アメリカ合衆国

証券取引委員会

ワシントン D. C. 20549

形式 10-K

” と年次報告書 1934 年証券取引法第 13 条または第 15 条（ d ）に基づく

終了した年の間 7 月 31 日, 2024.

あるいは…。

↓ ↓ 移行報告書に基づく 1934 年の証券取引法第 13 条または第 15 条（ d ）。

委員会ファイル番号： 000-55863

株式会社ラファエルホールディングス

(登録者の正確な氏名はその定款に記載)

デラウェア州

82-2296593

(明またはその他の司法管轄権

法人または組織）

(税務署の雇用主

識別番号)

520 ブロードストリート, ニューアーク, ニュージャージー 07102

（主要執行役所住所、郵便番号）

(212) 658-1450

（登録者の電話番号を含む）地域コード）

第 12 条（ b ）に基づく登録証券法律の：

クラスごとのタイトル		取引シンボル		登録された各取引所の名称
クラス b 普通株式、 1 株当たり 0.0 1 ドル		RFL の		ニューヨーク証券取引所

同法第12条(G)により登録された証券：なし

登録者がよく知られた経験豊富な発行者であるかどうかをチェックマークで示します。証券法第 405 条に規定されている。はいいいえ」と

登録者が報告書を提出する必要がない場合はチェックマークで示します。第 13 条または第 15 条（ d ）に基づく。はいいいえ」と

登録者がチェックマークで表示する (1)過去 12 ヶ月間に 1934 年証券取引法第 13 条または第 15 条（ d ）によって提出されるすべての報告書を提出している。 (or登録者がそのような報告書を提出する必要があったような短い期間のために）、および（ 2 ）そのような提出要件の対象となっている過去 90 日間。はい” と

投票の総市場価値と登録者の非関連会社が保有する無議決権株式は、 2024 年 1 月 31 日（最終営業日）の決算価格に基づいて登録者の最も最近の完了した第 2 四半期）のクラス b の普通株式の $1.81 1 株当たり、報告されたようにニューヨーク証券取引所は約 $百万ドルです。登録者の普通株式の発行済株式数 2024 年 11 月 5 日現在：

クラス A 普通株式、 1 株当たり 0.0 1 ドル：

株式	クラス b 普通株式、 1 株当たり 0.0 1 ドル：
株式株式会社ラファエルホールディングス	表格10-Kの年報将来的な情報と今後の業績に影響を与える要因
第1部項目 1 。

公事です。

第1 A項。リスク要因です

項目1 B。未解決の従業員のコメント。

プロジェクト1 C。

ネットワーク·セキュリティ項目 2 。

財産です。34.4項目 3 。

法律訴訟。

項目 4 。	787,163炭鉱の安全情報開示。
第II部	23,886,987五番目です。

登録者普通株、関連株主事項及び発行者が株式証券を購入する市場。

第六項です。

[予約] 。			ii

第七A項。
	市場リスクに関する定量的 · 質的開示。	第七項。	1
	経営陣の財務状況と経営結果の検討と分析。	第八項です。	26
	財務諸表と補足データ。	第九項です。	97
	会計や財務開示における会計士との変更と食い違い。	第9条。	97
	制御とプログラムです	プロジェクト9 B。	98
	他の情報。	プロジェクト9 Cです。	98
	検査を妨害する外国司法管轄区域を開示する。	第三部	98

第10項。
	役員、幹部、会社が管理する。	第十一項。	99
	役員報酬。	第十二項。	99
	いくつかの実益所有者の保証所有権及び管理層及び関連株主事項。	十三項。	100
	特定の関係と関連取引、そして役員の独立性。	14項です。	100
	首席の料金とサービス料です。	第IV部	109
	第十五項。	展示品、財務諸表明細書。	109
	第十六項。	● ●	109
	臨床試験案を修正し		109
	臨床サイトは試験案から外れたり、試験を終了したりした		109

法規の要件や指導の変化、あるいは行われている研究や他の研究からのデータ、必要新しい臨床計画を修正したり提出したりします
		臨床開発計画に基づく看護基準の変化には，新たなものが必要かもしれない追加的な実験もあります	110
		患者募集能力を著しく抑制する導入および/または除外基準を選択する臨床試験に入り	110
		長い観察や分析結果を必要とする臨床的ゴールを選択するデータ	110
		製薬会社の候補製品の臨床試験コストは期待していた	110
		製薬会社の候補製品の臨床試験の中断および/または遅延このような中断や遅延が候補製品の開発計画と臨床的有効性に及ぼす潜在的影響データは製品候補者の開発計画から来ています	110


	製薬会社の候補製品の臨床試験結果は陰性または不確定その結果、これは私たちまたは彼らの決定、あるいは規制機関が私たちに臨床試験案を修正して、追加的なことを要求する可能性があります。臨床試験やこのような候補製品の開発を放棄したり		111
	製造過程を契約製造組織が運営するより大規模な施設に移す。またはCMO、ならびにCMOまたは製薬会社が正確に実施されなかったか、またはそのような製造を適切に実施できなかったか、またはそのような製造に必要な変更を行う流れ；そして	他の人は、類似または代替のプロセスまたは技術を独立して開発したり、任意の複製をしたりすることができる私たちの技術や技術は知的財産権を侵害しません	112

● ●			113

私たちが処理している特許出願は発行された特許を生成しない可能性がある

私たちが所有していたり独占的に許可されている特許は競争優位性を提供してくれないかもしれませんまたは私たちの競争相手の法的挑戦によって無効と認定されたり、実行できない

競争相手は特許のない国で研究開発活動を行うかもしれませんそして、このような活動から学んだ情報を利用して、競争力のある製品を開発し、私たちの主要な商業市場で販売する

第三者が私たちの候補品や候補装置を使って製造やテストをしてくれます適切な許可を得ることなく他人の知的財産権を使用することができる我々のプロセスおよび技術を含む当事者は我々の知的財産権に対する所有権権益を主張することができ，勝訴すれば，このような紛争を主張することもできる. 私たちがこの知的財産権に対して排他的な権利を行使することを阻止することができる

他の特許を申請できるノウハウを開発しないかもしれません

私たちは商業的に合理的な条項で必要なライセンスを取得して維持することができないかもしれないし、必要なライセンスを取得して維持することができないかもしれない。そして

他の人たちの特許は私たちの業務に悪影響を及ぼすかもしれない。

もしこれらの事件のいずれかが起きたら、彼らはすでに私たちの業務、財務状況、経営結果、将来性に重大な悪影響を及ぼす。

私たちと権利を持っている会社は私たちの従業員、コンサルタント、または独立請負業者の機密情報の使用または開示のクレームを受ける可能性があります。彼らの元雇用主や他の第三者

私たちと権利を持っている会社は私たちの許可者を含めて、以前大学や他の生物製薬会社に雇われていた個人を雇うことはできない。競争相手や潜在的な競争相手。従業員、コンサルタント、独立請負業者が使用しないように努力していますが他の人たちが私たちのために働いている時の独自の情報やノウハウは、私たちは現在何の疑いも受けていません。コンサルタントや独立請負業者が第三者の機密情報を不適切に使用したり開示したりすることは、私たちは将来的にこのようなクレームの影響を受けます。

不動産セグメント

520 プロパティの収益と支出不動産セグメントは、下記の数字において、保有販売および事業廃止の分類により除外されています。 2022 年 8 月 22 日に 520 プロパティの売却。不動産セグメントは、イスラエルの商業ビルの一部で構成されています。不動産事業部門の連結損益および費用は以下のとおりです。

七月三十一日までの年度

変化

(単位：千)

レンタル — 第三者

レンタル — 関連当事者

一般と行政

減価償却 · 償却

営業収入

連結業務

連結損益 · 経費項目営業損失は以下の通りでした

年度終了 7 月 31 日

変化

(in数千人）^運営損失利子収入

投資の減損 — その他の医薬品買収後 3 日目の初期投資損失発行済有価証券の実現利益

7月31日まで^変化(単位：千)

貸借対照表データ：^{現金 · 現金同等物}可換債権、関係者

可換債権95配賦手形

運営資本総資産ラファエル · ホールディングス株式会社の出資総額非制御的権益

総株式

七月三十一日までの年度変化(in数千人）f使用したキャッシュフロー

継続事業の運営活動

継続事業の投資活動継続業務の資金調達活動

登録者の子会社

独立公認会計事務所 CohnReznick LLP の同意

2002年サバンズ·オキシリー法第302条による最高経営責任者の認証

2002年サバンズ·オキシリー法第302条に基づく首席財務官の認証

2002年のサバンズ·オキシリー法第906条によるCEOの認証

2002年のサバンズ·オキシリー法第906条による首席財務官の認証

報酬回収政策

101.INS*

XBRLインスタンスドキュメントを連結する

101.Sch*

イントラネットXBRL分類拡張アーキテクチャ文書

101.カール*

インラインXBRL分類拡張計算リンクライブラリ文書

101.定義*

インラインXBRL分類拡張Linkbase文書を定義する

101.実験所*

XBRL分類拡張ラベルLinkbase文書を連結する

101.前期*

インラインXBRL分類拡張プレゼンテーションLinkbaseドキュメント^{表紙対話データファイル(添付ファイル101に含まれるイントラネットXBRLのフォーマット)。}タイトル^投稿日ウィリアムコンクリング

社長と最高経営責任者

（執行役員）^{2024 年 11 月 5 日}ウィリアム · コンクリング

デイヴィッドポリンスキー最高財務責任者

（最高財務責任者および:

首席会計官)

2024 年 11 月 5 日

デイヴィッド · ポリンスキー

ハワード S.ジョナス

取締役、取締役会長

執行役員兼会長

2024 年 11 月 5 日ハワード · S 。ジョナス

スーザン Y 。ベルンシュタイン:

ディレクター

2024 年 11 月 5 日.

スーザン Y 。バーンスタイン

スティーブングリーンバーグ

ディレクター:

2024 年 11 月 5 日

スティーブン · グリーンバーグ

博士。マーク · スタン

ディレクター^{2024 年 11 月 5 日}Dr. Mark Stein

博士。マイケル · J · ワイス

ディレクター^{2024 年 11 月 5 日}マイケル · J · ワイス博士

連結財務諸表への指数

独立公認会計士事務所レポート(PCAOB ID)

連結貸借対照表 2024 年 7 月 31 日および 2023 年 7 月 31 日

2024 年 7 月 31 日期および 2023 年 7 月 31 日期連結業績計算書

2024 年 7 月 31 日期および 2023 年 7 月 31 日期連結自己資本計算書

2024 年 7 月 31 日期および 2023 年 7 月 31 日期連結キャッシュ · フロー計算書

資産

流動資産

現金 · 現金同等物

販売可能な証券

受取利息

サイクロからの可換債権

売掛金、信用損失を差し引いて純額#ドルを用意する

2024 年 7 月 31 日と 2023 年 7 月 31 日^{前払金経費その他の経常資産}可換債権、関係者

株式証券投資

流動資産総額

財産と設備、純額

投資 — サイクロ

ヘッジファンド — Hedge Fund

投資 — 3 日目

投資 — その他医薬品

可換債権

グッドウィル

無形資産、純額

現在行われている研究と開発

その他の資産

総資産

負債と権益

流動負債

売掛金

発生経費

転換支払手形

その他流動負債

関係者の都合で

配賦手形

流動負債総額

未発生経費、非経常

支払可能な可換紙幣、非流動紙幣

その他の負債

総負債

引受金とその他の事項

株権

A類普通株、$

パーバル；

連結財務諸表の付記を参照。

株式会社ラファエルホールディングス

連結営業および包括的な明細書 LOSS

(千単位で1株当たりおよび1株当たりのデータは含まれていない)

七月三十一日までの年度

収入.収入

輸液技術

レンタル — 第三者

レンタル — 関連当事者

総収入

費用と経費

輸液技術の収益コスト

一般と行政

研究 · 開発

プロセス中の研究開発費用

減価償却 · 償却

運営損失

利子収入

投資の減損 — その他の医薬品

買収後 3 日目の初期投資損失

発行済有価証券の実現利益

株式証券への投資の実現利益（損失）

株式証券投資の未実現利益

投資収益実績 — Cyclo

投資に対する未実現利益 — Cyclo

サイクロからの可換債権の未実現利益

投資の未実現利益 — ヘッジファンド

コーナーストーンからの債権回収

利子費用

その他の収入

所得税前の経営赤字が続く

所得税から利益を得る

3 日目の損失の株式

連結純損失継続営業

営業終了（注 14 ）

520 物件関連事業廃止による損失

520 資産の処分利益

非持続経営の収入

合併純損失

非持株権益は純損失を占めなければならない

ラファエルホールディングスに起因する純損失。

その他総合損失

合併純損失

発行済有価証券の未実現利益（損失）

外貨換算調整

総合損失

非持株権に帰属できる総合的な損失

ラファエルホールディングスに起因する包括損失。

普通株主に帰属する 1 株当たり利益（損失）

基本的で希釈されています

継続的に運営する

生産経営を停止する

1 株当たり基本損失と希釈損失の合計

1 株当たり利益（損失）の計算に使用する加重平均株式数

基本および希釈

連結財務諸表の付記を参照。

株式会社ラファエルホールディングス

合併権益表(単位：千、共有データを除く)

2024 年 7 月 31 日終了普通株式シリーズ A

普通株式シリーズ Bその他の内容

積算その他

在庫株

株

金額

株

金額

支払済み

資本

累積

赤字

総合的

収入

非制御

利益

クラス b 株式

金額

総株

2023 年 8 月 1 日の残高

純損失

株式報酬

給与税の源泉徴収

証券売却可能な未実現収益

ラファエルメディカルデバイスズ会員ユニットの売却

デイ 3 買収の非支配権益

在庫株を購入する

RP ファイナンス統合の利益

コーナーストーン買収による出資済

コーナーストーン買収による非支配権益

RP ファイナンスの統合による非支配権益

コーナーストーンへの RP ファイナンスの投資廃止

Levco の解散

外貨換算調整

バランス at

2024 年 7 月 31 日

連結財務諸表の付記を参照。

株式会社ラファエルホールディングス

合併権益表

(単位：千、共有データを除く)

2023 年 7 月 31 日期末

普通株

シリーズ A

普通株式、 シリーズ Bその他の内容 支払済 累積

累積

他にも

総合的

非制御性合計株

金額

株

金額

資本

赤字.赤字

収入.収入

利益．

株式会社

2022 年 8 月 1 日の残高

純損失

株式報酬

制限株の没収

給与税の源泉徴収

販売可能有価証券の未実現損失

LipoMedix の追加所有権を取得

外貨換算調整

2023 年 7 月 31 日残高

連結財務諸表の付記を参照。

株式会社ラファエルホールディングス

統合現金フロー表

(単位：千)

七月三十一日までの年度

事業活動

合併純損失

減算：事業廃止による収益

経営赤字を続ける

連結純損失と営業活動使用純現金の調整

減価償却 · 償却

財産と設備を売却する収益

投資の純未実現利益 — ヘッジファンド

株式有価証券の未実現利益

株式証券投資の実現損失

発行済有価証券の実現利益

販売可能有価証券の割引の償却

投資の減損 — その他の医薬品

買収後 3 日目の初期投資損失

株式投資の実現利益 — サイクロ

株式投資の未実現利益 — サイクロ

サイクロからの可換債権の未実現利益

コーナーストーンからの債権回収

プロセス中の研究開発費

事業の解散による利益

3 日目の損失の株式

不良支出

株式報酬

買収および事業廃止による影響を除いた資産 · 負債の変更

売掛金

受取利息

前払金経費その他の経常資産

その他の資産

売掛金と売掛金

その他流動負債

関係者の都合で

その他の負債

継続業務における純現金使用額

廃止事業に使用された純現金

経営活動のための現金純額

投資活動

財産と設備を購入する

販売可能な証券を買う

発行済有価証券の売却収益及び満期

3 日目の特許販売の収益

無形資産を購入する

株式有価証券の売却収益

サイクロからの可換社債発行

可換債権の発行、関係者

3 日目の投資購入

Cyclo への投資の購入

可換債券の発行

3 日目手形発行

投資収益 — その他医薬品

株式証券を購入する

3 日目の買収で取得した現金（現金支払を除く）

コーナーストーン買収で取得した現金（現金支払を除く）

ヘッジファンドからの収益

継続経営のための投資活動の現金純額

520 物件売却収益 — 営業終了

520 物件売却の取引費用の支払 — 営業終了

廃止事業の投資活動による純現金

投資活動が提供する現金純額

資金調達活動

配賦手形による元本支払い

従業員税の源泉徴収株式に関する税金の支払

在庫株を購入する

ラファエル · メディカル · ディバイザスの会員ユニット売却による収益

継続事業の資金調達活動に使用した純現金

520 件の売却に伴う債権の支払 — 営業終了

廃止事業の資金調達活動に使用された純現金^{資金調達活動に使用された純現金}為替レート変動が現金及び現金同等物に与える影響^{現金と現金等価物の純減少}現金と現金等価物、年明け

現金と現金等価物、年末非現金補足開示LipoMedix の追加所有権を取得RFL 信用ラインのコーナーストーン普通株式への転換

2023 年手形をコーナーストーン普通株式に転換

コーナーストーン買収に対する非支配権益の認識

RP ファイナンスの連結における非支配権益の認識（除去後）^{RP ファイナンスの連結利益は、取引の関係者性質による追加資本金の調整（除去除外）として計上されます。}機器と引き換えに受け取った非現金対価^{3 日目の取得の対価に含まれる 3 日目の手形に対する元本及び未払利子の取り消しについて}連結財務諸表の付記を参照。^{株式会社ラファエルホールディングス}アメリカ合衆国 — デラウェア州

Barer Institute， Inc.

アメリカ合衆国 — デラウェア州^{ヒルビュー · アベニュー · リアルティ}アメリカ合衆国 — デラウェア州^{ヒルビュー · アベニュー · リアルティ LLC}アメリカ合衆国 — デラウェア州

ラファエル · メディカル · ディバイズ、 LLC

アメリカ合衆国 — デラウェア州

レフコ製薬株式会社

イスラエル

ファーバー · パートナーズ LLC

アメリカ合衆国 — デラウェア州

ファーマホールディングス、 LLC

アメリカ合衆国 — デラウェア州

株式会社リポメディックス製薬（注 9 ）^{イスラエルの}Altira Capital & Consulting， LLC

アメリカ合衆国 — デラウェア州^{CS ファーマホールディングス（注 3 ）}連結財務諸表への注記

識別可能なVIEの正味額買収基盤に関する確認資産と負債は経営陣の初歩的な推定に基づいている適用することができますそのため、公正価値は、ASC 820で定義されている公正価値概念に基づいて決定されるべきである

公正価値計量公開しています

ASC 810，(1)支払対価の公正価値，(2)非持株権の公正価値，及び(3)報告の以前持っていた権益金額(千単位)：

代償を支払う公正価値

RFL与信限度額の公正価値

2023年本チケット公正価値

現金で値段を合わせる

(I)支払われた対価の公正価値総額

(二)非持株権益の公正価値137 (3)以前保有していた権益の報告価値ラファエロは敷石Dシリーズの優先株に興味を持っていた。 Cornerstone再編ではCornerstone普通株式に変換され、以前保有していたCornerstone資本を代表します。これはその報告書に含まれる金額、または#ドルだ2023次の表は以下の規定により提供される ASC 805(千単位)：取得した資産 · 負債現金 · 現金同等物

前払金経費その他の経常資産

財産と設備

その他の資産

買収した知的財産権の研究開発

売掛金

発生経費

Cシリーズ変換可能チケット、短期部分

関係者の都合で

その他流動負債

Cシリーズの転換可能なチケット、長期部分

債権者に対処し、非流動

修正されたRPF信用限度額その他の負債^合計ASC内部の計算による 810.Cornerstoneが最初に統合された場合、損益は確認されていません。同社が発生した取引コストは#ドル千人. 2024年7月31日現在の年次では、相談料、法律費、会料金、その他の専門費用が一般和とされている。礎石再編、礎石買収、RP財務統合の一部としての行政費用。同社は以下の金額の収益を確認した。 $^{Cornerstoneの売掛金の準備金を販売しています。この準備金は会社が全額準備しています。
データイベント。この受取残高はその後、合併においてCornerstoneから得られた対応残高と相殺される
Cornerstone買収事項には，関連先の買収資産残高および負担する負債を計上する.}株式会社ラファエルホールディングス連結財務諸表への注記

知的財産権の研究開発を重視するため、同社は利得法における多期超過利得法(“MPEG”)である.この方法は収入実現コストを考慮した後，Cornerstoneの資産による予想運営キャッシュフロー，および適切な割引率は、投資資本に関する時間的価値とリスクを反映する。買収した知的財産権研究開発代表Cornerstone 腫瘍学に重点を置いた薬物に関する研究·開発活動，利用を目指している正常な細胞と癌細胞です

知的財産権は基幹会社の研究開発資産ですそれは進行中だが、まだ完成されておらず、代替用途がない。Cornerstoneの買収が計上されたため買収が企業のVIEでない場合には，他の選択なしに買収した知的財産権研究開発資産の公正価値を決定した将来の使用は買収の日に知的財産権研究開発費を計上しなければならない。

会社はCornerstoneの責任を負いました改訂されたRPF信用限度額下のRP Financeは、敷石買収における公正価値およびRP Financeの売掛金を買収する修正されたRPF信用限度額に基づいて、RP財務合併における公正な価値でCornerstoneから得られる。これらの会社間の金額は合併で淘汰される。会社は礎石負債の公正価値とRP Financeの売掛金を合併する RPF信用限度額を2028年5月31日満期の金額に改訂し、それぞれ総合とした。改訂されたRPF信用限度額推定期間内の経営報告書と総合損失。

Cornerstoneの債権者には法的根拠がない会社の一般信用に対する請求権。

連結財務諸表には締め切り後の礎石買収の結果。礎石は以下の期間には何の収入も生じていない締め切りは2024年7月31日です。礎石銀行は純損失#ドル

100 万ドルのうち

100万ドルは非持株権益は、締め切りから2024年7月31日まで、当社の総合を含む 2024年7月31日までの年度経営報告書と全面赤字。基幹会社の経営実績には知的財産権研究開発が含まれています費用$

600万ドルは、買収された知的財産権研究開発資産と関係があり、将来的には他の用途がなく、この実体に低く抑えられている。

RP財務を統合する

RP Finance、同社が所有している実体 A^{%持分(以前はラファエロの持分方法として投資入金されていました)であって、メンバーに関連するエンティティ
ハワード·ジョナス家のメンバーは}%持分、基礎を持つ債務および持分投資(含む) 会社の

Cornerstoneの持分率)。礎を買収すると同時に，会社は再評価した RP Financeとの関係やCornerstone再構成とそれによるCornerstone買収によって決定された RP Financeは依然としてVIEであり、会社は現在会社が持っているRP Financeの主な受益者とされている RPFクレジットの償還能力を制御することは，RP Financeの経済表現に直接影響する.だから、 Cornerstoneを買収したため、会社はRP Finance(“RP Finance統合”)を統合した。♪the the the RP財務合併は、米国公認会計基準に基づいてRP FinanceとしてのビジネスではないVIE買収と表記される米国公認会計基準による企業の定義に合致しない。ASC 810によれば、初期統合 VIEは商誉が確認されるべきではなく、購入者は(A)差額の損益を確認しなければならない (I)支払われた任意の対価の公正価値、(Ii)任意の非持株権の公正価値、および(Iii)任意の従来保有していた権益、及び(B)VIE確認及び計量の確認可能資産及び負債純額 ASC 805を使用する。^{次の表は以下の規定により提供される
ASC 810，(1)支払対価の公正価値，(2)非持株権の公正価値，および(3)報告の
以前持っていた権益金額(千単位)：}(I)支払われた対価の公正価値(二)非持株権益の公正価値

(3)以前保有していた権益の報告価値

第(I)，(Ii)及び(Iii)項の和

ラファエロは

RP Financeの株式の%では RP Finance合併前に持分方法として投資入金し、以前保有していたCornerstone権益を代表するこれはその報告書に含まれる金額、または#ドルだ

株式会社ラファエルホールディングス

連結財務諸表への注記

次の表は以下の規定により提供される ASC 810、ASC 805に従って確認および計量されたVIEに従って資産および負債の正味額(金額)を識別することができる千単位)：

Cornerstoneの発行済み株式と発行済み株式の%を持ち、一定の統治権を持っている。おおむね

会社の子会社CS Pharmaが所有している発行済み株式と発行済み株式の割合

%の株式は会社の子会社Pharma Holdings。

礎が再構築される前に会社は CornerstoneがVIEであることが確認された；しかし、会社はそれが主要な受益者ではないと判断した。礎の活動を指導する権利があり，これらの活動が礎石の経済表現に最も影響を与える。また、 Cornerstoneが保有する権益はDシリーズ転換可能優先株であり、実質的な普通株を代表するものではない。

株式会社ラファエルホールディングス

連結財務諸表への注記

2024年3月13日に礎が完成しました返済されていない債務と株式を再編する。敷石再構成に関するより多くの情報は、付記3を参照されたい取引する。

注5-RP Finance、LLCに投資

2020年2月3日、礎石が入る RP Financeとのクレジット限度額(“RPFクレジット限度額”)は、$までの循環承諾額を提供します

資金を提供する臨床試験と他の資金需要。RPFへのクレジット加入については，RP Financeに敷石を配布した

基軸普通株を代表する株式(逆株式分割後)

礎石普通株式発行済み株式と発行済み株式の割合株式は、RPF信用限度額に規定された逆希釈によって保護された利益を受ける。

その会社は所有している

%の持分 RP Financeでは，ハワード·ジョナス家族に関する実体が持っている

RP Financeの持分の割合と残りのは

RP Financeの%持分はCornerstoneの他の株主が所有している。

RP Financeは総額$を累積しました

RPFクレジット限度額に基づいてCornerstoneに100万ドルを提供し、同社は累計資金合計$を提供しています

百万ドルそれを使った

RP Financeにおける%所有権の権利。データイベントのため、供給された金額はすべて予約された。

千元と累算利息$

LipoMedexが2021年3月に発行した当社を受益者とする手形に。このローンの満期金額は約 $

LipoMedexの総買収価格は100万ドルで、会社の現金で約$を支払いました

100万ドルを交換します上には

購入した株。株式を購入したため、会社のLipoMedexに対する所有権は約10%に増加しました

%、非持株資本は約

%です。同社は約$を記録しています

千円で帳簿の金額を調整する非持株権を差し引くことで、LipoMedex純資産の中で会社が増加した所有権権益を反映する。

2023年2月9日、当社は締結しました LipoMedexと締結した株式購入契約

普通株価格は$

1株当たりの総購入価格は $

到着約

%です。同社は約$を記録しています

千元調整額

2024年7月31日現在、当社は保有しています

パーセント. LipoMedexは発行された普通株式の一部と発行され、2018年度第2四半期からLipoMedexを統合した。

株式会社ラファエルホールディングス

連結財務諸表への注記

注10-3日目のラボ社に投資します。

累計対価

3 日目の普通株式の約束手形交換

過去保有権益の公正価値

総掛け値を買う

同社は以前を再測定した 3 日目の取得直前の 3 日目に持分を保有し、以前は持分法で会計されていた。公正価値（購入価格に数値の比率を乗じた暗黙の企業価値を用いて決定する）以前に保有していた株式は、買収日時点での総株式に相当し、 $

100 万ドルが記録されました買収後の 3 日目の初期投資損失として事業の損失と包括的損失。

以下の表は予備的な概要である。 3 日目の取得において取得した資産及び負債の公正価値

(単位：千)

1 月 2 日

現金 · 現金同等物

売掛金

前払金経費その他の経常資産

財産と設備

グッドウィル

無形資産を識別することができる

売掛金

発生経費

配賦手形

取得純資産の総公正価値

Less ：非支配権益

総未実現利益

未実現（損失）

公正価値

(単位：千)

販売可能な証券：

アメリカ国庫券

アメリカ合衆国機関債

企業債

売却可能証券総額

2023年7月31日

償却原価

未実現利益総額

未実現（損失）

フェアバリュー

(in数千人）

販売可能証券：

アメリカ合衆国財務省債券

企業債

販売可能有価証券総額

2024 年 7 月 31 日期は、当社はおよそ $再分類

廃止事業による総収益

事業廃止による原価 · 経費：

一般と行政

減価償却 · 償却

生産停止損失

利子費用

事業廃止による損失

廃止事業の処分による利益

非持続経営の収入

廃止業務の処分利益およそ $

約 100 万ドルの総収益から得られました

520 プロパティの売却から百万，より少ない 520 件の資産の帳簿価値は約 $

約 100 万ドル純です

取引コストの百万と約 $の償却

延期家賃収入の 100 万ドルです

注記 15 公正価値の測定

公正価値は価格として定義されます測定時の市場参加者間の秩序ある取引において資産を売却するために受け取ったり、負債を移転するために支払ったりすることデートだ公正価値指標の比較可能性を高めるために、以下の階層は、評価方法論へのインプットを優先します。公正価値の測定に使われます

● ●

レベル一

- 引用価格同じ資産または負債のアクティブ市場において

サイクロからの可換債権

サイクロへの投資 — ワラント

ヘッジファンド

可換債権

合計

2023年7月31日

レベル一

レベル 2

合計

(単位：千)

資産：

発行済有価証券 — 社債

発行済有価証券 — アメリカ合衆国財務国債

株式証券投資

Cyclo Therapeutics 株式会社への投資- 普通株式

Cyclo Therapeutics Inc. への投資- ワラント

ヘッジファンド

可換債権、関係者

合計

2024 年 7 月 31 日、 2023 年 7 月 31 日現在、当社は、経常的に公正価値で計量された負債を有していません。

株式会社ラファエルホールディングス

連結財務諸表への注記

以下の表は、変更の概要です。重要な観測不能な入力（レベル 3 ）を用いて適正価値で繰り返し測定される資産の適正価値。

七月三十一日までの年度

(単位：千)

