Bullfrog AI (BFRG) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section details the company's financial statements, management's analysis, and internal controls Item 1. Financial Statements This section presents unaudited condensed consolidated financial statements and related notes, addressing liquidity and going concern Condensed Consolidated Balance Sheets (unaudited) This section provides a summary of the company's financial position, detailing assets, liabilities, and equity at specific dates Condensed Consolidated Balance Sheets Summary | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------- | :-------------- | :---------------- | :----- | | Cash and cash equivalents | $2,473,635 | $5,435,983 | $(2,962,348) | | Total current assets | $2,702,472 | $5,547,580 | $(2,845,108) | | Total assets | $2,869,194 | $5,551,830 | $(2,682,636) | | Total current liabilities | $681,084 | $588,090 | $92,994 | | Total stockholders' equity | $2,188,110 | $4,963,740 | $(2,775,630) | - Total assets decreased by approximately $2.68 million, and total stockholders' equity decreased by approximately $2.78 million from December 31, 2024, to June 30, 2025[15] Condensed Consolidated Statements of Operations (unaudited) This section outlines the company's financial performance, including revenue, expenses, and net loss over specific periods Condensed Consolidated Statements of Operations Summary | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Collaboration revenue | $33,257 | $- | $33,257 | $- | | Gross profit | $6,522 | $- | $6,522 | $- | | Total operating expenses | $1,476,195 | $1,681,963 | $3,532,815 | $3,647,681 | | Net loss | $(1,448,729) | $(1,611,646) | $(3,466,282) | $(3,515,440) | | Net loss per common share (basic and diluted) | $(0.15) | $(0.20) | $(0.36) | $(0.46) | - The company recognized collaboration revenue and gross profit for the first time in the three and six months ended June 30, 2025[18] - Net loss decreased by $162,917 for the three months ended June 30, 2025, and by $49,158 for the six months ended June 30, 2025, compared to the prior year periods[18] Condensed Consolidated Statements of Changes in Stockholders' Equity (unaudited) This section details changes in the company's equity, including common stock, additional paid-in capital, and accumulated deficit Changes in Stockholders' Equity Summary | Metric | December 31, 2024 | June 30, 2025 | Change | | :-------------------------- | :---------------- | :-------------- | :----- | | Common Stock Shares (Number) | 9,113,139 | 9,627,114 | 513,975 | | Additional Paid-in Capital | $21,757,204 | $22,447,851 | $690,647 | | Accumulated Deficit | $(16,793,556) | $(20,259,838) | $(3,466,282) | | Total Stockholders' Equity | $4,963,740 | $2,188,110 | $(2,775,630) | - The accumulated deficit increased by approximately $3.47 million from December 31, 2024, to June 30, 2025, primarily due to net losses[21] - Issuance of common stock, net of issuance costs, contributed $212,459 to additional paid-in capital in the quarter ended June 30, 2025[21] Condensed Consolidated Statements of Cash Flows (unaudited) This section presents the company's cash inflows and outflows from operating, investing, and financing activities Consolidated Cash Flow Data Summary | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $(3,230,098) | $(3,132,149) | $(97,949) | | Net cash provided by financing activities | $372,750 | $6,121,507 | $(5,748,757) | | Net (decrease) increase in cash and cash equivalents | $(2,857,348) | $2,989,358 | $(5,846,706) | | Cash and cash equivalents, and restricted cash at end of period | $2,578,635 | $5,614,088 | $(3,035,453) | - Net cash provided by financing activities decreased significantly by approximately $5.75 million for the six months ended June 30, 2025, compared to the same period in 2024[24] - The company experienced a net decrease in cash and cash equivalents of approximately $2.86 million for the six months ended June 30, 2025, compared to a net increase of approximately $2.99 million in the prior year[24] Notes to Condensed Consolidated Financial Statements (unaudited) This section provides detailed explanations of the accounting policies, significant transactions, and other financial information - The company's cash balance of approximately $2.6 million as of June 30, 2025, is not sufficient to fund planned operations for at least a year, raising substantial doubt about its ability to continue as a going concern[32] - The company plans to raise additional capital through various avenues including sales of equity securities, debt transactions, licensing agreements, and collaborative arrangements[33] 1. Organization and Nature of Business This section describes the company's business model, objectives, and its liquidity and going concern status - Bullfrog AI Holdings, Inc. focuses