000 Net cash used in operating activities ( 6,001,299 ) ( 910,890 ) Cash flows from investing activities: Purchases of property and equipment - ( 8,744 ) Net cash used in investing activities - ( 8,744 ) Cash flows from financing activities: Proceeds from issuance of common stock (initial public offering), net of issuance costs 7,293,651 - Proceeds from exercise of warrants 1,494,658 - Proceeds from convertible notes payable - 1,016,290 Proceeds from notes payable 100,000 - Payments of notes payable ( 319,950 ) - Repayment of note payable and interest - related party - ( 49,000 ) Proceeds from short term insurance financing 697,534 Payments of short term insurance financing ( 697,534 ) - Net cash provided by financing activities 8,568,359 967,290 Net increase in cash and cash equivalents 2,567,060 47,656 Cash and cash equivalents, beginning of period 57,670 10,014 Cash and cash equivalents, end of period $ 2,624,730 $ 57,670 Supplemental cash flow information: Cash paid for interest $ 93,916 $ 5,757 Cash paid for taxes - - Supplemental non-cash activity Reclassification of warrant $ - $ 11,097 Issuance of common stock upon conversion of notes payable $ 1,535,615 $ - Conversion of convertible note payable $ - $ 226,138 Cancellation of common stock $ - $ 8 The accompanying notes are an integral part of these consolidated financial statements. F- 6 BULLFROG AI HOLDINGS, INC. NOTES TO FINANCIAL STATEMENTS December 31, 2023 and 2022 1. Organization and Nature of Business Description of Business Bullfrog AI Holdings, Inc. (“we”, “our” or the “Company”) was incorporated in the State of Nevada on February 6, 2020. Bullfrog AI Holdings, Inc. is the parent company of Bullfrog AI, Inc. and Bullfrog AI Management, LLC which were incorporated in Delaware and Maryland, in 2017 and 2021, respectively. All of our operations are currently conducted through BullFrog AI Holdings, Inc., which began operations on February 6, 2020. We are a company focused specifically on advanced AI/ML-driven analysis of complex data sets in medicine and healthcare. Our objective is to utilize our platform for precision medicine approach to drug asset enablement through external partnerships and selective internal development. Most new therapeutics will fail at some point in preclinical or clinical development. This is the primary driver of the high cost of developing new therapeutics. A major part of the difficulty in developing new therapeutics is efficient integration of complex and highly dimensional data generated at each stage of development to de-risk subsequent stages of the development process. Artificial Intelligence and Machine Learning (AI/ML) has emerged as a digital solution to help address this problem. We use artificial intelligence and machine learning to advance medicines for both internal and external projects. Most current AI/ML platforms still fall short in their ability to synthesize disparate, high-dimensional data for actionable insight. Our platform technology, named, bfLEAP™ is an analytical AI/ML platform developed at The Johns Hopkins University Applied Physics Laboratory (JHU-APL) which is able to surmount the challenges of scalability and flexibility currently hindering researchers and clinicians by providing a more precise, multi-dimensional understanding of their data. We are deploying bfLEAP™ for use at several critical stages of development for internal programs and through strategic partnerships and collaborations with the intention of streamlining data analytics in therapeutics development, decreasing the overall development costs by decreasing failure rates for new therapeutics, and impacting the lives of countless patients that may otherwise not receive the therapies they need. The bfLEAP™ platform utilizes both supervised and unsupervised machine learning – as such, it is able to reveal real/meaningful connections in the data without the need for a priori hypothesis. Algorithms used in the bfLEAP™ platform are designed to handle highly imbalanced data sets to successfully identify combinations of factors that are associated with outcomes of interest. Our primary goal is to improve the odds of success at any stage of pre-clinical and clinical therapeutics development, for in house programs, and our strategic partners and collaborators. Our primary business model is enabling the success of ongoing clinical trials or rescue of late stage failed drugs (i.e., Phase 2 or Phase 3 clinical trial failures) for development and divestiture; although, we will also consider collaborations for earlier stage drugs. We hope to accomplish this through strategic acquisitions of current clinical stage and failed drugs for in-house development, or through strategic partnerships with biopharmaceutical industry companies. We are able to pursue our drug asset enhancement business by leveraging a powerful and proven AI/ML platform (trade name: bfLEAP™) initially developed at JHU-APL. We believe the bfLEAP™ analytics platform is a potentially disruptive tool for analysis of pre-clinical and/or clinical data sets, such as the robust pre-clinical and clinical trial data sets being generated in translational R&D and clinical trial settings. Liquidity and Going Concern The Company has had negative cash flows from operations and operated at a net loss since inception. In the first quarter of 2023, we completed our initial public offering (“IPO”). In February 2024 the Company received net proceeds of approximately $ 4.9 million dollars from an underwritten public offering of 1,507,139 shares of common stock (or pre-funded warrants in lieu thereof) and accompanying warrants to purchase 1,507,139 shares of common stock at an offering price of $ 3.782 . The 5 year warrants have an exercise price of $ 4.16 . On February 21, 2024, the underwriters elected to take an overallotment of 218,382 common shares and the Company received net proceeds of approximately $ 750,000 . In the absence of significant revenues in 2024 the Company believes that its capital resources are sufficient to fund planned operations for more than 12 months from the date of this filing. F- 7 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements include the accounts of Bullfrog AI Holdings, Inc. and our wholly owned subsidiaries and have been prepared in conformity with United States generally accepted accounting principles (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. On February 13, 2023, we completed a 1-for-7 reverse split of our common stock . Stockholders’ equity and all references to shares and per share amounts in the accompanying consolidated financial statements have been adjusted to reflect the reverse stock split for all periods presented. