Rafael Holdings' Loss Widens on Soaring R&D for Key Drug Candidate

TL;DR

**RFL is burning cash on R&D for Trappsol Cyclo; it's a high-stakes bet on a single drug's success.**

AI Summary

Rafael Holdings, Inc. (RFL) reported a consolidated net loss of $9.797 million for the three months ended October 31, 2025, an increase from the $9.211 million loss in the prior-year period. Revenue significantly increased to $240 thousand from $128 thousand, primarily driven by $154 thousand in product revenue, which was zero in the comparable period. However, research and development expenses surged to $7.484 million from $1.326 million, reflecting the company's focus on its lead candidate, Trappsol Cyclo, following the merger with Cyclo Therapeutics, LLC in March 2025. Cash and cash equivalents decreased to $45.539 million as of October 31, 2025, from $52.769 million on July 31, 2025, largely due to $6.806 million in net cash used in operating activities. The company's strategic outlook centers on completing the Phase 3 clinical trial for Trappsol Cyclo for Niemann-Pick Disease Type C1 and expanding its investment portfolio in high unmet medical needs, while evaluating other holdings like LipoMedix and Cornerstone Pharmaceuticals.

Why It Matters

This filing reveals Rafael Holdings' intensified focus on its Trappsol Cyclo drug candidate, a critical pivot for investors given the substantial increase in R&D spending to $7.484 million. The success or failure of this Phase 3 clinical trial for Niemann-Pick Disease Type C1 will significantly impact RFL's valuation and future prospects, especially as cash and cash equivalents declined by $7.230 million this quarter. For employees, this signals a clear strategic direction towards biotechnology, potentially shifting resources from other ventures like Barer Institute. Customers and the broader market for rare disease treatments could benefit if Trappsol Cyclo achieves regulatory approval, offering a new therapy for NPC1, a fatal genetic disorder. Competitively, RFL is betting heavily on this single asset in a challenging biotech landscape.

Risk Assessment

Risk Level: high — The company reported a consolidated net loss of $9.797 million for the quarter and saw cash and cash equivalents decrease by $7.230 million. Research and development expenses dramatically increased to $7.484 million from $1.326 million in the prior year, indicating a significant cash burn on a single lead candidate, Trappsol Cyclo, which is still in Phase 3 clinical trials. This high expenditure on an unapproved drug, coupled with declining cash, presents substantial financial and operational risk.

Analyst Insight

Investors should closely monitor the progress and clinical trial results of Trappsol Cyclo, as its success is paramount to Rafael Holdings' future. Given the significant cash burn and increasing R&D expenses, consider the company's liquidity position and potential need for future financing. This is a speculative investment heavily reliant on a single drug's approval.

Financial Highlights

debt To Equity

0.18

revenue

$240K

operating Margin

-3002.9%

total Assets

$105.375M

total Debt

$16.195M

net Income

-$9.797M

eps

-$0.19

gross Margin

N/A

cash Position

$45.539M

revenue Growth

+87.5%

Revenue Breakdown

Key Numbers

• $9.797M — Consolidated Net Loss (Increased from $9.211 million in the prior year, reflecting higher expenses.)
• $240K — Total Revenue (Increased from $128 thousand in the prior year, driven by new product revenue.)
• $7.484M — Research and Development Expenses (Significantly increased from $1.326 million in the prior year, due to focus on Trappsol Cyclo.)
• $45.539M — Cash and Cash Equivalents (Decreased from $52.769 million on July 31, 2025, indicating cash burn.)
• $0.19 — Loss per share (Basic and Diluted) (Decreased from $0.37 in the prior year, despite higher net loss, due to increased share count.)
• 51,184,407 — Weighted average shares outstanding (Increased from 24,062,854 in the prior year, impacting EPS calculation.)
• $6.806M — Net cash used in operating activities (Increased from $3.042 million in the prior year, reflecting higher operational costs.)
• 100% — Ownership of Cyclo Therapeutics, LLC (Achieved through the merger on March 25, 2025.)
• 95% — Ownership of LipoMedix Pharmaceuticals Ltd. (Majority equity interest as of October 31, 2025.)
• 73% — Ownership of Rafael Medical Devices, LLC (Equity interest as of October 31, 2025.)