on advanced AI/ML-driven analysis of complex data sets in medicine and healthcare, aiming to provide precision medicine approaches to drug asset enablement[27] - The company's core platform technology, bfLEAP™, was developed at The Johns Hopkins University Applied Physics Laboratory (JHU-APL) and is used for internal programs and strategic partnerships[29] Description of Business This section details the company's mission to use AI/ML for precision medicine and drug asset enablement - The company's objective is to utilize its AI/ML platform to provide a precision medicine approach to drug asset enablement through external partnerships and selective internal development[27] - The bfLEAP™ platform leverages both correlative and causative machine learning and artificial intelligence approaches to provide comprehensive predictive analysis and meaningful insights[30] Liquidity and Going Concern This section addresses the company's financial viability and ability to continue operations - As of June 30, 2025, the company has a cash balance of approximately $2.6 million, which is not sufficient to fund planned operations for at least a year, raising substantial doubt about its ability to continue as a going concern[32] - The company anticipates raising additional capital through equity securities sales, debt transactions, licensing agreements, and collaborative arrangements[33] 2. Summary of Significant Accounting Policies This section outlines the key accounting principles and estimates used in preparing the financial statements - The company's significant accounting policies have not materially changed during the six months ended June 30, 2025, compared to its 2024 Annual Report on Form 10-K, except as noted[35] - The company views its operations and manages its business as one operating segment, focused on advancing drug development using AI/ML[40] Basis of Presentation This section explains the framework and principles used for preparing the unaudited financial statements - The unaudited condensed consolidated financial statements are prepared in conformity with United States generally accepted accounting principles (GAAP) for interim financial information[36] Segment Reporting This section clarifies that the company operates as a single segment focused on AI/ML drug development - The company operates as a single operating segment, focused on advancing drug development using AI/ML to analyze complex data sets in medicine and healthcare[40] - The Chief Operating Decision Maker (CODM) assesses company performance through the achievement of target identification goals and monitors cash and cash equivalents for liquidity needs[40][41] Revenue Recognition This section details the company's five-step model for recognizing revenue from collaborations and partnerships - The company recognizes revenue based on a five-step model, with future revenues expected from discovery and monetization of new drug targets and fee-for-service partnerships[42][45] - Consideration for services may include cash, equity, or other consideration, and in some instances, rights to new intellectual property[42] Investments This section describes the company's accounting treatment for its equity investment in a privately held entity - The company has a single investment in equity securities of a privately held entity, received as remuneration for services, and accounts for it using the measurement alternative (cost minus impairment) due to the lack of a readily determinable fair value[43] Financial Instruments This section explains the valuation methods for financial instruments and their fair value measurements - The carrying value of short-term instruments (cash, accounts payable, accrued expenses) approximates fair value due to their short maturity[44] - The company utilizes a three-level valuation hierarchy for fair value measurements but does not have any assets or liabilities measured at fair value on a recurring basis[44][46] Recent Accounting Pronouncements This section discusses the impact of recently issued accounting standards on the company's financial reporting - ASU No. 2023-09: Income Taxes (Topic 740) is effective for the company's fiscal year ending December 31, 2025, requiring additional income tax disclosures but not affecting recognition or measurement[47] 3. Investments This section details the company's sole equity investment in a private entity and its valuation method - The company's sole investment is in equity securities of a private entity, initially valued at approximately $58,000, received as remuneration for services[49] - The investment is carried at its estimated fair value (cost minus impairment) using the measurement alternative, with no fair value adjustments or impairment charges recognized as of June 30, 2025[49] 4. Revenue This section describes the recognition