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates include, but are not limited to, revenue recognition, allowances for doubtful accounts, recoverability of deferred tax assets and certain other of our accrued liabilities. Actual results could differ from these estimates. Revenue Recognition The Company recognizes revenue based on the following five step model: ● Identification of the contract with a customer This step outlines the criteria that must be met when establishing a contract with a customer to supply goods or services. ● Identification of the performance obligations in the contract This step describes how distinct performance obligations in the contract must be handled. ● Determination of the transaction price This step outlines what must be considered when establishing the transaction price, which is the amount the business expects to receive for transferring the goods and services to the customer. ● Allocation of the transaction price to the performance obligations in the contract This step outlines guidelines for allocating the transaction price across the contract’s separate performance obligations, and is what the customer agrees to pay for the goods and services. ● Recognition of revenue when, or as, the Company satisfies a performance obligation Revenue can be recognized as the business meets each performance obligation. This step specifies how that should happen. Contract Services The Company anticipates that the majority of revenues to be recognized in the near future will result from our fee for service partnership offering, designed for biopharmaceutical companies, as well as other organizations, of all sizes that have challenges analyzing data throughout the drug development process. The Company provides the customer with an analysis of large complex data sets using the Company’s proprietary Artificial Intelligence / Machine Learning platform called bfLEAP™. This platform is designed to predict targets of interest, patterns, relationships, and anomalies. The Company believes that there will be additional on-going work requested from partners therefore the service model utilizes a master services agreement with work or task orders issued for discrete analysis performed at the discovery, preclinical, or clinical stages of drug development. The Company receives a cash fee and in some instances the potential for rights to new intellectual property generated from the analysis. Once data analysis and the analysis report are complete, the Company delivers the analysis set to the customer and recognizes revenue at that point in time. F- 8 Financial Instruments The carrying value of short-term instruments, including cash and cash equivalents, accounts payable and accrued expenses approximate fair value due to the relatively short period to maturity for these instruments. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company utilizes a three-level valuation hierarchy for disclosures of fair value measurements, defined as follows: Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value. The Company does not have any assets or liabilities that are required to be measured and recorded at fair value on a recurring basis. Cash The Company considers cash to consist of cash on hand and temporary investments having an original maturity of 90 days or less that are readily convertible into cash. As of December 31, 2023 and 2022, cash balances were $ 2,624,730 and $ 57,670 , respectively. Concentrations of Credit Risk The Company’s financial instruments that are exposed to a concentration of credit risk are cash and accounts receivable. Occasionally, the Company’s cash in interest-bearing accounts may exceed FDIC insurance limits. The financial stability of these institutions is periodically reviewed by senior management. Cost of Sales Cost of sales is comprised of royalties and the cost of outsourced services provided to the Company related to customer service contracts. Property and Equipment Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition is reflected in earnings. For financial statement purposes, property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives. Advertising The Company follows the policy of charging the costs of advertising to expense as incurred. Income Taxes Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carry forwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The Company records an estimated valuation allowance on its deferred income tax assets if it is not more likely than not that these deferred income tax assets will be realized. The Company recognizes a tax benefit from an uncertain tax position if it is more likely than not that the tax position will be sustained on examination by taxing authorities. Interest and penalties associated with such uncertain tax positions are classified as a component of income tax expense. F- 9 Stock-Based Compensation Employee and non-employee share-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period. Net Loss per Share We calculate basic net loss per share by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by giving effect to all potentially dilutive common stock equivalents in the period, including unvested stock options and warrants. As we have reported losses for all periods presented, all potentially dilutive securities have been excluded from the calculation of diluted net loss per share as their effect would be antidilutive. Recent Accounting Pronouncements In December 2023, the FASB issued ASU No. 2024-09: Income Taxes (Topic 740): Improvements to Income Tax Disclosures that requires entities to disclose additional information about federal, state, and foreign income taxes primarily related to the income tax rate reconciliation and income taxes paid. The new standard also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. The guidance is effective for our fiscal year ending December 31, 2025. The guidance does not affect recognition or measurement in our consolidated financial statements. The Company does not believe that any other recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements. 