# EDGAR Filing Document

**Accession Number:** 0001713863
**File Stem:** 0001213900-23-019981
**Filing Date:** 2023-3
**Character Count:** 189042
**Document Hash:** 8ffb55ac4fe23ac428177be41e5b138b
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-23-019981.hdr.sgml**: 20230314

**ACCESSION NUMBER**: 0001213900-23-019981

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 89

**CONFORMED PERIOD OF REPORT**: 20230131

**FILED AS OF DATE**: 20230314

**DATE AS OF CHANGE**: 20230314

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Rafael Holdings, Inc.
- **CENTRAL INDEX KEY:** 0001713863
- **STANDARD INDUSTRIAL CLASSIFICATION:** REAL ESTATE [6500]
- **IRS NUMBER:** 822296593
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 0731

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-38411
- **FILM NUMBER:** 23731662

**BUSINESS ADDRESS:**
- **STREET 1:** 520 BROAD STREET
- **CITY:** NEWARK
- **STATE:** NJ
- **ZIP:** 07120
- **BUSINESS PHONE:** 212-658-1450

**MAIL ADDRESS:**
- **STREET 1:** 520 BROAD STREET
- **CITY:** NEWARK
- **STATE:** NJ
- **ZIP:** 07120

?xml version="1.0" encoding="ASCII"?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-Q**

☒ Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended January 31, 2023.

or

☐ Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934.

Commission File Number: 000-55863

**RAFAEL HOLDINGS, INC.**

(Exact name of registrant as specified in its charter)

---

| | |
|:---|:---|
| **Delaware** | **82-2296593** |
| (State or other jurisdiction of<br> incorporation or organization) | (I.R.S. Employer<br> Identification No.) |

---

**520 Broad Street, Newark, New Jersey 07102**

(Address of principal executive offices, zip code)

**(212) 658-1450**

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol** | **Name of each exchange on which registered** |
| Class B common stock, par value $0.01 per share | RFL | New York Stock Exchange |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ <br> Non-accelerated filer ☒ Smaller reporting company ☒ <br> Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The number of shares outstanding of the registrant's common stock as of March 10, 2023 was:

---

| | |
|:---|:---|
| Class A common stock, par value $0.01 per share: | 787,163 shares |
| Class B common stock, par value $0.01 per share: | 23,523,452 shares (excluding 112,523 treasury shares) |

---

**RAFAEL HOLDINGS, INC.**

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
| [Part I. FINANCIAL INFORMATION](#a_001) | [Part I. FINANCIAL INFORMATION](#a_001) | 1 |
| Item 1. | [Financial Statements (Unaudited)](#a_002) | 1 |
|  | [Consolidated Balance Sheets as of January 31, 2023 and July 31, 2022](#a_003) | 1 |
|  | [Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended January 31, 2023 and 2022](#a_004) | 2 |
|  | [Consolidated Statements of Equity for the Three and Six Months Ended January 31, 2023 and 2022](#a_005) | 3 |
|  | [Consolidated Statements of Cash Flows for the Six Months Ended January 31, 2023 and 2022](#a_006) | 5 |
|  | [Notes to the Consolidated Financial Statements](#a_007) | 6 |
| Item 2. | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#a_008) | 32 |
| Item 3. | [Quantitative and Qualitative Disclosures about Market Risks](#a_009) | 41 |
| Item 4. | [Controls and Procedures](#a_010) | 41 |
| [Part II. OTHER INFORMATION](#a_011) | [Part II. OTHER INFORMATION](#a_011) | 42 |
| Item 1. | [Legal Proceedings](#a_012) | 42 |
| Item 1A. | [Risk Factors](#a_013) | 42 |
| Item 2. | [Unregistered Sales of Equity Securities and Use of Proceeds](#a_013) | 42 |
| Item 3. | [Defaults Upon Senior Securities](#a_015) | 42 |
| Item 4. | [Mine Safety Disclosures](#a_016) | 42 |
| Item 5. | [Other Information](#a_017) | 42 |
| Item 6. | [Exhibits](#a_018) | 42 |
|  |  | 42 |
| [SIGNATURES](#a_019) |  | 43 |