期初残高

ヘッジファンド投資からの撤退

ヘッジファンドの未実現利益

サイクロワラントへの投資

サイクロワラントの未実現損失

可換債権の資金調達、関係者

可換債権の未実現利益関係者

AOCI から解除された可換債権の実現損失関係者

可換債権の換算 · 関連当事者

可換債権の資金調達

可換債券の公正価値の変動

Cyclo Convertible Note I の資金調達

Cyclo Convertible Note II の資金調達

サイクロ転換社債 I 発行の未実現利益

7 月 31 日

割引係数

換算価格

配当額

無リスク金利

株価.株価

用語.用語

年間

株式変動性

ブラック · ショールズ · マートンコールバリュー

会社は $

と $^{7 月 31 日現在、
2024 年と 2023 年 7 月 31 日にそれぞれ流動性のない他の事業体への有価証券への投資について
投資 — 添付の連結バランスシートにおけるその他の医薬品。投資は年末に清算された。
2024 年 7 月 31 日。投資は ASC 321 に基づいて会計されました。}投資 — 株式証券

測定の代替手段を使ってガイダンスで定義されています

その他の金融商品の公正価値

会社の公正価値の推定その他の金融商品は利用可能な市場情報やその他の適切な評価方法を使用して決定されましたしかし、かなり公正価値の推定を行うためにこれらのデータを解釈する判断が必要ですしたがって、推計は必ずしも指示的ではない。現在の市場取引所で実現または支払われる金額です

株式会社ラファエルホールディングス

連結財務諸表への注記

当社の金融商品は貿易売掛金貿易買掛金関係者からの支払金売掛金の記録済残高、買掛金と関係者に対する買掛金は、短期的な性質から公正価値に近似しています。

注記 16 — 受取可能な勘定科目

売掛金の構成は以下のとおりです。

7 月 31 日

(単位：千)

売掛金 — 第三者

売掛金関連先

信用損失引当金の削減

売掛金純額

注釈 17 — 財産と設備

財産と設備は：

7 月 31 日

(in数千人）

建築と改善

機械と設備

その他

減価償却累計と償却を差し引く

合計

その他の財産設備は機器や各種コンピュータハードウェア

減価償却費 · 償却費財産と設備は約 $

千ドルと

2024 年 7 月 31 日と 2023 年 7 月 31 日を末日とする年度はそれぞれ千円です

株式会社ラファエルホールディングス

連結財務諸表への注記

注釈 18— 善意及び無形資産

グッドウィル

以下は概要である。報告セグメント別の親善は

2024 年 7 月 31 日

医療保健

不動産.不動産

注入技術

統合

(単位：千)

2023 年 7 月 31 日現在の残高

3 日目取得

2024 年 7 月 31 日現在の残高

無形資産

以下は概要である。無形資産

2024 年 7 月 31 日：

加重平均残存耐用年数（年）

総帳簿金額

累計償却する

純運搬量

(単位：千)

知的財産権

競業禁止協定

無形資産総額

償却費今後 5 年間以降の無形資産の費用は、終了年度について以下の通り見積もられています。

年度終了 7 月 31 日

(in数千人）

その後…

合計

償却費無形資産の総額は

2024 年 7 月 31 日を末日とする年度の減価償却費に含まれています。連結営業決算書と包括的損失

注記 19 — 1 株当たり損失

1 株当たり基本損失は純割算で算出します当社のすべての普通株主に帰属する損失は、すべての普通株主の株式数の加重平均によって適用期間中の在庫残高。1 株当たり希釈損失には、ストックオプションなどの希釈可能な有価証券が含まれます。未投資制限株、普通株式購入令状その他の可換証券抗希釈剤。

以下の表は、会社の概要です。希釈効果が反希釈効果であるため、 1 株当たり希釈損失の計算から除外されている潜在希釈効果のある有価証券。

株式会社ラファエルホールディングス

連結財務諸表への注記

年度終了

7 月 31 日、

ストック · オプションの行使時に発行可能な株式

制限付き株式の譲渡による発行株式

1 株当たり希釈損失計算は等しい 2024 年 7 月 31 日期および 2023 年 7 月 31 日期における 1 株当たり基本損失は、これらのすべての事業継続による純損失を計上しました。制限付き株式の譲渡とストックオプションの行使が想定される影響は希薄化防止でした

以下の表は、基本と希釈をまとめたものです。 1 株当たり損失計算（株と 1 株当たり金額を除く千単位）：

年度終了

7 月 31 日

分子：

経営純損失を続ける

非持株権益は純損失を占めなければならない

継続営業の純損失の分子

廃止されたオペレーションの分子

ラファエルホールディングスに起因する純損失。

分母：

加重平均基本株式 · 希釈株式発行済

普通株主に帰属する 1 株当たり損失

注 22 — 所得税

継続業務による損失の構成要素 3 日目の損失における株式を含む所得税前は以下の通りです。

ここ数年で

7 月 31 日、

(単位：千)

国内

外国

所得税前損失

所得税の恩恵に記載されている連結営業決算表及び包括損失は以下のとおりです。

For the Years Ended

7 月 31 日

(in数千人）

現在：

外国人

連邦制

州

現在の給付総額

延期：

外国人

連邦

州

繰延給付総額

所得税から利益を得る

会社の和解について 2024 年 7 月 31 日および 7 月 31 日を末日とする事業継続による税引前損失に対する実効税率および法定税率 2023 年の予定は以下の通り。

ここ数年で

7 月 31 日

(単位：千)

アメリカ合衆国の法定所得税率

常設商品 — コーナーストーン買収

引導できない項目

州所得税

海外業務

その他

コーナーストーン買収による繰延税金資産への影響

コーナーストーン買収によるコーナーストーン投資の認識消去

州 NOLs の販売

評価免除額を変更する

所得税の恩恵

2024 年 7 月 31 日を末日とする年度は、同社は約 $

同社の 2020 — 2022 年のニュージャージー州 NOLs の販売から 100 万ドル

ニュージャージー州テクノロジービジネス税証明書移転プログラムを通じて 100 万ドルを支払います2023 年 7 月 31 日期は、当社が収益は約 $

同社の 2019 ニュージャージー NOLs の販売から 1000 万ドルを合計

100 万通ニュージャージー州テクノロジービジネス税証明書転送プログラム。

繰延所得税は純税効果を反映する財務報告目的の資産 · 負債の計上額と財務報告目的で使用される金額の一時的な差異所得税目的です繰延税金資産の実現は、将来の利益（もしあれば、その時期と金額）に依存します。不確かです

株式会社ラファエルホールディングス

連結財務諸表への注記

会社の重要な構成要素繰延税金資産と繰延税金負債は以下の通りです。

はい

7 月 31 日、

(単位：千)

繰延税金資産：

純営業損失が繰り越す

未実現損失

不確実な税務ポジションを差し引いた R & D クレジット

略称は SEC 。174 研究 · 実験費

株式報酬

減価償却

準備金 · 未払金

慈善寄付金

繰延税項目総資産

推定免税額を差し引く

繰延税金資産総額から推定免税額を差し引く

繰延税金負債：

未実現収益

償却

繰延税金負債総額：

繰延税金負債，純額

同社はその可能性を評価し続けている繰延税金資産の現金化、繰延税金資産の帳簿金額を推定手当に調整するある程度、繰延税金資産が将来現金化される可能性が高い。当社は評価しています将来的に繰延税金資産を実現する可能性は、最近課税管轄区で得られた累積収益を含む。将来の課税所得額あるいは損失の予想は、会社は納税申告の繰越期間、その他に用いることができます。関連する要素。

超過分のために設立された繰延税金資産被投資者の海外納税基盤は、被投資者が業務により国内子会社になった場合には再確認しない合併や合併は、繰延税金資産が確認資格を満たしていない可能性が高いからだ。年末までに年度を終える 2024年7月31日、会社は礎石と3日目までの投資に関する未実現損失繰延税金資産の確認を取り消したそれぞれ礎石買収と3日目買収の結果とした。

2024年7月31日までの会社ベースの赤字の歴史と将来の赤字の評価について、経営陣は、将来の課税収入の方が可能であると考えている繰延税金資産を達成するのに十分ではないだろう。したがって、繰延税金資産に推定免税額が適用される。

12月以降に始まった課税年度が発効する 2021年31日、納税者は研究と実験(R&E)付帯費用と考えられるいかなる費用を資本化することを要求された。 IRC第174条に基づく活動。納税者は従来IRC第174条に基づいてこれらの費用を差し引くことを選択することができたが、12月には 2017年減税·雇用法案は、2021年12月31日以降の納税年度内に研究開発費の資本化と償却を要求している。アメリカの研究開発活動に関する費用は1年以内に償却しなければならない

-年間期間および発生したR&E費用アメリカ以外の地域では

-年の間。合格した研究活動よりもR&E活動の範囲が広い IRC第41条(研究税控除に関する)に基づいて考慮されている。

2024年7月31日現在、当社は連邦、国と海外の純営業損失は#ドルに転約した

百万、ドル

百万ドルとドル

それぞれ100万ドルです連邦制. 純営業損失繰越額は#ドルです

百万ドルが満期になり始めた

約$と

何百万人もの不確実な生活しています。納税年度後に生成された連邦NOL繰り越し

営業収入(赤字)

(単位：千)

医療保健

輸液テクノロジー

不動産.不動産

合計

2023 年 7 月 31 日期末

売上高

営業利益（損失）

セグメント別の総資産は、 CODm によって提供またはレビューされません。

地理情報

輸液技術セグメント

輸液技術セグメントの収益は完全に顧客からのものです。アメリカ合衆国に位置しています

不動産セグメント

アメリカ合衆国国外にあるテナントからの収入国家は完全にイスラエルにある関係者から生成された。

これらの非米国顧客からの収益（総額に占める割合）事業廃止による収益を含む収益は以下の通りでした（国別収益は関連施設の所在地）

七月三十一日までの年度

イスラエルに所在するテナントからの収入

資産

純資産 · 設備 · 総資産地理的地域別では以下の通りです

(単位：千)

2022 年 7 月 31 日現在

付与

期限が切れる

キャンセル / 没収

2023 年 7 月 31 日現在

付与

2024 年 7 月 31 日現在

2024 年 7 月 31 日付

加重平均助成日の公正価値 1 件当たり 2024 年 7 月 31 日に付与されたオプションの単位は $

と $

それぞれ。2024 年 7 月 31 日現在、未投資のストックオプションに関連する未認識の補償コストがありました

100 万ドル以上認識されると予想されています次は

2024 年 7 月 31 日から

株式会社ラファエルホールディングス

連結財務諸表への注記

オプション助成金の価値は以下のように計算されます 2024 年 7 月 31 日と 2023 年 7 月 31 日を末日とする年度に付与されたオプションについて、それぞれ以下の仮定を伴う Black—Scholes モデル。

終了した年

7 月 31 日、

リスクフリー金利

予想期間（年）

予想ボラティリティ

期待配当利回り

ラファエロ医療機器会社の株式オプション

ラファエロ医療機器2022年株式インセンティブ当社は2022年5月にこの計画(“RMD 2022計画”)を策定し、採択した。RMD 2022計画の発行許可最高可達

B類普通株は、インセンティブ株式オプション又は制限株式の形態で付与することができる。

ラファエロ医療会社の転換と関係がありますデラウェア州の会社からデラウェア州の有限責任会社までラファエル医療機器会社はラファエル医療機器会社を採用しています 2023年8月、LLC 2023持分インセンティブ計画(RMD 2023計画)。RMD 2023計画最大発行許可

Aクラス単位(“単位”).いくつありますか

2024年7月31日まで、RMD 2023計画により発行可能な単位。

ラファエロ医療機器有限責任会社記録賠償株式奨励の費用は，付与日の評価に基づき，ブラック·スコアモデルを用いたオプションの公正価値である。所期中の期限は、簡略化された方法に従って決定される、すなわち、ホーム部分日および契約期間の平均値である。期限が切れる会社の特定の歴史と隠れ変動率データが不足しているため、予想変動率の推定は主にベースとなっている。似たような上場企業の歴史的変動性ですこれらの分析は比較可能な会社の特徴から来ています選ばれたのは、企業価値と業界における地位、歴史的株価情報が十分に満たされていること株式ベースの報酬の期待寿命。無リスク金利は米国債固定満期日を参考にして決定された残存期間がオプション予想期限に似た国債金利。収益率はゼロと予想されていますラファエル医療会社は設備、有限責任会社は現金配当金を支払ったことがなく、予測可能な未来に現金配当金を支払わないと予想される。

使用した仮定を表にまとめる 2024年7月31日までの年度内にRMD 2023計画により付与された単位の公正価値を計算する

リスクフリー金利

予想期限(年単位)

予想変動率

期待配当収益率

Rafael Medicalのオプション活動の概要設備、有限責任会社は以下の通りである

数量

オプション

重みをつける

平均値

トレーニングをする

価格

重みをつける

平均値

残り

契約書

期間（年）

骨材

内在的価値

(単位：千)

2022 年 7 月 31 日現在

付与

2023 年 7 月 31 日現在

付与

キャンセル / 没収

2024 年 7 月 31 日現在

2024 年 7 月 31 日付

株式会社ラファエルホールディングス

連結財務諸表への注記

加重平均助成日の公正価値 1 件当たり 2024 年 7 月 31 日に終了した年度における RMD オプション助成金の単位は $

2022 年 7 月 31 日現在

付与

既得

キャンセル / 没収

2023 年 7 月 31 日現在

付与

ベスト

2024 年 7 月 31 日時点の未出資株式

2024 年 7 月 31 日現在、 $

百万認識される見込みの未投資株式報酬取極に関連する未認識報酬費用の合計次は

4 年

株式報酬費用の概要当社の株式インセンティブプランの概要は以下の通りです（千単位）。

終了した年

7 月 31 日

一般と行政

研究 · 開発

一般および行政における RSU の没収

研究開発中の RSU の没収

株式ベース純報酬費用

証券購入協定

「 Cyclo Convertible Note V 」（サイクロコンバーチブルノート V ）をラファエルに

現金で 100 万サイクロコンバーチブル Note V 満期

2024 年 12 月 21 日に

利子も負担しています

年率% 、満期に支払われる。サイクロの元本額転換ノート V は、ラファエルの選択によりサイクロ普通株式に転換可能です（ただし、ラファエルが選択しないことを条件とします。転換社債（または以前の融資に関連して Cyclo が Rafael に発行した以前の転換社債）を転換する。そのような転換、ラファエルは有益なより多くの所有権を持つ

Cyclo 普通株式の% ）、および特定の他のイベントで自動的に。

また、 2024 年 10 月 8 日、 Cyclo Convertible Note I および Cyclo Convertible Note II の満期日を 2024 年 12 月 21 日に修正しました。

偽

会計年度

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rfl： SeriesCConvertibleNotesMember

us—gaap： CommonStockMember

rfl：コーナーストーンメンバー

us—gaap： CommonStockMember

rfl：コーナーストーンメンバー

rfl：コーナーストーンメンバーの再構築

us—gaap： CommonStockMember

rfl：コーナーストーンメンバー

アメリカ-公認会計基準：シリーズDPrefredStockMember

rfl：コーナーストーン買収メンバー

rfl： RPFinance メンバーの統合

rfl：コーナーストーンメンバー

rfl： RPFinanceLLC メンバー

us—gaap：シリーズ個人情報ビジネス買収メンバー

us—gaap： CommonStockMember

us—gaap： CommonStockMember

rfl： VIEMember

rfl：コーナーストーンメンバー

rfl：製薬ホールディングス LLC メンバー

アメリカ-公認会計基準：シリーズDPrefredStockMember

rfl： CSPharmaHoldingsLLC メンバー

us—gaap：シリーズDPreferredStockMember

rfl：製薬ホールディングス LLC メンバー

rfl： CSPharmaHoldingsLLC メンバー

rfl：製薬ホールディングス LLC メンバー

rfl： CSPharmaMember

US-GAAP：LineOfCreditMember

us—gaap： LineOfCreditMember

rfl： RPFLineOfCreditMember

rfl： PostReverseStockSplitMember

rfl：製薬ホールディングス LLC メンバー

rfl： HowardJonasMember

rfl： RPFinanceLLC メンバー

us—gaap： LineOfCreditMember

rfl： PostReverseStockSplitMember

us—gaap： CommonStockMember

rfl： HowardJonasMember

rfl：リポメディックス製薬株式会社メンバー

us—gaap： WarrantMember

rfl： LipoMedixSPAMember

us—gaap： WarrantMember

rfl：リポメディックス製薬株式会社メンバー

rfl ： LipoMedixSPAMember

rfl： LipoMedixSPAMember

rfl：リポメディックス製薬株式会社メンバー

rfl：初期投資日 3 メンバー

rfl： EquityMethodAndJointVentures メンバー

rfl：初期投資日 3 メンバー

us—gaap： CommonStockMember

rfl： DayThreeNoteOneMember

rfl ： DayThreeNoteTwoMember

rfl： DayThreeNoteThreeMember

rfl： DayThreeNoteFourMember

srt ： MinumMember

srt ： MaximumMember

rfl： DayThreeAcquisitionMember

rfl： AcquisitionOfDayThreeMember

rfl： AcquisitionOfDayThreeMember

srt：シナリオ予測メンバー

rfl： AcquisitionOfDayThreeMember

rfl ： AcquisitionOfDayThreeMember

rfl： AcquisitionOfDayThreeMember

rfl ： AcquisitionOfDayThreeMember

rfl：ラファエルホールディングス IncMember

rfl ： AcquisitionOfDayThreeMember

rfl： InvestmentInCycloTherapeuticsInc メンバー

rfl ： MayWarrantMember

rfl： InvestmentInCycloTherapeuticsInc メンバー

rfl ： ReplacementWarrantMember

rfl： InvestmentInCycloTherapeuticsInc メンバー

us—gaap： WarrantMember

rfl： InvestmentInCycloTherapeuticsInc メンバー

us—gaap： WarrantMember

rfl： InvestmentInCycloTherapeuticsInc メンバー

us—gaap： WarrantMember

rfl： CycloConvertibleNoteIMember

rfl： CycloConvertibleNoteIIMember

rfl： CycloConvertibleNoteMember

アメリカ-公認会計基準：転換可能な公有株式メンバー

rfl： CycloConvertibleNoteIMember

rfl： CycloMember

rfl： CycloConvertibleNoteMember

rfl： CycloConvertibleNoteIIMember

rfl： USTreasuryBillsMember

rfl： USAgencyMember

rfl：社債メンバー

rfl： USTreasuryBillsMember

rfl：社債メンバー

rfl：企業債券メンバー

rfl：レンタルサードパーティメンバー

rfl：レンタル関連パーティー会員

us—gaap： ParkingMember

アメリカ公認会計基準：ヘッジファンドのメンバー

srt ： MinumMember

srt ： MaximumMember

us—gaap： FairValueInputsLevel1 メンバー

us—gaap：コーポレート債券証券会員

us—gaap： FairValueInputsLevel2Member

us—gaap：コーポレート債券証券会員

us—gaap： FairValueInputsLevel3Member

us—gaap：コーポレート債券証券会員

us—gaap： FairValueInputsLevel1 メンバー

us—gaap ： USTreasuryBillSecuritiesMember

us—gaap： FairValueInputsLevel2Member

us—gaap ： USTreasuryBillSecuritiesMember

us—gaap： FairValueInputsLevel3Member

us—gaap ： USTreasuryBillSecuritiesMember

us—gaap： FairValueInputsLevel1 メンバー

us—gaap： CommonStockMember

us—gaap： FairValueInputsLevel2Member

us—gaap： CommonStockMember

us—gaap： FairValueInputsLevel3Member

us—gaap： CommonStockMember

us—gaap： FairValueInputsLevel1 メンバー

us—gaap：転換債務メンバー

us—gaap： FairValueInputsLevel2Member

us—gaap：転換債務メンバー

us—gaap： FairValueInputsLevel3Member

us—gaap：転換債務メンバー

us—gaap：転換債務メンバー

us—gaap： FairValueInputsLevel1 メンバー

us—gaap： WarrantMember

us—gaap： FairValueInputsLevel2Member

us—gaap： WarrantMember

us—gaap： FairValueInputsLevel3Member

us—gaap： WarrantMember

us—gaap： FairValueInputsLevel1 メンバー

アメリカ公認会計基準：ヘッジファンドのメンバー

us—gaap： FairValueInputsLevel2Member

us—gaap： HedgeFundsMember

us—gaap： FairValueInputsLevel3Member

us—gaap： HedgeFundsMember

us—gaap： FairValueInputsLevel1 メンバー

アメリカ公認会計基準：転換可能債務証券メンバー

us—gaap： FairValueInputsLevel2Member

us—gaap：転換債務証券会員

us—gaap： FairValueInputsLevel3Member

us—gaap：転換債務証券会員

us—gaap： FairValueInputsLevel1 メンバー

us—gaap： FairValueInputsLevel2Member

us—gaap： FairValueInputsLevel3Member

us—gaap： FairValueInputsLevel1 メンバー

us—gaap：コーポレート債券証券会員

us—gaap： FairValueInputsLevel2Member

us—gaap：コーポレート債券証券会員

us—gaap： FairValueInputsLevel3Member

us—gaap：コーポレート債券証券会員

us—gaap： FairValueInputsLevel1 メンバー

us—gaap ： USTreasuryBillSecuritiesMember

us—gaap： FairValueInputsLevel2Member

us—gaap ： USTreasuryBillSecuritiesMember

us—gaap： FairValueInputsLevel3Member

us—gaap ： USTreasuryBillSecuritiesMember

us—gaap： FairValueInputsLevel1 メンバー

us—gaap：株式証券会員

us—gaap： FairValueInputsLevel2Member

us—gaap：株式証券会員

us—gaap： FairValueInputsLevel3Member

us—gaap：株式証券会員

us—gaap：株式証券会員

us—gaap： FairValueInputsLevel1 メンバー

us—gaap： CommonStockMember

us—gaap： FairValueInputsLevel2Member

us—gaap： CommonStockMember

us—gaap： FairValueInputsLevel3Member

us—gaap： CommonStockMember

us—gaap： CommonStockMember

us—gaap： FairValueInputsLevel1 メンバー

us—gaap： WarrantMember

us—gaap： FairValueInputsLevel2Member

us—gaap： WarrantMember

us—gaap： FairValueInputsLevel3Member

us—gaap： WarrantMember

us—gaap： FairValueInputsLevel1 メンバー

アメリカ公認会計基準：ヘッジファンドのメンバー

us—gaap： FairValueInputsLevel2Member

アメリカ公認会計基準：ヘッジファンドのメンバー

us—gaap： FairValueInputsLevel3Member

us—gaap： HedgeFundsMember

us—gaap： FairValueInputsLevel1 メンバー

アメリカ公認会計基準：転換可能債務証券メンバー

us—gaap： FairValueInputsLevel2Member

us—gaap：転換債務証券会員

us—gaap： FairValueInputsLevel3Member

us—gaap：転換債務証券会員

us—gaap： FairValueInputsLevel1 メンバー

us—gaap： FairValueInputsLevel2Member

us—gaap： FairValueInputsLevel3Member

us—gaap： FairValueInputsLevel3Member

us—gaap： FairValueInputsLevel3Member

us—gaap： FairValueInputsLevel3Member

srt ： MinumMember

rfl： PricePerShareMember

srt ： MaximumMember

rfl： PricePerShareMember

srt ： MinumMember

アメリカ-公認会計基準：練習価格を測定するメンバー

srt ： MaximumMember

us—gaap：測定入力行使価格メンバー

srt ： MinumMember

us—gaap：測定入力価格ボラティリティメンバー

srt ： MaximumMember

us—gaap：測定入力価格ボラティリティメンバー

us—gaap：測定入力価格ボラティリティメンバー

srt ： MinumMember

us—gaap：測定入力リスクフリー利息レートメンバー

srt ： MaximumMember

us—gaap：測定入力リスクフリー利息レートメンバー

us—gaap：測定入力リスクフリー利息レートメンバー

srt ： MinumMember

アメリカ-アメリカ公認会計基準：市場性メンバーを低減するために投入割引を測定する

srt ： MaximumMember

us—gaap： MeasurementInputDiscountForLackOfMarketetability メンバー

アメリカ-アメリカ公認会計基準：市場性メンバーを低減するために投入割引を測定する

srt ： MinumMember

US-GAAP：入力期待タームメンバーの測定

srt ： MaximumMember

us—gaap： MeasurementInputExpectedTermMember

rfl： FairValuePerWarrantMember

srt ： MinumMember

rfl： CycloConvertibleNoteIMember

us—gaap：測定入力割引率メンバー

srt ： MaximumMember

rfl： CycloConvertibleNoteIMember

us—gaap：測定入力割引率メンバー

srt ： MinumMember

rfl： CycloConversibleNoteIMember

us—gaap：測定入力割引率メンバー

srt ： MaximumMember

rfl： CycloConversibleNoteIMember

us—gaap：測定入力割引率メンバー

rfl： CycloConvertibleNoteIIMember

us—gaap：測定入力割引率メンバー

rfl： CycloConvertibleNoteIIMember

us—gaap：測定入力割引率メンバー

rfl： CycloConvertibleNoteIMember

us—gaap：測定入力変換価格メンバー

rfl： CycloConvertibleNoteIMember

us—gaap：測定入力変換価格メンバー

rfl： CycloConvertibleNoteIIMember

us—gaap：測定入力変換価格メンバー

rfl： CycloConvertibleNoteIIMember

us—gaap：測定入力変換価格メンバー

rfl： CycloConvertibleNoteIMember

us—gaap：測定入力予想配当率メンバー

rfl： CycloConvertibleNoteIMember

us—gaap：測定入力予想配当率メンバー

rfl： CycloConvertibleNoteIIMember

us—gaap：測定入力予想配当率メンバー

rfl： CycloConvertibleNoteIIMember

us—gaap：測定入力予想配当率メンバー

srt ： MinumMember

rfl： CycloConvertibleNoteIMember

us—gaap：測定入力リスクフリー利息レートメンバー

srt ： MaximumMember

rfl： CycloConvertibleNoteIMember

us—gaap：測定入力リスクフリー利息レートメンバー

srt ： MinumMember

rfl： CycloConvertibleNoteIMember

us—gaap：測定入力リスクフリー利息レートメンバー

srt ： MaximumMember

rfl： CycloConvertibleNoteIMember

us—gaap：測定入力リスクフリー利息レートメンバー

rfl： CycloConvertibleNoteIIMember

us—gaap：測定入力リスクフリー利息レートメンバー

rfl： CycloConvertibleNoteIIMember

us—gaap：測定入力リスクフリー利息レートメンバー

rfl： CycloConvertibleNoteIMember

us—gaap：測定入力シェア価格メンバー

rfl： CycloConvertibleNoteIMember

us—gaap：測定入力シェア価格メンバー

rfl： CycloConvertibleNoteIIMember

us—gaap：測定入力シェア価格メンバー

rfl： CycloConvertibleNoteIIMember

us—gaap：測定入力シェア価格メンバー

srt ： MinumMember

rfl： CycloConversibleNoteIMember

US-GAAP：入力期待タームメンバーの測定

srt ： MaximumMember

rfl： CycloConvertibleNoteIMember

us—gaap： MeasurementInputExpectedTermMember

srt ： MinumMember

rfl： CycloConvertibleNoteIMember

us—gaap： MeasurementInputExpectedTermMember

srt ： MaximumMember

rfl： CycloConversibleNoteIMember

us—gaap： MeasurementInputExpectedTermMember

rfl： CycloConvertibleNoteIIMember

us—gaap： MeasurementInputExpectedTermMember

rfl： CycloConvertibleNoteIIMember

us—gaap： MeasurementInputExpectedTermMember

srt ： MinumMember

rfl： CycloConvertibleNoteIMember

us—gaap：測定入力オプションボラティリティメンバー

srt ： MaximumMember

rfl： CycloConvertibleNoteIMember

us—gaap：測定入力オプションボラティリティメンバー

srt ： MinumMember

rfl： CycloConvertibleNoteIMember^{us—gaap：測定入力オプションボラティリティメンバー}srt ： MaximumMember

100

rfl： CycloConvertibleNoteIMember

us—gaap：測定入力オプションボラティリティメンバー^{rfl： CycloConvertibleNoteIIMember}us—gaap：測定入力オプションボラティリティメンバー

rfl： CycloConvertibleNoteIIMember^{us—gaap：測定入力オプションボラティリティメンバー}srt ： MinumMember

rfl： CycloConversibleNoteIMember

rfl： BlackScholesMertonCallValueMember

srt ： MaximumMember

101

rfl： CycloConvertibleNoteIMember

rfl： BlackScholesMertonCallValueMember

srt ： MinumMember

rfl： CycloConvertibleNoteIMember

rfl： BlackScholesMertonCallValueMember

srt ： MaximumMember

rfl： CycloConvertibleNoteIMember

	rfl： BlackScholesMertonCallValueMember						srt ： MinumMember
	2024			2023			$			%
	rfl： CycloConvertibleNoteIIMember
rfl： BlackScholesMertonCallValueMember	$	(8,338	)	$	(8,794	)	$	456			5	%
srt ： MaximumMember		(3,668	)		(6,312	)		2,644			42	%
rfl： CycloConvertibleNoteIIMember		(89,861	)		—			(89,861	)		100	%
rfl： BlackScholesMertonCallValueMember		(165	)		(15	)		(150	)		(1000	)%
srt ： MinumMember	$	(102,032	)	$	(15,121	)	$	(86,911	)		(575	)%

rfl： CycloConvertibleNoteIIMember

rfl： BlackScholesMertonCallValueMember

srt ： MaximumMemberrfl： CycloConvertibleNoteIIMember

102

rfl： BlackScholesMertonCallValueMemberアメリカ-GAAP：PropertyPlantAndEquipmentMembers

us—gaap：プロパティプラント & 設備メンバーUS-GAAP：改善メンバーの構築と構築

アメリカ-GAAP：機械とデバイスのメンバー

	us—gaap：機械 · 設備会員					SRT：OtherPropertyMember
	2024			2023		$			%
	srt ： OtherPropertyMember
us—gaap：ヘルスケアメンバー	$	355		$	—	$	355			—	%
us—gaap： RealEstateMember		(154	)		—		(154	)		—	%
rfl： InfusionTechnology メンバー		(374	)		—		(374	)		—	%
us—gaap： HealthCareMember		(502	)		—		(502	)		—	%
us—gaap： RealEstateMember	$	(675	)	$	—	$	(675	)		—	%

rfl： InfusionTechnology メンバーus—gaap： HealthCareMember

us—gaap： RealEstateMemberrfl： InfusionTechnology メンバー

us—gaap：知的財産メンバーUS-GAAP：非競争プロトコルメンバ

rfl：株式発行可能行使時株式オプションメンバーrfl：株式発行可能行使時株式オプションメンバー

rfl：株式発行可能 VestingOfRestrictedStock メンバー

rfl：株式発行可能 VestingOfRestrictedStock メンバー

	米国-GAAP：NoteesPayableOtherPayableメンバー						us—gaap： Notes 支払金その他の支払金会員
	2024			2023			$			%
	us—gaap： Notes 支払金その他の支払金メンバー
us—gaap： Notes 支払金その他の支払金メンバー	$	174		$	171		$	3			2	%
us—gaap： Notes 支払金その他の支払金メンバー		108			108			—			—	%
us—gaap： Notes 支払金その他の支払金メンバー		(142	)		(138	)		(4	)		(3	)%
us—gaap： Notes 支払金その他の支払金メンバー		(60	)		(63	)		3			5	%
国/地域：IL	$	80		$	78		$	2			3	%