3. Property and Equipment Property and equipment consisted of $ 8,744 of equipment and has accumulated depreciation of $ 2,770 and $ 1,045 , as of December 31, 2023 and 2022, respectively. Depreciation expense totaled $ 1,725 and $ 1,045 in the years ended December 31, 2023 and 2022, respectively. 4. Convertible Notes March 2020 Note On March 27, 2020, the Company entered into a convertible loan agreement with the Maryland Technology Development Corporation with a principal balance of $ 200,000 at 6 % interest. The maturity date of the loan was September 27, 2021 . During the year ended December 31, 2022, the full amount of the loan and interest totaling $ 226,138 was converted into 205,984 shares of common stock of the Company, in accordance with the conversion notice submitted by the noteholder. Pursuant to the note agreement, the number of shares that the note converted into was based on the note balance plus accrued interest, divided by $ 5,000,000 , times the fully diluted equity of the company, excluding convertible securities issued for capital raising purposes. There was no gain or loss due to conversion being within the terms of the agreement. August 2021 Note In August 2021, the Company entered into a convertible loan agreement with an unrelated party for a commitment of up to $ 195,000 with a 5 % original issue discount and a 9 % interest rate. The loan provided for a maturity date of February 9, 2022 . We borrowed $ 72,000 and $ 123,000 of principal in the years ended December 31, 2021 and 2022, respectively. The noteholder had the right to convert the principal and interest into common shares of the Company at the IPO at a 20 % discount to the IPO price. F- 10 As of December 31, 2022, the loan was outstanding with a principal balance of $ 195,000 and accrued interest of $ 35,078 . The loan was paid in its entirety in February 2023. In connection with the convertible loan agreement, the Company also issued 195,000 Warrants with an exercise price of $ 1.00 exercisable for five years from issuance. In May 2022, the Company and the note holder agreed to cancel and void the warrants and enter into a new agreement for 225,000 warrants with an exercise price of $ 2.50 . The Company assessed the differences in fair value and determined that they were de minimis and expensed the full value of the new warrants. December 2021 Note On December 20, 2021, the Company entered into a loan agreement with an unrelated party. The loan provided for a December 19, 2022 maturity, a 10 % original issue discount and a 6 % interest rate. The Company received $ 25,000 of proceeds from this note. The note was automatically convertible into shares of common stock at a discount to the IPO price or based on the valuation of the Company, whichever was more favorable to the holder. Initially, the loan was estimated to be issued with 355,114 warrants. Subsequent to the closing of the loan agreement, the Company enhanced the terms of the Bridge Note Offering under which the loan was closed and in April 2022 closed on the sale of approximately $ 1 million in face value of convertible bridge notes. Pursuant to the enhanced terms, the warrants were issued concurrently with the conversion of the note. Concurrent with the closing of the Company’s IPO, the note converted according to its terms into 6,939 shares of common stock. No gain or loss was recognized on the conversion. Convertible Bridge Notes On April 11, 2022, the Company entered into an Exclusive placement agent and/or underwriter agreement with WallachBeth Capital LLC in connection with a proposed private and/or public offerings by the Company. On April 28, 2022, the Company received approximately $ 775,000 of proceeds, net of approximately $ 91,000 of fees and a 10 % original issue discount from the sale of Convertible Bridge Notes and Warrants to several institutional investors and several individual accredited investors. In addition, the Company also received $ 100,000 from the sale of a Convertible Bridge Note and Warrants to a related party earlier in April. In September 2022, the Company received an additional $ 25,000 of proceeds, net of a 10 % original issue discount from the sale of an additional Convertible Bridge Note and Warrant to an unrelated party. The Convertible Bridge Notes were initially convertible at the IPO at a 20 % discount to the IPO price. The Convertible Bridge Notes provided for an original maturity date of October 31, 2022 . In connection with the Convertible Bridge Notes, the purchasers were also entitled to conditional warrants to be issued upon completion of the Company’s IPO. The agreement provided for the warrants to be exercisable for a period of five years from issuance at an exercise price equal to 110% of the IPO price or, if the Company failed to complete the IPO before October 22, 2022, 90% of the IPO price . In the fourth quarter of 2022, the Company amended the Convertible Bridge Notes to (a) extend the maturity date until December 31, 2022, (b) provide that the conversion right would include interest through November 30, 2022, with interest accruing beyond that date being paid in cash and (c) revise the conversion price to be $ 4.27 based on a $25 million Company valuation . Concurrent with the closing of the Company’s IPO in February 2023, all of the Convertible Bridge Notes converted according to their terms into 269,513 shares of common stock. No gain or loss was recognized on the conversion. F- 11 5. Convertible Notes – Related Party SAFE Agreement On July 8, 2021, the Company entered into a Simple Agreement for Future Equity (SAFE), with a related party, at a purchase price of $ 150,000 . The SAFE provided for no interest and terminated after conversion upon completion of the Company’s IPO. The SAFE provided for automatic conversion into the number of shares of SAFE Preferred Stock equal to the Purchase