Key Players & Entities

• Rafael Holdings, Inc. (company) — registrant
• Cyclo Therapeutics, LLC (company) — wholly-owned subsidiary acquired in March 2025
• Trappsol Cyclo (drug) — lead drug candidate for Niemann-Pick Disease Type C1
• Niemann-Pick Disease Type C1 (disease) — rare, fatal genetic disorder
• LipoMedix Pharmaceuticals Ltd. (company) — majority-owned clinical stage pharmaceutical company
• Cornerstone Pharmaceuticals, Inc. (company) — majority-owned cancer metabolism-based therapeutics company
• Rafael Medical Devices, LLC (company) — majority-owned orthopedic-focused medical device company
• Day Three Labs, Inc. (company) — majority-owned technology company
• FDA (regulator) — granted Fast Track designation to Trappsol Cyclo
• New York Stock Exchange (regulator) — exchange where Class B common stock is registered

FAQ

Risk Factors

• Significant Net Loss and Cash Burn [high — financial]: The company reported a consolidated net loss of $9.797 million for the three months ended October 31, 2025, an increase from $9.211 million in the prior year. Net cash used in operating activities was $6.806 million, a substantial increase from $3.042 million, leading to a decrease in cash and cash equivalents from $52.769 million to $45.539 million.
• High R&D Expenses for Trappsol Cyclo [high — operational]: Research and development expenses surged to $7.484 million from $1.326 million year-over-year. This significant increase reflects the company's intensified focus and investment in the development of its lead candidate, Trappsol Cyclo, for Niemann-Pick Disease Type C1.
• Dependence on Trappsol Cyclo Approval [high — regulatory]: The company's strategic outlook and significant R&D investment are heavily reliant on the successful completion of the Phase 3 clinical trial for Trappsol Cyclo and subsequent regulatory approval. Any delays or failures in this process pose a substantial risk to the company's future.
• Dilution from Increased Share Count [medium — financial]: The loss per share (basic and diluted) decreased to $0.19 from $0.37, despite a higher net loss. This is attributed to a significant increase in the weighted average shares outstanding from 24,062,854 to 51,184,407, indicating potential dilution for existing shareholders.
• Integration and Performance of Acquired Entities [medium — operational]: The company holds significant interests in various subsidiaries including LipoMedix (95%), Cornerstone Pharmaceuticals (majority), and Rafael Medical Devices (73%). The success of these investments and their integration into the company's strategy, particularly post-merger with Cyclo Therapeutics, LLC, presents operational risks.
• Competition in Rare Disease Therapeutics [medium — market]: The market for treatments for rare diseases like Niemann-Pick Disease Type C1 is highly competitive and subject to rapid scientific advancements. Failure to differentiate Trappsol Cyclo or keep pace with emerging therapies could impact market adoption.
• Valuation of Investments and Intangibles [medium — financial]: The balance sheet includes significant amounts for Goodwill ($19.939 million) and In-process research and development ($31.575 million). Impairment of these assets due to clinical trial failures or market changes could lead to substantial write-downs.
• Reliance on Key Personnel and Expertise [low — operational]: As a biotechnology company focused on drug development, Rafael Holdings relies heavily on the expertise of its scientific and management teams. The loss of key personnel or an inability to attract and retain top talent could impede progress, especially in critical clinical trial phases.

Industry Context

The biotechnology sector, particularly in rare diseases, is characterized by high R&D costs, long development timelines, and significant regulatory hurdles. Companies like Rafael Holdings focus on specific unmet medical needs, such as Niemann-Pick Disease Type C1, where successful drug development can lead to substantial market opportunities but also faces intense competition and scientific risk. The industry trend involves strategic mergers and acquisitions to consolidate pipelines and leverage expertise.

Regulatory Implications

Rafael Holdings' primary regulatory focus is on the successful completion of the Phase 3 trial for Trappsol Cyclo and subsequent FDA approval. Any setbacks in clinical trials, manufacturing, or regulatory submissions could significantly delay or prevent market entry. The company must also comply with ongoing reporting requirements for its various subsidiaries and investments.