103

国： IL

国： IL

	srt：最高執行役員メンバー						us—gaap：関連パーティーメンバー
	2024			2023			$			%
	国：米国
rfl： OutsideTheUSMember	$	(102,627	)	$	(15,043	)	$	(87,584	)		(582	)%
rfl：連邦メンバー		2,383			3,253			(870	)		(27	)%
us—gaap：州と地方の税法管轄その他メンバー		—			(334	)		334			100	%
us—gaap：外国税管轄その他メンバー		(1,633	)		—			(1,633	)		(100	)%
rfl： FederalMember		1,772			154			1,618			1051	%
us—gaap：州と地方の税法管轄その他メンバー		(46	)		309			(355	)		(115	)%
アメリカ公認会計基準：部門持続運営メンバー		424			—			424			(100	)%
us—gaap ：セグメント継続業務メンバー		—			33			(33	)		(100	)%
us—gaap：オペレーティングセグメントメンバー		37			2,663			(2,626	)		100	%
us—gaap ：ヘルスケアセクターメンバー		1,191			—			1,191			100	%
us—gaap：オペレーティングセグメントメンバー		63			220			(157	)		(71	)%
us—gaap：テクノロジーセクターメンバー		31,305			—			31,305			100	%
us—gaap：オペレーティングセグメントメンバー		(248	)		—			(248	)		(100	)%
アメリカ-公認会計基準：不動産部門メンバー		118			—			118			100	%
us—gaap：オペレーティングセグメントメンバー		(67,261	)		(8,745	)		(58,516	)		(669	)%
us—gaap：オペレーティングセグメントメンバー		2,680			255			2,425			951	%
us—gaap ：ヘルスケアセクターメンバー		(422	)		(203	)		(219	)		108	%
us—gaap：オペレーティングセグメントメンバー		(65,003	)		(8,693	)		(56,310	)		(648	)%
us—gaap：テクノロジーセクターメンバー		—			6,478			(6,478	)		100	%
us—gaap：オペレーティングセグメントメンバー		(30,593	)		(339	)		(30,254	)		(8924	)%
us—gaap： RealEstateSectorMember	$	(34,410	)	$	(1,876	)	$	(32,534	)		(1734	)%

us—gaap：オペレーティングセグメントメンバー国：米国

国：米国国/地域：IL

US-GAAP：ライセンスプロトコル用語メンバrfl： 15 周年記念メンバー

us—gaap： CommonClassBMemberus—gaap： CommonClassBMember

us—gaap： CommonClassBMemberrfl： JonasOfferMember

rfl： PlanMemberus—gaap： CommonClassBMember

104

rfl： PlanMemberus—gaap： CommonClassBMember

rfl：プランメンバーus—gaap： CommonClassBMember

us—gaap： CommonClassBMember

us—gaap： CommonClassBMemberus—gaap： CommonClassBMember

rfl： StockOptionsMember

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	2024		2023			$			%
	rfl： StockOptionsMember
us—gaap： CommonClassBMember
rfl：証券購入契約会員	$	2,675	$	21,498		$	(18,823	)		(88	)%
us—gaap： CommonClassBMember		—		1,921			(1,921	)		(100	)%
rfl：証券購入契約会員		1,146		—			1,146			100	%
us—gaap： CommonClassBMember		1,700		—			1,700			100	%
rfl：証券購入契約会員		64,988		80,796			(15,808	)		(20	)%
us—gaap： CommonClassBMember		96,832		98,829			(1,997	)		(2	)%
rfl：証券購入契約会員		82,185		100,293			(18,108	)		(18	)%
rfl：証券購入契約会員		4,073		(3,664	)		7,737			211	%
us—gaap： CommonClassBMember		86,258		96,629			(10,371	)		(11	)%

	us—gaap： WarrantMember						us—gaap： WarrantMember
	2024			2023			$			%
	us—gaap： CommonClassBMember
us—gaap： WarrantMember
us—gaap： WarrantMember	$	(7,802	)	$	(10,247	)	$	2,445			24	%
rfl：ラファエルメディカルデバイスズ LLC メンバー		(10,820	)		(26,960	)		16,140			60	%
rfl：ラファエルメディカルデバイスズ LLC メンバー		(179	)		(218	)		39			18	%
us—gaap：変換可能ノート有料会員		(22	)		(146	)		124			85	%
us—gaap：次のイベントメンバー		—			32,532			(32,532	)		(100	)%
rfl： RefaelMember	$	(18,823	)	$	(5,039	)		(13,784	)		274	%

105

rfl： CycloConvertibleNoteIIIMember

us—gaap：変換可能ノート有料会員

us—gaap：次のイベントメンバー

rfl： CycloConvertibleNoteIIIMember

us—gaap：次のイベントメンバー

rfl ： RefaelMember

rfl： CycloConvertibleNoteIIIMember

us—gaap：次のイベントメンバー

rfl： CycloConvertibleNoteIVMember

us—gaap：変換可能ノート有料会員

us—gaap：次のイベントメンバー

rfl： RefaelMember

rfl： CycloConvertibleNoteIVMember

us—gaap：変換可能ノート有料会員

us—gaap：次のイベントメンバー

rfl： CycloConvertibleNoteIVMember

106

us—gaap：次のイベントメンバー

rfl： RefaelMember

rfl： CycloConvertibleNoteIVMemberus—gaap：次のイベントメンバーrfl： CycloConvertibleNoteVMember

us—gaap：変換可能ノート有料会員

us—gaap：次のイベントメンバー

rfl： RefaelMemberrfl： CycloConvertibleNoteVMemberus—gaap：変換可能ノート有料会員

us—gaap：次のイベントメンバーrfl： CycloConvertibleNoteVMemberus—gaap：次のイベントメンバー

rfl： RefaelMember

rfl： CycloConvertibleNoteVMember

107

us—gaap：次のイベントメンバー

iso4217： USD

xbrli： shares

iso4217： USD

xbrli： shares

xbrli：純粋

Utr：SQFT

We hold acquired in-process research and development (“IPR&D”) intangible assets pursuant to a business combination. These IPR&D assets are considered indefinite-lived intangible assets until completion or abandonment of the associated research and development efforts. These IPR&D assets are not amortized but reviewed for impairment at least annually, or when events or changes in the business environment indicate the carrying value may be impaired.

IPR&D acquired as part of the Cornerstone Acquisition represents the R&D asset of Cornerstone which was in-process, but not yet completed, and which had no alternative use. To value the IPR&D acquired as part of the Cornerstone Acquisition, the Company utilized the Multi-Period Excess Earnings Method (“MPEEM”), under the Income Approach. The method reflects the present value of the projected operating cash flows generated by Cornerstone’s assets after taking into account the cost to realize the revenue, and an appropriate discount rate to reflect the time value and risk associated with the invested capital. IPR&D acquired represents Cornerstone’s research and development activities related to oncology-focused pharmaceuticals which seeks to exploit the metabolic differences between normal cells and cancer cells. The IPR&D acquired as part of the Cornerstone Acquisition, accounted for as an asset acquisition, was expensed immediately as a component of in-process research and development expense in the consolidated statement of operations and comprehensive loss as it had no alternative future use.

108

Off-Balance Sheet Arrangements

We do not have any “off-balance sheet arrangements,” as defined in relevant SEC regulations, that are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

Item 8. Financial Statements and Supplementary Data.

The Consolidated Financial Statements of the Company and the report of the independent registered public accounting firm thereon starting on page F-1 are included herein.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of July 31, 2024. Based on that evaluation, the Company’s management, including the President and Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.

Management’s Annual Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The internal control process has been designed under management’s supervision to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with U.S. GAAP.

Management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of July 31, 2024 utilizing the framework established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has determined that the Company’s internal control over financial reporting as of July 31, 2024 is effective.

The Company’s internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that accurately and fairly reflect, in reasonable detail, transactions and dispositions of assets; and provide reasonable assurances that: (1) transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP; (2) receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and (3) unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s financial statements are prevented or timely detected.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control over Financial Reporting

There were no significant changes made in the Company’s internal control over financial reporting during the fourth quarter of the year ended July 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information.

None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

109

Part III

Item 10. Directors, Executive Officers and Corporate Governance.

The following is a list of our directors and executive officers as of November 6, 2024, along with the specific information required by Rule 14a-3 of the Securities Exchange Act of 1934:

Executive Officers

Howard S. Jonas — Executive Chairman

William Conkling — Chief Executive Officer

David Polinsky — Chief Financial Officer

John Goldberg — Chief Medical Officer

Directors

Howard S. Jonas—Chairman of the Board

Susan Bernstein

Stephen Greenberg

Dr. Mark Stein

Dr. Michael J. Weiss

The remaining information required by this Item will be contained in our Proxy Statement for our Annual Stockholders Meeting, which will be filed with the Securities and Exchange Commission within 120 days after July 31, 2024, and which is incorporated by reference herein.

Corporate Governance

We have included as exhibits to this Annual Report on Form 10-K certificates of our Chief Executive Officer and Chief Financial Officer certifying the quality of our public disclosure.

We make available free of charge through the investor relations page of our web site (http://rafaelholdings.irpass.com/) our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports, and all beneficial ownership reports on Forms 3, 4 and 5 filed by directors, officers and beneficial owners of more than 10% of our equity, as soon as reasonably practicable after such reports are electronically filed with the Securities and Exchange Commission. We have adopted codes of business conduct and ethics for all of our employees, including our principal executive officer, principal financial officer and principal accounting officer. Copies of the codes of business conduct and ethics are available on our web site.

Our web site and the information contained therein or incorporated therein are not intended to be incorporated into this Annual Report on Form 10-K or our other filings with the Securities and Exchange Commission.

Item 11. Executive Compensation.

The information required by this Item will be contained in our Proxy Statement for our Annual Stockholders Meeting, which will be filed with the Securities and Exchange Commission within 120 days after July 31, 2024, and which is incorporated by reference herein.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Item 14. Principal Accounting Fees and Services.

110

Part IV

Item 15. Exhibits, Financial Statement Schedules.

(a)

The following documents are filed as part of this Report:

1	Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements.

Consolidated Financial Statements covered by Report of Independent Registered Public Accounting Firm.

2	Financial Statement Schedules.

All schedules have been omitted since they are either included in the Notes to Consolidated Financial Statements or not required or not applicable.

3	Exhibits. The exhibits listed in paragraph (b) of this item are filed, furnished, or incorporated by reference as part of this Form 10-K.

Certain of the agreements filed as exhibits to this Form 10-K contain representations and warranties by the parties to the agreements that have been made solely for the benefit of the parties to the agreement. These representations and warranties:

●

may have been qualified by disclosures that were made to the other parties in connection with the negotiation of the agreements, which disclosures are not necessarily reflected in the agreements;

●

may apply standards of materiality that differ from those of a reasonable investor; and

●

were made only as of specified dates contained in the agreements and are subject to subsequent developments and changed circumstances.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date that these representations and warranties were made or at any other time. Investors should not rely on them as statements of fact.

(b)

Exhibits.

Exhibit Number		Description

2.1(1)		Agreement and Plan of Merger, dated as of August 21, 2024, by and among Rafael, Cyclo, First Merger Sub and Second Merger Sub.

3.1(2)		Amended and Restated Certificate of Incorporation of Rafael Holdings, Inc.

3.2(3)		Third Amended and Restated By-Laws of Rafael Holdings, Inc.

4.2*		Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934

10.1(4)		2021 Equity Incentive Plan, as amended and restated

10.2(3)		Employment Agreement dated as of June 13, 2022, between the Company and Howard S. Jonas.

111

10.3(5)		Letter Agreement dated January 20, 2022, between the Company and William Conkling.

10.4*		Letter Agreement dated November 16, 2023, between the Company and John Goldberg

10.5(6)		Securities Purchase Agreement, dated August 19, 2021, by and among Rafael Holdings, Inc. and the Investors named therein.

10.6(6)		Securities Purchase Agreement, dated August 19, 2021, by and among Rafael Holdings, Inc. and I9 Plus, LLC.

10.7(6)		Registration Rights Agreement, dated August 19, 2021, by and among Rafael Holdings, Inc. and the Investors named therein.

21.01*		Subsidiaries of the Registrant

23.1*		Consent of CohnReznick LLP, Independent Registered Public Accounting Firm

31.01*		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.02*		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.01*		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.02*		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

97*		Compensation Clawback Policy

101.INS*		Inline XBRL Instance Document

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase 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 (formatted as Inline XBRL and contained in Exhibit 101).

*	Filed or furnished herewith.

(1)	Incorporated by reference to Form 8-K, filed August 22, 2024.

(2)	Incorporated by reference to Form 10-12G/A, filed March 26, 2018.

(3)	Incorporated by reference to Form 8-K, filed June 14, 2022.

(4)	Incorporated by reference to Exhibit A of the Company’s Definitive Proxy Statement, filed with the Commission on November 28, 2022.

(5)	Incorporated by reference to Form 8-K, filed January 21, 2022.

(6)	Incorporated by reference to Form 8-K, filed August 24, 2021.

(7)	Incorporated by reference to Form 8-K, filed May 9, 2022.

Item 16. Form 10-K Summary

None.

112

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

	Rafael Holdings, Inc.

	By:	/s/ William Conkling
		William Conkling
		Chief Executive Officer

Date: November 6, 2024

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Titles	Date

/s/ William Conkling	President and Chief Executive Officer (Principal Executive Officer)	November 5, 2024
William Conkling
/s/ David Polinsky	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	November 5, 2024
David Polinsky
/s/ Howard S. Jonas	Director, Chairman of the Board and Executive Chairman	November 5, 2024
Howard S. Jonas

/s/ Susan Y. Bernstein	Director	November 5, 2024
Susan Y. Bernstein

/s/ Stephen Greenberg	Director	November 5, 2024
Stephen Greenberg

/s/ Dr. Mark Stein	Director	November 5, 2024
Dr. Mark Stein

/s/ Dr. Michael J. Weiss	Director	November 5, 2024
Dr. Michael J. Weiss

113

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID 596)	F-2

Consolidated Balance Sheets as of July 31, 2024 and 2023	F-3

Consolidated Statements of Operations and Comprehensive Loss for the years ended July 31, 2024 and 2023	F-4

Consolidated Statements of Equity for the years ended July 31, 2024 and 2023	F-5

Consolidated Statements of Cash Flows for the years ended July 31, 2024 and 2023	F-7

Notes to Consolidated Financial Statements	F-8

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

Rafael Holdings, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Rafael Holdings, Inc. as of July 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive loss, equity and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Rafael Holdings, Inc. as of July 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, 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 these consolidated 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 Rafael Holdings, Inc. 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 audits 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. Rafael Holdings, Inc. 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 consolidated 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 consolidated 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 was communicated or required to be communicated to the audit committee and that: (i) related to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communications of critical audit matters 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 it relates.

Valuation of Intangible Assets and Purchase Price Consideration in the Cornerstone Pharmaceuticals, Inc. Restructuring and Acquisition

Description of the matter

As described in Note 3 to the consolidated financial statements, the Company, Cornerstone Pharmaceuticals, Inc. (“Cornerstone”), and other holders of debt and equity securities of Cornerstone agreed to various transactions which effected a recapitalization and restructuring of the outstanding debt and equity interests in Cornerstone. The recapitalization resulted in the Company becoming the primary beneficiary of Cornerstone, a variable interest entity, and consolidating Cornerstone. The Company was determined to be the accounting acquiror and treated the restructuring as an asset acquisition resulting in the recording of an in-process research and development asset of approximately $89,861,000. The purchase consideration resulting from the restructuring included the forgiveness of a line of credit and a promissory note in exchange for Cornerstone common stock valued at $37,845,000 and $2,663,000, respectively. The fair value of this consideration and the in-process research and development asset were calculated by management using a blend of a discounted cash flow and comparable companies valuations. The methods used to estimate the fair value of acquired intangible assets and purchase consideration utilizing a discounted cash flow involve significant assumptions. The significant assumptions applied by management in estimating the fair value of acquired intangible assets and purchase consideration included income projections and discount rates.

Significant judgment is exercised by the Company in determining the valuation of the intangible assets and purchase price consideration.

Given these factors, the related audit effort in evaluating management’s judgments in determining the valuation of the intangible assets and purchase price consideration was challenging, subjective, and complex and required a high degree of auditor judgment.

How our Audit Addressed the Critical Audit Matter

Our principal audit procedures related to this critical audit matter included the following:

●

We gained an understanding of and evaluated the design and implementation of the Company’s controls that address the risk of material misstatement related to developing fair value estimates and management projections.

●

We evaluated management's significant accounting policies related to estimating the fair value of intangible assets and purchase consideration.

●

We tested the reasonableness of the underlying data used to determine the forecasted discounted future cash flows.

●

We evaluated the reasonableness of the discounted future cash flows utilized in the discounted cash flow model by comparing forecasted discounted cash flows to market information.

●

We evaluated the reasonableness of the probability weighting of the discounted cash flows based upon the likelihood of approval of the acquired research and development projects by comparing the probabilities to historical market information and industry data.

●

Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of the discount rates utilized.

/s/ CohnReznick LLP

We have served as Company’s auditor since 2019.

New York, New York

November 6, 2024

F-2

PART I. FINANCIAL INFORMATION

RAFAEL HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

	Year Ended July 31,
	2024			2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2,675		$	21,498
Available-for-sale securities		63,265			57,714
Interest receivable		515			387
Convertible note receivables, due from Cyclo		5,191			—
Accounts receivable, net of allowance for credit losses of $245 at July 31, 2024 and July 31, 2023		426			213
Prepaid expenses and other current assets		430			914
Convertible note receivable, related party		—			1,921
Investment in equity securities		—			294
Total current assets		72,502			82,941

Property and equipment, net		2,120			1,695
Investments – Cyclo		12,010			4,763
Investments – Hedge Funds		2,547			4,984
Investment – Day Three		—			2,797
Investments – Other Pharmaceuticals		—			65
Convertible note receivable		1,146			—
Goodwill		3,050			—
Intangible assets, net		1,847			—
In-process research and development		1,575			1,575
Other assets		35			9
TOTAL ASSETS	$	96,832		$	98,829

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	$	2,556		$	333
Accrued expenses		1,798			763
Convertible notes payable		614			—
Other current liabilities		113			1,023
Due to related parties		733			26
Installment note payable		1,700			—
Total current liabilities		7,514			2,145

Accrued expenses, noncurrent		2,982			—
Convertible notes payable, noncurrent		73			—
Other liabilities		5			55
TOTAL LIABILITIES		10,574			2,200

COMMITMENTS AND CONTINGENCIES

EQUITY
Class A common stock, $0.01 par value; 35,000,000 shares authorized, 787,163 shares issued and outstanding as of July 31, 2024 and July 31, 2023		8			8
Class B common stock, $0.01 par value; 200,000,000 shares authorized, 24,142,535 issued and 23,819,948 outstanding (excluding treasury shares of 101,487) as of July 31, 2024, and 23,635,709 shares issued and 23,490,527 shares outstanding as of July 31, 2023		238			236
Additional paid-in capital		280,048			264,010
Accumulated deficit		(201,743	)		(167,333	)
Treasury stock, at cost; 101,487 and 0 Class B shares as of July 31, 2024 and July 31, 2023, respectively		(168	)		—
Accumulated other comprehensive income (loss) related to unrealized income on available-for-sale securities		111			(353	)
Accumulated other comprehensive income related to foreign currency translation adjustment		3,691			3,725
Total equity attributable to Rafael Holdings, Inc.		82,185			100,293
Noncontrolling interests		4,073			(3,664	)
TOTAL EQUITY		86,258			96,629
TOTAL LIABILITIES AND EQUITY	$	96,832		$	98,829

See accompanying notes to the consolidated financial statements.

F-3

RAFAEL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except share and per share data)

	Year Ended July 31,
	2024			2023
REVENUE
Infusion Technology	$	355		$	—
Rental – Third Party		174			171
Rental – Related Party		108			108
Total revenue		637			279

COSTS AND EXPENSES
Cost of Infusion Technology revenue		154			—
General and administrative		8,854			8,932
Research and development		4,170			6,312
In-process research and development expense		89,861			—
Depreciation and amortization		225			78
Loss from operations		(102,627	)		(15,043	)

Interest income		2,383			3,253
Impairment of investments - Other Pharmaceuticals		—			(334	)
Loss on initial investment in Day Three upon acquisition		(1,633	)		—
Realized gain on available-for-sale securities		1,772			154
Realized gain (loss) on investment in equity securities		(46	)		309
Unrealized gain on investment in equity securities		—			33
Realized gain on investment - Cyclo		424			—
Unrealized gain on investment - Cyclo		37			2,663
Unrealized gain on convertible notes receivable, due from Cyclo		1,191			—
Unrealized gain on investment - Hedge Funds		63			220
Recovery of receivables from Cornerstone		31,305			—
Interest expense		(248	)		—
Other income		118			—
Loss from continuing operations before income taxes		(67,261	)		(8,745	)
Benefit from income taxes		2,680			255
Equity in loss of Day Three		(422	)		(203	)
Consolidated net loss from continuing operations		(65,003	)		(8,693	)

Discontinued Operations (Note 14)
Loss from discontinued operations related to 520 Property		—			(306	)
Gain on disposal of 520 Property		—			6,784
Income from discontinued operations		—			6,478

Consolidated net loss		(65,003	)		(2,215	)
Net loss attributable to noncontrolling interests		(30,593	)		(339	)
Net loss attributable to Rafael Holdings, Inc.	$	(34,410	)	$	(1,876	)

OTHER COMPREHENSIVE LOSS
Consolidated net loss	$	(65,003	)	$	(2,215	)
Unrealized (loss) gain on available-for-sale securities		464			(290	)
Foreign currency translation adjustment		(53	)		(42	)
Comprehensive loss		(64,592	)		(2,547	)
Comprehensive loss attributable to noncontrolling interests		(30,595	)		(336	)
Comprehensive loss attributable to Rafael Holdings, Inc.	$	(33,997	)	$	(2,211	)

Income (loss) per share attributable to common stockholders
Basic and diluted:
Continuing operations	$	(1.45	)	$	(0.36	)
Discontinued operations		—			0.28
Total basic and diluted loss per share	$	(1.45	)	$	(0.08	)

Weighted average number of shares used in calculation of income (loss) per share
Basic and diluted		23,745,516			23,263,211

See accompanying notes to the consolidated financial statements.

F-4

RAFAEL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(in thousands, except share data)

	Year Ended July 31, 2024
	Common Stock, Series A				Common Stock, Series B						Additional						Accumulated other						Treasury Stock
	Shares		Amount		Shares			Amount			paid-in capital			Accumulated deficit			comprehensive income			Noncontrolling interests			Class B Shares		Amount			Total Equity
Balance at August 1, 2023		787,163	$	8		23,490,527		$	236		$	264,010		$	(167,333	)	$	3,372		$	(3,664	)		—	$	—		$	96,629
Net loss		—		—		—			—			—			(34,410	)		—			(30,593	)		—		—			(65,003	)
Stock-based compensation		—		—		506,826			3			2,293			—			—			—			—		—			2,296
Shares withheld for payroll taxes		—		—		(75,918	)		(1	)		(135	)		—			—			—			—		—			(136	)
Unrealized gain on available-for-sale securities		—		—		—			—			—			—			464			—			—		—			464
Sale of Rafael Medical Devices membership units		—		—		—			—			869			—			—			56			—		—			925
Noncontrolling interest in Day Three acquisition		—		—		—			—			—			—			—			1,151			—		—			1,151
Purchases of treasury stock		—		—		(101,487	)		—			—			—			—			—			101,487		(168	)		(168	)
Gain on RP Finance consolidation		—		—		—			—			7,600			—			—			—			—		—			7,600
Paid-in capital arising from Cornerstone Acquisition		—		—		—			—			7,260			—			—			—			—		—			7,260
Noncontrolling interest arising from Cornerstone Acquisition		—		—		—			—			—			—			—			27,501			—		—			27,501
Noncontrolling interest arising from RP Finance Consolidation		—		—		—			—			—			—			—			12,667			—		—			12,667
Elimination of RP Finance investment in Cornerstone		—		—		—			—			(1,849	)		—			—			(3,082	)		—		—			(4,931	)
Dissolution of Levco		—		—		—			—			—			—			19			37			—		—			56
Foreign currency translation adjustment		—		—		—			—			—			—			(53	)		—			—		—			(53	)
Balance at July 31, 2024		787,163	$	8		23,819,948		$	238		$	280,048		$	(201,743	)	$	3,802		$	4,073			101,487	$	(168	)	$	86,258

See accompanying notes to the consolidated financial statements.

F-5

RAFAEL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(in thousands, except share data)

	Year Ended July 31, 2023
	Common Stock, Series A				Common Stock, Series B						Additional paid-in			Accumulated			Accumulated other comprehensive			Noncontrolling			Total
	Shares		Amount		Shares			Amount			capital			deficit			income			interests			Equity
Balance at August 1, 2022		787,163	$	8		23,687,964		$	237		$	262,023		$	(165,457	)	$	3,704		$	(3,309	)	$	97,206
Net loss		—		—		—			—			—			(1,876	)		—			(339	)		(2,215	)
Stock-based compensation		—		—		220,019			2			3,089			—			—			—			3,091
Forfeiture of restricted stock		—		—		(296,759	)		(2	)		(901	)		—			—			—			(903	)
Shares withheld for payroll taxes		—		—		(120,697	)		(1	)		(217	)		—			—			—			(218	)
Unrealized loss on available-for-sale securities		—		—		—			—			—			—			(290	)		—			(290	)
Acquisition of additional ownership interest in LipoMedix		—		—		—			—			16			—			—			(16	)		—
Foreign currency translation adjustment		—		—		—			—			—			—			(42	)		—			(42	)
Balance at July 31, 2023		787,163	$	8		23,490,527		$	236		$	264,010		$	(167,333	)	$	3,372		$	(3,664	)	$	96,629

See accompanying notes to the consolidated financial statements.

F-6

RAFAEL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended July 31,
	2024			2023
Operating activities
Consolidated net loss	$	(65,003	)	$	(2,215	)
Less: Income from discontinued operations		—			6,478
Loss from continuing operations		(65,003	)		(8,693	)
Adjustments to reconcile consolidated net loss to net cash used in operating activities
Depreciation and amortization		225			78
Gain on sale of property and equipment		(27	)		—
Net unrealized gain on investment - Hedge Funds		(63	)		(220	)
Unrealized gain on equity securities		—			(33	)
Realized loss on investment in equity securities		46			—
Realized gain on available-for-sale securities		(1,772	)		(154	)
Amortization of discount on available-for-sale securities		(1,891	)		(1,195	)
Impairment of investments - Other Pharmaceuticals		—			334
Loss on initial investment in Day Three upon acquisition		1,633			—
Realized gain in equity investments - Cyclo		(424	)		—
Unrealized gain in equity investments - Cyclo		(37	)		(2,663	)
Unrealized gain on convertible notes receivable, due from Cyclo		(1,191	)		—
Recovery of receivables from Cornerstone		(31,305	)		—
In-process research and development expense		89,861			—
Gain on dissolution of a business		18			—
Equity in loss of Day Three		422			203
Bad debt expense		20			—
Stock-based compensation		2,296			2,188

Change in assets and liabilities, net of effects from acquisitions and discontinued operations:
Trade accounts receivable		(150	)		(117	)
Interest receivable		(139	)		(247	)
Prepaid expenses and other current assets		673			373
Other assets		22			(27	)
Accounts payable and accrued expenses		(146	)		(827	)
Other current liabilities		(938	)		781
Due to related parties		138			(43	)
Other liabilities		(70	)		15
Net cash used in continuing operations		(7,802	)		(10,247	)
Net cash used in discontinued operations		—			(639	)
Net cash used in operating activities		(7,802	)		(10,886	)

Investing activities
Purchase of property and equipment		(143	)		—
Purchases of available-for-sale securities		(155,657	)		(204,798	)
Proceeds from the sale and maturities of available-for-sale securities		153,352			185,121
Proceeds from Day Three patent sale		270			—
Purchase of intangible assets		(35	)		—
Proceeds from sales of equity securities		271			1,325
Issuance of Convertible Notes, Due from Cyclo		(4,000	)		—
Issuance of convertible note receivable, related party		—			(2,000	)
Purchase of Investment in Day Three		—			(3,000	)
Purchase of Investment in Cyclo		(6,786	)		(2,100	)
Issuance of convertible note receivable		(1,000	)		—
Issuance of Day Three Promissory Notes		(1,989	)		—
Proceeds from investments - Other Pharmaceuticals		42			78
Purchases of equity securities		—			(1,586	)
Cash acquired in acquisition of Day Three, net of cash payments		1,099			—
Cash acquired in the Cornerstone Acquisition, net of cash payments		1,256			—
Proceeds from hedge funds		2,500			—
Net cash used in investing activities of continuing operations		(10,820	)		(26,960	)
Proceeds from sale of 520 Property - discontinued operations		—			49,400
Payment of transaction costs for sale of 520 Property - discontinued operations		—			(1,229	)
Net cash provided by investing activities of discontinued operations		—			48,171
Net cash (used in) provided by investing activities		(10,820	)		21,211

Financing activities
Principal payments on installment note payable		(800	)		—
Payments for taxes related to shares withheld for employee taxes		(136	)		(218	)
Purchases of treasury stock		(168	)		—
Proceeds from sale of Rafael Medical Devices membership units		925			—
Net cash used in financing activities of continuing operations		(179	)		(218	)
Payment of Note Payable in connection with sale of 520 Property - discontinued operations		—			(15,000	)
Net cash used in financing activities of discontinued operations		—			(15,000	)
Net cash used in financing activities		(179	)		(15,218	)

Effect of exchange rate changes on cash and cash equivalents		(22	)		(146	)
Net decrease in cash and cash equivalents		(18,823	)		(5,039	)
Cash and cash equivalents, beginning of year		21,498			26,537
Cash and cash equivalents, end of year	$	2,675		$	21,498

Non-cash supplemental disclosure
Acquisition of additional ownership interest in LipoMedix	$	—		$	16
Conversion of RFL Line of Credit into Cornerstone Common Stock	$	37,845		$	—
Conversion of 2023 Promissory Note into Cornerstone Common Stock	$	2,663		$	—
Recognition of noncontrolling interest in the Cornerstone Acquisition	$	27,501		$	—
Recognition of noncontrolling interest in the RP Finance Consolidation, net of elimination	$	9,585		$	—
Gain on RP Finance Consolidation recorded as an adjustment to additional paid-in capital due to related party nature of transaction, net of elimination	$	5,751		$	—
Noncash consideration received in exchange for equipment	$	34		$	—
Elimination of principal and accrued interest on the Day Three Promissory Notes included in consideration for acquisition of Day Three	$	2,000		$	—

See accompanying notes to the consolidated financial statements.