of collaboration revenue from a single customer agreement in the quarter - In the quarter ended June 30, 2025, the company recognized approximately $33,000 of revenue from a single customer agreement for contract services, upon completion of a deliverable[50][51] - The initial payment for these services was received in the form of equity securities of the customer, valued at approximately $58,000, with the balance reflected as deferred revenue[50][51] 5. Notes Payable This section outlines the company's financing arrangement for its directors and officers insurance premium - In February 2025, the company financed $181,797 of its directors and officers insurance premium[53] - The agreement provides for 10 equal monthly installments of $18,743 through December 2025, accruing interest at 6.70%[53] 6. Stockholders' Equity This section details the company's preferred stock, common stock, equity incentive plan, options, and warrants - As of June 30, 2025, the company had 9,627,114 shares of common stock issued and outstanding, and 73,449 shares of Series A Convertible Preferred Stock outstanding[15][21] - The company has an At-The-Market (ATM) Sales Agreement with BTIG, LLC, allowing it to sell up to $20.0 million in common stock, with approximately $19.7 million capacity remaining as of June 30, 2025, subject to SEC limitations[58][59] Preferred Stock This section describes the issued and outstanding Series A Convertible Preferred Stock and its conversion terms - As of June 30, 2025, 73,449 shares of Series A Convertible Preferred Stock were issued and outstanding[54] - Each Series A share is convertible into 10 shares of common stock, has no voting rights, and is subject to a 4.99% ownership blocker[54] Common Stock This section summarizes the company's common stock issuances, including proceeds from various offerings - In February 2024, the company received approximately $6.5 million gross proceeds from the sale of 1,247,092 common shares, pre-funded warrants, and common warrants[56] - In October 2024, the company received approximately $3.13 million gross proceeds from a registered direct offering and concurrent private placement of common stock and warrants[57] - In June 2025, the company received approximately $346,000 gross proceeds from the sale of 211,589 common shares through its ATM Agreement[59] 2022 Equity Incentive Plan This section outlines the authorized shares and awards under the company's equity incentive plan - The 2022 Equity Incentive Plan authorizes equity-based awards with an initial maximum of 900,000 shares and an automatic annual increase to 15% of total outstanding shares[61] - As of June 30, 2025, 497,260 awards are authorized but unissued under the Plan[61] Stock Options This section provides a summary of outstanding stock options, their exercise prices, and compensation expense Stock Option Activity Summary | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Outstanding Stock Options (Number) | 938,927 | 832,731 | | Weighted Average Exercise Price ($) | $3.57 | $3.96 | | Weighted Average Remaining Contractual Term (Years) | 8.3 | 8.5 | - The company recognized $478,193 in stock-based compensation expense related to stock options for the six months ended June 30, 2025[64] - As of June 30, 2025, total unrecognized compensation expense for unvested stock options was approximately $238,000, expected to be recognized over approximately 1.5 years[65] Warrants This section details the company's outstanding warrants, their exercise prices, and anti-dilution adjustments Outstanding Warrants as of June 30, 2025 | Exercise Price ($) | Expiration | Number of Warrants (Number) | | :------------- | :--------- | :----------------- | | $0.0007 | 2030 | 274,286 | | $2.00 - $2.66 | 2026 - 2032 | 2,164,179 | | $3.36 - $4.16 | 2028 - 2029 | 1,842,807 | | $6.51 - $7.80 | 2026 - 2032 | 1,484,829 | | $8.125 | 2028 | 1,443,227 | | Total | | 7,209,328 | - Warrant issuances in February and October 2024 led to anti-dilution adjustments, reducing the exercise price of 90,419 IPO warrants and resulting in deemed dividends of $16,774 and $28,211, respectively[67][71] - No compensation expense related to warrants issued as consideration for services was recognized for the six months ended June 30, 2025, as no unvested warrants remain[69][70] 7. Income Taxes This section explains the company's income tax position, including the absence of tax provision and valuation allowance - The company has not recorded any tax provision or benefit for the six months ended June 30, 2025 or 2024[72] - A full valuation allowance has been provided for net deferred tax assets due to the uncertainty of realizing future benefits[72] 8. Material Agreements This section outlines the company's key licensing agreements for its AI/ML platform and drug candidates - The company holds