---

i

**PART I. FINANCIAL INFORMATION**

**Item 1. Financial Statements**

**RAFAEL HOLDINGS, INC.**

**CONSOLIDATED BALANCE SHEETS**

**(unaudited, in thousands, except share and per share data)**

---

| | | |
|:---|:---|:---|
|  | **January 31,<br> 2023** | **July 31,<br> 2022** |
|  | | **Note 2** |
| **ASSETS** | | |
| **CURRENT ASSETS** | | |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $9670 | $26537 |
| &nbsp;&nbsp;&nbsp;Available-for-sale securities | 79197 | 36698 |
| &nbsp;&nbsp;&nbsp;Interest receivable | 314 | 140 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net of allowance for doubtful accounts of $180 and $197 at January 31, 2023 and July 31, 2022, respectively | 272 | 157 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 512 | 4621 |
| &nbsp;&nbsp;&nbsp;Assets held-for-sale |  | 40194 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 89965 | 108347 |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | 1732 | 1770 |
| &nbsp;&nbsp;&nbsp;Investments – Other Pharmaceuticals | 254 | 477 |
| &nbsp;&nbsp;&nbsp;Investments – Hedge Funds | 5015 | 4764 |
| &nbsp;&nbsp;&nbsp;In-process research and development and patents | 1575 | 1575 |
| &nbsp;&nbsp;&nbsp;Other assets | 9 | 1387 |
| **TOTAL ASSETS** | $98550 | $118320 |
| **LIABILITIES AND EQUITY** |  |  |
| **CURRENT LIABILITIES** |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $443 | $564 |
| &nbsp;&nbsp;&nbsp;Accrued expenses | 1326 | 1875 |
| &nbsp;&nbsp;&nbsp;Other current liabilities | 197 | 3518 |
| &nbsp;&nbsp;&nbsp;Due to related parties |  | 69 |
| &nbsp;&nbsp;&nbsp;Note payable, net of debt issuance costs, held-for-sale |  | 15000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 1966 | 21026 |
| &nbsp;&nbsp;&nbsp;Other liabilities | 49 | 88 |
| **TOTAL LIABILITIES** | 2015 | 21114 |
| **COMMITMENTS AND CONTINGENCIES** |  |  |
| **EQUITY** |  |  |
| &nbsp;&nbsp;&nbsp;Class A common stock, $0.01 par value; 35,000,000 shares authorized, 787,163 shares issued and outstanding as of January 31, 2023 and July 31, 2022, respectively | 8 | 8 |
| &nbsp;&nbsp;&nbsp;Class B common stock, $0.01 par value; 200,000,000 shares authorized, 23,636,084 issued and 23,522,995 outstanding as of January 31, 2023, and 23,712,449 issued and 23,687,964 outstanding as of July 31, 2022, respectively | 236 | 237 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 262924 | 262023 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (167115) | (165457) |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive gain (loss) related to unrealized gain (loss) on available-for-sale securities | 308 | (63) |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive income related to foreign currency translation adjustment | 3741 | 3767 |
| &nbsp;&nbsp;&nbsp;Total equity attributable to Rafael Holdings, Inc. | 100102 | 100515 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Noncontrolling interests | (3567) | (3309) |
| **TOTAL EQUITY** | 96535 | 97206 |
| **TOTAL LIABILITIES AND EQUITY** | $98550 | $118320 |

---

See accompanying notes to the unaudited consolidated interim financial statements.