F-7

RAFAEL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – DESCRIPTION OF BUSINESS

Description of Business

Rafael Holdings, Inc. (“Rafael Holdings”, “Rafael”, “we” or the “Company”) is a holding company with interests in clinical and early-stage pharmaceutical companies (the “Pharmaceutical Companies”), including an investment in (and planned merger with) Cyclo Therapeutics Inc. (Nasdaq: CYTH), (“Cyclo Therapeutics” or “Cyclo”), a clinical stage biotechnology company dedicated to developing Trappsol® Cyclo™, which is being evaluated in clinical trials for the potential treatment of Niemann-Pick Disease Type C1 (“NPC1”), a rare, fatal and progressive genetic disorder, a majority equity interest in LipoMedix Pharmaceuticals Ltd. (“LipoMedix”), a clinical stage pharmaceutical company, Barer Institute Inc. (“Barer”), a wholly-owned preclinical cancer metabolism research operation, and a majority interest in Cornerstone Pharmaceuticals, Inc. (“Cornerstone”), formerly known as Rafael Pharmaceuticals Inc., a cancer metabolism-based therapeutics company. We also hold a majority interest in Rafael Medical Devices, LLC. (“Rafael Medical Devices”), an orthopedic-focused medical device company developing instruments to advance minimally invasive surgeries, and a majority interest in Day Three Labs, Inc. (“Day Three”), a company which empowers third-party manufacturers to reimagine their existing cannabis offerings enabling them to bring to market better, cleaner, more precise and predictable versions by utilizing Day Three’s pharmaceutical-grade technology and innovation like Unlokt™. Day Three and Rafael Medical Devices, together with the Pharmaceutical Companies, represent our “Portfolio Companies”). In November 2022, the Company resolved to curtail its early-stage development efforts, including pre-clinical research at Barer. The decision was taken to reduce spending as the Company focuses on exploring strategic opportunities. Since then, the Company has sought partners for programs at Farber and has entered into a license agreement for one of its technologies. The Company’s primary focus is to expand our investment portfolio through opportunistic and strategic investments including therapeutics, which address high unmet medical needs. Upon closing of the planned merger with Cyclo, the Company intends to focus its efforts on making Trappsol^® Cyclo™ its lead clinical program.

Historically, the Company owned real estate assets. In 2020, the Company sold an office building located in Piscataway, New Jersey and, on August 22, 2022, the Company sold the building at 520 Broad Street in Newark, New Jersey that serves as headquarters for the Company and several tenants and an associated public garage (the “520 Property”). As of July 31, 2024, the Company holds a portion of a commercial building in Jerusalem, Israel as its remaining owned real estate asset.

In May 2023, the Company first invested in Cyclo Therapeutics. Cyclo is a clinical-stage biotechnology company that develops cyclodextrin-based products for the potential treatment of neurodegenerative diseases. Cyclo’s lead drug candidate is Trappsol® Cyclo™ (hydroxypropyl beta cyclodextrin), a treatment for Niemann-Pick Disease, type C1. NPC1 is a rare and fatal autosomal recessive genetic disease resulting in disrupted cholesterol metabolism that impacts the brain, lungs, lifover, spleen, and other organs. In January 2017 the FDA granted Fast Track designation to Trappsol® Cyclo™ for the treatment of NPC1. Initial patient enrollment in the U.S. Phase I study commenced in September 2017, and in May 2020 Cyclo announced Top Line data demonstrating Trappsol® Cyclo™ was well tolerated in this study. Cyclo is currently conducting a Phase III Clinical Trial Evaluating Trappsol^®Cyclo™ in Pediatric and Adult Patients with Niemann-Pick Disease, Type C1. See Notes 11 and 12 for more information on the Company’s investments in Cyclo.

As discussed in more detail below, on August 21, 2024, the Company entered into a merger agreement with Cyclo. In the event the merger is consummated, the Company intends to fund the TransportNPC phase III clinical trial, evaluating Trappsol® Cyclo™ in Niemann Pick C, to its interim analysis in the middle of 2025 and focus its efforts on Trappsol^® Cyclo™ as its lead clinical program. At that point, the Company will make a determination as to whether or not to file an NDA for Trappsol® Cyclo™.

LipoMedix is a clinical stage Israeli company focused on the development of a product candidate that holds the potential to be an innovative, safe, and effective cancer therapy based on liposome delivery. As of July 31, 2024, the Company’s ownership interest in LipoMedix was approximately 95%. LipoMedix has completed various clinical stages of Promitil® including Phase 1A (solid tumors) and 1B (as single agent and in combination with capecitabine and/or bevacizumab in colorectal cancer). Another phase 1B testing Promitil® as radiosensitizer is ongoing and near completion. A total of 149 patients have been treated with Promitil® as a single agent, or in combination with other anticancer drugs or radiotherapy, under the framework of a phase 1A and two 1B clinical studies and under named patient approval for compassionate use.

In 2019, the Company established Barer, a preclinical cancer metabolism research operation, to focus on developing a pipeline of novel therapeutic compounds, including compounds designed to regulate cancer metabolism with potentially broader application in other indications beyond cancer. Barer has been comprised of scientists and academic advisors that are experts in cancer metabolism, chemistry, and drug development. In addition to its own internal discovery efforts, Barer pursued collaborative research agreements and in-licensing opportunities with leading scientists from top academic institutions. Barer’s majority owned subsidiary, Farber Partners, LLC (“Farber”), was formed around one such agreement with Princeton University’s Office of Technology Licensing (“Princeton”) for technology from the laboratory of Professor Joshua Rabinowitz, in the Department of Chemistry, Princeton University, for an exclusive worldwide license to its SHMT (serine hydroxymethyltransferase) inhibitor program. In November 2022, the Company resolved to curtail its early-stage development efforts, including pre-clinical research at Barer Institute. Since then, the Company has sought partners for Farber programs and has entered into a license agreement for one of its technologies.

F-8

RAFAEL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company owns a 37.5% equity interest in RP Finance LLC (“RP Finance”), which was, until March 13, 2024 (the date of the RP Finance Consolidation, as described in Note 3), accounted for under the equity method. RP Finance is an entity associated with members of the family of Howard Jonas (Executive Chairman, Chairman of the Board, and controlling stockholder of the Company) which holds 37.5% equity interest of RP Finance. RP Finance holds debt and equity investments in Cornerstone. In October 2021, Cornerstone received negative results of its Avenger 500 Phase 3 study for Devimistat in pancreatic cancer as well as a recommendation to stop its ARMADA 2000 Phase 3 study due to a determination that the trial would unlikely achieve its primary endpoint (the “Data Events”). Due to the Data Events, RP Finance fully impaired its then debt and equity investments in Cornerstone.

On March 13, 2024, Cornerstone consummated a restructuring of its outstanding debt and equity interests (the “Cornerstone Restructuring”). As a result of the Cornerstone Restructuring, Rafael became a 67% owner of the issued and outstanding common stock of Cornerstone (the “Cornerstone Acquisition”), and Cornerstone became a consolidated subsidiary of Rafael. The Cornerstone Acquisition is accounted for as an acquisition of a variable interest entity that is not a business in accordance with U.S. GAAP. The Company was determined to be the accounting acquirer for financial reporting purposes. See Note 3 to the Consolidated Financial Statements for additional information regarding the transaction. In conjunction with the Cornerstone Restructuring and Cornerstone Acquisition, the Company reassessed its relationship with RP Finance, and as a result determined that RP Finance is still a variable interest entity and that the Company became the primary beneficiary of RP Finance as the Company now holds the ability to control repayment of the RP Finance Line of Credit which directly impacts RP Finance’s economic performance. Therefore, following the Cornerstone Restructuring and Cornerstone Acquisition, the Company consolidated RP Finance (the “RP Finance Consolidation”). See Note 3 for additional information on the Consolidation.

In May 2021, the Company formed Rafael Medical Devices, an orthopedic-focused medical device company developing instruments to advance minimally invasive surgeries. In August 2023, the Company raised $925,000 from third parties in exchange for 31.6% ownership of Rafael Medical Devices.

In April 2023, the Company first invested in Day Three, a company which empowers third-party manufacturers to reimagine their existing cannabis offerings enabling them to bring to market better, cleaner, more precise and predictable versions by utilizing Day Three’s pharmaceutical-grade technology and innovation like Unlokt™. In January 2024, the Company entered into a series of transactions with Day Three and certain shareholders, acquiring a controlling interest of Day Three and subsequently consolidating Day Three’s results (the “Day Three Acquisition”).

The “Company” in these consolidated financial statements refers to Rafael Holdings and its subsidiaries on a consolidated basis.

F-9

RAFAEL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

All majority-owned subsidiaries and RP Finance, LLC are consolidated with all intercompany transactions and balances eliminated in consolidation. In addition to Rafael Holdings, Inc., the entities included in these consolidated financial statements are as follows:

Company	Country of Incorporation	Percentage Owned
Broad Atlantic Associates, LLC	United States – Delaware		100	%
IDT R.E. Holdings Ltd.	Israel		100	%
Rafael Holdings Realty, Inc.	United States – Delaware		100	%
Barer Institute, Inc.	United States – Delaware		100	%*
Hillview Avenue Realty, JV	United States – Delaware		100	%
Hillview Avenue Realty, LLC	United States – Delaware		100	%
Rafael Medical Devices, LLC	United States – Delaware		68	%
Levco Pharmaceuticals Ltd.	Israel		95	%**
Farber Partners, LLC	United States – Delaware		93	%
Pharma Holdings, LLC	United States – Delaware		90	%***
LipoMedix Pharmaceuticals Ltd. (Note 9)	Israel		95	%
Altira Capital & Consulting, LLC	United States – Delaware		67	%
CS Pharma Holdings, LLC (Note 3)	United States – Delaware		45	%***
Day Three Labs, Inc. (Note 10)	United States – Delaware		84	%****
Cornerstone Pharmaceuticals, Inc. (Note 4)	United States – Delaware		67	%
RP Finance, LLC (Note 5)	United States – Delaware		38	%

*	In November 2022, the Company resolved to curtail its early-stage development efforts, including pre-clinical research at Barer. The decision was taken to reduce spending as the Company focuses on exploring strategic opportunities.

**	During Fiscal 2022, the Company discontinued further material investment in Levco. In August 2023, Levco was dissolved.

***

50% of CS Pharma Holdings, LLC is owned by Pharma Holdings, LLC. We have a 90% ownership in Pharma Holdings, LLC and, therefore, an effective 45% interest in CS Pharma Holdings, LLC. The Company, along with CS Pharma Holdings, LLC and Pharma Holdings LLC, collectively own securities representing 67% of the outstanding capital stock of Cornerstone.

****	In May 2024, the Company increased its ownership interest in Day Three Labs, Inc. from 79% to 84%.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company’s fiscal year ends on July 31 of each calendar year. Each reference below to a fiscal year refers to the fiscal year ending in the calendar year indicated (e.g., fiscal year 2024 refers to the fiscal year ended July 31, 2024).

The accompanying consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with U.S. GAAP. The accompanying consolidated financial statements reflect the activity related to the 520 Property as discontinued operations.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated balance sheet and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ significantly from those estimates.

Liquidity

As of July 31, 2024, the Company had cash and cash equivalents of approximately $2.7 million, and available-for-sale securities valued at approximately $63.3 million. The Company expects the balance of cash and cash equivalents, and available-for-sale securities to be sufficient to meet its obligations for at least the next 12 months from the issuance of these consolidated financial statements.

F-10

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Concentration of Credit Risk and Significant Customers

The Company routinely assesses the financial strength of its customers. As a result, the Company believes that its accounts receivable credit risk exposure is limited.

As of July 31, 2024, there was one related party which represented 50% of the Company’s accounts receivable balance. As of July 31, 2023, there was one customer which represented 27% of the Company’s accounts receivable balance and one related party which represented 47% of the Company’s accounts receivable balance.

For the year ended July 31, 2024, one customer represented 51% of total revenue, and one tenant and one related party tenant represented 27% and 17% of the Company’s revenue, respectively. For the year ended July 31, 2023, including revenue from discontinued operations, a related party tenant represented 42% of the Company’s revenue.

Cash and Cash Equivalents

The Company considers all liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Reserve for Receivables

The allowance for credit losses reflects the Company’s best estimate of lifetime credit losses inherent in the accounts receivable balance. The allowance is determined based on known troubled accounts, historical experience and other currently available evidence. Doubtful accounts are written off upon final determination that the trade accounts will not be collected. The computation of this allowance is based on the tenants’ or customers’ payment histories, as well as certain industry or geographic specific credit considerations. If the Company’s estimates of collectability differ from the cash received, then the timing and amount of the Company’s reported revenue could be impacted. The Company recorded bad debt expense from continuing operations, which is included in general and administrative expenses on the Consolidated Statements of Operations and Comprehensive Loss, of approximately $20 thousand and $0 for the years ended July 31, 2024 and 2023, respectively. The Company recorded bad debt expense from discontinued operations of approximately $0 and $110 thousand for the years ended July 31, 2024 and 2023, respectively.

Convertible Note Receivable

The Company holds convertible notes receivable that are classified as available-for-sale as defined under Accounting Standards Codification (“ASC”) 320, Investments - Debt and Equity Securities, and are recorded at fair value. Subsequent changes in fair value are recorded in accumulated other comprehensive income (loss).

The fair value of these convertible note receivables are estimated using a scenario-based analysis based on the probability-weighted present value of future investment returns, considering each of the possible outcomes available to the Company, including cash repayment, equity conversion, and collateral transfer scenarios. Estimating the fair value of the convertible note requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors.

Variable Interest Entities

In accordance with ASC 810, Consolidation, the Company assesses whether it has a variable interest in legal entities in which it has a financial relationship and, if so, whether or not those entities are variable interest entities (“VIEs”). For those entities that qualify as VIEs, ASC 810 requires the Company to determine if the Company is the primary beneficiary of the VIE, and if so, to consolidate the VIE.

If an entity is determined to be a VIE, the Company evaluates whether the Company is the primary beneficiary. The primary beneficiary analysis is a qualitative analysis based on power and economics. The Company consolidates a VIE if both power and benefits belong to the Company – that is, the Company (i) has the power to direct the activities of a VIE that most significantly influence the VIE’s economic performance (power), and (ii) has the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE (benefits). The Company consolidates VIEs whenever it is determined that the Company is the primary beneficiary.

F-11

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Investments

The method of accounting applied to long-term investments in equity securities involves an evaluation of the significant terms of each investment that explicitly grant or suggest evidence of control or influence over the operations of the investee and also include the identification of any variable interests in which the Company is the primary beneficiary. The consolidated financial statements include the Company’s controlled affiliates. All significant intercompany accounts and transactions between the consolidated affiliates are eliminated.

Investments in equity securities may be accounted for using (i) the fair value option, if elected, (ii) fair value through earnings if fair value is readily determinable or (iii) for equity investments without readily determinable fair values, the measurement alternative to measure at cost adjusted for any impairment and observable price changes, as applicable. The election to use the measurement alternative is made for each eligible investment.

The Company has elected the fair value option to account for its investment in Cyclo Therapeutics, Inc., as the Company has significant influence over Cyclo’s management. The fair value option is irrevocable once elected. The Company measured its initial investment in Cyclo at fair value and shall record all subsequent changes in fair value in earnings in the consolidated statements of operations and comprehensive loss. The Company believes the fair value option best reflects the underlying economics of the investment. The Company has determined that Cyclo is a VIE; however, the Company has determined that it is not the primary beneficiary as the Company does not have the power to direct the activities of Cyclo that most significantly impact Cyclo’s economic performance. See Note 11, “Investment in Cyclo Therapeutics, Inc.”

Investments in which the Company does not have the ability to exercise significant influence over operating and financial matters are accounted for in accordance with ASC 321, Investments – Equity Securities. Investments without readily determinable fair values are accounted for using the measurement alternative which is at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The Company periodically evaluates its investments for impairment due to declines considered to be other than temporary. If the Company determines that a decline in fair value is other than temporary, then a charge to earnings is recorded in the accompanying consolidated statements of operations and comprehensive loss, and a new basis in the investment is established.

Investments - Hedge Funds

The Company accounts for its investments in hedge funds in accordance with ASC 321, Investments – Equity Securities. Unrealized gains and losses resulting from the change in fair value of these securities is included in unrealized gain on investment - Hedge Funds in the consolidated statements of operations and comprehensive loss.

Corporate Bonds and US Treasury Bills

The Company’s marketable securities are considered to be available-for-sale as defined under ASC 320, Investments - Debt and Equity Securities, and are recorded at fair value. Unrealized gains or losses are included in accumulated other comprehensive loss. Realized gains or losses are determined using the specific identification method and are released from accumulated other comprehensive loss and into earnings on the consolidated statements of operations and comprehensive loss.

Effective August 1, 2023, the Company uses a current expected credit losses (“CECL”) model to estimate the allowance for credit losses on available-for-sale debt securities. For available-for-sale debt securities in an unrealized loss position, management first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For available-for-sale debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors.

If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any decline in fair value that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. No allowance for credit losses was recognized by the Company at July 31, 2024.

F-12

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cost Method Investment

Prior to the Cornerstone Acquisition, the Company had determined that Cornerstone was a VIE; however, the Company had determined that it was not the primary beneficiary as the Company did not have the power to direct the activities of Cornerstone that most significantly impact Cornerstone’s economic performance. See Note 3 for additional information.

Equity Method Investments

Investments classified as equity method consist of investments in companies in which the Company is able to exercise significant influence but not control. Under the equity method of accounting, the investment is initially recorded at cost, then the Company’s proportional share of investee’s underlying net income or loss is recorded as a component of income from continuing operations, with a corresponding increase or decrease to the carrying value of the investment. These investments are evaluated for impairment if events or circumstances arise that indicate that the carrying amount of such assets may not be recoverable.

The Company has determined that RP Finance and Day Three are VIEs. Prior to the RP Finance Consolidation, which occurred as a result of the Cornerstone Acquisition, and the Day Three Acquisition, the Company accounted for RP Finance and Day Three under the equity method of accounting. As of January 2, 2024, Day Three is consolidated as a majority-owned subsidiary. In conjunction with the Cornerstone Acquisition on March 13, 2024, the Company reassessed its relationship with RP Finance and, as a result, the Company has consolidated RP Finance.

Long-Lived Assets

Equipment, buildings, leasehold improvements, and furniture and fixtures are recorded at cost less accumulated depreciation and amortization. The related depreciation and amortization are computed using the straight-line method over the estimated useful lives, which range as follows:

Classification		Years
Building and improvements		40
Tenant improvements		7-15
Machinery and equipment		3-5
Other (primarily office equipment, furniture and fixtures)		5

Properties

On August 22, 2022, Broad Atlantic Associates LLC, a wholly-owned subsidiary of the Company (“Broad Atlantic”), completed the sale of the 520 Property for a purchase price of $49.4 million. The 520 Property serves as the Company’s headquarters and has several other tenants, and includes a related 800-car public parking garage. The Company determined that the 520 Property met the held-for-sale and discontinued operations criteria as of July 1, 2022. The 520 Property was disposed of on August 22, 2022.

The Company owns a portion of the 6th floor of a building located at 5 Shlomo Halevi Street, in Jerusalem, Israel.

Business Combinations

The purchase price for acquisitions are allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The fair value of identifiable intangible assets is based on detailed valuations that use information and assumptions provided by management, including expected future cash flows. We allocate any excess purchase price over the fair value of the identifiable net assets and liabilities acquired to goodwill. Identifiable intangible assets with finite lives are amortized over their useful lives. Acquisition-related costs, including advisory, legal, accounting, valuation, and other costs, are expensed in the periods in which the costs are incurred. The results of operations of acquired businesses are included in the consolidated financial statements from the acquisition date.

F-13

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Impairment of Long-Lived Assets

The Company assesses the recoverability of long-lived assets, which include property and equipment, intangible assets, in-process research and development and patents, whenever significant events or changes in circumstances indicate that its carrying amount may not be recoverable. If indicators of impairment exist, projected future undiscounted cash flows associated with the asset are compared to its carrying amount to determine whether the asset’s carrying value is recoverable. Any resulting impairment is recorded as a reduction in the carrying value of the related asset in excess of fair value and a charge to operating results. For the years ended July 31, 2024 and 2023, the Company determined there was no impairment of its long-lived assets.

Assets Held-for-Sale and Discontinued Operations

The Company classifies assets as held-for-sale if all held-for-sale criteria are met pursuant to ASC 360-10, Property, Plant and Equipment. Criteria include management commitment to sell the disposal group in its present condition and the sale being deemed probable of being completed within one year. Assets classified as held-for-sale are not depreciated and are measured at the lower of their carrying amount or fair value less cost to sell. The Company assesses the fair value of a disposal group, less any costs to sell, each reporting period it remains classified as held-for-sale and reports any subsequent changes as an adjustment to the carrying value of the disposal group, as long as the new carrying value does not exceed the initial carrying value of the disposal group.

Strategic changes in the Company’s operations can be considered a discontinued operation if both the operations and cash flows of the discontinued component have been (or will be) eliminated from the ongoing operations of the Company and the Company will not have any significant continuing involvement in the operations of the discontinued component after the disposal transaction. The results of the discontinued operations shall be reflected as a discontinued operation on the consolidated statements of operations and comprehensive loss and prior periods shall be recast to reflect the earnings from discontinued operations. As a result of the agreement to sell the 520 Property, the accompanying consolidated financial statements reflect the activity related to the sale of the 520 Property as discontinued operations. The Company determined that the 520 Property met the held-for-sale and discontinued operations criteria as of July 1, 2022. The 520 Property was disposed of on August 22, 2022. See Note 14 for additional information regarding the results, major classes of assets and liabilities, significant non-cash operating items, and capital expenditures of discontinued operations.

Goodwill

The Company assesses goodwill for impairment on an annual basis or more frequently when events and circumstances occur indicating that the recorded goodwill may be impaired. The Company regularly monitors current business conditions and other factors including, but not limited to, adverse industry or economic trends and lower projections of profitability that may impact future operating results. The process of evaluating the potential impairment of goodwill requires significant judgment. In performing the Company’s annual goodwill impairment test, the Company is permitted to first assess qualitative factors to determine whether it is more likely than not that the fair value of any of the Company’s reporting units is less than its carrying amount, including goodwill. In performing the qualitative assessment, the Company considers certain events and circumstances specific to the reporting unit and the entity as a whole, such as macroeconomic conditions, industry and market considerations, overall financial performance and cost factors when evaluating whether it is more likely than not that the fair value of any of the reporting units is less than its carrying amount. The Company is also permitted to bypass the qualitative assessment and proceed directly to the quantitative test. If the Company chooses to undertake the qualitative assessment and concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company would then proceed to the quantitative impairment test. In the quantitative assessment, the Company compares the fair value of the reporting unit to its carrying amount, which includes goodwill. If the fair value exceeds the carrying value, no impairment loss exists. If the fair value is less than the carrying amount, a goodwill impairment loss is measured and recorded.

The Company assesses goodwill for impairment on an annual basis as of May 31 or more frequently when events and circumstances occur indicating that recorded goodwill may be impaired. The Company did not record an impairment charge during the year ended July 31, 2024.

In-Process Research and Development

The Company has acquired in-process research and development (“IPR&D”) intangible assets pursuant to a business combination. These IPR&D assets are considered indefinite-lived intangible assets until completion or abandonment of the associated research and development efforts. These IPR&D assets are not amortized but reviewed for impairment at least annually, or when events or changes in the business environment indicate the carrying value may be impaired.

F-14

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Acquired IPR&D pursuant to an asset acquisition that has no alternative future use is expensed immediately as a component of in-process research and development expense in the consolidated statements of operations and comprehensive loss.

Revenue Recognition

The Company applies the five-step approach as described in ASC 606, Revenue from Contracts with Customers, which consists of the following: (i) identifying the contract with a customer, (ii) identifying the performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the performance obligations in the contract and (v) recognizing revenue when (or as) the entity satisfies a performance obligation. The Company disaggregates its revenue by source within its consolidated statements of operations and comprehensive loss.

The Company’s infusion technology revenue is derived from Day Three’s Unlokt technology which is recognized in accordance with ASC 606. Day Three provides manufacturing services where they use proprietary technology, equipment, and processes to manufacture water-soluble product for their customers at their customer facilities. Day Three is acting as a principal in the transaction, as it is primarily responsible for fulfillment and acceptability of the services. Infusion technology revenue is recognized over time as the Company’s performance obligation is satisfied, which is generally within a 30-day period. The criterion in ASC 606-10-25-27, that the entity’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced, is met given that the customer is controlling the product as Day Three is performing the service on the customer’s premises. Revenue is recognized over the period of performance using an output method where the number of grams produced is the output, as such method best depicts the Company’s efforts to satisfy the performance obligation. Customer billings in advance of revenue recognition result in contract liabilities. As of July 31, 2024, there were no contract liabilities recognized on the consolidated balance sheets related to infusion technology revenue.

As an owner and operator of real estate, the Company derives rental revenue from leasing office and parking space to tenants at its properties. In addition, the Company earns revenue from recoveries from tenants, consisting of amounts due from tenants for common area maintenance, real estate taxes and other recoverable costs. Revenue from recoveries from tenants is recorded together with rental income on the consolidated statements of operations and comprehensive loss which is also consistent with the guidance under ASC 842, Leases.

The revenue derived from the 520 Property for the period prior to its sale, which included leasing office and parking space to the tenants, is presented within discontinued operations in the consolidated statements of operations and comprehensive loss.

Contractual rental revenue is reported on a straight-line basis over the terms of the respective leases. Accrued rental income, included within other assets on the consolidated balance sheets, represents cumulative rental income earned in excess of rent payments received pursuant to the terms of the individual lease agreements.

The Company also earned revenue from parking which was derived primarily from monthly and transient daily parking which is a component of income from discontinued operations. The monthly and transient daily parking revenue falls within the scope of ASC 606 and was accounted for at the point in time when control of the goods or services transfers to the customer and the Company’s performance obligation is satisfied, consistent with the Company’s previous accounting.

Cost of Infusion Technology Revenue

The cost of Infusion Technology revenue includes costs related to supplies, materials, production labor, and travel costs.

Research and Development Costs

Research and development costs and expenses incurred by consolidated entities consist primarily of salaries and related personnel expenses, stock-based compensation, fees paid to external service providers, laboratory supplies, costs for facilities and equipment, license costs, and other costs for research and development activities. Research and development expenses are recorded in operating expenses in the period in which they are incurred. Estimates have been used in determining the liability for certain costs where services have been performed but not yet invoiced. The Company monitors levels of performance under each significant contract for external service providers, including the extent of patient enrollment and other activities through communications with the service providers to reflect the actual amount expended.

F-15

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Contingent milestone payments associated with acquiring rights to intellectual property are recognized when probable and estimable. These amounts are expensed to research and development when there is no alternative future use associated with the intellectual property. There were no such payment expenses during the years ended July 31, 2024 and 2023.

Stock-Based Compensation

The Company accounts for stock-based compensation using the provisions of ASC 718, Stock-Based Compensation, which requires the recognition of the fair value of stock-based compensation. Stock-based compensation is estimated at the grant date based on the fair value of the awards. The Company accounts for forfeitures of grants as they occur. Compensation cost for awards is recognized using the straight-line method over the vesting period. Stock-based compensation is included in general and administrative expense and research and development expense in the consolidated statements of operations and comprehensive loss.

Income Taxes

The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the period in which related temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in its assessment of a valuation allowance. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date of such change.

The Company uses a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return. The Company determines whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more likely than not recognition threshold, the Company presumes that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. Tax positions that meet the more-likely-than-not recognition threshold are measured to determine the amount of tax benefit to recognize in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in one or more of the following: an increase in a liability for income taxes payable, a reduction of an income tax refund receivable, a reduction in a deferred tax asset, or an increase in a deferred tax liability.

The Company classifies interest and penalties on income taxes as a component of income tax expense, if any.

Contingencies

The Company accrues for loss contingencies when both (a) information available prior to issuance of the financial statements indicates that it is probable that a liability had been incurred at the date of the financial statements and (b) the amount of loss can reasonably be estimated. When the Company accrues for loss contingencies and the reasonable estimate of the loss is within a range, the Company records its best estimate within the range. When no amount within the range is a better estimate than any other amount, the Company accrues the minimum amount in the range. The Company discloses an estimated possible loss or a range of loss when it is at least reasonably possible that a loss may have been incurred.

Fair Value Measurements

Fair value of financial and non-financial assets and liabilities is defined as an exit price, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three-tier hierarchy for inputs used to measure fair value, which prioritizes the inputs to valuation techniques used to measure fair value, is as follows:

●

Level 1 - quoted prices in active markets for identical assets or liabilities;

●

Level 2 - quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability; or

●

Level 3 - unobservable inputs for the asset or liability, such as discounted cash flow models or valuations.

F-16

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy.