What Investors Should Do

1. Monitor Trappsol Cyclo Phase 3 Trial Progress
2. Assess Cash Burn Rate and Future Funding Needs
3. Evaluate Strategic Value of Diversified Holdings
4. Analyze Impact of Increased Share Count on EPS
5. Scrutinize R&D Spending Allocation

Key Dates

• 2025-03-25: Merger with Cyclo Therapeutics, LLC — This merger significantly impacted the company's operations and R&D focus, leading to increased investment in Trappsol Cyclo.
• 2025-10-31: End of Q3 Fiscal Year — Reporting period for the 10-Q, showing increased R&D expenses and net loss, alongside revenue growth.
• 2025-07-31: End of Q2 Fiscal Year — Prior balance sheet date, showing higher cash and cash equivalents before the current period's burn.
• 2024-10-31: Prior Year Q3 End — Comparison period for the current quarter's financial results, highlighting revenue growth and increased R&D spending.
• 2017-01-01: FDA Fast Track Designation for Trappsol Cyclo — Early regulatory milestone for the company's lead drug candidate, indicating potential for expedited development and review.
• 2023-05-01: First Investment in Cyclo Therapeutics — Initial strategic investment that preceded the eventual merger and intensified focus on Trappsol Cyclo.

Glossary

Trappsol Cyclo

A cyclodextrin-based product being developed by Cyclo Therapeutics, LLC (now part of Rafael Holdings) for the potential treatment of Niemann-Pick Disease Type C1. (It is the company's lead drug candidate, and significant R&D investment is focused on its development and approval.)

Niemann-Pick Disease Type C1 (NPC1)

A rare, fatal, and progressive genetic disorder resulting in disrupted cholesterol metabolism, affecting multiple organs. (This is the target disease for Trappsol Cyclo, and successful treatment would address a significant unmet medical need.)

Phase 3 Clinical Trial

The final stage of clinical testing in drug development, involving a large number of patients to confirm efficacy, monitor side effects, and compare the drug to commonly used treatments. (The company's primary focus is completing this trial for Trappsol Cyclo, which is critical for regulatory approval.)

Goodwill

An intangible asset that arises when a company acquires another business for a price greater than the fair value of its identifiable net assets. (Represents a significant portion of the company's assets ($19.939 million), indicating past acquisitions.)

In-process research and development

Costs incurred for research and development projects that have not yet reached technological feasibility or marketability. (A substantial asset on the balance sheet ($31.575 million), reflecting ongoing development efforts, particularly for Trappsol Cyclo.)

Weighted average shares outstanding

The average number of outstanding shares over a period, used to calculate earnings per share. (The significant increase in this metric (from 24,062,854 to 51,184,407) impacts the EPS calculation and indicates potential dilution.)

Noncontrolling interests

The portion of equity in a subsidiary that is not attributable to the parent company. (Represents the ownership stake of others in consolidated subsidiaries, impacting total equity.)

Accumulated deficit

The cumulative net losses of a company since its inception that have not been offset by net income. (Indicates the company has historically incurred more losses than profits, with a deficit of $242.079 million as of October 31, 2025.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, Rafael Holdings reported a significant increase in total revenue to $240K from $128K, primarily driven by new product revenue. However, this top-line growth was overshadowed by a substantial surge in R&D expenses, which rose from $1.326 million to $7.484 million, leading to a wider net loss of $9.797 million. The company's cash position also decreased, reflecting an increased operating cash burn, while the share count more than doubled, impacting earnings per share calculations.

