Stockholder’s Equity | 8. Stockholder’s Equity Preferred Stock The Company has 10,000,000 0.00001 5,500,000 734,492 73,449 10 315,000 Common Stock The Company has 100,000,000 0.00001 ● Exchanged 734,429 ● Issued 205,984 226,138 ● Cancelled 112,225 ● Issued 38,879 189,828 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 6.50 8.4 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 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 In connection with the IPO, in February 2023, the Company completed a 1-for-7 reverse split of our common stock. In February 2023, the Company issued 7,692 50,000 In the second quarter of 2023, we issued 436,533 436,533 1,494,658 Dilutive securities are excluded from the diluted earnings per share calculation because their effect is anti-dilutive. As of September 30, 2023, 3,796,164 507,717 5,270,617 484,525 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 10 900,000 15 461,500 Stock Options The following table summarizes the stock option activity for the nine months ended September 30, 2023: 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, 2022 69,217 $ 3.06 7.08 $ 117,669 Granted 438,500 $ 4.41 - $ - Exercised - $ - - $ - Forfeited / canceled - $ - - $ - Outstanding at September 30, 2023 507,717 $ 4.23 9.17 $ 102,441 Vested at September 30, 2023 215,623 $ 3.97 8.64 $ 52,644 The fair value of options granted in the nine months ended September 30, 2023 were estimated using the Black-Scholes option pricing model based on the assumptions in the table below: Schedule of Black Scholes Option Pricing Model 2023 Expected dividend yield 0% Expected volatility 87 92% Risk-free interest rate 3.4 4.1 Expected life (in years) 5.0 6.0 The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2023 was $ 3.20 No options were exercised in any of the periods presented. During the three and nine months ended September 30, 2023, the Company recognized $ 116,410 475,465 51,536 290,876 As of September 30, 2023, the total unrecognized compensation expense related to unvested stock options, was approximately $ 936,000 2.1 Warrants During the nine months ended September 30, 2023 and 2022, the Company granted a total of 3,195,906 56,623 The warrants have an original life of ten years and vest immediately and over 12 months. 22,939 35,712 174,105 337,269 51,941 11,097 42,057 1,883 During the year ended December 31, 2021, the Company granted a total of 431,659 200,000 12,462 0 200,000 138,929 28,683 The warrants have an original life of ten years and vest at different rates over as much as 36 months. During the year ended December 31, 2021, the Company issued 92,859 12,980 five years 50,735 11,097 99,000 115,185 2.50 1 15,412 195,000 225,000 2.50 64,978 The 92,859 During the nine months ended September 30, 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 4.27 5 ● In February 2023, in connection with the completion of the initial public offering, the Company issued 18,000 8.125 4 ● As part of the sale of units in the Company’s initial public offering the Company issued 1,297,318 7.80 5 1,297,318 8.125 5 ● In February 2023, as part of the Company’s initial public offering, the Company issued 153,409 7.80 5 153,409 8.125 5 During the three and nine months ended September 30, 2023, the Company recognized $ 5,050 35,712 51,086 289,317 6,556 0.4 The following table provides details over the Company’s outstanding warrants as of September 30, 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 | NOTE 10– SHAREHOLDER’S DEFICT Stockholder’s Equity The Company has 10,000,000 0.00001 no 734,492 73,449 10 he Company evaluated the terms of the exchange and determined there would be no significant change in fair value and therefore no accounting entry recorded as a result of the exchange. The value of the Series A Preferred Stock was determined to be $ 315,000 Common Stock In June of 2020, BullFrog AI Holdings, Inc. acquired BullFrog AI, Inc. via a 1:1 share exchange. Immediately prior to the share exchange, each authorized common share of BullFrog AI, Inc. was split into 25 shares of common stock The Company has 100,000,000 0.00001 734,492 205,984 226,138 112,225 38,879 189,828 4,021,935 4,622,789 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. Our Board of Directors and stockholders approved an amendment to our Certificate of Incorporation to effect a 1-for-7 reverse stock split Stock Options During the first quarter of 2022, 399,354 (post reverse stock split) During the year ended December 31, 2021, the Company granted a total of 29,286 ten years 48 months 1,310 157 16,601 2,010 The following tables summarizes the stock options (post reverse stock split) activity for the years ended December 31, 2022 and 2021: Schedule of Stock Options Activity Granted and outstanding, December 31, 2020 884,821 Granted during 2021 29,286 Exercised - Forfeited - Expired during 2021 (445,536 ) Granted and outstanding, December 31, 2021 468,571 Granted during 2022 - Exercised - Forfeited (399,354 ) Expired during 2022 - Granted and outstanding, December 31, 2022 69,217 Schedule of Vested and