Functional Currency

The U.S. Dollar is the functional currency of our entities operating in the United States. The functional currency for our subsidiaries operating outside of the United States is the New Israeli Shekel, the currency of the primary economic environment in which such subsidiaries primarily expend cash. The Company translates those subsidiaries’ financial statements into U.S. Dollars. The Company translates assets and liabilities at the exchange rate in effect as of the consolidated financial statement date, and translates accounts from the consolidated statements of operations and comprehensive loss using the weighted average exchange rate for the period. The Company reports gains and losses from currency exchange rate changes related to intercompany receivables and payables, which are not of a long-term investment nature, as part of other comprehensive loss.

Loss Per Share

Basic loss per share is computed by dividing net loss attributable to all classes of common stockholders of the Company by the weighted average number of shares of all classes of common stock outstanding during the applicable period. Diluted loss per share is determined in the same manner as basic loss per share, except that the number of shares is increased to include restricted stock still subject to risk of forfeiture and to assume exercise of potentially dilutive stock options using the treasury stock method, unless the effect of such increase would be anti-dilutive. The Company uses loss from continuing operations as the “control number” or benchmark to determine whether potential common shares are dilutive or anti-dilutive for purposes of reporting loss per share for discontinued operations.

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments, which was codified in ASC 326, Financial Instruments - Credit Losses (“ASC 326”). The standard changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. Because the Company is a smaller reporting company, ASC 326 became effective for the Company for fiscal years beginning after December 15, 2022. As such, the Company adopted ASC 326 effective August 1, 2023, utilizing the modified retrospective transition method. Upon adoption, the Company updated its impairment model to utilize a forward-looking CECL model in place of the incurred loss methodology for financial instruments measured at amortized cost, primarily including its accounts receivable. In relation to available-for-sale (“AFS”) debt securities, the guidance eliminates the concept of “other-than-temporary” impairment, and instead focuses on determining whether any impairment is a result of a credit loss or other factors. The adoption of ASC 326 did not have a material impact on our consolidated financial statements as of the adoption date.

Recently Issued Accounting Standards Not Yet Adopted

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date. The Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies an issuer’s accounting for convertible instruments by reducing the number of accounting models that require separate accounting for embedded conversion features. ASU 2020-06 also simplifies the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification and makes targeted improvements to the disclosures for convertible instruments and earnings-per-share (“EPS”) guidance. This update will be effective for the Company’s fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Entities can elect to adopt the new guidance through either a modified retrospective method of transition or a fully retrospective method of transition. The Company is currently evaluating the impact of the pending adoption of the new standard on its consolidated financial statements and intends to adopt the standard as of August 1, 2024.

F-17

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”), which clarifies the guidance in ASC Topic 820, Fair Value Measurement (“Topic 820”), when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. ASU 2022-03 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements and intends to adopt the standard as of August 1, 2024.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for all entities for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The new guidance is effective for the Company in the annual period beginning August 1, 2024 and interim periods beginning February 1, 2025. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

NOTE 3 – CORNERSTONE RESTRUCTURING, ACQUISITION, AND RP FINANCE CONSOLIDATION

Prior to the Cornerstone Restructuring, Rafael (directly via certain of its subsidiaries, and through an equity method investment in RP Finance) held certain debt and equity investments in Cornerstone, which are described in Note 4.

Restructuring of Cornerstone

On March 13, 2024, Rafael, Cornerstone, and other holders of debt and equity securities of Cornerstone agreed to various transactions which effected a recapitalization and restructuring of the outstanding debt and equity interests in Cornerstone. In the Cornerstone Restructuring, Rafael obtained shares of common stock of Cornerstone (“Cornerstone Common Stock”) that gave the Company control over approximately 67% of the outstanding voting interests of Cornerstone (the “Cornerstone Acquisition”). For accounting purposes, Rafael was determined to be the acquirer, as the Company has been determined to be the primary beneficiary of Cornerstone, a VIE, in accordance with ASC 810. For Rafael, the Cornerstone Acquisition is the result of the Cornerstone Restructuring. As part of the Cornerstone Restructuring:

(i) all issued and outstanding shares of Cornerstone’s preferred stock and non-voting common stock converted into shares of Cornerstone Common Stock (the “Mandatory Common Conversion”) on a one-for-one basis, which shares of Cornerstone Common Stock were then subjected to the Reverse Stock Split (as defined below), including the conversion of Rafael’s 60,673,087 shares of Cornerstone’s Series D Preferred Stock into 6,067,306 shares of post-Reverse Stock Split Cornerstone Common Stock;

(ii) Cornerstone offered shares of Cornerstone’s Common Stock to all holders of Cornerstone’s promissory notes convertible into Cornerstone Series C preferred stock (the “Series C Convertible Notes”) who were Accredited Investors with the purchase price to be paid through conversion of the outstanding principal amount and accrued interest on their Series C Convertible Notes held by each holder into Common Stock at the Cornerstone Restructuring Common Stock Price as described below (the “Series C Convertible Notes Exchange”). Approximately 94% of the outstanding Series C Convertible Notes participated in the Series C Convertible Notes Exchange, and $15.5 million of principal and accrued interest outstanding on the Series C Convertible Notes was converted into 15,739,661 shares of post-Reverse Stock Split Cornerstone Common Stock. Series C Convertible Notes with an aggregate principal and accrued interest amount of $0.9 million remaining outstanding, of which Series C Convertible Notes with an aggregate principal and accrued interest amount of $93 thousand were amended in the Cornerstone Restructuring to (A) extend the maturity date thereof to May 31, 2028 and (B) provide that, on conversion thereof, the converting holder will receive shares of Cornerstone Common Stock. The holders of these amended Series C Convertible Notes that remain outstanding waived such holders’ rights in connection with the Cornerstone Restructuring. Series C Convertible Notes with an aggregate principal and accrued interest amount of $0.8 million remained outstanding and were not amended in connection with the Cornerstone Restructuring. The principal and accrued interest are included in Convertible notes on the consolidated balance sheets;

F-18

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(iii) Rafael converted the approximately $30.6 million of the outstanding principal and accrued interest under the RFL Line of Credit (as defined in Note 4) into 30,080,747 shares of post-Reverse Stock Split Cornerstone Common Stock. The conversion of the RFL Line of Credit, inclusive of accrued interest, into equity in Cornerstone represents a recovery of a previously written-off asset, and the Company recorded the recovery in accordance with ASC 326, by recognizing a gain of $30.6 million in the year ended July 31, 2024, in conjunction with and immediately prior to the Cornerstone Restructuring equal to the fair value of the Cornerstone Common Stock, up to the amount of principal and accrued interest on the instrument, that was received in settlement of the RFL Line of Credit in connection with the Cornerstone Restructuring. Upon the consummation of the Cornerstone Acquisition, the investment was eliminated as Cornerstone became a majority-owned subsidiary of Rafael and the difference between the investment’s carrying value and its fair value included in purchase consideration, which is based on the value of Cornerstone’s Common Stock, resulted in a gain of $7.3 million that was recorded to the Company’s additional paid-in capital given the related party nature of the transaction;

(iv) Rafael converted the approximately $2.1 million of the outstanding principal and accrued interest pursuant to the 2023 Promissory Note (as defined in Note 4) into 2,116,932 shares of post-Reverse Stock Split Cornerstone Common Stock. Prior to the Cornerstone Restructuring, the Company recorded the 2023 Promissory Note at its fair value as the security was classified as available-for-sale. The 2023 Promissory Note is included in the consideration paid at its fair value (which was deemed to be the fair value of the Cornerstone Common Stock received) in the Cornerstone Acquisition in accordance with ASC 810-10-30-4. The Company recognized a gain of $0.6 million in the year ended July 31, 2024 for the realization of previously unrealized gains on the fair value of the 2023 Promissory Note in other comprehensive loss;

(v) Cornerstone and RP Finance amended the RPF Line of Credit (as defined in Note 5) to (i) extend the maturity date of the approximately $21.9 million in borrowings thereunder to May 31, 2028, (ii) limit the number of shares to be issued thereunder in respect of anti-dilution protection provided for therein in connection with the Cornerstone Restructuring and to provide RP Finance 3,658,368 shares of post-Reverse Stock Split Cornerstone Common Stock so that following the Cornerstone Restructuring, RP Finance holds six percent (6%) of the outstanding Common Stock of Cornerstone (the “RPF 6% Top Up Shares”), (iii) terminate any anti-dilution protection in respect of such ownership interest following consummation of the Cornerstone Restructuring, and (iv) terminate all future lending obligations of RP Finance under the RPF Line of Credit (as so amended, the “Amended RPF Line of Credit”);

(vi) Rafael invested an additional $1.5 million in cash in exchange for 1,546,391 shares of post-Reverse Stock Split Cornerstone Common Stock;

(vii) Cornerstone amended and restated its certificate of incorporation, to, among other things, effect a reverse split of all of Cornerstone’s capital stock on a one-for-ten basis (the “Reverse Stock Split”), set the number of authorized shares of Cornerstone Common Stock to be sufficient for issuance of the Common Stock in the Cornerstone Restructuring and eliminate the authorized preferred stock not required to be authorized as a result of the Mandatory Common Conversion;

(viii) Cornerstone amended prior agreements in place giving certain parties rights to designate members of the Board and those rights have been eliminated. All directors are elected by the Cornerstone stockholders and as the majority stockholder, Rafael can control that vote. The Company has entered into a voting agreement (the “Voting Agreement”) whereby Rafael has agreed to maintain three directors of Cornerstone that are independent of Rafael; and

(ix) Cornerstone increased the available reserve of Cornerstone Common Stock for grant to employees, consultants and other service providers to approximately 10% of Cornerstone’s fully diluted capital stock (the “Reserve Increase”).

Acquisition of Cornerstone

As a result of the Cornerstone Restructuring, Rafael became a 67% owner of the issued and outstanding Common Stock of Cornerstone, which became a consolidated subsidiary of Rafael. The Cornerstone Acquisition is accounted for as an acquisition of a VIE that is not a business in accordance with U.S. GAAP. The Company was determined to be the accounting acquirer for financial reporting purposes. The guidance requires an initial screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single asset or group of similar assets. If that screen test is met, the acquired entity is not a business for financial reporting purposes. Accordingly, the Cornerstone Acquisition will be accounted for as an asset acquisition as substantially all of the fair value of Cornerstone’s gross assets is concentrated within in-process research and development, an intangible asset.

Under ASC 810, the initial consolidation of a VIE shall not result in goodwill being recognized, and the acquirer shall recognize a gain or loss for the difference of (a) the sum of (i) the fair value of any consideration paid, (ii) the fair value of any noncontrolling interests, and (iii) the reported amount of any previously held interests, and (b) the net amount of the VIE’s identifiable assets and liabilities recognized and measured in accordance with ASC 805, Business Combinations (“ASC 805”). In accordance with the calculation within ASC 810, no gain or loss was recognized on the Cornerstone Acquisition.

F-19

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The net amount of the VIE’s identifiable assets and liabilities recognized with respect to the Cornerstone Acquisition is based upon management’s preliminary estimates of and assumptions related to the fair values of assets acquired and liabilities assumed, using currently available information. For this purpose, fair value shall be determined in accordance with the fair value concepts defined in ASC 820, Fair Value Measurements and Disclosures.

The following table presents, in accordance with ASC 810, the sum of (i) the fair value of consideration paid, (ii) the fair value of noncontrolling interests, and (iii) the reported amount of previously held interests (amounts in thousands):

Fair value of consideration paid
Fair value of RFL Line of Credit	$	37,845
Fair value of 2023 Promissory Note		2,663
Cash consideration		1,500
(i) Total fair value of consideration paid		42,008
(ii) Fair value of noncontrolling interests		27,501
(iii) Reported value of previously held interests⁽¹⁾		—
Sum of (i), (ii), and (iii)	$	69,509

⁽¹⁾

Rafael’s interest in the Series D Preferred Stock of Cornerstone, that was converted into Cornerstone Common Stock in the Cornerstone Restructuring, represents a previously held interest in Cornerstone that is included at its reported amount, or $0.

The following table presents, in accordance with ASC 810, the net preliminary amount of the VIE’s identifiable assets and liabilities recognized and measured in accordance with ASC 805 (amounts in thousands):

Assets acquired and liabilities assumed
Cash and cash equivalents	$	2,756
Prepaid expenses and other current assets		121
Property and equipment		19
Other assets		48
Acquired IPR&D		89,861
Accounts payable		(2,006	)
Accrued expenses		(1,188	)
Series C Convertible Notes, short-term portion		(614	)
Due to related parties		(1,289	)
Other current liabilities		(28	)
Series C Convertible Notes, long-term portion		(70	)
Creditor payable, noncurrent		(2,745	)
Amended RPF Line of Credit		(15,336	)
Other liabilities		(20	)
Total	$	69,509

In accordance with the calculation within ASC 810, no gain or loss was recognized on the initial consolidation of Cornerstone. The Company incurred transaction costs of $716 thousand for the year ended July 31, 2024 for consulting, legal, accounting, and other professional fees that have been expensed as general and administrative expenses as part of the Cornerstone Restructuring, Cornerstone Acquisition, and RP Finance Consolidation.

The Company recognized a gain in the amount of $720 thousand on the reversal of a reserve on a receivable due from Cornerstone, which was fully reserved for by the Company due to the Data Events. This receivable balance is then eliminated in consolidation against the corresponding payable balance acquired from Cornerstone recorded in Cornerstone’s Due to related parties balance in the assets acquired and liabilities assumed in the Cornerstone Acquisition.

F-20

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

To value the IPR&D, the Company utilized the Multi-Period Excess Earnings Method (“MPEEM”), under the Income Approach. The method reflects the present value of the projected operating cash flows generated by Cornerstone’s assets after taking into account the cost to realize the revenue, and an appropriate discount rate to reflect the time value and risk associated with the invested capital. IPR&D acquired represents Cornerstone’s research and development activities related to oncology-focused pharmaceuticals which seeks to exploit the metabolic differences between normal cells and cancer cells.

IPR&D represents the R&D asset of Cornerstone which is in-process, but not yet completed, and which has no alternative use. As the Cornerstone Acquisition has been accounted for as an acquisition of a VIE that is not a business, it was determined that the fair value of IPR&D asset acquired with no alternative future use should be charged to IPR&D expense at the acquisition date.

The Company assumed Cornerstone’s liability to RP Finance under the Amended RPF Line of Credit at its fair value in the Cornerstone Acquisition and acquired RP Finance’s receivable from Cornerstone under the Amended RPF Line of Credit at its fair value in the RP Finance Consolidation. These intercompany amounts are eliminated in consolidation. The Company will accrete the fair value of Cornerstone’s liability and RP Finance’s receivable under the Amended RPF Line of Credit to the amount due on May 31, 2028 as interest expense and interest income, respectively, in the consolidated statements of operations and comprehensive loss over the estimated term of the Amended RPF Line of Credit.

The creditors of Cornerstone do not have legal recourse to the Company’s general credit.

The consolidated financial statements include the results of the Cornerstone Acquisition subsequent to the closing date. Cornerstone did not produce any revenue for the period from the closing date through July 31, 2024. Cornerstone incurred a net loss of $93.0 million, of which $30.7 million is attributable to non-controlling interests, for the period from the closing date through July 31, 2024, which is included in the Company’s consolidated statements of operations and comprehensive loss for the year ended July 31, 2024. Cornerstone’s results of operations included IPR&D expense of $89.9 million, related to the IPR&D asset acquired with no alternative future use, that was pushed down to the entity.

Consolidation of RP Finance

RP Finance, an entity in which the Company owns a 37.5% equity interest (previously accounted for as an equity method investment of Rafael), and in which an entity associated with members of the family of Howard Jonas holds an additional 37.5% equity interest, holds debt and equity investments in Cornerstone (which is included in the Company’s 67% equity ownership interest in Cornerstone). In conjunction with the Cornerstone Acquisition, the Company reassessed its relationship with RP Finance and, as a result of the Cornerstone Restructuring and resulting Cornerstone Acquisition, determined that RP Finance is still a VIE and that the Company is now considered the primary beneficiary of RP Finance as the Company now holds the ability to control repayment of the RPF Line of Credit, which directly impacts RP Finance’s economic performance. Therefore, the Company has consolidated RP Finance as a result of the Cornerstone Acquisition (the “RP Finance Consolidation”). The RP Finance Consolidation is accounted for as an acquisition of a VIE that is not a business in accordance with U.S. GAAP as RP Finance does not meet the definition of a business under U.S. GAAP.

(i) Fair value of consideration paid	$	—
(ii) Fair value of noncontrolling interests		12,667
(iii) Reported value of previously held interests⁽¹⁾		—
Sum of (i), (ii), and (iii)	$	12,667

⁽¹⁾

Rafael ownership of 37.5% of the equity interests in RP Finance, accounted for as an equity method investment prior to the RP Finance Consolidation, represents a previously held interest in Cornerstone that is included at its reported amount, or $0.

F-21

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents, in accordance with ASC 810, the net amount of the VIE’s identifiable assets and liabilities recognized and measured in accordance with ASC 805 (amounts in thousands):

Assets acquired and liabilities assumed
Investments - Cornerstone common stock	$	4,931
Due from Cornerstone - Amended RPF Line of Credit		15,336
Total	$	20,267

In accordance with the calculation within ASC 810, a gain of $7.6 million was recognized as an adjustment to Rafael’s additional paid-in capital, due to the related parties involved, upon the RP Finance Consolidation. The acquired RP Finance investment in Cornerstone of $4.9 million, consisting of the fair value of RP Finance’s 3,919,598 shares of post-Reverse Stock Split Cornerstone Common Stock, is eliminated in consolidation, as Cornerstone is a consolidated subsidiary of Rafael with a corresponding decrease of $1.8 million to Rafael’s additional paid-in capital and corresponding decrease of $3.1 million to noncontrolling interests, equivalent to their respective proportionate ownership interest in RP Finance’s shares of Cornerstone Common Stock.

The consolidated financial statements include the results of RP Finance subsequent to the closing date. The results of operations of RP Finance were insignificant.

Pro Forma Financial Information

The following table sets forth the pro forma consolidated results of operations of Rafael, Cornerstone, and RP Finance after giving effect to the Cornerstone Restructuring, the Cornerstone Acquisition, and the RP Finance Consolidation for the year ended July 31, 2024 and 2023, as if the Cornerstone Restructuring, the Cornerstone Acquisition, and the RP Finance Consolidation had collectively occurred on August 1, 2022. The pro forma results of operations are presented for informational purposes only and are not indicative of the results of operations that would have been achieved if the Cornerstone Restructuring, the Cornerstone Acquisition, and RP Finance Consolidation had taken place on the date noted above, or of results that may occur in the future.

(in thousands, except for share and per share amounts)	Twelve Months ended July 31,
	2024			2023
Revenue	$	637		$	279
Loss from operations		(15,803	)		(117,234	)
Net loss from continuing operations attributable to common stockholders		(6,745	)		(42,483	)
Net loss per share from continuing operations attributable to common stockholders		(0.28	)		(1.83	)
Weighted average common shares outstanding		23,745,516			23,263,211

The pro forma loss from operations for the year ended July 31, 2023 includes the IPR&D expense of $89.9 million, related to the IPR&D asset acquired in the Cornerstone Acquisition with no alternative future use, which is reported in Rafael’s historical financial statements for the year ended July 31, 2024.

The pro forma net loss from continuing operations attributable to common stockholders for the year ended July 31, 2023 includes a gain of $31.3 million on the recovery of receivables from Cornerstone and the recognition of a net loss attributable to noncontrolling interests of Cornerstone of $31.5 million, which are reported in Rafael’s historical financial statements for the year ended July 31, 2024.

NOTE 4 – INVESTMENT IN CORNERSTONE

Cornerstone is a clinical stage, cancer metabolism-based therapeutics company focused on the development and commercialization of therapies that seeks to exploit the metabolic differences between normal cells and cancer cells.

F-22

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Prior to the Cornerstone Restructuring described in Note 3, Rafael (directly via certain of its subsidiaries, and through an equity method investment in RP Finance) held certain debt and equity investments in Cornerstone which included:

(a) 44.0 million shares of Series D Preferred Stock of Cornerstone held by Pharma Holdings LLC (“Pharma Holdings”), a 90% owned non-operating subsidiary of the Company, and 16.7 million shares of Series D Preferred Stock of Cornerstone held by CS Pharma Holdings LLC (“CS Pharma”), a non-operating subsidiary of the Company (the “Series D Preferred Stock”). Pharma Holdings owns 50% of CS Pharma. Accordingly, the Company holds an effective 45% indirect interest in the assets held by CS Pharma. The Company serves as the managing member of Pharma Holdings, and Pharma Holdings serves as the managing member of CS Pharma, with broad authority to make all key decisions regarding their respective holdings. Any distributions that are made to CS Pharma from Cornerstone that are in turn distributed by CS Pharma will need to be made pro rata to all members, which would entitle Pharma Holdings to 50% (based on current ownership) of such distributions. Similarly, if Pharma Holdings were to distribute proceeds it receives from CS Pharma, it would do so on a pro rata basis, entitling the Company to 90% (based on current ownership) of such distributions. Due to the Data Events, the Company previously recorded a full impairment of the value of the Series D Preferred Stock included in the Company’s cost method investment in Cornerstone;

(b) a loan of $25 million by the Company to Cornerstone under a Line of Credit Agreement (the “RFL Line of Credit”). Due to the Data Events, the Company previously recorded a full reserve on the $25 million in principal due to the Company, and on the accrued interest, from Cornerstone;

(c) a $2 million promissory note (the “2023 Promissory Note”) from Cornerstone, bearing interest at a rate of seven and one-half percent (7.5%) per annum, held by the Company. The 2023 Promissory Note was secured by a first priority security interest in all of Cornerstone’s right, title and interest in and to all of the tangible and intangible assets purchased by Cornerstone pursuant to the purchase agreement between Cornerstone and Calithera Biosciences, Inc. (“Calithera”), which was a clinical-stage, precision oncology biopharmaceutical company that was developing targeted therapies to redefine treatment for biomarker-specific patient populations, and all proceeds therefrom and all rights to the data related to CB-839 (the “Collateral”). The Company recorded the 2023 Promissory Note at fair value and the security was classified as available-for-sale prior to the Cornerstone Restructuring;

(d) a $720 thousand receivable balance due from Cornerstone, which was fully reserved for by the Company due to the Data Events; and

(e) loans in the aggregate amount of $21.9 million by RP Finance to Cornerstone under a Line of Credit Agreement which provided for a revolving commitment of up to $50 million to fund clinical trials and other capital needs (the “RPF Line of Credit”, see Note 5). The Company owns 37.5% of the equity interests in RP Finance and was required to fund 37.5% of funding requests from Cornerstone under the RPF Line of Credit. RP Finance also holds 261,230 post-Reverse Stock Split shares of Cornerstone Common Stock (“RPF Historical Cornerstone Shares”), issued to RP Finance in connection with entering into the RPF Line of Credit representing 12% of the issued and outstanding shares of Cornerstone Common Stock prior to the Cornerstone Restructuring, with such ownership interest subject to anti-dilution protection as set forth in the RPF Line of Credit agreement. The Company accounted for its investment in RP Finance under the equity method.

Due to the Data Events on October 28, 2021, the Company recorded a full impairment for the assets recorded related to Rafael’s cost method investment in Cornerstone, the amounts due to Rafael under the RFL Line of Credit, and its investment in RP Finance.

A trust for the benefit of the children of Howard Jonas (Chairman of the Board and Executive Chairman and former Chief Executive Officer of the Company and Member of the Board of Cornerstone) holds a financial instrument (the “Instrument”) that owns 10% of Pharma Holdings. The Instrument holds a contractual right to receive additional shares of Cornerstone capital stock equal to 10% of the fully diluted capital stock of Cornerstone (the “Bonus Shares”) upon the achievement of certain milestones, each of which the Company has determined not to be probable. The additional 10% is based on the fully diluted capital stock of Cornerstone, at the time of issuance. If any of the milestones are met, the Bonus Shares are to be issued without any additional payment.

Prior to the Cornerstone Restructuring described in Note 3, the Company indirectly owned 51% of the issued and outstanding equity in Cornerstone and had certain governance rights, with approximately 8% of the issued and outstanding equity owned by the Company’s subsidiary CS Pharma and 43% owned by the Company’s subsidiary Pharma Holdings.

Prior to the Cornerstone Restructuring, the Company had determined that Cornerstone was a VIE; however, the Company had determined that it was not the primary beneficiary as it did not have the power to direct the activities of Cornerstone that most significantly impact Cornerstone’s economic performance. In addition, the interests held in Cornerstone were Series D Convertible Preferred Stock and did not represent in-substance common stock.

F-23

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On March 13, 2024, Cornerstone consummated a restructuring of its outstanding debt and equity interests. See Note 3 for additional information regarding the Cornerstone Restructuring transaction.

NOTE 5 – INVESTMENT IN RP FINANCE, LLC

On February 3, 2020, Cornerstone entered into a Line of Credit with RP Finance (“RPF Line of Credit”) which provided a revolving commitment of up to $50,000,000 to fund clinical trials and other capital needs. In connection with entering into the RPF Line of Credit, Cornerstone issued to RP Finance 261,230 shares (post-Reverse Stock Split) of Cornerstone Common Stock representing 12% of the issued and outstanding shares of Cornerstone Common Stock, with such interest subject to anti-dilution protection as set forth in the RPF Line of Credit.

The Company owns 37.5% of the equity interests in RP Finance, an entity associated with members of the family of Howard Jonas owns 37.5% of the equity interests in RP Finance, and the remaining 25% equity interests in RP Finance are owned by other stockholders of Cornerstone.

RP Finance had funded a cumulative total of $21.9 million to Cornerstone under the RPF Line of Credit, of which the Company had funded a cumulative total of $9.375 million in accordance with its 37.5% ownership interests in RP Finance. Due to the Data Events, the amounts funded had been fully reserved.

Prior to the Cornerstone Restructuring and resulting RP Finance Consolidation described in Note 3, the Company had determined that RP Finance was a VIE; however, the Company had determined that it was not the primary beneficiary as the Company did not have the power to direct the activities of RP Finance that most significantly impacted RP Finance’s economic performance and, therefore, was not required to consolidate RP Finance. Therefore, the Company used the equity method of accounting to record its investment in RP Finance.

On March 13, 2024, Cornerstone consummated the Cornerstone Restructuring of its outstanding debt and equity interests. As part of the Cornerstone Restructuring, Cornerstone and RP Finance amended the RPF Line of Credit agreement. See Note 3 for additional information regarding the Cornerstone Restructuring transaction.

NOTE 6 – CONVERTIBLE NOTES PAYABLE

As of July 31, 2024, Cornerstone has $686 thousand in principal, and $236 thousand of accrued interest thereon, of Series C Convertible Notes outstanding (the “Series C Convertible Notes”). The Series C Convertible Notes accrue interest at a rate of 3.5% per annum and are due, together with accrued interest, one year (unless amended) from date of issuance and automatically accelerate upon the sale of Cornerstone in its entirety or the sale or license of substantially all of Cornerstone’s assets or intellectual property. The Series C Convertible Notes (including all accrued and unpaid interest thereon) automatically convert into the same class of securities (including stock warrants) sold in Cornerstone’s next equity financing (i) where Cornerstone receives gross proceeds of at least $10,000,000 from Institutional Investors (a “Qualified Financing”), or (ii) from an underwritten initial public offering (“IPO”). The conversion price of the Series C Convertible Notes upon a Qualified Financing shall be the lesser of (i) 90% of the price per share (or unit) at which the securities in the Qualified Financing are sold, or (ii) $1.25 price per share (or unit) (whichever is less) at the holder’s selection of (i) or (ii), and 90% of the share price per share (or unit) at which securities in an IPO are first sold.

The outstanding Series C Convertible Notes are convertible, at the option of the holders, in certain equity financings consummated by Cornerstone or into equity securities and warrants to purchase equity securities of Cornerstone.

In the event of a liquidation event of Cornerstone prior to the repayment or conversion of the Series C Convertible Notes, the holders are entitled to receive either (a) an amount equal to the outstanding principal and interest due, or (b) the pro rata per share amount of the proceeds of such liquidation the holders would be entitled to had they exercised their conversion right.

Of the Series C Convertible Notes outstanding as of July 31, 2024:

(a) Series C Convertible Notes with an aggregate principal amount of $614 thousand remain outstanding and were not amended in connection with the Cornerstone Restructuring. The interest accrued on these Series C Convertible Notes is $213 thousand and is recorded in accrued expenses on the consolidated balance sheet as of July 31, 2024. In the Cornerstone Acquisition, Rafael recorded these Series C Convertible Notes as current liabilities at the value of their aggregate principal amount of $614 thousand, and $205 thousand of accrued interest thereon recorded in accrued expenses on the consolidated balance sheet as of the date of the Cornerstone Acquisition, as these values approximate their fair values. As of July 31, 2024, these Series C Convertible Notes are currently in default as they are beyond the maturity date; and

F-24

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(b) Series C Convertible Notes with an aggregate principal amount of $72 thousand were amended in the Cornerstone Restructuring to (i) extend the maturity date thereof to May 31, 2028 and (ii) provide that, on conversion thereof, the converting holder will receive shares of Cornerstone Common Stock. The holders of these amended Series C Convertible Notes that remain outstanding waived such holders’ rights in connection with the Cornerstone Restructuring. The interest accrued on these Series C Convertible Notes is $23 thousand as of July 31, 2024. In the Cornerstone Acquisition, Rafael recorded these Series C Convertible Notes as noncurrent liabilities at their fair value of $70 thousand, which considers the aggregate principal plus accrued interest. The Company will accrete the fair value of these Series C Convertible Notes to the value of the principal plus accrued interest thereon as of the date of the Cornerstone Acquisition as interest expense in the consolidated statements of operations and comprehensive loss over the estimated term of these amended Series C Convertible Notes.

During the year ended July 31, 2024, the Company recorded $9 thousand of interest expense in relation to the Cornerstone Series C Convertible Notes to interest expense on the consolidated statements of operations and comprehensive loss.