exclusive, worldwide, royalty-bearing licenses for its bfLEAP™ AI/ML platform from JHU-APL and for various drug candidates from George Washington University and Johns Hopkins University[73][74][77][79][81] - All licensed programs are currently in early stages, and associated license fees and development costs are expensed rather than capitalized, as commercial viability is not yet likely[76][78][80][81] JHU-APL Technology License This section details the exclusive license for the bfLEAP™ platform, including royalty rates and minimum payments - The 2022 License Agreement with JHU-APL grants exclusive, worldwide rights to the bfLEAP™ platform, with royalties of 8% for services and 3% for internal drug projects[74] - Minimum annual royalty payments are $300,000 for 2024 and beyond, with $150,000 accrued for 2025 as of June 30, 2025[74][76] George Washington University - Beta2-spectrin siRNA License This section describes the exclusive license for siRNA targeting Beta2-spectrin and associated royalty terms - The company holds an exclusive, worldwide license from GWU for siRNA targeting Beta2-spectrin for treating human diseases, including hepatocellular carcinoma[77] - The agreement includes a 3% royalty on net sales (post-regulatory approval) and annual license maintenance fees, with $10,000 accrued for the $20,000 fee for 2025[78] Johns Hopkins University – Mebendazole License This section outlines the exclusive license for an improved Mebendazole formulation for cancer treatment - The company has an exclusive, worldwide license from JHU for an improved Mebendazole formulation for human cancer treatment[79] - The license includes a 3.5% royalty on net sales and tiered minimum annual royalty payments, with $15,000 accrued for the $30,000 minimum for 2025[80] Johns Hopkins University – Mebendazole Prodrug License This section details the exclusive license for N-substituted Mebendazole prodrugs for improved bioavailability - The company holds an exclusive, worldwide license from JHU and IOCB for N-substituted prodrugs of Mebendazole, aimed at improved solubility and bioavailability[81] - The agreement includes a 4.0% royalty on net sales and tiered minimum annual royalty payments starting in 2026, with no accrued expense as of June 30, 2025[81] 9. Subsequent Events This section reports on significant events occurring after the reporting period, specifically common stock sales - Subsequent to June 30, 2025, the company raised approximately $710,000 in gross proceeds from common stock sales under its ATM Agreement[84] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of financial condition and results, highlighting AI/ML drug development and liquidity challenges - The company's core business is advanced AI/ML analysis of complex data in medicine, utilizing its bfLEAP™ platform to accelerate drug development[87][89] - The company continues to face liquidity challenges, with current cash insufficient to fund operations for the next year, necessitating additional capital raising efforts[97][98] Overview This section provides an overview of the company's business, strategic initiatives, and current liquidity status - Bullfrog AI Holdings, Inc. focuses on advanced AI/ML analysis in medicine, utilizing its bfLEAP™ platform to improve drug development success and rescue late-stage failed drugs[87][89][91] - Key initiatives include investor relations, research and development, collaborations (e.g., J Craig Venter Institute, Lieber Institute for Brain Development), and preclinical studies for in-licensed drug programs[93][94] - The company's cash balance of approximately $2.6 million as of June 30, 2025, is insufficient to fund planned operations for at least a year, raising substantial doubt about its ability to continue as a going concern[97] Our Strategy This section outlines the company's dual strategy of partnerships and in-licensing drugs for AI/ML-driven development - The company's strategy involves generating revenue through strategic partnerships with biopharma companies for AI/ML analysis, structured with fees in cash, equity, or intellectual property[99] - A secondary strategy involves acquiring rights to drugs at various development stages, using proprietary AI/ML technology to advance and monetize them, preferably within approximately 30 months[100] Critical Accounting Policies and Estimates This section discusses the key accounting policies and estimates used in preparing the company's financial statements - The company's financial statements are prepared in accordance with U.S. GAAP, requiring estimates and assumptions that are evaluated on an ongoing basis[101] - There have been no material changes to the company's critical accounting policies and estimates as described in its Form 10-K[101] Financial Operations Overview This section provides an overview of