Outstanding Options Options Intrinsic Value of Vested Options Weight Averaged exercise Price Vested and outstanding, December 31, 2020 104,795 12,706 3.36 Granted and vested during 2021 1,310 157 2.66 Exercised - - - Forfeited - - - Expired (66,524 ) (7,922 ) (3.36 ) Vested and outstanding, December 31, 2021 39,581 4,941 3.36 Granted and vested during 2022 16,661 2,010 2.73 Exercised - - - Forfeited - - - Expired - - - Vested and outstanding, December 31, 2022 56,242 6,951 3.15 As of December 31, 2022 and 2021, 16,661 1,310 0 66,524 7.08 7.38 As of December 31, 2022 and 2021, the fair value of options vested and outstanding was $ 6,951 4,941 Schedule of Black Scholes Option Pricing Model December 31, 2022 December 31, 2021 Fair Value of Common Stock on measurement date $ 4.76 $ 0.308 Risk free interest rate From 0.79 3.01 % From 1.26 1.33 % Volatility 89 % 93 % Dividend Yield 0 % 0 % Expected Term 4 10 10 (1) The risk-free interest rate was determined by management using the market yield on U.S. Treasury securities with comparable terms as of the measurement date. (2) The trading volatility was determined by calculating the volatility of the Company’s peer group. (3) The Company does not expect to pay a dividend in the foreseeable future. Warrants During the year ended December 31, 2022, the Company granted a total of 123,660 (post reverse stock split) The warrants have an original life of four to ten years and vest immediately and over 12 months. 174,105 (post reverse stock split) 337,269 51,941 11,097 42,057 During the year ended December 31, 2021, the Company granted a total of 431,659 (post reverse stock split) 200,000 (post reverse stock split) 12,462 The warrants have an original life of five years and vest 30 days before the intended IPO 0 200,000 (post reverse stock split) cancelled and voided per agreement of the warrant holder and the Company. There was no gain or loss due to cancellation. 138,929 (post reverse stock split) 28,683 The warrants have an original life of ten years and vest at different rates over as much as 36 months. During the year ended December 31, 2021, the Company issued 92,859 (post reverse stock split) 12,980 five years 50,735 (post reverse stock split) 11,097 As discussed in Note 8 in May 2022, the Company and the note holders agreed to cancel and void the previous 99,000 115,185 2.50 1 15,412 . As discussed in Note 8 in May 2022, the Company and the note holders agreed to cancel and void the previous 195,000 225,000 2.50 64,978 . The 92,859 The following tables summarize the warrant activity (post reverse stock split) for the year ended December 31, 2022 and 2021, Schedule of Stock Warrant Activity Warrants Granted and outstanding, December 31, 2020 495,714 Granted during 2021 431,659 Exercised - Forfeited - Expired during 2021 - Granted and outstanding, December 31, 2021 927,373 Granted during 2022 123,660 Exercised - Forfeited (298,088 ) Expired during 2022 - Granted and outstanding, December 31, 2022 752,945 Schedule of Vested And Outstanding Warrants Warrants Intrinsic Value of Warrants Weight Averaged exercise Price Vested and outstanding, December 31, 2020 479,940 127,480 0.98 Granted and Vested 2021 137,552 22,208 3.15 Exercised - - - Forfeited - - - Expired - - - Vested and outstanding, December 31, 2021 617,492 149,688 2.80 Granted and Vested 2022 174,105 337,263 3.15 Exercised - - - Forfeited (94,665 ) (12,980 ) - Expired - - - Vested and outstanding, December 31, 2022 696,932 473,971 1.96 As of December 31, 2022, 752,945 (post reverse stock split) 696,932 (post reverse stock split) 7.13 For the year ended December 31, 2022, the aggregate fair value of warrants vested was $ 324,283 For the year ended December 31, 2021, 927,516 617,492 22,208 7.73 As of December 31, 2021, the aggregate fair value of warrants vested was $ 149,688 The number of warrants related to the Convertible Bridge Notes discussed Note 7 is not yet determinable, given some of the terms discussed in Note 8 have not been completed. Therefore, the warrants to be issued are not accounted for in our warrants outstanding. Due to the IPO price not being completed at December 31, 2022, no current accounting for these warrants has been journalized. Schedule of Black Scholes Option Pricing Model December 31, 2022 December 31, 2021 Fair Value of Common Stock on measurement date $ 4.76 $ 0.308 Risk free interest rate From 1.86 1.97 % From 0.78 1.63 % Volatility 89 % 93 % Dividend Yield 0 % 0 % Expected Term 10 5 10 (1) The risk-free interest rate was determined by management using the market yield on U.S. Treasury securities with comparable terms as of the measurement date. (2) The trading volatility was determined by calculating the volatility of the Company’s peer group. (3) The Company does not expect to pay a dividend in the foreseeable future. (4) 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 for all 2022 grant date stock prices. The following table provides details over the Company’s outstanding warrants as of September 30, 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 |