Rafael Holdings Files Q3 2024 10-Q

TL;DR

Rafael Holdings filed its 10-Q for Oct 31, 2024. RFL trades on NYSE.

AI Summary

Rafael Holdings, Inc. filed its quarterly report on Form 10-Q for the period ended October 31, 2024. The company, incorporated in Delaware, is involved in the Pharmaceutical Preparations industry. Its principal executive offices are located at 520 Broad Street, Newark, NJ. The filing indicates that the company's Class B common stock trades under the symbol RFL on the New York Stock Exchange.

Why It Matters

This filing provides investors with an update on Rafael Holdings' financial performance and operational status for the third quarter of 2024.

Risk Assessment

Risk Level: low — This is a routine quarterly filing providing standard financial and operational information.

Key Players & Entities

• Rafael Holdings, Inc. (company) — Registrant
• October 31, 2024 (date) — Quarterly period end date
• 520 Broad Street, Newark, NJ (location) — Principal executive offices
• RFL (ticker) — Trading symbol for Class B common stock
• New York Stock Exchange (company) — Exchange where Class B common stock is registered

FAQ

Key Financial Figures

• $0.01 — stered Class B common stock, par value $0.01 per share RFL New York Stock Exchange

Filing Documents

• ea0224125-10q_rafael.htm (10-Q) — 1316KB
• ea022412501ex31-1_rafael.htm (EX-31.1) — 7KB
• ea022412501ex31-2_rafael.htm (EX-31.2) — 7KB
• ea022412501ex32-1_rafael.htm (EX-32.1) — 4KB
• ea022412501ex32-2_rafael.htm (EX-32.2) — 4KB
• 0001213900-24-107637.txt ( ) — 10056KB
• rfl-20241031.xsd (EX-101.SCH) — 106KB
• rfl-20241031_cal.xml (EX-101.CAL) — 76KB
• rfl-20241031_def.xml (EX-101.DEF) — 555KB
• rfl-20241031_lab.xml (EX-101.LAB) — 938KB
• rfl-20241031_pre.xml (EX-101.PRE) — 566KB
• ea0224125-10q_rafael_htm.xml (XML) — 1160KB

FINANCIAL INFORMATION

Part I. FINANCIAL INFORMATION 1 Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited) Consolidated Balance Sheets as of October 31, 2024 and July 31, 2024 1 Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended October 31, 2024 and 2023 2 Consolidated Statements of Equity for the Three Months Ended October 31, 2024 and 2023 3 Consolidated Statements of Cash Flows for the Three Months Ended October 31, 2024 and 2023 5 Notes to the Consolidated Financial Statements 6 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 48 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 54 Item 4.

Controls and Procedures

Controls and Procedures 54

OTHER INFORMATION

Part II. OTHER INFORMATION 55 Item 1. Legal Proceeding 55 Item 1A.

Risk Factors

Risk Factors 55 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 55 Item 3. Defaults Upon Senior Securities 55 Item 4. Mine Safety Disclosures 55 Item 5. Other Information 55 Item 6. Exhibits 55

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION RAFAEL HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) October 31, 2024 July 31, 2024 (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 8,159 $ 2,675 Available-for-sale securities 46,138 63,265 Interest receivable 438 515 Convertible note receivables, due from Cyclo 12,603 5,191 Accounts receivable, net of allowance for credit losses of $ 245 at October 31, 2024 and July 31, 2024 201 426 Prepaid expenses and other current assets 2,942 430 Total current assets 70,481 72,502 Property and equipment, net 2,078 2,120 Investments – Cyclo 7,645 12,010 Investments – Hedge Funds — 2,547 Convertible note receivable classified as available-for-sale 1,161 1,146 Goodwill 3,050 3,050 Intangible assets, net 1,818 1,847 In-process research and development 1,575 1,575 Other assets 27 35 TOTAL ASSETS $ 87,835 $ 96,832 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable $ 2,700 $ 2,556 Accrued expenses 1,379 1,798 Convertible notes payable 614 614 Other current liabilities 112 113 Due to related parties 734 733 Installment note payable 1,700 1,700 Total current liabilities 7,239 7,514 Accrued expenses, noncurrent 3,138 2,982 Convertible notes payable, noncurrent 74 73 Other liabilities — 5 TOTAL LIABILITIES 10,451 10,574 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 October 31, 2024 and July 31, 2024 8 8 Class B common stock, $ 0.01 par value; 200,000,000 shares authorized, 24,135,035 issued and 23,785,043 outstanding (excluding treasury shares of 101,487) as of October 31, 2024, and 24,142,535 issued and 23,819,948 outstanding (excluding treasury shares of 101,487) as of July 31, 2024 238 238 Additional paid-in capital 280,359 280,048 Accumulate

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 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, including an investment in (and planned Merger (as defined below) 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. 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 (as defined below) and has entered into a license agreement for one of its technologies that is in pre-cli

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 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 was 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 that is in pre-clinical research stage, 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 a

financial statements refers to Rafael Holdings and its subsidiaries on a consolidated basis

financial statements refers to Rafael Holdings and its subsidiaries on a consolidated basis. 7 RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 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 4) United States – Delaware 45 %*** Day Three Labs, Inc. (Note 10) United States – Delaware 84 %**** Cornerstone Pharmaceuticals, Inc. (Note 3) 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 interest in Pharma Holdings, LLC and, therefore, an effective 45 % economic 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 outs

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 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 October 31, 2024, the Company had cash and cash equivalents of approximately $ 8.2 million, and available-for-sale securities valued at approximately $ 46.1 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. 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 October 31, 2024 and July 31, 2024, there was one related party tenant which represented 24 % and 50 %, respectively, of the Company's accounts receivable balance. For the three months ended October 31, 2024, one customer represented 28 % of the Company's total revenue, and one tenant and one related party tenant represented 39 % and 21 % of the Company's total revenue, respectively. For the three months ended October 31, 2023, one related party tenant represented 40 % of the Company's total 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

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