NOTE 7 – ACCRUED EXPENSES

Accrued expenses consist of the following:

	July 31, 2024		July 31, 2023
	(in thousands)
Accrued expenses, current
Accrued bonuses	$	654	$	403
Accrued professional fees		437		276
Accrued payroll expenses		441		7
Accrued interest		213		—
Other accrued expenses		53		77
Total accrued expenses, current		1,798		763

Creditor payable, noncurrent		2,982		—
Total accrued expenses	$	4,780	$	763

In the Cornerstone Acquisition, Rafael assumed a forbearance agreement, signed by Cornerstone on June 2, 2023, with a major creditor (the “Creditor”) of Cornerstone to which Cornerstone owed approximately $10.5 million arising from unpaid amounts in connection with work performed and costs incurred by the Creditor under previous work orders. The outstanding balance does not bear interest. As part of Cornerstone’s plan to seek new capitalization, it paid $2.0 million following the execution of a change order on July 21, 2023. Cornerstone also agreed to an additional payment of $2,000,000 upon the issuance of a FDA authorization to market any product of Cornerstone (the “FDA Approval Payment”). In the event Cornerstone completes a capital transaction which results in an aggregate of $100 million in additional capital received after January 1, 2023, Cornerstone agrees to pay an additional $4.0 million to the Creditor within 15 days of such capital transaction (the “Capital Raise Payment”). In exchange for Cornerstone’s agreement to make timely payments of the above-mentioned sums due in the Agreement, and after the payment of the FDA Approval Payment and the Capital Raise Payment, the Creditor will waive approximately $2.5 million of outstanding debt representing all remaining amounts due to the Creditor.

Following the payment of the initial $2.0 million, and pursuant to the terms of the agreement, the Creditor agreed to forbear from exercising any of its rights, remedies or claims in respect to the outstanding balance. The forbearance shall not be deemed to have otherwise waived, released, or adversely affected any of the Creditor’s rights, remedies or claims in respect to the outstanding balance.

F-25

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As part of the Cornerstone Acquisition, the creditor payable was recognized by the Company as an assumed liability and measured at its fair value of $2.7 million as of the date of the Cornerstone Acquisition. The Company will accrete the fair value of the creditor payable to the amount payable of $8.5 million owed to the Creditor as interest expense in the consolidated statements of operations and comprehensive loss over the estimated term of the forbearance agreement. The Company recorded $237 thousand of accretion in relation to the creditor payable recorded to interest expense in the consolidated statements of operations and comprehensive loss for year ended July 31, 2024.

The carrying value of the creditor payable was $3.0 million as of July 31, 2024 and is included in accrued expenses, noncurrent on the consolidated balance sheets.

NOTE 8 – CONVERTIBLE NOTE RECEIVABLE

On March 8, 2024, Day Three entered into a convertible note subscription agreement with a third-party company, Steady State LLC. Steady State LLC promises to pay to Day Three $1,000,000, together with interest, on October 16, 2026. The convertible note will accumulate simple interest at the annual rate being the lesser of: (i) the Bank of England base rate (updated on the first business day of each quarter) plus eight (8) percentage points, or (ii) 15% (computed on the basis of 365 days per year). Upon the closing and funding of a bona fide offering of equity securities by Steady State, LLC in an aggregate amount of at least $5,000,000, the convertible note will automatically convert into the number of membership interests equal to the outstanding principal plus accrued and unpaid interest divided by eighty percent (80%) of the price per membership unit in the offering. If a qualifying bona fide offering has not occurred on or before the maturity date, the principal and unpaid accrued interest of the convertible note may be converted, at the option of Day Three, into membership units. The convertible note receivable is classified as available-for-sale and recorded at fair value - see Note 15.

NOTE 9 – INVESTMENT IN LIPOMEDIX PHARMACEUTICALS LTD.

LipoMedix is a development-stage, privately held Israeli company focused on the development of an innovative, safe and effective cancer therapy based on liposome delivery.

In March 2021, the Company provided bridge financing in the principal amount of up to $400,000 to LipoMedix with a maturity date of September 1, 2021, and an interest rate of 8% per annum. As of September 1, 2021, LipoMedix was in default on the terms of the loan and as such, the interest rate has increased to 15% per annum.

On November 15, 2021, the Company entered into a share purchase agreement with LipoMedix to purchase up to 15,975,000 ordinary shares at $0.1878 per share for an aggregate purchase price of $3.0 million (the “LipoMedix SPA”). Additionally, LipoMedix issued the Company a warrant to purchase up to 15,975,000 ordinary shares at an exercise price of $0.1878 per share which expired on November 11, 2022.

As of the date of the LipoMedix SPA, there was an outstanding loan balance including principal of $400 thousand and accrued interest of $21.8 thousand owed by LipoMedix to the Company on a note made by LipoMedix in favor of the Company issued in March 2021. The amount due on the loan was netted against the approximately $3.0 million aggregate purchase price due to LipoMedix, resulting in a cash payment by the Company of approximately $2.6 million in exchange for the 15,975,000 shares purchased. As a result of the share purchase, the Company’s ownership of LipoMedix increased to approximately 84% with a noncontrolling interest of approximately 16%. The Company recorded approximately $8 thousand to adjust the carrying amount of the noncontrolling interest to reflect the Company’s increased ownership interest in LipoMedix’s net assets.

On February 9, 2023, the Company entered into a Share Purchase Agreement with LipoMedix to purchase 70,000,000 ordinary shares at $0.03 per share for an aggregate purchase price of $2.1 million (the “2023 LipoMedix SPA”). As a result of the share purchase, the Company’s ownership of LipoMedix increased to approximately 95% with a noncontrolling interest of approximately 5%. The Company recorded approximately $16 thousand to adjust the carrying amount of the noncontrolling interest to reflect the Company’s increased ownership interest in LipoMedix’s net assets.

As of July 31, 2024, the Company held 95% of the issued and outstanding ordinary shares of LipoMedix and has consolidated LipoMedix from the second quarter of fiscal 2018.

F-26

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – INVESTMENT IN DAY THREE LABS INC.

Initial investment in Day Three

On April 7, 2023, the Company entered into a Common Stock Purchase Agreement (the “Day Three Purchase Agreement”) with Day Three. Day Three is a company which reimagines existing cannabis offerings with pharmaceutical-grade technology and innovation like Unlokt™ to bring to market better, cleaner, more precise and predictable products. Pursuant to the Day Three Purchase Agreement, the Company purchased 4,302 shares of common stock, post DTL Reverse Stock Split (as defined below), representing 38% of the outstanding shares of common stock of Day Three (33% on a fully diluted basis), for a purchase price of $3.0 million. The Company also received a warrant exercisable for 7,529 shares of common stock, post DTL Reverse Stock Split, which expires five years from the date of issuance or earlier based on the occurrence of certain events as defined in the Day Three Purchase Agreement (the “Day Three Warrant”).

Prior to January 2024, the Company accounted for this investment as an equity method investment in accordance with the guidance in ASC 323, Investments – Equity Method and Joint Ventures. The Company determined that a 38% ownership interest in Day Three and its right to designate two members of the Board of Directors of Day Three (out of a current total of seven members) indicates that the Company is able to exercise significant influence.

The Company determined that Day Three is a VIE; however, the Company determined that, prior to January 2024, it was not the primary beneficiary as it did not have the power to direct the activities that most significantly impacted Day Three’s economic performance. The Company has therefore concluded it was not required to consolidate Day Three. The Company used the equity method of accounting to record its investment in Day Three.

Day Three’s fiscal year ends on December 31 and, as a result, the Company recognizes its share of Day Three’s earnings/loss on a one-month lag. For the years ended July 31, 2024 and 2023, the Company recognized approximately $422 thousand and $203 thousand of equity in loss of Day Three, based on its proportionate share of Day Three’s results through January 2, 2024, the effective date of the Day Three Acquisition, as discussed below. The assets and operations of Day Three are not significant to the Company’s assets or operations.

Acquisition of Day Three

In January 2024, the Company entered into a series of transactions with Day Three and certain shareholders to purchase an aggregate of 13,771 shares of common stock, post DTL Reverse Stock Split, of Day Three, acquiring a controlling interest of Day Three (the “Day Three Acquisition”). As a result of the Day Three Acquisition, the Company holds an aggregate 79% of the issued and outstanding shares of common stock of Day Three. Day Three has options and warrants outstanding that, if and when exercised, could dilute the Company’s ownership interest in Day Three. In connection with the Day Three Acquisition, the Day Three Warrant was terminated. The acquisition date was determined to be January 2, 2024, which is the date that Rafael obtained a controlling interest of the common stock of Day Three. The Day Three Acquisition is being accounted for as a business combination in accordance with ASC 805.

During the period of October 2023 through January 2024, the Company advanced $250,000 to Day Three pursuant to a promissory note (the “Day Three Note I”), $150,000 to Day Three pursuant to a promissory note (the “Day Three Note II”), $1,000,000 to Day Three pursuant to a third promissory note (the “Day Three Note III”), and $589,024 to Day Three pursuant to a fourth promissory note (the “Day Three Note IV”) (collectively, the “Day Three Promissory Notes”). The Day Three Promissory Notes accrue interest at rate of between 5.01% and 5.19% per annum.

The aggregate consideration of the Day Three Acquisition was $3.1 million, which consisted of 1) cash consideration of $0.2 million, 2) accrued consideration of $0.2 million, 3) the exchange of principal and accrued interest amounts totaling to $2.0 million owed by Day Three to the Company pursuant to the Day Three Promissory Notes for common stock, and 4) the fair value of previously held interests in Day Three of $0.7 million.

F-27

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the purchase consideration transferred in the Day Three Acquisition as defined in ASC 805:

(in thousands)	Purchase Consideration
Cash consideration	$	200
Accrued consideration		200
Exchange of Day Three Promissory Notes for Common Stock		2,000
Fair value of previously held interests⁽¹⁾		742
Total purchase consideration	$	3,142

⁽¹⁾

The Company remeasured its previously held equity interest in Day Three immediately before the Day Three Acquisition, previously accounted for under the equity method of accounting, to its fair value (determined using the implied enterprise value based on the purchase price multiplied by the ratio of the number of shares previously held to total shares, as of the acquisition date) and recognized a loss of $1.6 million recorded on the statements of operations and comprehensive loss as a Loss on initial investment in Day Three upon acquisition.

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed in the Day Three Acquisition as of the acquisition date:

(in thousands)	January 2, 2024
Cash and cash equivalents	$	1,499
Accounts receivable		63
Prepaid expenses and other current assets		77
Property and equipment		408
Goodwill		3,050
Identifiable intangible assets		2,180
Accounts payable		(386	)
Accrued expenses		(98	)
Installment note payable		(2,500	)
Total fair value of net assets acquired		4,293
Less: noncontrolling interest		(1,151	)
Net assets acquired attributable to Rafael	$	3,142

The preliminary fair values of the assets acquired and liabilities assumed in the Day Three Acquisition are subject to change as we perform additional reviews of our assumptions utilized. During the year ended July 31, 2024, the Company recognized an adjustment which changed the fair value of certain acquired liabilities and goodwill as a result of obtaining additional information about the estimated liabilities. Further adjustments may be necessary as additional information related to the fair values of assets acquired, liabilities assumed, and tax implications thereon is assessed during the measurement period (up to one year from the acquisition date).

The noncontrolling interest was recognized at fair value, which was determined using the implied enterprise value based on the purchase price multiplied by the ratio of the number of shares owned by minority holders to total shares, as of the acquisition date.

Included in the acquired liabilities assumed in the Day Three Acquisition is a non-interest bearing installment note payable of $2.5 million. The installment note was recognized by Day Three in relation to a 2021 asset purchase agreement for certain patents. The assumed installment note payable had a balance of $800 thousand due January 2024 (which was paid in January 2024) and the remaining $1.7 million due in November 2024. At July 31, 2024, the installment note payable has a remaining balance due of $1.7 million which is included in Installment note payable on the consolidated balance sheets.

Goodwill of $3.1 million arising from the Day Three Acquisition was included in the Infusion Technology segment as of July 31, 2024 and was attributable to potential synergies and an assembled workforce. The calculated goodwill is not deductible for tax purposes.

F-28

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Intangible assets acquired primarily include patents, technology licenses and non-compete agreements. The weighted average amortization period for the acquired intangible assets is approximately 14.7 years.

The consolidated financial statements include the results of the Day Three Acquisition subsequent to the closing date. Pro forma information is not presented as the acquisition was not considered significant.

On January 23, 2024, Day Three entered into an asset purchase agreement for the sale of certain patents for $280 thousand.

On March 20, 2024, Day Three amended and restated its certificate of incorporation to, among other things, effect a reverse split of all of Day Three’s common stock on a one-for-one-thousand basis (the “DTL Reverse Stock Split”).

On May 1, 2024, Rafael entered into a stock purchase agreement with Day Three to purchase 7,194 shares of common stock at a purchase price of $173.75 per share for an aggregate purchase price of $1.25 million, $1 million of which was funded through the relief of an existing intercompany receivable. As a result of the transaction, Rafael has an 84% ownership interest in Day Three.

NOTE 11 – INVESTMENT IN CYCLO THERAPEUTICS, INC.

On May 2, 2023, the Company entered into a Securities Purchase Agreement (the “Cyclo SPA”) with Cyclo. Cyclo is a clinical-stage biotechnology company dedicated to developing life-changing medicines for patients and families living with challenging diseases through its lead therapeutic asset, Trappsol^®. The Company purchased from Cyclo (i) 2,514,970 common shares (the “Purchased Shares”) and (ii) a warrant to purchase 2,514,970 common shares with an exercise price of $0.71 per share (the “May Warrant”), at a combined purchase price equal to $0.835 per Purchased Share and May Warrant to purchase one share, for an aggregate purchase price of $2.1 million. The May Warrant is exercisable until August 1, 2030.

Cyclo and the Company are party to a Registration Rights Agreement requiring Cyclo to file a registration statement with the Securities and Exchange Commission to register the resale of the shares and shares of common stock underlying the May Warrant, upon the request of Rafael.

On August 1, 2023, pursuant to a Securities Purchase Agreement (the “Cyclo II SPA”) dated June 1, 2023, the Company purchased an additional 4,000,000 shares of common stock (the “Cyclo II Shares”), and received a warrant to purchase an additional 4,000,000 Shares (the “Cyclo II Warrant”), for an aggregate purchase price of $5,000,000. The Cyclo II Warrant has an exercise price of $1.25 per share and is exercisable until August 1, 2030. The August 1, 2023 investment increased the Company’s percentage ownership of Cyclo common stock to approximately 34% at the time of investment. As of the date of this filing, the Company has not exercised the Cyclo II Warrant.

On October 20, 2023, the Company exercised the May Warrant to purchase 2,514,970 common shares at an exercise price of $0.71 per share, pursuant to a Securities Purchase Agreement dated October 20, 2023, and received a new warrant (the “Replacement Warrant”) to purchase 2,766,467 common shares at an exercise price of $0.95 per share. The Replacement Warrant is exercisable until October 20, 2027. As of the date of this report, the Company had not exercised the Replacement Warrant. Both the Cyclo II Warrant and Replacement Warrant (collectively, the “Cyclo Warrants”) are subject to the restriction that exercise(s) do not convey more than 49% ownership to the Company (the “Cyclo Blocker”). Upon exercise of the May Warrant, the Company recognized a realized gain of $424 thousand. The October 20, 2023 investment increased the Company’s percentage ownership of Cyclo common stock to approximately 40% at the time of investment.

William Conkling, Rafael’s CEO, serves on Cyclo’s Board of Directors.

The Company has determined that Cyclo is a VIE; however, the Company has determined that it is not the primary beneficiary as the Company does not have the power to direct the activities of Cyclo that most significantly impact Cyclo’s economic performance and, therefore, is not required to consolidate Cyclo. The Company has elected to account for its investment in Cyclo under the fair value option, with subsequent changes in fair value recognized as unrealized (gain) loss on investment - Cyclo in the consolidated statements of operations and comprehensive loss. During the years ended July 31, 2024 and 2023, the Company recognized an unrealized gain of $37 thousand and $2.7 million related to its investment in Cyclo common stock and warrants, respectively.

Summarized Fair Value Method Investment Details

The 31.5% ownership percentage as of July 31, 2024 is comprised of the shares of common stock owned by the Company and does not include the Cyclo Warrants. The total aggregate fair value of the Cyclo investment of $12,009,630 as of July 31, 2024 is comprised of common shares with an aggregate fair value of $10,745,629 and Cyclo Warrants with an aggregate fair value of $1,264,001. The total aggregate fair value of the Cyclo investment of $4,763,102 as of July 31, 2023 is comprised of common shares with an aggregate fair value of $3,898,204 and the May Warrants with an aggregate fair value of $864,898, see Note 15.

Subsequent to year end, the Company entered into an Agreement and Plan of Merger with Cyclo. See Note 27 for further details.

F-29

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 12 – CONVERTIBLE NOTE RECEIVABLES, DUE FROM CYCLO THERAPEUTICS, INC.

On June 11, 2024, the Company entered into a Note Purchase Agreement with Cyclo, pursuant to which Cyclo issued and sold a convertible promissory note in the principal amount of $2 million (the “Cyclo Convertible Note I”) to the Company for $2 million in cash. The Cyclo Convertible Note I was issued with a maturity date of November 11, 2024 and bears interest at a rate of 5% per annum, payable upon maturity. The principal amount of the Cyclo Convertible Note I is convertible into shares of Cyclo’s common stock at the option of the Company unless converted automatically upon certain events, as defined in the Cyclo Convertible Note I Note Purchase Agreement. On October 8, 2024, the maturity date of Convertible Note I was amended to be December 21, 2024, refer to Note 27.

On July 16, 2024, the Company entered into a First Amended and Restated Note Purchase Agreement with Cyclo, pursuant to which Cyclo issued and sold a convertible promissory note in the principal amount of $2 million (the “Cyclo Convertible Note II”) to the Company for $2 million in cash. The Cyclo Convertible Note II was issued with a maturity date of November 11, 2024 and bears interest at a rate of 5% per annum, payable upon maturity. The principal amount of the Cyclo Convertible Note II is convertible into shares of Cyclo’s common stock at the option of the Company unless converted automatically upon certain events, as defined in the Cyclo Convertible Note II Note Purchase Agreement. On October 8, 2024, the maturity date of Convertible Note II was amended to be December 21, 2024, refer to Note 27.

The Cyclo Convertible Note I and Cyclo Convertible Note II are together referred to as the “Cyclo Convertible Notes.”

In the event that Cyclo consummates any public or private offering of its Equity Securities resulting in gross proceeds of at least $8,000,000 (excluding this Note) (a “Qualified Financing”) at any time prior to the earlier of the Maturity Date and the repayment in full of this Note, then the outstanding principal balance of the Cyclo Convertible Notes, together with any accrued and unpaid interest thereon, will automatically convert into shares of Cyclo’s common stock, par value $.0001 per share (the “Common Stock”), at a conversion price equal to the lesser of (i) $.95 (the “Base Price”), and (ii) eighty percent (80%) of the purchase price paid by the investors purchasing the Equity Securities in the Qualified Financing. For purposes of the Cyclo Convertible Notes, the term “Equity Securities” shall mean (1) any shares of Common Stock or preferred stock of Cyclo, (2) any security convertible or exchangeable for Common Stock or preferred stock of Cyclo, and (3) any other rights to purchase or otherwise acquire Common Stock or preferred stock of Cyclo, in each case issued in a Qualified Financing following the date hereof.

In the event Cyclo consummates a Sale Transaction (“Sale Transaction” as defined in the Cyclo Convertible Notes’ Agreements as a) the sale of all or substantially all of Cyclo’s assets, b) the consolidation or merger of Cyclo or any of its subsidiaries with or into any other corporation or other entity or person or other similar transaction, or c) any other transaction or series of related transactions to which Cyclo is a party in which in excess of fifty percent (50%) of Cyclo’s voting securities are transferred) with (i) Rafael or its affiliates, the Cyclo Convertible Notes shall be treated for as provided for in the terms of the definitive agreements relating to such Sale Transaction, or (ii) a third party other than Rafael or its affiliates, at the election of the Rafael, either (x) the outstanding principal balance of the Cyclo Convertible Notes, together with any accrued and unpaid interest thereon, shall convert into that number of shares of Common Stock at a conversion price equal to the lesser of (1) the base price of $0.95 and (ii) eighty percent (80%) of the implied value of Cyclo in the Sale Transaction, or (y) Cyclo will pay to Rafael an amount equal to the outstanding principal balance of the Cyclo Convertible Notes, together with any accrued and unpaid interest thereon, in full satisfaction of Cyclo’s obligations under Cyclo Convertible Notes. Additionally, the Cyclo Convertible Notes shall be convertible, in whole or in part, and from time to time, at the discretion of Rafael, into validly issued, fully paid and non-assessable shares of Common Stock at a conversion price equal to the lowest of (i) the base price (Cyclo Convertible Note I and Cyclo Convertible Note II), (ii) the closing price of the Common Stock on NASDAQ on the trading date immediately preceding the date of conversion (Cyclo Convertible Note II, only) and (iii) 80% of the purchase price paid by the investors purchasing equity securities in any financing consummated within sixty (60) days preceding the date of conversion (Cyclo Convertible Note II only).

The Cyclo Convertible Notes are required to be accounted for at fair value pursuant to ASC 825, Financial Instruments (“ASC 825”), at their respective dates of issuance and in subsequent reporting periods, as the Company elected to account for its prior investment in Cyclo common stock under the fair value option. The Company has elected to present interest income from the Cyclo Convertible Notes, together with the changes in fair value of the notes, along with the changes in fair value related to the investments in Cyclo, in unrealized gain on investments - Cyclo on the consolidated statements of operations and comprehensive loss. During the year ended July 31, 2024, the Company recognized an unrealized gain of $1.2 million, related to its investment in Cyclo Convertible Notes receivable. See Note 15 for further details.

F-30

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Subsequent to year end, the Company entered into an Agreement and Plan of Merger with Cyclo and entered into the Second and Third Amended and Restated Note Purchase Agreements with Cyclo, whereby the Company was issued $6.0 million in convertible notes receivable for $6 million in cash. See Note 27 for further details.

NOTE 13 – INVESTMENTS IN MARKETABLE SECURITIES

The Company has classified its investments in corporate bonds, U.S. agency bonds, and U.S. treasury bills as available-for-sale securities. These securities are carried at estimated fair value with unrealized holding gains and losses included in accumulated other comprehensive income (loss) in stockholders’ equity until realized. Investment transactions are recorded on their trade date. Gains and losses on marketable security transactions are reported on the specific-identification method. Interest income is accrued daily and adjusted for amortization of premiums and accretion of discounts on the corporate bonds, U.S. agency bonds, and U.S. treasury bills.

The amortized cost, gross unrealized holding gains, gross unrealized holding losses, and fair value for available-for-sale securities as of July 31, 2024 and July 31, 2023 are as follows:

July 31, 2024	Amortized cost		Gross unrealized gains		Gross unrealized (losses)			Fair value
	(in thousands)
Available-for-sale securities:
U.S. Treasury Bills	$	3,969	$	—	$	(2	)	$	3,967
U.S. Agency bonds		4,079		—		(3	)		4,076
Corporate bonds		55,252		2		(32	)		55,222
Total available-for-sale securities	$	63,300	$	2	$	(37	)	$	63,265

July 31, 2023	Amortized cost		Gross unrealized gains		Gross unrealized (losses)			Fair value
	(in thousands)
Available-for-sale securities:
U.S. Treasury Bills	$	11,222	$	53	$	—		$	11,275
Corporate bonds		46,766		4,333		(4,660	)		46,439
Total available-for-sale securities	$	57,988	$	4,386	$	(4,660	)	$	57,714

During the year ended July 31, 2024, the Company reclassified approximately $1.8 million of unrealized gains out of accumulated other comprehensive income (loss) related to the sale of available-for-sale securities into realized gain on available-for-sale securities. During the year ended July 31, 2023, the Company reclassified approximately $154 thousand of unrealized gains out of accumulated other comprehensive income (loss) related to the sale of available-for-sale securities into realized gain on available-for-sale securities.

Corporate bonds, U.S. agency bonds, and U.S. Treasury Bills held as of July 31, 2024 were all due within one year.

Marketable securities in an unrealized loss position as of July 31, 2024 and 2023 were not deemed impaired at acquisition. Effective August 1, 2023, the Company evaluates subsequent unrealized losses to determine whether the decline in fair value has resulted from credit losses or other factors. No such credit losses have been identified during the year ended July 31, 2024.

NOTE 14 – DISCONTINUED OPERATIONS

On July 1, 2022, the Company determined that the 520 Property met the held-for-sale criteria and the Company therefore classified the 520 Property as held-for-sale in the consolidated balance sheets at July 31, 2022. The sale of the 520 Property also represented a significant strategic shift that will have a major effect on the Company’s operations and financial results. Therefore, the Company has classified the results of operations related to the 520 Property as discontinued operations in the consolidated statements of operations and comprehensive loss. Depreciation on the 520 Property ceased on July 1, 2022, as a result of the 520 Property being classified as held-for-sale.

F-31

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On August 22, 2022, Broad Atlantic completed the sale of the 520 Property for an aggregate gross purchase price of $49.4 million.

The 520 Property was encumbered by a mortgage securing a $15 million note payable which was paid off in this transaction. See Note 20 for further information on the note payable. After repaying the note payable, commissions, taxes, and other related costs, the Company received a net cash amount of approximately $33 million at closing.

Discontinued operations include (i) rental and parking revenues, (ii) payroll, benefits, facility costs, real estate taxes, consulting and professional fees dedicated to the 520 Property, (iii) depreciation and amortization expenses and (iv) interest (including amortization of debt issuance costs) on the note payable on the 520 Property. The operating results of these items are presented in our consolidated statements of operations and comprehensive loss as discontinued operations for all periods presented.

	Year Ended July 31,
	2023
Revenue from discontinued operations:
Rental – third party	$	68
Rental – related party		115
Parking		66
Total revenue from discontinued operations		249

Costs and expenses from discontinued operations:
General and administrative		468
Depreciation and amortization		—
Loss from discontinued operations		(219	)
Interest expense		(87	)
Loss from discontinued operations		(306	)
Gain on disposal of discontinued operations		6,784
Income from discontinued operations	$	6,478

The gain on disposal of discontinued operations of approximately $6.8 million was derived from the gross proceeds of approximately $49.4 million from the sale of the 520 Property, less the carrying value of the 520 Property of approximately $40.2 million, net of approximately $1.2 million in transaction costs and the write off of approximately $1.2 million of deferred rental income.

NOTE 15 – FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

●

Level 1 - quoted prices in active markets for identical assets or liabilities;

●

Level 2 - quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability; or

●

Level 3 - unobservable inputs for the asset or liability, such as discounted cash flow models or valuations.

The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

F-32

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company’s assets required to be measured at fair value on a recurring basis and where they are classified within the fair value hierarchy as of July 31, 2024 and July 31, 2023 are as follows:

	July 31, 2024
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Available-for-sale securities - Corporate and U.S. Agency Bonds	$	—	$	59,298	$	—	$	59,298
Available-for-sale securities - U.S. Treasury Bills		3,967		—		—		3,967
Investment in Cyclo - Common Stock		10,746		—		—		10,746
Convertible note receivables, due from Cyclo		—		—		5,191		5,191
Investment in Cyclo - Warrants		—		—		1,264		1,264
Hedge funds		—		—		2,547		2,547
Convertible note receivable		—		—		1,146		1,146
Total	$	14,713	$	59,298	$	10,148	$	84,159

	July 31, 2023
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Available-for-sale securities - Corporate Bonds	$	—	$	46,439	$	—	$	46,439
Available-for-sale securities - U.S. Treasury Bills		11,275		—		—		11,275
Investment in equity securities		294		—		—		294
Investment in Cyclo Therapeutics Inc. - Common Stock		3,898		—		—		3,898
Investment in Cyclo Therapeutics Inc. - Warrants		865		—		—		865
Hedge funds		—		—		4,984		4,984
Convertible note receivable, related party		—		—		1,921		1,921
Total	$	16,332	$	46,439	$	6,905	$	69,676

As of July 31, 2024 and July 31, 2023, the Company did not have any liabilities measured at fair value on a recurring basis.

F-33

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the changes in the fair value of the assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

	Year Ended July 31,
	2024			2023
	(in thousands)
Balance, beginning of period	$	6,905		$	4,764
Withdrawal from Hedge Fund Investments		(2,500	)		—
Unrealized gain on Hedge Fund		63			220
Investment in Cyclo Warrants		1,338			—
Unrealized loss on Cyclo Warrants		(74	)		—
Funding of Convertible note receivable, related party		—			2,000
Unrealized gain on Convertible note receivable, related party		742			—
Realized loss on Convertible note receivable, related party released from AOCI		(663	)		—
Conversion of convertible note receivable, related party		(2,000	)		—
Funding of Convertible note receivable		1,000			—
Change in fair value of Convertible note receivable		146			—
Funding of Cyclo Convertible Note I		2,000			—
Funding of Cyclo Convertible Note II		2,000			—
Unrealized gain on issuance of Cyclo Convertible Note I		665			—
Unrealized gain on issuance of Cyclo Convertible Note II		648			—
Change in fair value of Cyclo Convertible Notes		(122	)		—
Total loss included in other comprehensive loss		—			(79	)
Balance, end of period	$	10,148		$	6,905

Hedge funds classified as Level 3 include investments and securities which may not be based on readily observable data inputs. The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. The fair value of these assets is estimated based on information provided by the fund managers or the general partners. Therefore, these assets are classified as Level 3. During the year ended July 31, 2024, the Company requested a withdrawal from Hedge Fund Investments of $2.5 million. The withdrawal was funded during the three months ended January 31, 2024.

Available-for-sale securities classified as Level 3 include a convertible note receivable, related party (see Note 8) which may not be based on readily observable data inputs. The availability of observable inputs can vary and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. The fair value of this asset is estimated using a scenario-based analysis based on the probability-weighted present value of future investment returns, considering each of the possible outcomes available to us, including cash repayment, equity conversion, and collateral transfer scenarios. Estimating the fair value of the convertible note requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. Therefore, this asset is classified as Level 3.

The Company recognizes the fair value of the Cyclo Warrants utilizing a Black-Scholes option pricing valuation model (“Black-Scholes model”) at acquisition and each reporting date. The application of the Black-Scholes model utilizes significant assumptions, including expected volatility, expected life, marketability discount and risk-free interest rate. In order to determine the volatility, we measured expected volatility based on several inputs, including considering a peer group of publicly traded companies and the implied volatility of Cyclo’s publicly-traded warrants. As a result of the unobservable inputs that were used to determine the expected volatility of the Cyclo Warrants, the fair value measurement of these warrants reflected a Level 3 measurement within the fair value measurement hierarchy. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term.‌ The expected volatility is a key assumption or input to the valuation of the Cyclo Warrants; however, changes in the expected volatility assumption will have less of an effect on the Black-Scholes model valuation as the Cyclo Warrants approach their expiration. The Cyclo Warrants are subject to limits on exercise and any sales of the underlying shares of common stock would be subject to volume restrictions for which a discount to the stock price of Cyclo was applied. The Black-Scholes model further incorporated a discount for the overall lack of marketability for the Cyclo Warrants.