**RAFAEL HOLDINGS, INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**

**(unaudited, in thousands, except share and per share data)**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended<br> January 31,** | **Three Months Ended<br> January 31,** | **Six Months Ended<br> January 31,** | **Six Months Ended<br> January 31,** |
|  | **2023** | **2022** | **2023** | **2022** |
| **REVENUE** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Rental – Third Party | $43 | $45 | $86 | $89 |
| &nbsp;&nbsp;&nbsp;Rental – Related Party | 27 | 29 | 54 | 56 |
| &nbsp;&nbsp;&nbsp;Other – Related Party |  |  |  | 120 |
| **Total revenue** | 70 | 74 | 140 | 265 |
| **COSTS AND EXPENSES** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;General and administrative | 2085 | (1680) | 5194 | 10594 |
| &nbsp;&nbsp;&nbsp;Research and development | 2225 | 3335 | 4306 | 5488 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 19 | 18 | 41 | 37 |
| &nbsp;&nbsp;&nbsp;Provision for loss on receivable from Cornerstone Pharmaceuticals pursuant to line of credit |  |  |  | 25000 |
| &nbsp;&nbsp;&nbsp;Provision for losses on related party receivables |  |  |  | 10095 |
| **Loss from operations** | (4259) | (1599) | (9401) | (50949) |
| &nbsp;&nbsp;&nbsp;Interest expense |  |  |  | (13) |
| &nbsp;&nbsp;&nbsp;Interest income | 562 |  | 770 |  |
| &nbsp;&nbsp;&nbsp;Impairment of investments - Other Pharmaceuticals | (67) |  | (223) |  |
| &nbsp;&nbsp;&nbsp;Impairment of cost method investment - Cornerstone Pharmaceuticals |  |  |  | (79141) |
| &nbsp;&nbsp;&nbsp;Realized gain on available-for-sale securities | 139 |  | 154 |  |
| &nbsp;&nbsp;&nbsp;Unrealized gain (loss) on investments - Hedge Funds | 378 | (454) | 251 | (243) |
| **Loss from continuing operations before income taxes** | (3247) | (2053) | (8449) | (130346) |
| &nbsp;&nbsp;&nbsp;Provision for income taxes | (5) | (4) | (10) | (4) |
| &nbsp;&nbsp;&nbsp;Equity in loss of RP Finance |  |  |  | (575) |
| **Consolidated net loss from continuing operations** | (3252) | (2057) | (8459) | (130925) |
| **Discontinued Operations (Note 3)** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Loss from discontinued operations related to 520 Property | (157) | (508) | (241) | (1051) |
| &nbsp;&nbsp;&nbsp;Gain on disposal of 520 Property |  |  | 6784 |  |
| **(Loss) income from discontinued operations** | (157) | (508) | 6543 | (1051) |
| **Consolidated net loss** | (3409) | (2565) | (1916) | (131976) |
| &nbsp;&nbsp;&nbsp;Net loss attributable to noncontrolling interests | (159) | (244) | (258) | (17631) |
| **Net loss attributable to Rafael Holdings, Inc.** | $(3250) | $(2321) | $(1658) | $(114345) |
| **OTHER COMPREHENSIVE LOSS** |  |  |  |  |
| **Consolidated net loss** | $(3409) | $(2565) | $(1916) | $(131976) |
| &nbsp;&nbsp;&nbsp;Unrealized gain on available-for-sale securities | 268 |  | 371 |  |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment | (16) | 146 | (26) | 155 |
| **Total comprehensive loss** | (3157) | (2419) | (1571) | (131821) |
| &nbsp;&nbsp;&nbsp;Comprehensive loss attributable to noncontrolling interests | (156) | (330) | (255) | (17681) |
| **Total comprehensive loss attributable to Rafael Holdings, Inc.** | $(3001) | $(2089) | $(1316) | $(114140) |
| **Loss per share attributable to common shareholders** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic and diluted: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Continuing operations | $(0.13) | $(0.09) | $(0.36) | $(5.86) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Discontinued operations | (0.01) | (0.03) | $0.28 | (0.05) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total basic and diluted (loss) per share | $(0.14) | $(0.12) | $(0.08) | $(5.91) |
| **Weighted average number of shares used in calculation of loss per share** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic and diluted | 23155018 | 19713127 | 23085612 | 19332630 |

---

See accompanying notes to the unaudited consolidated interim financial statements.