Key Financial Figures

• $0.01 — stered Class B common stock, par value $0.01 per share RFL New York Stock Exchange
• $2.03 — quarter) of the Class B common stock of $2.03 per share, as reported on the New York
• $38.6 million — York Stock Exchange, was approximately $38.6 million. The number of shares outstanding of t

Filing Documents

• ea0268691-10q_rafael.htm (10-Q) — 982KB
• ea026869101ex31-1_rafael.htm (EX-31.1) — 10KB
• ea026869101ex31-2_rafael.htm (EX-31.2) — 10KB
• ea026869101ex32-1_rafael.htm (EX-32.1) — 4KB
• ea026869101ex32-2_rafael.htm (EX-32.2) — 4KB
• 0001213900-25-120897.txt ( ) — 8079KB
• rfl-20251031.xsd (EX-101.SCH) — 90KB
• rfl-20251031_cal.xml (EX-101.CAL) — 69KB
• rfl-20251031_def.xml (EX-101.DEF) — 438KB
• rfl-20251031_lab.xml (EX-101.LAB) — 782KB
• rfl-20251031_pre.xml (EX-101.PRE) — 461KB
• ea0268691-10q_rafael_htm.xml (XML) — 924KB

FINANCIAL INFORMATION

Part I. FINANCIAL INFORMATION 1 Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited) Consolidated Balance Sheets as of October 31, 2025 and July 31, 2025 1 Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended October 31, 2025 and 2024 2 Consolidated Statements of Equity for the Three Months Ended October 31, 2025 and 2024 3 Consolidated Statements of Cash Flows for the Three Months Ended October 31, 2025 and 2024 4 Notes to the Consolidated Financial Statements 5 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 39 Item 3.

Quantitative and Qualitative Disclosures about Market Risks

Quantitative and Qualitative Disclosures about Market Risks 46 Item 4.

Controls and Procedures

Controls and Procedures 46

OTHER INFORMATION

Part II. OTHER INFORMATION 47 Item 1. Legal Proceeding 47 Item 1A.

Risk Factors

Risk Factors 47 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 47 Item 3. Defaults Upon Senior Securities 47 Item 4. Mine Safety Disclosures 47 Item 5. Other Information 47 Item 6. Exhibits 48

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION RAFAEL HOLDINGS, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) October 31, 2025 July 31, 2025 (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 45,539 $ 52,769 Prepaid clinical costs 1,584 1,045 Other receivables — 1,206 Accounts receivable, net of allowance for credit losses of $ 245 at October 31, 2025 and July 31, 2025 413 627 Inventory 272 281 Prepaid expenses and other current assets 513 786 Total current assets 48,321 56,714 Property and equipment, net 1,562 1,596 Non-current prepaid clinical costs 629 1,399 Convertible notes receivable classified as available-for-sale 1,858 1,858 Goodwill 19,939 19,939 Intangible assets, net 962 994 In-process research and development 31,575 31,575 Investments 500 — Other assets 29 34 TOTAL ASSETS $ 105,375 $ 114,109 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable $ 6,794 $ 6,893 Accrued expenses 3,860 3,304 Convertible notes payable 608 614 Due to related parties 751 723 Other current liabilities 63 66 Total current liabilities 12,076 11,600 Accrued expenses, noncurrent 3,898 3,895 Convertible notes payable, noncurrent 56 78 Deferred income tax liability 138 138 Other liabilities 27 27 TOTAL LIABILITIES 16,195 15,738 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, 2025 and July 31, 2025 8 8 Class B common stock, $ 0.01 par value; 200,000,000 shares authorized, 50,867,964 issued and outstanding (excluding treasury shares of 101,487) as of October 31, 2025, and 50,789,697 issued and outstanding (excluding treasury shares of 101,487) as of July 31, 2025 509 508 Additional paid-in capital 322,730 322,161 Accumulated deficit ( 242,079 ) ( 232,263 ) Treasury stock, at cost; 101,487 C