F-34

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Below are the unobservable inputs to the Cyclo Warrants which reflect a Level 3 measurement within the fair value measurement hierarchy as of July 31, 2024:

Unobservable Input	Range		Weighted Average
Price Per Share ^[1]	$	0.7-$0.74	$	0.72
Exercise Price	$	0.95 - $1.25	$	1.13
Expected Volatility		85% - 104%		96.2	%
Risk - Free Rate ^[2]		4.0%-4.1%		4.04	%
Marketability Discount		38%-41%		55.0	%
Remaining Term (Years)		3.2 - 6.0		4.9
Fair Value per Warrant ^[3]	$	0.19	$	0.19

^[1]	Closing price of Cyclo’s common shares adjusted to reflect regulatory resale restrictions which ranged from 40.0% to 50.0%.

^[2]	US Treasury rate for a period commensurate with the Remaining Term.

^[3]	Concluded fair value per warrant as of July 31, 2024.

The Company used a scenario-based analysis to estimate the fair value of the Cyclo Convertible Notes based on the probability-weighted present value of future investment returns, considering each of the possible outcomes available to the Company, including cash repayment and equity conversion. Estimating the fair values of the Cyclo Convertible Notes requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. The four scenarios included maturity, a subsequent financing, a change in control, and an event of default, whereby total probability of one-hundred percent (100%) is allocated across the four scenarios, at issuance and each subsequent reporting period. With respect to the scenario reflecting maturity of the Cyclo Convertible Notes, the associated volatility assumption reflects voluntary conversion of the Cyclo Convertible Notes prior to their respective maturities. The Company used scenario-based analyses at June 11, 2024, July 16, 2024, and July 31, 2024 to determine the issuance date and period-end fair values of the Cyclo Convertible Note I and Cyclo Convertible Note II, respectively, with the following inputs:

	Convertible Note I						Convertible Note II
Input	Issuance at June 11, 2024			Remeasured at July 31, 2024			Issuance at July 16, 2024			Remeasured at July 31, 2024
Discount factor		0.927 - 0.932			0.95 - 0.955			0.942			0.955
Conversion price	$	0.95		$	0.95		$	0.95		$	0.95
Dividend		0	%		0	%		0	%		0	%
Risk free rate		5.29% - 5.30	%		5.24% - 5.26	%		5.25	%		5.26	%
Stock price	$	1.24		$	1.19		$	1.22		$	1.19
Term		0.39 - 0.42 years			0.28 - 0.25 years			0.30 years			0.25 years
Equity volatility		61.0% - 73.0	%		59.0% - 67.0	%		65.0	%		59.0	%
Black-Scholes Merton Call Value	$	0.22 - $0.39		$	0.15 - $0.31		$	0.19- $0.33		$	0.15 - $0.29

The Company holds $0 and $65 thousand as of July 31, 2024 and July 31, 2023, respectively, in investments in securities in another entity that are not liquid, which were included in Investments - Other Pharmaceuticals in the accompanying consolidated balance sheets. The investment was liquidated during the year ended July 31, 2024. The investment was accounted for under ASC 321, Investments - Equity Securities, using the measurement alternative as defined within the guidance.

Fair Value of Other Financial Instruments

The estimated fair value of the Company’s other financial instruments was determined using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting these data to develop estimates of fair value. Consequently, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange.

F-35

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company’s financial instruments include trade accounts receivable, trade accounts payable, and due from related parties. The recorded carrying amounts of accounts receivable, accounts payable and due to related parties approximate their fair value due to their short-term nature.

NOTE 16 – ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following:

	July 31, 2024			July 31, 2023
	(in thousands)
Accounts receivable - third party	$	338		$	247
Accounts receivable - related party		333			211
Less allowance for credit losses		(245	)		(245	)
Accounts receivable, net	$	426		$	213

NOTE 17 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	July 31, 2024			July 31, 2023
	(in thousands)
Building and improvements	$	2,505		$	2,505
Machinery and equipment		552			—
Other		81			68
		3,138			2,573
Less accumulated depreciation and amortization		(1,018	)		(878	)
Total	$	2,120		$	1,695

Other property and equipment consist of other equipment and miscellaneous computer hardware.

Depreciation expense and amortization pertaining to property and equipment was approximately $137 thousand and $78 thousand for the years ended July 31, 2024 and 2023, respectively.

F-36

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18 - GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following is a summary of goodwill by reportable segment for the year ended July 31, 2024:

	Healthcare		Real Estate		Infusion Technology		Consolidated
	(in thousands)
Balance as of July 31, 2023	$	—	$	—	$	—	$	—
Day Three Acquisition		—		—		3,050		3,050
Balance as of July 31, 2024	$	—	$	—	$	3,050	$	3,050

Intangible assets

The following is a summary of intangible assets at July 31, 2024:

	Weighted average remaining useful life (years)		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
			(in thousands)
Intellectual Property		15	$	1,885		(73	)	$	1,812
Non-compete Agreements		2		50		(15	)		35
Total Intangible Assets			$	1,935		(88	)	$	1,847

Amortization expense for the next five years and thereafter for intangible assets is estimated to be as follows for years ending:

Year Ending July 31,	*(in thousands)*
2025	$	148
2026		132
2027		123
2028		123
2029		123
Thereafter		1,198
Total	$	1,847

Amortization of intangible assets totaled $88 thousand for the year ended July 31, 2024, and is included in depreciation and amortization expense within the consolidated statements of operations and comprehensive loss.

NOTE 19 – LOSS PER SHARE

The following table summarizes the Company’s potentially dilutive securities which have been excluded from the calculation of dilutive loss per share as their effect would be anti-dilutive:

F-37

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Year Ended July 31,
	2024		2023
Shares issuable upon exercise of stock options		638,409		388,409
Shares issuable upon vesting of restricted stock		608,540		684,766
		1,246,949		1,073,175

The diluted loss per share computation equals basic loss per share for the years ended July 31, 2024 and 2023 because the Company had a net loss from continuing operations in all such periods and the impact of the assumed vesting of restricted shares and exercise of stock options would have been anti-dilutive.

The following table summarizes the basic and diluted loss per share calculations (in thousands, except for share and per share amounts):

	Year Ended July 31,
	2024			2023
Numerator:
Net loss from continuing operations	$	(65,003	)	$	(8,693	)
Net loss attributable to noncontrolling interests		(30,593	)		(339	)
Numerator for net loss from continuing operations		(34,410	)		(8,354	)

Numerator for discontinued operations		—			6,478
Net loss attributable to Rafael Holdings, Inc.	$	(34,410	)	$	(1,876	)

Denominator:
Weighted average basic and diluted shares outstanding		23,745,516			23,263,211

Loss per share attributable to common stockholders
Basic and diluted:
Continuing operations	$	(1.45	)	$	(0.36	)
Discontinued operations		—			0.28
Total basic and diluted loss per share	$	(1.45	)	$	(0.08	)

NOTE 20 – NOTE PAYABLE, HELD-FOR-SALE

On July 9, 2021, the Company, as guarantor, Rafael Holdings Realty, Inc., a wholly-owned subsidiary of the Company (“Realty”), as pledgor, and Broad-Atlantic, a wholly-owned subsidiary of Realty (the “Borrower,” and together with the Company and Realty, the “Borrower Parties”), as borrower, entered into a loan agreement (the “Loan Agreement”) with 520 Broad Street LLC, a third-party lender (the “Lender”). The Loan Agreement provided for a loan in the amount of $15 million (the “Note Payable”) from Lender to Borrower secured by (i) a first mortgage on 520 Broad Street, Newark, New Jersey 07102, and (ii) a first priority security interest in the equity of the Borrower as set forth in the Pledge and Security Agreement between Realty and Lender.

The Note Payable bore interest at a rate per annum equal to seven and one-quarter percent (7.25%) from July 9, 2021 through July 31, 2021 and thereafter at an interest rate per annum equal to the 30-day LIBOR Rate, as published in The Wall Street Journal, plus 6.90% per annum, but in no event less than seven and one-quarter percent (7.25%) per annum. The Note Payable was due on August 1, 2022, subject to the Company’s option to extend the maturity date until August 1, 2023 for a fee equal to three-quarters of one percent (0.75%) of the Note Payable.

The Loan Agreement contained customary affirmative covenants, negative covenants and events of default, as defined in the Loan Agreement, including covenants and restrictions that, among other things, restricted the Borrower’s ability to incur liens, or transfer, lease or sell the collateral as defined in the Loan Agreement. A failure to comply with these covenants would have permitted the Lender to declare the Borrower’s obligations under the Loan Agreement, together with accrued interest and fees, to be immediately due and payable. The Company was in compliance with the covenants in the Loan Agreement as of July 31, 2022. The Company extended the maturity date to November 1, 2022 and paid an extension fee of $37,500 on July 29, 2022.

F-38

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In connection with the sale of the 520 Property, on August 22, 2022, the Company paid off the outstanding principal balance of $15 million and accrued interest of approximately $87,000 on the Note Payable. See Note 14 for further details on the subsequent sale of the 520 Property.

Interest expense under the Note Payable, which is recognized in loss on discontinued operations, amounted to $0 and $87 thousand for the years ended July 31, 2024 and 2023, respectively.

NOTE 21 – RELATED PARTY TRANSACTIONS

IDT Corporation

IDT Corporation (“IDT”), a related party through common ownership and some common members of management, has historically maintained a due to/from balance that relates to cash advances for investments, loan repayments, charges for services provided to the Company by IDT and payroll costs for the Company’s personnel that were paid by IDT as the relevant persons were also providing services to IDT. IDT billed the Company approximately $296 thousand and $313 thousand for services during the years ended July 31, 2024 and 2023, respectively, of which $70 thousand is included in due to related parties at July 31, 2024 and 2023.

IDT leased, prior to the Company’s sale of the 520 Property, approximately 80,000 square feet of office space plus parking at the 520 Property and currently leases approximately 3,600 square feet of office space in Jerusalem, Israel. The Company invoiced IDT approximately $108 thousand and $211 thousand for the years ended July 31, 2024 and 2023, respectively. As of July 31, 2024 and 2023, IDT owed the Company approximately $332 thousand and $210 thousand, respectively, for office rent and parking plus Israeli value added tax.

Genie Energy Ltd.

Genie Energy Ltd. (“Genie”), a related party through common ownership and some common members of management, leased office space at 520 Broad Street prior to the Company’s sale of the 520 Property. The Company invoiced Genie approximately $19 thousand which is included in discontinued operations during the year ended July 31, 2023.

Related Party Rental Income

The Company leased space to related parties (including IDT Corporation – see above) which represented approximately 17% and 42% of the Company’s total revenue for the years ended July 31, 2024 and 2023, respectively. The portion of related party rental income pertaining to the 520 Property has been classified in discontinued operations on the consolidated statements of operations and comprehensive loss for the year ended July 31, 2023.

Howard Jonas, Chairman of the Board, Former Chief Executive Officer

On July 31, 2023, eight trusts, each for the benefit of a child of Howard S. Jonas, the Company’s Executive Chairman and Chairman of the Board, with independent trustees, transferred an aggregate of 787,163 shares of Class A common stock of the Company (representing all of the issued and outstanding shares of the Class A common stock of the Company, and 51.3% of the aggregate voting power of all issued and outstanding shares of capital stock of the Company) to a limited partnership. Howard Jonas is the sole manager of the sole general partner of the limited partnership and, therefore, has sole voting and dispositive power over the shares of Class A common stock held by the limited partnership. Following the transfer, Mr. Jonas is the controlling stockholder of the Company and the Company is a controlled company as defined in Section 303A of the New York Stock Exchange Listed Company Manual.

During the year ended July 31, 2024, the Company paid Sam Beyda, who serves as Chief Executive Officer and a Director of Day Three and is Howard Jonas’ son-in-law, a salary in the amount of $160 thousand.

F-39

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 22 – INCOME TAXES

The components of loss from continuing operations before income taxes, including equity in loss of Day Three, are as follows:

	For the Years Ended July 31,
	2024			2023
	(in thousands)
Domestic	$	(67,653	)	$	(6,259	)
Foreign		(30	)		(2,689	)
Loss before income taxes	$	(67,683	)	$	(8,948	)

Benefit from income taxes as presented in the consolidated statements of operations and comprehensive loss consisted of the following:

	For the Years Ended July 31,
	2024			2023
	(in thousands)
Current:
Foreign	$	19		$	19
Federal		—			—
State		(2,602	)		(274	)
Total current benefit		(2,583	)		(255	)
Deferred:
Foreign		(73	)		—
Federal		(17	)		—
State		(7	)		—
Total deferred benefit		(97	)		—
Benefit from income taxes	$	(2,680	)	$	(255	)

The reconciliation between the Company’s effective tax rate on pretax loss from continuing operations and the statutory tax rate for the years ended July 31, 2024 and July 31, 2023 is as follows:

	For the Years Ended July 31,
	2024			2023
	(in thousands)
U.S. federal income tax at statutory rate	$	(14,213	)	$	(1,877	)
Permanent items - Cornerstone Acquisition		18,871			—
Nondeductible items		672			—
State income tax		1,807			(479	)
Foreign operations		(1	)		(583	)
Other		627			—
Cornerstone Acquisition impact to deferred tax assets		(51,546	)		—
Derecognition of Cornerstone investment due to Cornerstone Acquisition		23,312			—
Sales of state NOLs		(2,613	)		(274	)
Change in valuation allowance		20,404			2,958
Benefit from income taxes	$	(2,680	)	$	(255	)

During the year ended July 31, 2024, the Company received proceeds of approximately $2.6 million from the sale of the Company’s 2020-2022 New Jersey NOLs totaling $31.6 million through the New Jersey Technology Business Tax Certificate Transfer Program. During the year ended July 31, 2023, the Company received proceeds of approximately $274 thousand from the sale of the Company’s 2019 New Jersey NOLs totaling $3.3 million through the New Jersey Technology Business Tax Certificate Transfer Program.

Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of net deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain.

F-40

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Significant components of the Company’s deferred tax assets and deferred tax liabilities are as follows:

	At July 31,
	2024			2023
	(in thousands)
Deferred tax assets:
Net operating loss carryforwards	$	61,204		$	17,852
Unrealized loss		—			30,236
R&D credits, net of uncertain tax position		6,145			—
Capitalized Sec. 174 research and experimental expenditures		3,121			689
Stock-based compensation		2,486			1,858
Depreciation		286			(1	)
Reserves and accruals		249			237
Charitable contributions		141			—
Gross deferred tax assets		71,362			50,871
Less valuation allowance		(71,275	)		(50,871	)
Total deferred tax assets, net of valuation allowance		2,357			—

Deferred tax liabilities:
Unrealized gain		(2,327	)		—
Amortization		(30	)		—
Total deferred tax liabilities:		(2,357	)		—
Deferred tax liability, net	$	—		$	—

The Company continually evaluates the likelihood of the realization of deferred tax assets and adjusts the carrying amount of the deferred tax assets by the valuation allowance to the extent the future realization of the deferred tax assets is more likely than not. The Company considers many factors when assessing the likelihood of future realization of its deferred tax assets, including its recent cumulative earnings experience by taxing jurisdiction, expectation of future taxable income or loss, the carryforward periods available to the Company for tax reporting purposes, and other relevant factors.

Deferred tax assets established for the excess outside tax basis of an investee are derecognized upon the event that the investee becomes a domestic subsidiary as a result of a business combination or consolidation, as it is likely that the deferred tax asset will no longer qualify for recognition. During the year ended July 31, 2024, the Company derecognized unrealized loss deferred tax assets related to prior investments in Cornerstone and Day Three as a result of the Cornerstone Acquisition and Day Three Acquisition, respectively.

As of July 31, 2024, based on the Company’s history of losses and its assessment of future losses, management believes that it is more likely than not that future taxable income will not be sufficient to realize the deferred tax assets. Therefore, a valuation allowance has been applied to deferred tax assets.

Effective for tax years beginning after December 31, 2021, taxpayers are required to capitalize any expenses incurred that are considered incidental to research and experimentation (“R&E”) activities under IRC Section 174. While taxpayers historically had the option of deducting these expenses under IRC Section 174, the December 2017 Tax Cuts and Jobs Act mandates capitalization and amortization of R&E expenses for tax years beginning after December 31, 2021. Expenses incurred in connection with R&E activities in the US must be amortized over a 5-year period and R&E expenses incurred outside the US must be amortized over a 15-year period. R&E activities are broader in scope than qualified research activities that are considered under IRC Section 41 (relating to the research tax credit).

As of July 31, 2024, the Company has federal, state, and foreign net operating loss carryforwards of approximately $270.0 million, $17.5 million and $11.6 million, respectively. Federal net operating loss carryforwards in the amount of $83.1 million begin expiring in 2025 and approximately $186.9 million have an indefinite life. Federal NOL carryforwards generated after tax year 2021 are subject to an 80% limitation on taxable income, do not expire and will carryforward indefinitely. State net operating loss carryforwards in the amount of $17.5 million begin expiring in 2042. Foreign net operating loss carryforwards in the amount of $11.6 million have an indefinite life.

F-41

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The utilization of the Company’s net operating losses may be subject to a U.S. federal limitation due to the “change in ownership provisions” under Section 382 and 383 of the Internal Revenue Code and other similar limitations in various state jurisdictions. Such limitations may result in a reduction of the amount of net operating loss carryforwards and research and development tax credits in future years and possibly the expiration of certain net operating loss and research and development tax credits carryforwards before their utilization.

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examinations by federal, foreign, and state and local jurisdictions, where applicable. There are currently no pending tax examinations. The Company’s tax years are still open under statute from 2021 to the present in the U.S. and from 2020 to present in the Company’s foreign operations. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service and state and local tax authorities to the extent utilized in a future period.

The Company is also subject to certain non-income taxes such as value added taxes, sales taxes, and property taxes. The Company has taken certain positions that management feels, although not free from doubt, should not result in a successful challenge by certain tax authorities.

As required by the uncertain tax position guidance in ASC No. 740, Income Taxes, (“ASC 740”) the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company applied the uncertain tax position guidance in ASC 740 to all tax positions for which the statute of limitations remained open. Any estimates of tax contingencies contain assumptions and judgments about potential actions by taxing jurisdictions. Any interest and penalties related to uncertain tax positions would be included as part of the income tax provision.

The Company’s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon ongoing analysis of or changes in tax laws, regulations and interpretations thereof as well as other factors.

A reconciliation of the beginning and ending amount of unrecognized tax benefits associated with uncertain tax positions is as follows:

	At July 31,
	2024		2023
	(in thousands)
Balance, beginning of the year	$	—	$	—
Additions of tax positions related to the prior year		6,218		—
Balance, end of year	$	6,218	$	—

NOTE 23 – BUSINESS SEGMENT INFORMATION

The Company conducts business as three operating segments, Healthcare, Infusion Technology and Real Estate. The Company’s reportable segments are distinguished by types of service, customers and methods used to provide their services. The operating results of these business segments are regularly reviewed by the Company’s Chief Executive Officer who is the chief operating decision-maker. Following the Day Three Acquisition, the chief operating decision-maker began reviewing the operating results of Day Three and in accordance with the Company’s accounting policy, the Company concluded this resulted in a new operating segment, which the Company refers to as Infusion Technology.

The accounting policies of the segments are the same as the accounting policies of the Company as a whole. The Company evaluates the performance of its Healthcare segment based primarily on research and development efforts and results of clinical trials and the Infusion Technology and Real Estate segments based primarily on results of operations.

The Healthcare segment is comprised of a majority equity interest in LipoMedix, Barer, Cornerstone and Rafael Medical Devices. To date, the Healthcare segment has not generated any revenues.

F-42

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Real Estate segment consists of the Company’s real estate holdings, which is currently comprised of a portion of a commercial building in Israel. The revenues, and (loss) income from operations of the 520 Property have been excluded from the Real Estate segment in the figures below due to its classification of held-for-sale and discontinued operations.

The Infusion Technology segment is comprised of a majority equity interest in Day Three. Revenues associated with the Infusion Technology segment include infusion technology revenue derived from Day Three’s Unlokt technology.

Operating results for the business segments of the Company are as follows:

(in thousands)	Healthcare			Infusion Technology			Real Estate		Total
Year Ended July 31, 2024
Revenues	$	—		$	355		$	282	$	637
(Loss) income from operations		(102,032	)		(675	)		80		(102,627	)

(in thousands)	Healthcare			Infusion Technology		Real Estate		Total
Year Ended July 31, 2023
Revenues	$	—		$	—	$	279	$	279
(Loss) income from operations		(15,121	)		—		78		(15,043	)

Total assets by segment are not provided to or reviewed by the CODM.

Geographic Information

Infusion Technology Segment

Revenue from the Infusion Technology segment is entirely from customers located in the United States.

Real Estate Segment

Revenues from tenants located outside of the United States were generated entirely from related parties located in Israel. Revenues from these non-U.S. customers as a percentage of total revenues, which are inclusive of revenue from discontinued operations, were as follows (revenues by country are determined based on the location of the related facility):

Year Ended July 31,		2024				2023
Revenue from tenants located in Israel			100	%			53	%

Assets

Net property, plant, and equipment and total assets summarized by geographic area are as follows:

(in thousands)	United States		Israel		Total
July 31, 2024
Property, plant, and equipment, net	$	783	$	1,337	$	2,120
Total assets		93,434		3,398		96,832

July 31, 2023
Property, plant, and equipment, net	$	293	$	1,402	$	1,695
Total assets		95,244		3,585		98,829

F-43

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 24 – COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Company may from time to time be subject to legal proceedings that may arise in the ordinary course of business. Although there can be no assurance in this regard, the Company does not expect any of those legal proceedings to have a material adverse effect on the Company’s results of operations, cash flows or financial condition.

License Agreements

Cornerstone is a party to two license agreements in connection with certain technology being used for products under development and is required to make certain annual maintenance payments. In addition, royalty payments, calculated on a low single digit percentage of net sales, as defined in the respective agreements, will be required upon the commercialization of licensed technology. Sublicensing fees are calculated and due based upon a percentage of gross sublicense fees. Cornerstone expenses license obligation payments to research and development on the consolidated statements of operations and comprehensive loss.

One worldwide license agreement requires Cornerstone to reimburse the other party for costs associated with filing and defending various patents worldwide. Payment obligations under this license agreement remain in effect until the last underlying patents granted under the license agreement expire in their respective countries. The last patent expired in 2019. License maintenance fees are currently $20,000 per year and continue for the term of the agreement, which expires in 2026. The license maintenance fees are replaced by minimum royalties of $10,000 during the first year following governmental approval to market products and escalates to $1,000,000 during the term of the agreement. Cornerstone is also responsible to pay fees on any sub-licensing of the licensed patents. Cornerstone may credit each annual license maintenance fee in full against all royalties and sublicensing fees due during the same calendar year. Cornerstone may terminate the license agreement upon 90 days’ notice. Either party may terminate the license agreement if the other party commits any material breach of any covenant or promise and does not cure such breach within 30 days of the receipt of written notice of such material breach. In May 2017, Cornerstone renegotiated the agreement referred to as the “second license.” In exchange for a waiver of certain product development milestones, Cornerstone modified the agreement to pay a low single digit percentage royalty for a duration of five years on Net Sales of product sold after the expiration of the licensed patent and potentially up to eight years. As of July 31, 2024, there are no products being marketed which are covered by the patents under the license agreement.

The remaining minimum payments required under the license agreement, assuming the agreement is not terminated by Cornerstone, excluding any escalation for receiving government marketing approval subsequent to July 31, 2018, are $20,000 per year. The agreement may continue until January 1, 2029 (if not earlier terminated).

Cornerstone’s second license continues until the termination of the later of the last to expire patent or royalty obligation under the agreement on a country-by-country basis (currently, or as otherwise provided in the license agreement). Fifty percent of the maintenance fee payments, up to $1.1 million, may be credited against the potential future royalty payments, calculated on a single digit percentage of net sales, as defined, that Cornerstone would have to make to the license holder should royalties be paid. The agreement may be terminated on 15 days’ written notice after default by the other party if said default is not cured within 30 days of receipt of notice by the defaulting party. In addition, Cornerstone may terminate the agreement on 15 days’ written notice to the license holder. Royalties are due based on Gross Sales, as defined, for products sold relating to patented and unpatented technology, and shall terminate on the 15^th anniversary of the first commercial sale of the product in the corresponding country or territory. Sublicense payments are due in connection with any sublicense fees received relating to patented and non-patented products related to the patented technology and proprietary know-how, as provided in the agreement. As of July 31, 2024, there were no products being marketed which are covered by the patents under the license agreement. There were no additional annual license maintenance fees required beyond 2010.

As part of a royalty agreement, Cornerstone is obligated to pay royalties, based upon percentage (low single digit) of net sales, to Altira Capital and Consulting LLC (“Altira”), a consolidated subsidiary of the Company. The royalty obligations remain in effect, on a country-by-country basis, until the last to expire patent claims associated with such products and services expire or are no longer in force. No payments have been made in connection with a royalty pool. As of July 31, 2024, the last to expire patent claim is to remain in force until fiscal 2034.

NOTE 25 – EQUITY

Share Repurchase Program

Effective April 14, 2023, the Company’s Board of Directors approved a share repurchase program (the “2023 Share Repurchase Program”) authorizing the repurchase of up to $5 million of the Company’s Class B common stock. Under the 2023 Share Repurchase Program, the Company was authorized to purchase, at purchase prices up to $1.75 per share, shares of its Class B common stock from time to time until June 16, 2023 (the “Plan Termination Date”). In July 2023, the 2023 Share Repurchase Program was amended to extend the Plan Termination Date to July 1, 2024. On December 22, 2023, the Company suspended the share repurchase program through the Plan Termination Date.

F-44

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The timing and amount of any share repurchases under the 2023 Share Repurchase Program will be determined at the Company’s discretion and based on market conditions and other considerations. Share repurchases under the authorizations may be made through open market purchases or pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Securities Exchange Act of 1934. The program does not obligate the Company to acquire any particular amount of its Class B common stock, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion.

During the year ended July 31, 2024, the Company repurchased 101,487 of its Class B common stock for a total cost of $168 thousand under the 2023 Share Repurchase Program.

Class A Common Stock and Class B Common Stock

The rights of holders of Class A common stock and Class B common stock are identical except for certain voting and conversion rights and restrictions on transferability. The holders of Class A common stock and Class B common stock receive identical dividends per share when and if declared by the Company’s Board of Directors. In addition, the holders of Class A common stock and Class B common stock have identical and equal priority rights per share in liquidation. The Class A common stock and Class B common stock do not have any other contractual participation rights. The holders of Class A common stock are entitled to three votes per share and the holders of Class B common stock are entitled to one-tenth of a vote per share. Each share of Class A common stock may be converted into one share of Class B common stock, at any time, at the option of the holder. Shares of Class A common stock are subject to certain limitations on transferability that do not apply to shares of Class B common stock.

On May 27, 2021, the Company filed a Registration Statement on Form S-3, whereby the Company may sell up to $250 million of Class B common stock. This Registration Statement was declared effective on June 7, 2021.

On June 1, 2021, the Company filed a Registration Statement on Form S-3 to issue 48,859 shares of Class B common stock for payment due on the purchase of Altira, an investment which has been subsequently fully impaired.

On August 19, 2021, the Company entered into a Securities Purchase Agreement (the “Institutional Purchase Agreement”) with certain third-party institutional investors (the “Institutional Investors”) and a Securities Purchase Agreement with I9Plus, LLC, (the “Jonas Purchase Agreement”), an entity affiliated with Howard S. Jonas, the Chairman of the Board of Directors of the Company. On August 24, 2021, the Company issued 2,833,425 shares of Class B common stock (the “Institutional Shares”), par value $0.01 per share, to the Institutional Investors, at a purchase price equal to $35.00 per share, for aggregate gross proceeds of approximately $99.2 million, before deducting placement agent fees and other offering expenses. Additionally, pursuant to the Jonas Purchase Agreement, the Company issued 112,501 shares of Class B common stock to I9Plus, LLC, at a purchase price equal to $44.42 per share, which was equal to the closing price of a share of the Class B common stock on the New York Stock Exchange on August 19, 2021 (the “Jonas Offering”). The Jonas Offering resulted in additional aggregate gross proceeds of approximately $5.0 million. The total net proceeds from the issuance of shares were $98.0 million after deducting transaction costs of $6.2 million.

On August 19, 2021, in connection with the Institutional Purchase Agreement, the Company entered into a Registration Rights Agreement with the Institutional Investors whereby the Company agreed to prepare and file a registration statement with the SEC within 30 days after the earlier of (i) the date of the closing of the Merger Agreement, and (ii) the date the Merger Agreement is terminated in accordance with its terms, for purposes of registering the resale of the Institutional Shares and any shares of Class B common stock issued as a dividend or other distribution with respect to the Institutional Shares.

On February 15, 2022, the Company filed a Registration Statement on Form S-3 (as amended on March 2, 2022) registering the resale by the Institutional Investors of the shares purchased by them. The Registration Statement was declared effective on March 7, 2022.

In March 2018, the Company established its 2018 Equity Incentive Plan. On January 19, 2022, the Company’s stockholders approved the 2021 Equity Incentive Plan (the “2021 Plan”). The 2018 Equity Incentive Plan was suspended and replaced by the 2021 Plan and, following January 19, 2022, no new grants are to be awarded under the 2018 Equity Incentive Plan. Existing grants under the 2018 Equity Incentive Plan will not be impacted by the adoption of the 2021 Plan. Any of the Company’s employees, directors, consultants, and other service providers, and those of the Company’s affiliates, are eligible to participate in the 2021 Plan. In accordance with applicable tax rules, only employees (and the employees of parent or subsidiary corporations) are eligible to be granted incentive stock options. The 2021 Plan authorizes stock options (both incentive stock options or non-qualified stock options), stock appreciation rights, restricted stock, restricted stock units, and cash or other stock-based awards. On January 19, 2022, the Company filed a Registration Statement on Form S-8 registering 1,919,025 shares of Class B common stock reserved for issuance under the 2021 Plan. On November 28, 2022, the Company’s Board of Directors approved an amendment to the 2021 Plan that, among other things, increases the number of shares of the Company’s Class B common stock available for the grant of awards thereunder by an additional 696,770, which the stockholders approved on January 23, 2023. The maximum number of shares of Class B common stock that may be issued under the 2021 Plan is 2,615,795 shares. As of July 31, 2024, there were 171,986 shares still available for issuance under the 2021 Plan.