the company's revenue, cost of revenue, and operating expenses - The company recognized its first commercial service contract revenue in Q3 2023 and approximately $33,000 in Q2 2025 from a collaboration agreement with Eleison Pharmaceuticals Inc[102] - Research and development costs and general and administrative expenses are anticipated to increase in the future to support service offerings and clinical/pre-clinical activities[104][105] Revenue This section details the company's revenue recognition from its first commercial service contracts - The company recognized $65,000 in revenue from its first commercial service contract in Q3 2023 and approximately $33,000 in Q2 2025 from a collaboration agreement[102] Cost of Revenue This section describes the components of cost of revenue, primarily personnel and third-party consultant costs - Cost of revenue primarily consists of internal personnel and third-party consultants directly attributable to satisfying performance obligations under revenue arrangements[103] Research and Development Costs and Expenses This section outlines the nature of R&D expenses, including licensed drug candidates and bfLEAP™ development - Research and development expenses include costs for licensed drug candidates, discovery efforts, collaborations, and internal personnel developing bfLEAP™ offerings[104] - R&D costs are expensed as incurred and are anticipated to become significant as the company executes its business plan, including preclinical research and IND application efforts[104] General and Administrative Expenses This section details G&A expenses, including personnel, public company costs, and business development efforts - General and administrative expenses include personnel costs, public company expenses (D&O insurance, audit, legal, exchange listing), and business development, investor relations, and marketing efforts[105] - G&A expenses are expected to increase in the future to support service offerings and clinical/pre-clinical research and development activities[105] Results of Operations - Comparison of Three Months Ended June 30, 2025 and 2024 This section compares the company's financial performance for the three months ended June 30, 2025 and 2024 - The company recognized approximately $33,000 in collaboration revenue and $27,000 in cost of revenue for the three months ended June 30, 2025, with no comparable activity in the prior year[106] Operating Expenses (Three Months Ended June 30) | Operating Expense | June 30, 2025 | June 30, 2024 | Net Change | | :------------------------ | :------------ | :------------ | :--------- | | Research and development | $480,297 | $513,699 | $(33,402) | | General and administrative | $995,898 | $1,168,264 | $(172,366) | | Total operating expenses | $1,476,195 | $1,681,963 | $(205,768) | Collaboration Revenue and Cost of Collaboration Revenue This section compares collaboration revenue and associated costs for the three months ended June 30 Collaboration Revenue and Cost (Three Months Ended June 30) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Collaboration Revenue | $33,257 | $- | | Cost of Collaboration Revenue | $26,735 | $- | Operating expenses This section compares total operating expenses for the three months ended June 30, including R&D and G&A Operating Expenses (Three Months Ended June 30) | Operating Expense | June 30, 2025 | June 30, 2024 | Net Change | | :------------------------ | :------------ | :------------ | :--------- | | Research and development | $480,297 | $513,699 | $(33,402) | | General and administrative | $995,898 | $1,168,264 | $(172,366) | | Total operating expenses | $1,476,195 | $1,681,963 | $(205,768) | Research and Development This section details the changes in research and development expenses for the three months ended June 30 - Research and development expenses decreased by $33,402 for the three months ended June 30, 2025, primarily due to a reduction in personnel costs, partially offset by increased target discovery and validation efforts[107][108] General and Administrative This section details the changes in general and administrative expenses for the three months ended June 30 - General and administrative expenses decreased by $172,366 for the three months ended June 30, 2025, primarily due to reductions in director and officer insurance policy premiums and non-cash stock-based compensation expense[107][109] Other Income (Expense), Net This section compares other income and expense, primarily interest income, for the three months ended June 30 Interest Income (Three Months Ended June 30) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | | Interest income | $23,393 | $78,216 | - Interest income decreased by approximately $55,000 for the three months ended June 30, 2025, primarily due to a decrease in the company's average cash