financial statements

financial statements. 2 RAFAEL HOLDINGS, INC. CONSOLIDATED STATEMENTS OF EQUITY (unaudited, in thousands, except share data) Three Months Ended October 31, 2025 Common Stock, Series A Common Stock, Series B Additional paid-in Accumulated Accumulated other comprehensive Noncontrolling Treasury Stock Total Shares Amount Shares Amount capital deficit income interests Class B Shares Amount Equity Balance at July 31, 2025 787,163 $ 8 50,789,697 $ 508 $ 322,161 $ ( 232,263 ) $ 4,145 $ 3,980 101,487 $ ( 168 ) $ 98,371 Net (income) loss — — — — — ( 9,816 ) — 19 — — ( 9,797 ) Stock-based compensation — — 99,429 1 597 — — — — — 598 Shares withheld for payroll taxes — — ( 21,162 ) — ( 28 ) — — — — — ( 28 ) Foreign currency translation adjustment — — — — — — 36 — — — 36 Balance at October 31, 2025 787,163 $ 8 50,867,964 $ 509 $ 322,730 $ ( 242,079 ) $ 4,181 $ 3,999 101,487 $ ( 168 ) $ 89,180 Three Months Ended October 31, 2024 Common Stock, Series A Common Stock, Series B Additional paid-in Accumulated Accumulated other comprehensive Noncontrolling Treasury Stock Total Shares Amount Shares Amount Capital deficit Income Interests Class B Shares Amount Equity 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 Net loss — — — — — ( 9,006 ) — ( 205 ) — — ( 9,211 ) Stock-based compensation — — — — 359 — — — — — 359 Forfeiture of restricted stock — — ( 7,500 ) — — — — — — — — Shares withheld for payroll taxes — — ( 27,405 ) — ( 48 ) — — — — — ( 48 ) Unrealized gain on available-for-sale securities — — — — — — 21 — — — 21 Foreign currency translation adjustment — — — — — — 5 — — — 5 Balance at October 31, 2024 787,163 $ 8 23,785,043 $ 238 $ 280,359 $ ( 210,749 ) $ 3,828 $ 3,868 101,487 $ (

financial statements

financial statements. 3 RAFAEL HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands) Three Months Ended October 31, 2025 2024 Operating activities Consolidated net loss $ ( 9,797 ) $ ( 9,211 ) Adjustments to reconcile consolidated net loss to net cash used in operating activities Depreciation and amortization 50 86 Gain on sale of property and equipment ( 54 ) — Gain on settlement of convertible notes payable ( 34 ) — Realized gain on available-for-sale securities — ( 194 ) Amortization of discount on available-for-sale securities — ( 257 ) Unrealized loss on equity investments - Cyclo — 4,365 Unrealized loss on Convertible Notes, due from Cyclo — 1,588 Stock-based compensation 598 359 Change in assets and liabilities, net of effects from acquisitions: Trade accounts receivable 214 225 Interest receivable — 77 Inventory 9 — Prepaid expenses and other current assets 273 35 Prepaid clinical trial costs (current and non-current) 231 — Other receivables 1,206 — Other assets 5 8 Accounts payable and accrued expenses 457 ( 118 ) Other current liabilities ( 3 ) ( 1 ) Due to related parties 28 1 Accrued expenses, noncurrent 3 — Convertible notes payable 8 — Other liabilities — ( 5 ) Net cash used in operating activities ( 6,806 ) ( 3,042 ) Investing activities Purchase of property and equipment — ( 6 ) Proceeds from sale of property and equipment 70 — Purchases of available-for-sale securities — ( 15,728 ) Purchase of preferred shares and warrants from Nina Medical ( 500 ) — Proceeds from the sale and maturities of available-for-sale securities — 33,318 Purchase of intangible assets — ( 9 ) Issuance of Convertible Notes, due from Cyclo — ( 9,000 ) Net cash (used in) provided by investing activities ( 430 ) 8,575 Financing activities Payments for taxes related to shares withheld for employee taxes ( 28 ) ( 48 )