**RAFAEL HOLDINGS, INC.**

**CONSOLIDATED STATEMENTS OF EQUITY**

**(unaudited, in thousands, except share data)**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended January 31, 2023** | **Three Months Ended January 31, 2023** | **Three Months Ended January 31, 2023** | **Three Months Ended January 31, 2023** | **Three Months Ended January 31, 2023** | **Three Months Ended January 31, 2023** | **Three Months Ended January 31, 2023** | **Three Months Ended January 31, 2023** | **Three Months Ended January 31, 2023** |
|  | **Common Stock, Series A** | **Common Stock, Series A** | **Common Stock, Series B** | **Common Stock, Series B** | | | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Additional<br> paid-in**<br>**capital** | **Accumulated**<br>**deficit** | **Accumulated<br> other<br> comprehensive**<br>**income** | **Noncontrolling**<br>**interests** | **Total**<br>**Equity** |
| **Balance at November 1, 2022** | **787163** | $**&nbsp;&nbsp;&nbsp;&nbsp; 8** | **23685036** | $**237** | $**263197** | $**(163865)** | $**3797** | $**(3408)** | $**99966** |
| &nbsp;&nbsp;&nbsp;Net loss for the three months ended January 31, 2023 |  |  |  |  |  | (3250) |  | (159) | **(3409)** |
| &nbsp;&nbsp;&nbsp;Stock-based compensation |  |  | 220019 | 2 | 778 |  |  |  | **780** |
| &nbsp;&nbsp;&nbsp;Forfeiture of restricted stock |  |  | (296384) | (2) | (901) |  |  |  | **(903)** |
| &nbsp;&nbsp;&nbsp;Shares withheld for payroll taxes |  |  | (85676) | (1) | (150) |  |  |  | **(151)** |
| &nbsp;&nbsp;&nbsp;Unrealized gain on available-for-sale securities |  |  |  |  |  |  | 268 |  | **268** |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment |  |  |  |  |  |  | (16) |  | **(16)** |
| **Balance at January 31, 2023** | 787163 | $8 | 23522995 | $236 | $262924 | $(167115) | $4049 | $(3567) | $96535 |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Six Months Ended January 31, 2023** | **Six Months Ended January 31, 2023** | **Six Months Ended January 31, 2023** | **Six Months Ended January 31, 2023** | **Six Months Ended January 31, 2023** | **Six Months Ended January 31, 2023** | **Six Months Ended January 31, 2023** | **Six Months Ended January 31, 2023** | **Six Months Ended January 31, 2023** |
|  | **Common Stock, Series A** | **Common Stock, Series A** | **Common Stock, Series B** | **Common Stock, Series B** | | | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Additional<br> paid-in**<br>**capital** | **Accumulated**<br>**deficit** | **Accumulated<br> other<br> comprehensive**<br>**income** | **Noncontrolling**<br>**interests** | **Total**<br>**Equity** |
| **Balance at August 1, 2022** | **787163** | $**8** | **23687964** | $**237** | $**262023** | $**(165457)** | $**3704** | $**(3309)** | $**97206** |
| &nbsp;&nbsp;&nbsp;Net loss for the six months ended January 31, 2023 |  |  |  |  |  | (1658) |  | (258) | **(1916)** |
| &nbsp;&nbsp;&nbsp;Stock-based compensation |  |  | 220019 | 2 | 1957 |  |  |  | **1959** |
| &nbsp;&nbsp;&nbsp;Forfeiture of restricted stock |  |  | (296384) | (2) | (900) |  |  |  | **(902)** |
| &nbsp;&nbsp;&nbsp;Shares withheld for payroll taxes |  |  | (88604) | (1) | (156) |  |  |  | **(157)** |
| &nbsp;&nbsp;&nbsp;Unrealized gain on available-for-sale securities |  |  |  |  |  |  | 371 |  | **371** |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment |  |  |  |  |  |  | (26) |  | **(26)** |
| **Balance at January 31, 2023** | 787163 | $8 | 23522995 | $236 | $262924 | $(167115) | $4049 | $(3567) | $96535 |

---

See accompanying notes to the unaudited consolidated interim financial statements.