Amount divided by the Conversion Price, defined as either: (1) the SAFE Price (the price per share equal to the Post-Money Valuation Cap divided by the Company Capitalization) or (2) the Discount Price (the price per share of the Standard Preferred Stock sold in the Equity Financing multiplied by the Discount Rate),whichever calculation results in a greater number of shares of SAFE Preferred Stock. In February 2023, the SAFE terminated and converted into 32,967 shares of common stock according to its terms upon the Company’s closing of its IPO. The conversion was considered a redemption for accounting purposes and consequently, the Company recognized a $ 63,626 loss on the conversion. As of December 31, 2022, the $ 150,000 received from the SAFE was recorded at 6 % imputed interest. August 2021 Note On August 19, 2021, the Company entered into a convertible loan agreement with a related party, with a principal balance of $ 99,900 , an original issuance discount of 5 % and a 9 % interest rate. The loan provided for a maturity date of February 19, 2022. The noteholder had the right to convert the principal and interest into common shares of the Company at a conversion price based on a discount to the IPO price. In February 2023, the related party elected to convert the convertible loan into 21,747 shares of common stock according to its terms upon the Company’s closing of its IPO. The conversion was considered a redemption for accounting purposes and consequently, the Company recognized a $ 29,333 loss on the conversion. In connection with the convertible loan agreement, the Company also issued 99,000 warrants with an exercise price of $ 1.00 exercisable for five years from issuance. In May 2022, the Company and the note holder agreed to cancel and void previous warrants and enter into a new agreement for 115,185 warrants with an exercise price of $ 2.50 . The Company assessed the differences in fair value and determined that they were de minimis and expensed the full value of the new warrants. 6. Related Party During the year ended December 31, 2023, the Company issued 75,000 stock options to its Chief Financial Officer for services rendered. During the year ended December 31, 2021, the Company issued 29,286 common stock options to related parties for services rendered. The options have an original life of 10 years and vest over different periods for up to 24 months . During the years ended December 31, 2023 and 2022, the Company recognized $ 1,707 and $ 1,803 , respectively of stock-based compensation related to these options. At various times in 2021, the Company entered into unsecured short term loan agreements with a related party for an aggregate principal balance of $ 49,000 , each with a one-year maturity date, accruing interest at 5 % and imputing an additional 1 % interest. The full amount of the loans and interest was repaid in 2022. 7 . Notes Payable In January 2023 the Company entered into a short-term note payable with a principal balance of $ 100,000 , an original discount of 20 % and a 9 % interest rate. The note was paid in its entirety in February 2023. In February 2023, the Company entered into an agreement to finance a portion of the premium for its Directors and Officers Insurance. The agreement provides for financing of $ 697,534 of the premium, repayments in 10 equal monthly installments of $ 71,485 each through December 2023 and accrued interest at 6.5 %. The financing was repaid during 2023. 8. Stockholders’ Equity Preferred Stock The Company has 10,000,000 shares of preferred stock authorized at a par value of $ 0.00001 with 5,500,000 being designated as Series A Convertible Preferred Stock. On October 5, 2022, the Company entered into an exchange agreement with an Investor providing for the exchange of 734,492 shares of commons stock into 73,449 shares of Series A Convertible Preferred Stock. Each share of Series A Convertible Preferred Stock is convertible at any time into 10 shares of the Company’s common stock. The Series A Preferred Stock is the economic equivalent of the common stock but has no voting rights and is subject to a blocker which prohibits the conversion into common stock if it would result in the Investor owning more than 4.99 % of the Company’s outstanding common stock at such time. The Company evaluated the terms of the exchange and determined there was no significant change in fair value and therefore the Series A Preferred Stock was valued at $ 315,000 which is the Investor’s basis in the common stock that was exchanged. F- 12 Common Stock The Company has 100,000,000 shares of common stock authorized at a par value of $ 0.00001 . During the year ended December 31, 2022, the Company: ● Exchanged 734,429 shares of common stock for shares of Series A Convertible Preferred stock as noted above, ● Issued 205,984 shares of common stock pursuant to a conversion of $ 226,138 worth of convertible notes principal and interest, ● Cancelled 112,225 shares of common stock as the change in number of shares issued as part of the cancellation of the prior agreements and new agreements with advisors, and ● Issued 39,879 shares of common stock pursuant to a license agreement valued at $189,828. After the Company signed two licenses for two drug programs from universities in the first half of 2022 it engaged an independent valuation firm to perform an Enterprise-Equity valuation. The results of this engagement resulted in an increase in the value per share of common stock used in the Black Scholes option pricing model employed to value the Company’s equity grants and warrant issuances. In February 2023, the Company completed its IPO for the sale of 1,297,318 units (each, a “Unit,” collectively, the “Units”) at a price of $ 6.50 per Unit for a total of approximately $ 8.4 million of gross proceeds. Each Unit consisted of one share of the Company’s common stock, one tradeable warrant (each, a “Tradeable Warrant,” collectively, the “Tradeable Warrants”) to purchase one share of common stock at an exercise price of $ 7.80 per share, and one non-tradeable warrant (each, a “Non-tradeable Warrant,” collectively, the “Non-tradeable Warrants”; together with the Tradeable Warrants, each, a “Warrant,” collectively, the “Warrants”) to purchase one share of the Company’s common stock at an exercise price of $ 8.125 . In connection with the completion of its IPO, the Company issued an aggregate of 331,166 shares of common stock upon the conversion of certain outstanding convertible debt. In connection with the IPO, in February 2023, the Company completed a 1-for-7 reverse split of our common stock. Stockholders’ equity and all references to shares and per share amounts in the accompanying consolidated financial statements have been retroactively adjusted to reflect the reverse stock split for all periods presented. In February 2023, the Company issued 7,692 shares of common stock for consulting services and recognized $ 50,000 of compensation expense related to these shares. In the second quarter of 2023, we issued 436,533 shares of common stock following the exercise of 436,533 warrants for proceeds of $ 1,494,658 . Dilutive securities are excluded from the diluted earnings per share calculation because their effect is anti-dilutive. As of December 31, 2023 and December 31, 2022, 3,521,880 and 927,373 warrants were not included in the calculation of net loss per share, respectively. In addition, 527,717 and 69,217 options for common shares were not included in the calculation of net loss per share, respectively. 2022 Equity Incentive Plan In November 2022, the Company’s Board of Directors adopted, and its shareholders approved the 2022 Equity Incentive Plan (the “Plan”). The Plan provides for the granting of equity-based awards to employees, directors, and consultants. The Plan provides for equity-based awards including incentive stock options, non-qualified stock options, stock appreciation rights, performance share awards, cash awards and other equity-based awards. Awards are limited to a maximum term of 10 years and any exercise prices shall not be less than 100% of the fair market value of one share of common stock on the grant date. The Plan authorizes an initial maximum number of shares underlying awards of 900,000 with an automatic annual 15 % increase beginning in 2024. As of December 31, 2023, there were 441,500 awards authorized but unissued available under the Plan. F- 13 Stock Options The following tables summarizes the stock option activity for the years ended December 31, 2023 and 2022: Schedule of Stock Options Activity Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at December 31, 2021 468,571 $ 3.32 7.4 $ - Granted - $ - Exercised - $ - Forfeited / canceled ( 399,354 ) $ - Outstanding at December 31, 2022 69,217 $ 3.06 7.1 $ - Granted 458,500 $ 4.34 Exercised - $ - Forfeited / canceled - $ - Outstanding at December 31, 2023 527,717 $ 4.17 9.0 $ 112,141 Vested at December 31, 2023 255,826 $ 4.01 8.5 $ 62,193 The fair value of options granted in the year ended December 31, 2023 was estimated using the Black-Scholes option pricing model based on the assumptions in the table below: Schedule of Options Valuation Assumptions 2023 Expected dividend yield 0 % Expected volatility 87 % - 92 % Risk-free interest rate 3.4 % - 4.4 % Expected life (in years) 5.0 - 6.0 ● Volatility - The trading volatility was determined by calculating the volatility of the Company’s peer group. ● Expected life of options – The expected life of options granted to employees was determined using the simplified method. ● Risk-free interest rate – This is the U.S. Treasury rate, having a term comparable to the expected life of the stock option. ● Dividend yield – The Company does not expect to pay a dividend in the foreseeable future. The weighted-average grant-date fair value of options granted during the year ended December 31, 2023 was $ 3.15 . The total grant-date fair value of options granted and vested during the year ended December 31, 2023 was approximately $ 1,445,200 and $ 585,500 , respectively. No options were exercised in any of the periods presented. During the years ended December 31, 2023 and 2022, the Company recognized $ 592,268 and $ 2,010 , respectively of compensation expense related to stock options. As of December 31, 2023, the total unrecognized compensation expense related to unvested stock options, was approximately $ 861,000 , which the Company expects to recognize over a weighted-average period of approximately 1.9 years. Warrants During the years ended December 31, 2023 and 2022, the Company granted a total of 3,195,906 and 415,247 warrants, respectively. The warrants have an original life of ten years and vest over varying periods up to 24 months from the grant date . During the year ended December 31, 2023, warrants to purchase 27,867 shares vested and had a fair value of $ 39,265 . During the year ended December 31, 2022, 350,908 shares of warrants vested and amended with a fair value of $ 337,269 , 51,941 shares of warrants were reclassified with a fair value of $ 11,097 , and 42,057 shares of warrants with a fair value of $ 1,883 were forfeited. F- 14 During the year ended December 31, 2021, the Company granted a total of 431,659 warrants. Of this amount, 200,000 warrants, with a fair value of $ 12,462 , were granted to advisors related to the Company’s IPO objective. The warrants have an original life of five years and vest 30 days before the intended IPO. During the year ended December31, 2021, 0 shares of these warrants were vested. As of June 30, 2022, the warrants for 200,000 shares were cancelled and voided per agreement of the warrant holder and the Company. There was no gain or loss recognized due to this cancellation. During the year ended December 31, 2021, the Company issued 92,859 warrants with a fair value of $ 12,980 , in connection with convertible bridge debt agreements with multiple parties including a related party. The warrants had an original life of five years . During the period ending June 30, 2022, the Company determined that 50,735 warrants, with a fair value of $ 11,097 , should not have been issued. The fair value was reclassified to additional paid in capital. In May 2022, the Company and the noteholders agreed to cancel and void the previous 99,000 warrants and entered into a new agreement for 115,185 warrants and the exercise price increased to $ 2.50 from $ 1.00 , with a fair value of $ 15,412 . In May 2022, the Company and the note holders agreed to cancel and void the previous 195,000 warrants and entered into a new agreement for 225,000 warrants with an exercise price of $ 2.50 , with a fair value of $ 64,978 . The 92,859 warrants discussed above were initially discounted against the notes, subsequent to the year ended December 31, 2021, they were deemed voided and these individuals were issued new warrants in accordance with the new terms as stated above. We assessed the differences in fair values and determined the values were de minimis and expensed the full value of the new warrants. During the year ended December 31, 2023, the Company issued the following warrants: ● In February 2023, in connection with the completion of the initial public offering, the Company issued 276,452 contingent warrants to certain debt holders with an exercise price of $ 4.27 and an expiration date 5 years from issuance. ● In February 2023, in connection with the completion of the initial public offering, the Company issued 18,000 contingent warrants as fees to the Company’s underwriters with an exercise price of $ 8.125 and an expiration date 4 years from issuance. ● As part of the sale of units in the Company’s initial public offering the Company issued 1,297,318 tradable warrants with an exercise price of $ 7.80 and an expiration date 5 years from issuance. Also, as part of the sale of units in the Company’s initial public offering, the Company issued 1,297,318 non-tradable warrants with an exercise price of $ 8.125 and an expiration date 5 years from issuance. ● In February 2023, as part of the Company’s initial public offering, the Company issued 153,409 tradeable warrants to our underwriters pursuant to the overallotment options with an exercise price of $ 7.80 and an expiration date 5 years from issuance. Also in February 2023, as part of the Company’s initial public offering the Company issued 153,409 non-tradeable warrants to our underwriters pursuant to the overallotment options with an exercise price of $ 8.125 and an expiration date 5 years from issuance. F- 15 The following table provides details over the Company’s outstanding warrants including those issued as consideration for services and those issued in conjunction with transactions as of December 31, 2023: Schedule of Outstanding Warrants Exercise Price Expiration Number of Warrants $ 0.0007 2030 274,286 $ 2.10 - $ 2.66 2026 - 2032 460,445 $ 3.36 - $ 4.27 2028 - 2029 115,277 $ 6.51 - $ 7.80 2026 - 2032 1,484,929 $ 8.125 2027 - 2028 1,461,227 3,796,164 During the years ended December 31, 2023 and 2022, the Company recognized $ 39,265 and $ 338,142 , respectively of compensation expense related to certain warrants. Warrants Issued as Consideration for Services The following table summarizes the activity for warrants issued as consideration for services for the years ended December 31, 2023 and 2022: Schedule of Warrant Activity Number of Warrants Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at December 31, 2021 885,373 $ 2.59 7.4 $ 2,147 Granted 56,629 $ 3.87 Exercised - $ - Forfeited / canceled ( 263,826 ) $ 5.50 Outstanding at December 31, 2022 678,176 $ 1.57 7.6 $ 2,131,123 Granted - $ - Exercised - $ - Forfeited / canceled - $ - Outstanding at December 31, 2023 678,176 $ 1.57 6.6 $ 1,209,136 Vested at December 31, 2023 671,789 $ 1.56 6.6 $ 1,205,305 The fair value of options granted in the years ended 2022 were estimated using the Black-Scholes option pricing model based on the assumptions in the table below: Schedule of Warrants Valuation Assumptions 2022 Expected dividend yield 0 % Expected volatility 89 % Risk-free interest rate 1.86 % - 1.97 % Expected life (in years) 10 ● Volatility - The trading volatility was determined by calculating the volatility of the Company’s peer group. ● Expected life of options – The expected life of options granted to employees was determined using the simplified method. ● Risk-free interest rate – This is the U.S. Treasury rate, having a term comparable to the expected life of the stock option. ● Dividend yield – The Company does not expect to pay a dividend in the foreseeable future. No warrants were issued in the year ended December 31, 2023. As of December 31, 2023, the total unrecognized compensation expense related to unvested warrants was approximately $ 3,000 , which the Company expects to recognize over a weighted-average period of approximately 0.2 years. The total grant-date fair value of warrants vested during the year ended December 31, 2023 was approximately $ 39,300 . F- 16 9. Income Taxes Deferred income taxes reflect the net tax effects of loss and credit carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets for federal and state income taxes are as follows: Schedule of Deferred Tax Assets And Liabilities 2023 2022 December 31, 2023 2022 Deferred tax assets: Net operating losses $ 1,432,634 $ 924,000 Capitalized research and development 283,353 - Stock-based compensation 175,213 - Intangibles 173,273 - Other 9,438 - Total deferred tax assets 2,073,911 924,000 Valuation allowance ( 2,073,459 ) ( 924,000 ) Net deferred tax asset 452 - Deferred tax liabilities: Property and equipment ( 452 ) - Total deferred tax liabilities ( 452 ) - Net deferred tax asset / (liability) $ - $ - Realization of our deferred tax assets is dependent upon future earnings, if any, the timing, and amount of which are uncertain. Because of our lack of U.S. earnings history, the net U.S. deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by $ 1,151,827 and $ 585,000 during the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, the Company has available for federal income tax purposes a net operating loss carry forward of approximately $ 6.1 million and a total state net operation loss carryforward of approximately $ 2 million. The net operating loss carryforwards do not expire and may be used to offset future taxable income. Utilization of some of the federal and state net operating loss carryforwards are subject to annual limitations due to the “change in ownership” provisions of the Internal Revenue Code of 1986 and similar state provisions. The annual limitations may result in the expiration of net operating losses and