balance[110] Results of Operations – Comparison of Six Months Ended June 30, 2025 and 2024 This section compares the company's financial performance for the six months ended June 30, 2025 and 2024 - The company recognized approximately $33,000 in collaboration revenue and $27,000 in cost of revenue for the six months ended June 30, 2025, with no comparable activity in the prior year[111] Operating Expenses (Six Months Ended June 30) | Operating Expense | June 30, 2025 | June 30, 2024 | Net Change | | :------------------------ | :------------ | :------------ | :--------- | | Research and development | $1,056,557 | $1,065,825 | $(9,268) | | General and administrative | $2,476,258 | $2,581,856 | $(105,598) | | Total operating expenses | $3,532,815 | $3,647,681 | $(114,866) | Collaboration Revenue and Cost of Collaboration Revenue This section compares collaboration revenue and associated costs for the six months ended June 30 Collaboration Revenue and Cost (Six Months Ended June 30) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Collaboration Revenue | $33,257 | $- | | Cost of Collaboration Revenue | $26,735 | $- | Operating expenses This section compares total operating expenses for the six months ended June 30, including R&D and G&A Operating Expenses (Six Months Ended June 30) | Operating Expense | June 30, 2025 | June 30, 2024 | Net Change | | :------------------------ | :------------ | :------------ | :--------- | | Research and development | $1,056,557 | $1,065,825 | $(9,268) | | General and administrative | $2,476,258 | $2,581,856 | $(105,598) | | Total operating expenses | $3,532,815 | $3,647,681 | $(114,866) | Research and Development This section details the changes in research and development expenses for the six months ended June 30 - Research and development expenses decreased by $9,268 for the six months ended June 30, 2025, primarily due to a reduction in personnel costs, partially offset by increased target discovery and validation efforts[112][113] General and Administrative This section details the changes in general and administrative expenses for the six months ended June 30 - General and administrative expenses decreased by $105,598 for the six months ended June 30, 2025, primarily due to reductions in D&O insurance policy premiums and recruiting fees, partially offset by increased personnel costs[112][114] Other Income (Expense), Net This section compares other income and expense, primarily interest income, for the six months ended June 30 Interest Income (Six Months Ended June 30) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | | Interest income | $63,475 | $143,413 | - Interest income decreased by approximately $80,000 for the six months ended June 30, 2025, primarily due to a decrease in the company's average cash balance[115] Liquidity and Capital Resources This section discusses the company's cash position, capital needs, and efforts to secure additional funding - As of June 30, 2025, the company has an accumulated deficit of approximately $20.3 million[116] - The company's cash and cash equivalents position of $2.6 million as of June 30, 2025, is not sufficient to fund planned operations for at least a year, raising substantial doubt about its ability to continue as a going concern[120] - The company plans to seek additional capital through equity sales, debt, licensing, and collaborative arrangements, but there is no assurance of sufficient funding[120] Consolidated Cash Flow Data This section summarizes cash flows from operating, investing, and financing activities for the six-month periods Consolidated Cash Flow Data (Six Months Ended June 30) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $(3,230,098) | $(3,132,149) | $(97,949) | | Net cash provided by financing activities | $372,750 | $6,121,507 | $(5,748,757) | | Net (decrease) increase in cash and cash equivalents | $(2,857,348) | $2,989,358 | $(5,846,706) | Cash Flows Used in Operating Activities This section details the changes in cash used for operating activities for the six months ended June 30 - Net cash used in operating activities increased by $97,949 for the six months ended June 30, 2025, primarily due to payments of vendor payables, partially offset by a reduction in prepaid D&O insurance premiums[121][122] Cash Flows Used in Investing Activities This section reports on the absence of cash flows from investing activities for the six months ended June 30 - There was no cash used in investing activities during the six months ended June 30, 2025 or 2024[123] Cash Flows Provided by Financing Activities This section details the changes in cash flows from financing activities for the six months ended June 30 - Net cash provided by financing activities decreased by approximately $5.75 million for the six months ended June 30, 2025, primarily due to lower proceeds