financial statements

financial statements. 4 RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 – DESCRIPTION OF BUSINESS Rafael Holdings, Inc. ("Rafael Holdings", "Rafael", "we" or the "Company") is a biotechnology company that develops pharmaceuticals and holds interests in clinical and early-stage companies that develop pharmaceuticals and medical devices. The Company's lead candidate is 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. The Company also holds: (i) a majority equity interest in LipoMedix Pharmaceuticals Ltd. ("LipoMedix"), a clinical stage pharmaceutical company:; (ii) Barer Institute Inc. ("Barer"), a wholly-owned cancer research focused operation whose operations have been substantially streamlined; (iii) and a majority interest in Cornerstone Pharmaceuticals, Inc. ("Cornerstone"), formerly known as Rafael Pharmaceuticals Inc., a cancer metabolism-based therapeutics company; (iv) 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 (v) a majority interest in Day Three Labs, Inc. ("Day Three"), a company which empowers third-party manufacturers to reimagine their existing product offerings enabling those third-party manufacturers to bring to market better, cleaner, more precise and predictable versions of their product by utilizing Day Three's technology. The Company's primary focus is to finish development of Trappsol Cyclo through the completion of its ongoing pivotal Phase 3 clinical trial and bring that product to regulatory approval and market, and to expand its investment portfolio through opportunistic and strategic investments, including in therapeutics, that address high unmet medical needs. The Company is currently evaluating their other holdings to ensure the future focus of their resources on core as

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 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, Rafael Medical Devices sold an aggregate 31.6 % equity interest to third parties for $ 925,000 . In February 2025, the Company invested approximately $ 582,000 in cash, and Rafael Medical Devices raised approximately $ 45,000 from third parties in exchange for Rafael Medical Devices' Class A Units. The Company currently holds a 73 % equity interest in Rafael Medical Devices. On December 11, 2024, Rafael Medical Devices received a substantial equivalence determination for the VECTR System from the Food and Drug Administration ("FDA") in response to Rafael Medical Devices' 510(k) premarket notification. The FDA's clearance of the VECTR System is for use in minimally invasive ligament or fascia release surgeries, such as carpal tunnel release in the wrist and cubital tunnel release in the elbow. The VECTR System has been classified into Class II and is subject to special controls (performance standards). Rafael Medical Devices' development of future products will depend upon the success of the VECTR System and the Company's ability to identify attractive opportunities in the marketplace. In January 2024, the Company entered into a series of transactions with Day Three and certain of its shareholders, acquiring a controlling interest in Day Three and subsequently consolidating Day Three's results (the "Day Three Acquisition"). On March 14, 2025, Day Three Labs Manufacturing, a majority owned subsidiary of Day Three, entered into an Asset Purchase Agreement and Licensing Agreement, pursuant to which they sold assets and licensed certain applications of their Unlokt technology used in their cannabinoid ingredient manufacturing business. The "Company" in these consolidated

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. 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 73 % Farber Partners, LLC United States – Delaware 93 % Pharma Holdings, LLC United States – Delaware 90 %** LipoMedix Pharmaceuticals Ltd. Israel 95 % Altira Capital & Consulting, LLC United States – Delaware 67 % CS Pharma Holdings, LLC United States – Delaware 45 %** Day Three Labs, Inc. United States – Delaware 84 % Cornerstone Pharmaceuticals, Inc. United States – Delaware 67 % RP Finance, LLC United States – Delaware 38 % Cyclo Therapeutics, LLC (Note 3) United States – Nevada 100 % * 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. ** 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 outstanding capital stock of Cornerstone. 6 RAFAEL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial included. 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 2025 refers to the fiscal year ended July 31, 2025). Operating results for the three months ended October 31, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, 2026. The balance sheet at July 31, 2025 has been derived from the Company's audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. Therefore, these consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended July 31, 2025 (the "2025 Form 10-K") as filed with the U.S. Securities and Exchange Commission (the "SEC") on October 29, 2025. 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 a

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 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 did not recognize any credit loss expense during the three months ended October 31, 2025 and 2024. Inventory and Cost of Goods Sold Inventory consists of cyclodextrin products and chemical complexes purchased for resale recorded at the lower of cost (first-in, first-out) or net realizable value. Cost of products sold includes the acquisition cost of the products sold. The Company records a specific reserve for inventory items that are determined to be obsolete. The Company determined no reserve for obsolete inventory was necessary as of October 31, 2025 and July 31, 2025. Prepaid Clinical Expenses Prepaid clinical expenses consist of the Company's active pharmaceutical ingredients and other raw materials for Trappsol Cyclo

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