credits before utilization. The Company has provided a valuation reserve against the full amount of the net operating loss benefit, since in the opinion of management, based upon the earnings history of the Company; it is more likely than not that the benefits will not be realized. All or portion of the remaining valuation allowance may be reduced in future years based on an assessment of earnings sufficient to fully utilize these potential tax benefits. We have incurred net operating losses since inception and we do not have any significant unrecognized tax benefits. Our policy is to include interest and penalties related to unrecognized tax benefits, if any, within the provision for taxes in the consolidated statements of operations. If we are eventually able to recognize our uncertain positions, our effective tax rate would be reduced. We currently have a full valuation allowance against out net deferred tax asset which would impact the timing of the effective tax rate benefit should any of these uncertain tax positions be favorably settled in the future. Any adjustments to our uncertain tax positions would result in an adjustment of our net operating loss or tax credit carry forwards rather than resulting in a cash outlay. We file income tax returns in the U.S. and certain state jurisdictions. We are not currently under examination in these jurisdictions for any tax year. The Company’s tax years beginning with 2020 are open tax years. Because of net operating losses and research credit carryovers, substantially all of our tax years remain open to examination. F- 17 The Company did not have unrecognized tax benefits as of December 31, 2023 and 2022, and does not anticipate this to change significantly over the next 12 months. The Company will recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. Reconciliations between the statutory federal income tax rate and the effective income tax rate of income tax expense is as follows: Effective Income Tax Rate of Income Tax Expense December 31, 2023 U.S. Federal statutory tax rate 21.0 % Stock-based compensation ( 1.1 ) Other ( 3.3 ) Change in valuation allowance ( 16.6 ) Total - % 10. Material Agreements JHU-APL Technology License On February 7, 2018, the Company entered into an exclusive, world-wide, royalty-bearing license from JHU-APL for the technology. The license covers three (3) issued patents, one (1) new provisional patent application, non-patent rights to proprietary libraries of algorithms and other trade secrets, the license also includes modifications and improvements. In October of 2021, the Company executed an amendment to the original license which represents improvements and new advanced analytics capabilities. In consideration of the rights granted to the Company under the License Agreement JHU received a warrant equal to five percent ( 5 %) of the then fully diluted equity base of the Company, which shall be diluted following the closing of the IPO. Under the terms of the License Agreement, JHU will be entitled to eight percent ( 8 %) royalty on net sales for the services provided by the Company in which the JHU licensed technology was utilized, as well as fifty percent ( 50 %) of all sublicense revenues received by the Company. In addition, the Company is required to pay JHU an annual maintenance fee of $ 1,500 . Minimum annual royalty payments are $ 20,000 for 2022, $ 80,000 for 2023, and $ 300,000 for 2024 and beyond, if cumulative annual royalty payments do not reach these levels, the amount due to JHU to reach the annual minimum is due by January 31st of the following year. Failure to make annual royalty payments is considered a material breach under the agreement and upon notice from JHU of a material breach, the Company shall have 60 days to cure the material breach. On July 8, 2022, the company entered into an exclusive, world-wide, royalty-bearing license from JHU-APL for the additional technology developed to enhance the bfLEAP™ platform. The new license provides additional intellectual property rights including patents, copyrights, and knowhow to be utilized under the Company’s bfLEAP™ analytical AI/ML platform. This license supersedes the previous license. In consideration of the new license, the Company issued 39,879 shares of common stock. Under the terms of the new License Agreement, JHU will be entitled to eight percent ( 8 %) of net sales for the services provided by the Company to other parties and three percent ( 3 %) for internally development drug projects in which the JHU license was utilized. The new license also contains tiered sub licensing fees that start at 50 % and reduce to 25 % based on revenues. In addition, under the new license agreement, the minimum annual royalty payments are $ 30,000 for 2022, $ 60,000 for 2023, and $ 300,000 for 2024 and beyond. On May 31, 2023, the Company and JHU-APL entered into Amendment number 1 of the July 8, 2022 License Agreement whereby the Company gained access to certain improvements including additional patents and knowhow in exchange for a series of payments totaling $ 275,000 . The first of these payments for $ 75,000 was due in July 2023 followed by payments of $ 75,000 , $ 75,000 , and $ 50,000 in years 2025, 2026 and 2027, respectively. The amendment also reduced the 2023 minimum annual royalty payment to $ 60,000 , all other financial terms remain the same. As of December 31, 2023, we have accrued $ 60,000 of the 2023 minimum annual royalty payments. F- 18 George Washington University - Beta2-spectrin siRNA License On January 14, 2022, the Company entered into an exclusive, world-wide, royalty-bearing license from George Washington University (GWU) for rights to use siRNA targeting Beta2-spectrin in the treatment of human diseases, including hepatocellular carcinoma (HCC). The license covers methods claimed in three US and worldwide patent applications, and also includes use of this approach for treatment of obesity, non-alcoholic fatty liver disease, and non-alcoholic steatohepatitis. In consideration of the rights granted to the Company under the License Agreement the Company paid GWU a $ 20,000 License Initiation Fee. Under the terms of the License Agreement, GWU will be entitled to a three percent ( 3 %) royalty on net sales subject to quarterly minimums once the first sale has occurred subsequent to regulatory approval, as well sublicense or assignment fees in the event the Company sublicenses or assigns their rights to use the technology. The Company will also reimburse GWU for previously incurred and ongoing patent costs. The Sublicense and Assignment fee amounts decline as the Company advances the clinical development of the licensed technology. The license agreement also contains milestone payments for clinical development through the approval of an NDA and commercialization. As of December 31, 2023 and 2022, there has been no accrual for royalties since we have not begun to generate applicable revenue. The Company assessed whether the license should be capitalized and determined that the licensed program is in the early stage and therefore may not be recoverable; the Company expensed the license fee and will expense development costs until commercial viability is likely. Johns Hopkins University – Mebendazole License On February 22, 2022, the Company entered into an exclusive, world-wide, royalty-bearing license from Johns Hopkins University (JHU) for the use of an improved formulation of Mebendazole for the treatment of any human cancer or neoplastic disease. This formulation shows potent activity in animal models of different types of cancer and has been evaluated in a Phase I clinical trial in patients with high-grade glioma (NCT01729260). The trial, an open-label dose-escalation study, assessed the safety and efficacy of the improved formulation with adjuvant temozolomide in 24 patients with newly diagnosed gliomas. Investigators observed no dose-limiting toxicity in patients receiving all but the highest tested dose (200mg/kg/day). Four of the 15 patients receiving the maximum tested dose of 200mg/kg/day experienced dose-limiting toxicity, all of which were reversed by decreasing or eliminating the dose given. There were no serious adverse events attributed to Mebendazole at any dose during the trial. 41.7% of patients who received Mebendazole were alive at two years after enrollment, and 25% were alive at four years (Gallia et al., 2021). The license covers six (6) issued patents and one (1) pending application. In consideration of the rights granted to the Company under the License Agreement, JHU will receive a staggered Upfront License Fee of $ 250,000 . The initial payment for $ 50,000 was paid and the remaining balance of $ 200,000 was paid after the Company completed its IPO. The Company will also reimburse JHU for previously incurred and ongoing patent costs. Under the terms of the License Agreement, JHU will be entitled to three and one-half percent ( 3.5 %) royalty on net sales by the Company. In addition, the Company is required to pay JHU minimum annual royalty payments of $ 5,000 for 2023, $ 10,000 for 2024, $ 20,000 for 2025, $ 30,000 for 2026 and $ 50,000 for 2027 and each year after until the first commercial sale after which the annual minimum royalty shall be $ 250,000 . The license agreement also contains milestone payments for clinical development steps through the approval of an NDA and commercialization. As of December 31, 2023 and 2022, the balance of accrued expense related to this license agreement was $ 10,000 and $ 242,671 , respectively. The Company assessed whether the license should be capitalized and determined that the licensed program is in the early stage and therefore may not be recoverable; the Company expensed the license fee and will expense development costs until commercial viability is likely. F- 19 Johns Hopkins University – Prodrug License On October 13, 2022, the Company entered into an exclusive, world-wide, royalty-bearing license from JHU and the Institute of Organic Chemistry and Biochemistry (IOCB) of the Czech Academy of Sciences for rights to commercialize N-substituted prodrugs of Mebendazole that demonstrate improved solubility and bioavailability. The license covers prodrug compositions and use for treating disease as claimed in multiple US and worldwide patent applications. In consideration for the rights granted to the Company under the License Agreement JHU and IOCB will receive a staggered upfront license fee of $ 100,000 . The Company will also reimburse JHU and IOCB for previously incurred patent costs. Under the terms of the License Agreement, JHU and IOCB will be entitled to four percent ( 4.0 %) royalty on net sales by the Company. In addition, the Company is required to pay JHU and IOCB minimum annual royalty payments of $ 5,000 for 2027, $ 10,000 for 2028, $ 20,000 for 2029, $ 30,000 for 2030 and $ 50,000 for 2031 and each year after until the first commercial sale after which the annual minimum royalty shall be $ 150,000 . The license agreement also contains milestone payments for patent grants, clinical development steps through the approval of an NDA and commercialization. As of December 31, 2023 and 2022, the balance of accrued expense related to this license agreement was $ 0 and $ 133,238 , respectively. The Company assessed whether the license should be capitalized and determined that the licensed program is in the early stage and therefore may not be recoverable; the Company expensed the license fee and will expense development costs until commercial viability is likely. 11. Commitments and Contingencies While not assured, management does not believe, based upon information available at this time, that a loss contingency will have a material adverse effect on the Company’s financial position, results of operations or cash flows. Additionally, the Company does not have any material commitments. 12. Subsequent Events On February 5, 2024 the Company received net proceeds of approximately $ 4.9 million dollars from an underwritten public offering of 1,507,139 shares of common stock (or pre-funded warrants in lieu thereof) and accompanying warrants to purchase 1,507,139 shares of common stock at an offering price of $ 3.782 . The 5 year warrants have an exercise price of $ 4.16 . On February 21, 2024, the underwriters elected to take an overallotment of 218,382 common shares and the Company received net proceeds of approximately $ 750,000 . F- 20