from secondary offerings and reduced D&O insurance financing, partially offset by proceeds from ATM common stock sales[121][124] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is exempt from providing market risk disclosures - The company is exempt from providing quantitative and qualitative disclosures about market risk as it is a smaller reporting company[125] Item 4. Controls and Procedures Management concluded disclosure controls were ineffective due to unremediated material weaknesses, with ongoing remediation efforts - Disclosure controls and procedures were not effective as of June 30, 2025, due to unremediated material weaknesses in internal control over financial reporting[126][127] - Remediation efforts include transitioning accounting processes to an external firm, completing transfer to an enterprise accounting platform, reviewing control design, hiring a Corporate Controller, and engaging a third-party specialist[128][130] - Despite the identified material weaknesses, management concluded that the unaudited condensed consolidated financial statements fairly present the financial position, results of operations, and cash flows[126] Evaluation of Disclosure Controls and Procedures This section details management's conclusion on the effectiveness of disclosure controls and procedures - Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025, due to previously identified material weaknesses in internal control over financial reporting[126] - Notwithstanding the material weaknesses, management believes the unaudited condensed consolidated financial statements fairly present the company's financial position, results of operations, and cash flows[126] Material Weakness and Ongoing Remediation Efforts This section describes the unremediated material weaknesses and the company's ongoing remediation efforts - Material weaknesses in internal controls over financial reporting, identified at December 31, 2023, remain unremediated as of June 30, 2025, specifically regarding the documentation, implementation, and operation of effective controls[127] - Remediation efforts include transitioning day-to-day accounting processes to an external firm, completing the transfer to an enterprise accounting platform, reviewing control design, hiring a Corporate Controller, and engaging a third-party specialist[128][130] Changes in Internal Control Over Financial Reporting This section reports on any material changes in internal control over financial reporting during the quarter - Other than the material weakness remediation efforts, there have been no material changes in the company's internal control over financial reporting during the most recent quarter[129] PART II. OTHER INFORMATION This section covers legal proceedings, equity sales, defaults, insider trading, and exhibits Item 1. Legal Proceedings The company is not currently a party to any legal proceedings material to its financial condition or operations - The company is not currently a party to any legal proceedings deemed material to its financial condition or results of operations[131] Item 1A. Risk Factors As a smaller reporting company, the company is not required to provide risk factor disclosures - Smaller reporting companies are not required to provide the information required by this item[132] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the six months ended June 30, 2025 - There were no unregistered sales of equity securities during the six months ended June 30, 2025[133] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - There were no defaults upon senior securities[134] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[135] Item 5. Other Information This section discloses insider trading arrangements, specifically detailing the 10b5-1 sales plan of the CEO - During the quarter ended June 30, 2025, none of the company's directors or executive officers adopted, modified, or terminated any new insider trading arrangements[136] - The CEO, Vininder Singh, continues to operate under a 10b5-1 sales plan, under which 50,000 shares were sold in Q2 2025[136] (c) Insider Trading Arrangements This section details the CEO's 10b5-1 sales plan and reports no new insider trading arrangements - No new insider trading arrangements were adopted, modified, or terminated by directors or executive officers during the quarter ended June 30, 2025[136] - The CEO's 10b5-1 sales plan, established in June 2023, provides for the sale of up to 1,000,000 shares of common stock by August 31, 2025, with 50,000 shares sold in Q2 2025[136] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications and XBRL documents - Key exhibits include the At-The-Market Sales Agreement (Exhibit 1.1), CEO/CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2), and Inline XBRL documents (Exhibits 101.INS to 101.PRE, and 104)[137]