F-45

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On July 6, 2022, pursuant to the I9 SPA dated June 22, 2022 with I9 Plus, LLC, an entity affiliated with members of the family of Howard Jonas, the Company sold 3,225,806 shares of the Company’s Class B common stock to I9 Plus, LLC at a price per share of $1.86 and an aggregate sale price of $6 million.

Employment Agreement

On June 13, 2022, the Company entered into an employment agreement with Howard S. Jonas (who serves as the Chairman of the Board and Executive Chairman of the Company) (the “Employment Agreement”), which provides, among other things: (i) a term of five years (subject to extension unless either party elects not to renew); (ii) an annual base salary of $260,000, of which $250,000 is payable through the issuance of restricted shares of the Company’s Class B common stock with the value of the shares based upon the volume weighted closing price of the Class B Stock on the NYSE on the thirty days ending with the NYSE trading day immediately preceding the issuance to be issued within thirty days of the date of the Employment Agreement (the “Start Date”) and each annual anniversary, and such shares vesting, contingent on Mr. Jonas’ remaining in continuous service to the Company, in substantially equal amounts on the three, six, nine and twelve month anniversaries of the Start Date or annual anniversary; and (iii) a grant of restricted shares of Class B common stock with a value of $600,000, issuable within 30 days with the value of the shares based upon the volume weighted closing price of the Class B common stock on the NYSE on the 30 days ending with the NYSE trading day immediately preceding the issuance and such shares, and vesting, contingent on Mr. Jonas remaining in continuous service to the Company, in substantially equal amounts on the first and second annual anniversaries of the Start Date. On June 19, 2024, the Employment Agreement was amended to provide an annual base salary of $294,000, of which $250,000 is payable through the issuance of Class B common stock in accordance with the terms defined above.

Stock Options

A summary of stock option activity for the Company is as follows:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at July 31, 2022		1,021,277		$	12.11		4.47	$	—
Granted		175,000			2.08		9.51		—
Expired		(589,205	)		—		—		—
Cancelled / Forfeited		(218,663	)		—		—		—
Outstanding at July 31, 2023		388,409		$	14.51		8.71	$	—
Granted		250,000			1.84		9.50		—
Outstanding at July 31, 2024		638,409		$	9.55		8.39	$	—
Exercisable at July 31, 2024		114,602		$	13.13		7.61	$	—

The weighted average grant date fair value per unit for the options granted during the years ended July 31, 2024 and 2023, was $1.34 and $1.58, respectively. At July 31, 2024, there were unrecognized compensation costs related to non-vested stock options of $1.3 million, which are expected to be recognized over the next 2.2 years from July 31, 2024.

F-46

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The value of option grants is calculated using the Black-Scholes model with the following assumptions for options granted during the years ended July 31, 2024 and 2023, respectively:

	For the Year Ended July 31,
	2024			2023
Risk-free interest rate		3.98	%		3.66	%
Expected term (in years)		6.25			6.11
Expected volatility		88	%		95	%
Expected dividend yield		—	%		—	%

Rafael Medical Devices Stock Options

The Rafael Medical Devices 2022 Equity Incentive Plan (the “RMD 2022 Plan”) was created and adopted by the Company in May 2022. The RMD 2022 Plan allows for the issuance of up to 10,000 shares of Class B common stock which may be awarded in the form of incentive stock options or restricted shares.

In connection with the conversion of Rafael Medical Devices from a Delaware corporation to a Delaware limited liability company, Rafael Medical Devices adopted the Rafael Medical Devices, LLC 2023 Equity Incentive Plan (the “RMD 2023 Plan”) in August 2023. The RMD 2023 Plan allows for issuance of up to 46,125 Class A Units (the “Units”). There were 2,247 Units available for issuance under the RMD 2023 Plan as of July 31, 2024.

Rafael Medical Devices, LLC records compensation expense for stock-based awards based upon an assessment of the grant date fair value for options using the Black-Scholes model. The expected term was determined according to the simplified method, which is the average of the vesting tranche dates and the contractual term. Due to the lack of company specific historical and implied volatility data, the estimate of expected volatility is primarily based on the historical volatility of a group of similar companies that are publicly traded. For these analyses, characteristics from comparable companies are selected, including enterprise value and position within the industry, and with historical share price information sufficient to meet the expected life of the share-based awards. The risk-free interest rate is determined by reference to the U.S. Treasury Constant Maturity Treasury rates with remaining maturities similar to the expected term of the options. Expected dividend yield is zero as Rafael Medical Devices, LLC has never paid cash dividends and does not expect to pay cash dividends in the foreseeable future.

The following table summarizes assumptions used to compute the fair value of Units granted under the RMD 2023 Plan during the year ended July 31, 2024:

Risk-free interest rate			4.24-4.54%
Expected term (in years)			5-6.25
Expected volatility			113%
Expected dividend yield			—%

A summary of option activity for Rafael Medical Devices, LLC is as follows:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at July 31, 2022		5,266		$	3.82		9.76	$	—
Granted		—			—		—		—
Outstanding at July 31, 2023		5,266		$	3.82		8.76	$	—
Granted		43,878			10.00		9.01		—
Cancelled / Forfeited		(5,266	)		3.82		—		—
Outstanding at July 31, 2024		43,878		$	10.00		9.01	$	—
Exercisable at July 31, 2024		11,886		$	10.00		9.01	$	—

F-47

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The weighted average grant date fair value per unit for the RMD option grants during the year ended July 31, 2024 was $8.50. At July 31, 2024, the total unrecognized compensation related to stock option awards granted was $193 thousand, which the Company expects to recognize over a weighted average period of approximately 3.0 years.

Cornerstone Stock Options

Cornerstone has outstanding stock options and non-qualified options to purchase Cornerstone’s common stock which were granted under Cornerstone’s 2009 and 2018 Stock Incentive Plans (the “Plans”), as well as additional options issued during a prior capital raise.

At July 31, 2024, there were 1,004,341 options outstanding granted under the Plans that are vested with a weighted average exercise price of $24.17 per share and a weighted average remaining contractual term of 4.4 years. The fair value of outstanding options granted under the Plans assumed during the Cornerstone Acquisition were determined to be de minimis.

In connection with Cornerstone’s 2003 common stock offerings, Cornerstone entered into an option agreement with an individual in connection with identifying investors. The option agreement grants the right to purchase an option (a “Purchase Option”) to purchase 472,000 Class A Options (“Class A Options”), which allows the purchase of 0.25 shares of common stock for each Class A Option at $11.00 per share. In order to secure this Class A Option, a Purchase Option must initially be purchased for $.005 per potential share of Class A options. Upon exercise of each Class A Option, a right is granted to one Class B Option (“Class B Options”), which allow the purchase of 0.25 shares of common stock for each Class B Option at $12.50 per share. The expiration date of the Class A Options is the later of October 29, 2005 or six months from the date the Company’s shares become publicly traded. The Class B Options expire 180 days from the exercise of the Class A Options. In 2003, 625,000 options (the “Cornerstone Common Options”) were granted with an exercise price of $11.00 per share to a 2003 investor. These Cornerstone Common Options are set to expire 180 days following the closing of an IPO, or from the date Cornerstone’s shares become publicly traded. The fair value of the Class A Options, Class B Options, and Cornerstone Common Options assumed during the Cornerstone Acquisition were determined to be de minimis.

As part of the Cornerstone Restructuring, as detailed in Note 3, Cornerstone increased the available reserve of Cornerstone Common Stock for grant to employees, consultants and other service providers to approximately 10% of Cornerstone’s capital stock following the Cornerstone Restructuring, the Mandatory Common Conversion and the Reverse Stock Split (the “Reserve Increase”) but prior to the issuance of the RPF 6% Top Up Shares or any shares to the holders of the Remaining Series C Convertible Notes after the Closing.

Restricted Stock

The fair value of restricted shares of the Company’s Class B common stock is determined based on the closing price of the Company’s Class B common stock on the grant date. Share awards generally vest on a graded basis over three years of service.

In January 2022, the Company granted 33,360 restricted shares of Class B common stock to non-employee directors, 18,336 of which were granted under the 2018 Equity Incentive Plan, and 15,024 of which were granted under the 2021 Plan. The restricted shares vested immediately on the grant date. The share-based compensation cost was approximately $151 thousand, which was included in general and administrative expense in the consolidated statements of operations and comprehensive loss.

On February 1, 2022, the Company issued 986,835 shares of Class B restricted stock to two executive officers. Approximately 24% of the restricted shares vested in December 2022, with the remaining shares vesting ratably each quarter through December 2025.

On June 14, 2022, the Company issued 452,130 shares of Class B restricted stock to Howard S. Jonas.

In January 2023, the Company issued 120,019 shares of Class B restricted stock to certain members of its Board of Directors, and 100,000 shares of Class B restricted stock to its Chief Financial Officer.

During January 2023, 296,759 shares of Class B restricted stock were cancelled or forfeited due to (i) the cancellation of 285,036 shares of restricted stock in connection with the departure of the Company’s former Chief Financial Officer and (ii) the remaining shares forfeited upon the termination of certain employees of the Company.

F-48

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In connection with Patrick Fabbio’s January 27, 2023 departure as the Company’s Chief Financial Officer, the Company and Mr. Fabbio entered into a Separation and General Release Agreement (the “Separation Agreement”), which provides, among other things, that the Company shall pay Mr. Fabbio severance in the amount of $307,913, which is included in general and administrative expense on the consolidated statement of operations and comprehensive loss for the year ended July 31, 2023.

In connection with the termination of Mr. Fabbio’s position as Chief Financial Officer of the Company, there was a material forfeiture of his Class B restricted shares and stock options resulting in a reversal of approximately $915 thousand in stock-based compensation expense for the year ended July 31, 2023 that was previously recorded to selling, general and administrative expense.

On August 28, 2023, the Company issued 111,408 shares of Class B restricted stock to Howard S. Jonas.

On October 25, 2023, the Company issued 135,000 shares of Class B restricted stock to employees of the Company.

On January 5, 2024, the Company issued 101,402 shares of Class B restricted stock to certain members of its Board of Directors.

On June 13, 2024, the Company issued 159,016 shares of Class B restricted stock to Howard S. Jonas.

A summary of the status of the Company’s grants of restricted shares of Class B common stock is presented below:

	Number of Non-vested Shares			Weighted Average Grant Date Fair Value
Outstanding at July 31, 2022		1,507,373		$	4.22
Granted		220,019			1.99
Vested		(745,867	)		3.37
Cancelled / Forfeited		(296,759	)		(5.10	)
Outstanding at July 31, 2023		684,766		$	4.04
Granted		506,826			1.75
Vested		(583,052	)		3.15
Non-vested shares at July 31, 2024		608,540		$	2.99

At July 31, 2024, there was $0.8 million of total unrecognized compensation cost related to non-vested stock-based compensation arrangements, which is expected to be recognized over the next four years.

A summary of the stock-based compensation expense for the Company’s equity incentive plans is presented below (in thousands):

	For the Year Ended July 31,
	2024		2023
General and administrative	$	2,000	$	3,044
Research and development		296		194
Forfeiture of RSUs within general and administrative		—		(931	)
Forfeiture of RSUs within research and development		—		(119	)
Net stock-based compensation expense	$	2,296	$	2,188

Securities Purchase Agreement

On December 7, 2020, Rafael Holdings entered into a Securities Purchase Agreement (the “SPA”) for the sale of 567,437 shares of the Company’s Class B common stock at a price per share of $22.91 (which was the closing price for the Class B common stock on the New York Stock Exchange on December 4, 2020, the trading day immediately preceding the date of the SPA) for an aggregate purchase price of $13 million.

F-49

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Approximately $8.2 million of the proceeds received pursuant to the SPA were used by the Company to exercise an additional portion of a warrant in order to maintain the Company’s relative position in Cornerstone in light of issuances of Cornerstone equity securities to third-party shareholders of Cornerstone, due to warrant exercises by these shareholders. Under the SPA, two entities, on whose Boards of Directors Howard Jonas (the Registrant’s Chairman of the Board and former Chief Executive Officer) serves, each purchased 218,245 shares of Class B common stock for consideration of $5 million each. The shares and warrants were issued in reliance on the exemption from registration provided for under Section 4(a)(2) of the Securities Act of 1933, as amended.

Equity-classified Warrants

In connection with the SPA entered into on December 7, 2020, each purchaser was granted warrants to purchase twenty percent (20%) of the shares of Class B common stock purchased by such purchaser. The Company issued warrants to purchase 113,487 shares of Class B common stock to the purchasers. The warrants are exercisable at a per share exercise price of $22.91, and are exercisable at any time on or after December 7, 2020 through June 6, 2022. The Company determined that these warrants are equity-classified.

On June 6, 2022, the Company’s outstanding warrants to purchase 26,189 shares of common stock at an exercise price of $22.91 per share expired. As of July 31, 2024, the Company had no outstanding warrants.

NOTE 26 – LEASES

The Company is the lessor of the Israeli property which is leased to tenants under net operating leases with a term expiration date within 2025. Lease income included on the consolidated statements of operations and comprehensive loss was $282 thousand and $279 thousand for the years ended July 31, 2024 and 2023, respectively. During the years ended July 31, 2024 and 2023, no real estate property taxes were included in rental income.

The future contractual minimum lease payments to be received (excluding operating expense reimbursements) by the Company as of July 31, 2024, under a non-cancellable operating lease are as follows:

Year ending July 31,	Related Parties		Other		Total
	(in thousands)
2025	$	78	$	—	$	78
Total Minimum Future Rental Income	$	78	$	—	$	78

A related party has the right to terminate the Israeli lease upon four months’ notice.

NOTE 27 – SUBSEQUENT EVENTS

Agreement and Plan of Merger with Cyclo

On August 21, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among: the Company; Tandem Therapeutics, Inc., a Nevada corporation and a wholly-owned subsidiary of the Company (“First Merger Sub”); Tandem Therapeutics, LLC, a Nevada limited liability company and a wholly-owned subsidiary of the Company (“Second Merger Sub” and together with First Merger Sub, the “Merger Subs”); and Cyclo. The Merger Agreement and the transactions contemplated thereby were unanimously approved by the Company and Cyclo’s boards of directors (the “Boards”). The Merger Agreement also requires approval of Cyclo’s stockholders (the “Cyclo Shareholder Vote”) and the issuance of the Company’s Class B Common Stock, $0.01 par value per share (“Rafael Class B Common Stock”) in the Business Combination (as defined below) requires approval by the Company’s stockholders (the “Rafael Shareholder Vote”). Upon such approvals and satisfaction or waiver of all other conditions set forth in the Merger Agreement and the effectiveness of a registration statement on Form S-4 to register the shares of Rafael Class B Common Stock of Rafael to be issued in the Business Combination, as defined below, the Business Combination will be consummated (the date upon which is referred to as the “Closing Date”).

F-50

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Business Combination

The Merger Agreement provides for, among other things, that at the First Effective Time (the “First Effective Time”), First Merger Sub will merge with and into Cyclo (the “First Merger”), First Merger Sub will cease to exist, and Cyclo will become a wholly-owned subsidiary of the Company. Immediately following the First Merger, Cyclo will merge with and into Second Merger Sub, with Second Merger Sub being the Surviving Entity of the subsequent merger (the “Second Merger” and together with the First Merger, the “Business Combination”).

If the Business Combination is consummated, Rafael would become the primary beneficiary of Cyclo, a VIE that constitutes a business. In accordance with ASC 810, the initial consolidation of a VIE that is a business shall be accounted for as a business combination in accordance with the provisions in Topic 805.

Consideration to Cyclo Equity Holders in the Business Combination

At the First Effective Time: (i) any shares of Cyclo Capital Stock then held by Cyclo or in Cyclo’s treasury immediately prior to the First Effective Time shall be canceled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor; (ii) any shares of Cyclo Capital Stock then held by Rafael immediately prior to the First Effective Time shall be canceled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor; (iii) except as provided in (i) and (ii) above, each share of Cyclo Common Stock issued and outstanding immediately prior to the First Effective Time shall cease to be an existing and issued share of Cyclo Common Stock, and shall be converted, by virtue of the First Merger and without any action on the part of the holders thereof, into the right to receive a number of validly issued, fully paid and nonassessable shares of Rafael Common Stock equal to the Exchange Ratio (as defined below). The shares of Rafael Common Stock to be issued upon conversion of the Cyclo Common Stock are referred to as the “Merger Consideration”.

The “Exchange Ratio” means the quotient (rounded down to four decimal places) obtained by dividing (x) $0.95 by (y) the sum of the (A) Total Net Cash Amount, plus (B) Total Loan Amount, divided by the total number of shares of Rafael Capital Stock outstanding at the First Effective Time, including any shares of Rafael Capital Stock issuable upon exercise or conversion of outstanding securities of Rafael with exercise or conversion prices that are no greater than 150% of the then market price for the Rafael Class B common stock.

The “Total Net Cash Amount” is defined in the Merger Agreement as (a) the sum of the total of (i) cash, cash equivalents and marketable securities of Rafael as of the Closing Date; and (ii) Included Assets (as defined below), minus (b) the amount of Rafael’s current liabilities (on an unconsolidated basis), including, without limitation, accounts payable and accrued expenses, as of the end of the last month immediately prior to the Closing Date, updated for material changes to such amounts following such date until the Closing Date, and determined in a manner consistent with the manner such liabilities were historically reflected in Rafael’s financial statements.

The “Included Assets” is defined in the Merger Agreement as the appraised value of the real estate located at 5 Shlomo Levy Street, Har Hotzvim Jerusalem and the value of the Globis Capital Partners, L.P. holdings as of the latest calendar quarter ending prior to the First Effective Time. Total Loan Amount shall mean the outstanding principal amount of all amounts loaned by Rafael to Cyclo between June 11, 2024 and the Closing, including, without limitation, the Cyclo Convertible Notes, Cyclo Convertible Note III (as defined below) and Cyclo Convertible Note IV (as defined below), plus the accrued and unpaid interest thereon as of the date of the Closing.

The “Parent Capital Stock” (also referred to as “Rafael Capital Stock”) is defined in the Merger Agreement as the Rafael Class B common stock, $0.01 par value per share, the Rafael Class A common stock, par value $0.01 per share, of Rafael and the Rafael preferred stock, $0.01 par value per share.

All compensatory options to purchase Cyclo common stock shall automatically convert into options to acquire, on substantially similar terms and conditions, an adjusted number of shares of Rafael Class B Common Stock, based upon the Exchange Ratio (rounded down to the nearest whole share), at an adjusted exercise price per share, based upon the Exchange Ratio (rounded up to the nearest whole cent).

Unless otherwise provided for in outstanding warrant agreements, all outstanding warrants to purchase Cyclo common stock (other than those held by Rafael which will be cancelled) will automatically be converted into warrants to purchase an adjusted number of shares of Rafael Class B Common Stock, based upon the Exchange Ratio, at an adjusted exercise price per share, based upon the Exchange Ratio. Certain Cyclo warrants have the right to elect to receive cash payment in lieu of receiving warrants to purchase Rafael Class B Common Stock.

F-51

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For U.S. federal income tax purposes, the Business Combination is intended to qualify as a “reorganization” within the meaning of Section 368(a)(1) of the Internal Revenue Code of 1986, as amended.

No fractional shares of Rafael Class B Common Stock will be issued in connection with the Business Combination, and holders of Cyclo common stock who would otherwise be entitled to receive a fraction of a share of Rafael Class B Common Stock, shall, in lieu of any such fractional shares to which they would otherwise be entitled, receive the number of shares of Rafael Class B Common Stock to which such holder of Cyclo common stock would be entitled to receive aggregated and rounded up to the nearest whole share.

Cyclo Securities held by the Company

Cyclo’s common stock and warrants held by the Company will be cancelled and retired and shall cease to exist upon consummation of the Business Combination.

The Cyclo Convertible Notes, Cyclo Convertible Note III (as defined below), Cyclo Convertible Note IV (as defined below) and Cyclo Convertible Note V (as defined below) will be forgiven at the closing of the Business Combination.

Representations and Warranties; Covenants

The Merger Agreement contains representations, warranties and covenants of each of the parties thereto that are customary for transactions of this type.

Under the Merger Agreement, (a) Cyclo has agreed, among other things, (i) to conduct its business in the ordinary course, and not to take certain actions without the consent of the Company, (ii) not to solicit or engage in discussions regarding any alternative acquisition proposal or other transaction similar to the Business Combination, (iii) seek approval of its stockholders to the Business Combination, and (iv) use reasonable best efforts to cause all conditions to the Business Combination to be satisfied and to consummate the Business Combination, and (b) the Company has agreed (i) not to take certain actions without the consent of Cyclo, (ii) use reasonable efforts to cause the shares of Rafael Class B Common Stock to be issued in the Business Combination to be listed on the New York Stock Exchange, (iii) create, register with the Securities and Exchange Commission (“SEC”) and list on the New York Stock Exchange a class of warrants to be issued to certain holders of publicly-traded warrants to purchase Cyclo common stock, (iv) increase the number of shares available for grant under its equity plan to cover options to be issued to holders of Cyclo Options, (v) seek approval of its stockholders to the issuance of the shares of the Rafael Class B Common Stock in the Business Combination, and (vi) use reasonable best efforts to cause all conditions to the Business Combination to be satisfied and to consummate the Business Combination.

The Company has also agreed, so long as Cyclo is not in active discussions regarding an acquisition proposal, to fund Cyclo through the earlier of the consummation of the Business Combination or termination of the Merger Agreement in such amounts as may be necessary for Cyclo to operate its business and pay its debts and obligations as they become due, provided that Cyclo is being operated in a manner consistent with the terms of the Merger Agreement and the financial forecast previously shared with the Company (the “Pre-Closing Funding”). Following the closing, the Company will fund Cyclo’s TransportNPC™ clinical trial to its 48-week interim analysis up to a maximum amount, when added to the Pre-Closing Funding, of $25 million.

The Merger Agreement places certain restrictions on the operation of Rafael’s business prior to the closing of the Business Combination, and such restrictions, the waiver of which is subject to the consent of Cyclo, may prevent Rafael from making certain acquisitions, taking certain other specified actions or otherwise pursuing business opportunities during the pendency of the Business Combination that Rafael would have made, taken or pursued if these restrictions were not in place.

In addition, in connection with the closing of the Business Combination, the Company has agreed to appoint Markus W. Sieger, a current independent member of Cyclo’s board of directors, to the Company’s Board.

Lock-Up Agreements

The Merger Agreement provides that Cyclo’s directors and their affiliates that will receive shares of Rafael Class B Common Stock pursuant to the Merger Agreement or upon exercise of Rafael options received upon conversion of Cyclo options in the Business Combination have each agreed to enter into a lock-up agreement which contains certain restrictions on transfer of such shares of Rafael Class B Common Stock for a period of the earlier of (a) six (6) months following closing of the Business Combination or (b) the date on which Rafael completes a liquidation, merger, share exchange, reorganization or other similar transaction that results in all of Rafael’s stockholders having the right to exchange their Rafael Class B Common Stock for cash, securities or other property.

F-52

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Voting Agreement

In connection with the entry into the Merger Agreement, Rafael and certain other holders of Cyclo common stock entered into voting agreements pursuant to which those holders have agreed to vote in favor of the Merger Agreement and the consummation of the Business Combination at any meeting of Cyclo’s stockholders and take other actions in furtherance of the consummation of the Business Combination until the earlier of (i) the First Effective Time and (ii) the termination of the Merger Agreement (the “Voting Agreement”).

Support Agreement

In connection with the entry into the Merger Agreement, Howard Jonas entered into a support agreement (the “Support Agreement”) with Rafael and Cyclo, under which Mr. Jonas has agreed to vote all shares of Rafael capital stock over which he exercises voting control to approve the issuance of the Rafael Class B Common Stock to the stockholders of Cyclo as contemplated by the Merger Agreement.

Termination

The Merger Agreement may be terminated under certain customary and limited circumstances prior to closing of the Business Combination, including, but not limited to, (i) by the mutual written consent of the Company and Cyclo, (ii) by the Company, subject to certain exceptions, if any of the representations or warranties of Cyclo are not true and correct or if Cyclo fails to perform any of its covenants or agreements under the Merger Agreement (iii) by Cyclo, subject to certain exceptions, if any of the representations or warranties made by the Company are not true and correct or if the Company fails to perform any of its covenants or agreements under the Merger Agreement; (iv) by either the Company or Cyclo, if the Business Combination has not been consummated on or prior to November 30, 2024; provided, however, that, in the event that the SEC has not declared effective under the Securities Act of 1933, as amended (the “Securities Act”) the Form S-4 by the date which is 45 calendar days prior to the End Date of November 30, 2024 pursuant to the Merger Agreement, then the End Date shall automatically be extended to December 31, 2024 (the “End Date”), unless the breach of any covenants or obligations under the Merger Agreement by the party seeking to terminate was the principal cause of the failure to consummate the transactions contemplated by the Merger Agreement; (v) by either the Company or Cyclo, if any governmental entity has issued an order or taken any other action permanently enjoining, restraining or otherwise prohibiting the transactions contemplated by the Merger Agreement and such order or other action has become final and non-appealable; (vi) by either the Company or Cyclo, if the required approvals by the stockholders of the Company and Cyclo have not been obtained; and (vii) by the Company, if Cyclo’s Board (or a committee thereof) makes a Cyclo Adverse Change Recommendation, as defined in the Merger Agreement. A “Cyclo Adverse Change Recommendation” means during the pre-closing Period, neither Cyclo’s board nor any committee thereof shall (i)(A) withdraw, withhold, amend or qualify or modify, in each case, in a manner adverse to Rafael, or publicly propose to withdraw, withhold, amend or qualify or modify, in each case, in a manner adverse to Rafael, Cyclo’s board recommendation, (B) fail to include Cyclo’s board recommendation in the joint proxy statement/prospectus, (C) fail to publicly reaffirm Cyclo’s board recommendation within ten (10) business days after Rafael so requests in writing (it being understood that the Rafael shall only be entitled to make up to two (2) such reaffirmation requests), (D) approve, recommend or declare advisable, or publicly propose to approve, recommend or declare advisable, any acquisition proposal other than from Rafael and Rafael’s affiliates or (E) if any tender offer or exchange offer is commenced for equity securities of Cyclo, fail to recommend against such tender offer or exchange offer by the earlier of (1) the tenth (10th) business day after the commencement of such tender offer or exchange offer and (2) the third (3rd) business day prior to Cyclo’s stockholders meeting other than a “stop, look and listen” communication pursuant to Rule 14d-9(f) under the Exchange Act.

If the Business Combination is validly terminated in accordance with the Merger Agreement, then either of Rafael or Cyclo shall reimburse the terminating party for their reasonable documented out-of-pocket expenses, including all fees and expenses of counsel, financial advisors and accountants, actually incurred in connection with the Merger Agreement, in an amount not to exceed $250,000 in cash, or if Rafael terminates the Business Combination in the event of a Cyclo Adverse Change Recommendation, Cyclo will promptly pay to Rafael an amount equal to $400,000 in cash (the “Company Termination Fee”).

The Business Combination is expected to close in the fourth calendar quarter of 2024, following the receipt of the required approvals by Rafael and Cyclo stockholders and the fulfillment of other customary closing conditions.

F-53

RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Second Amended and Restated Note Purchase Agreement

On August 21, 2024, Rafael entered into a Second Amended and Restated Note Purchase Agreement with Cyclo, pursuant to which Cyclo issued and sold a convertible promissory note in the principal amount of $3 million to Rafael for $3 million (the “Cyclo Convertible Note III”) in cash. The Cyclo Convertible Note III matures on December 21, 2024 and bears interest at a rate of 5% per annum, payable upon maturity. The principal amount of the Cyclo Convertible Note III is convertible into shares of Cyclo’s common stock at the option of Rafael (provided, however, that Rafael may not elect to convert the convertible note (or prior convertible notes) issued by Cyclo to Rafael in connection with previous loans if, following such conversion, Rafael will beneficially own more than 49.9% of Cyclo’s common stock); and automatically on certain other events.

Third Amended and Restated Note Purchase Agreement

On September 9, 2024, Rafael entered into a Third Amended and Restated Note Purchase Agreement with Cyclo, pursuant to which Cyclo issued and sold a convertible promissory note in the principal amount of $3 million (the “Cyclo Convertible Note IV”) to Rafael for $3 million in cash. The Cyclo Convertible Note IV matures on December 21, 2024 and bears interest at a rate of 5% per annum, payable upon maturity. The principal amount of the Cyclo Convertible Note IV is convertible into shares of Cyclo’s common stock at the option of Rafael (provided, however, that Rafael may not elect to convert the convertible note (or prior convertible notes) issued by Cyclo to Rafael in connection with previous loans if, following such conversion, Rafael will beneficially own more than 49.9% of Cyclo’s common stock); and automatically on certain other events.

Fourth Amended and Restated Note Purchase Agreement

On October 8, 2024, Rafael entered into a Fourth Amended and Restated Note Purchase Agreement with Cyclo, pursuant to which Cyclo issued and sold a convertible promissory note in the principal amount of $3 million (the “Cyclo Convertible Note V”) to Rafael for $3 million in cash. The Cyclo Convertible Note V matures on December 21, 2024 and bears interest at a rate of 5% per annum, payable upon maturity. The principal amount of the Cyclo Convertible Note V is convertible into shares of Cyclo Common Stock at the option of Rafael (provided, however, that Rafael may not elect to convert the convertible note (or prior convertible notes issued by Cyclo to Rafael in connection with previous loans if, following such conversion, Rafael will beneficially own more than 49.9% of Cyclo Common Stock); and automatically on certain other events.

Also on October 8, 2024, the maturity dates of the Cyclo Convertible Note I and the Cyclo Convertible Note II were amended to be December 21, 2024.

F-54