**RAFAEL HOLDINGS, INC.**

**CONSOLIDATED STATEMENTS OF EQUITY**

**(unaudited, in thousands, except share data)**

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Three Months Ended January 31, 2022** | **Three Months Ended January 31, 2022** | **Three Months Ended January 31, 2022** | **Three Months Ended January 31, 2022** | **Three Months Ended January 31, 2022** | **Three Months Ended January 31, 2022** | **Three Months Ended January 31, 2022** | **Three Months Ended January 31, 2022** | **Three Months Ended January 31, 2022** |
|  | **Common Stock, Series A** | **Common Stock, Series A** | **Common Stock, Series B** | **Common Stock, Series B** | | | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Additional<br> paid-in**<br>**capital** | **Accumulated**<br>**deficit** | **Accumulated<br> other<br> comprehensive**<br>**income** | **Noncontrolling**<br>**interests** | **Total**<br>**Equity** |
| **Balance at November 1, 2021** | **787163** | $**8** | **19882219** | $**198** | $**264867** | $**(152823)** | $**3781** | $**(2969)** | $**113062** |
| &nbsp;&nbsp;&nbsp;Net loss for the three months ended January 31, 2022 |  |  |  |  |  | (2321) |  | (244) | **(2565)** |
| &nbsp;&nbsp;&nbsp;Stock-based compensation |  |  | 63360 | 1 | 8031 |  |  |  | **8032** |
| &nbsp;&nbsp;&nbsp;Acquisition of additional ownership interest in LipoMedix |  |  |  |  | 8 |  |  | (8) | **—** |
| &nbsp;&nbsp;&nbsp;Forfeiture of restricted stock |  |  | (908497) | (9) | (18969) |  |  |  | **(18978)** |
| &nbsp;&nbsp;&nbsp;Shares withheld for payroll taxes |  |  | (8070) |  | (41) |  |  |  | **(41)** |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment |  |  |  |  |  |  | 146 |  | **146** |
| **Balance at January 31, 2022** | 787163 | $8 | 19029012 | $190 | $253896 | $(155144) | $3927 | $(3221) | $99656 |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Six Months Ended January 31, 2022** | **Six Months Ended January 31, 2022** | **Six Months Ended January 31, 2022** | **Six Months Ended January 31, 2022** | **Six Months Ended January 31, 2022** | **Six Months Ended January 31, 2022** | **Six Months Ended January 31, 2022** | **Six Months Ended January 31, 2022** | **Six Months Ended January 31, 2022** |
|  | **Common Stock, Series A** | **Common Stock, Series A** | **Common Stock, Series B** | **Common Stock, Series B** | | | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Additional<br> paid-in**<br>**capital** | **Accumulated**<br>**deficit** | **Accumulated<br> other<br> comprehensive**<br>**income** | **Noncontrolling**<br>**interests** | **Total**<br>**Equity** |
| **Balance at August 1, 2021** | **787163** | $**8** | **16936864** | $**169** | $**159136** | $**(40799)** | $**3772** | $**14418** | $**136704** |
| &nbsp;&nbsp;&nbsp;Net loss for the six months ended January 31, 2022 |  |  |  |  |  | (114345) |  | (17631) | **(131976)** |
| &nbsp;&nbsp;&nbsp;Stock-based compensation |  |  | 63360 | 1 | 15882 |  |  |  | **15883** |
| &nbsp;&nbsp;&nbsp;Forfeiture of restricted stock |  |  | (908497) | (9) | (18969) |  |  |  | **(18978)** |
| &nbsp;&nbsp;&nbsp;Common stock sold to investors |  |  | 2833425 | 28 | 99142 |  |  |  | **99170** |
| &nbsp;&nbsp;&nbsp;Transaction costs incurred in connection with sale of common stock |  |  |  |  | (6228) |  |  |  | **(6228)** |
| &nbsp;&nbsp;&nbsp;Common stock sold to related party |  |  | 112501 | 1 | 4996 |  |  |  | **4997** |
| &nbsp;&nbsp;&nbsp;Acquisition of additional ownership interest in LipoMedix |  |  |  |  | 8 |  |  | (8) | **—** |
| &nbsp;&nbsp;&nbsp;Shares withheld for payroll taxes |  |  | (8641) |  | (71) |  |  |  | **(71)** |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustment |  | &nbsp;&nbsp;&nbsp;&nbsp;— |  |  |  |  | 155 |  | **155** |
| **Balance at January 31, 2022** | 787163 | $8 | 19029012 | $190 | $253896 | $(155144) | $3927 | $(3221) | $99656 |

---

See accompanying notes to the unaudited consolidated interim financial statements.

**RAFAEL HOLDINGS, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(unaudited, in thousands)**

---

| | | |
|:---|:---|:---|
|  | **Six Months Ended <br> January 31,** | **Six Months Ended <br> January 31,** |
|  | **2023** | **2022** |
| **Operating activities** |  |  |
| Consolidated net loss | $(1916) | $(131976) |
| Less: Income (loss) from discontinued operations | 6543 | (1051) |
| Loss from continuing operations | (8459) | (130925) |
| Adjustments to reconcile consolidated net loss to net cash used in operating activities |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 41 | 37 |
| &nbsp;&nbsp;&nbsp;Net unrealized (gain) loss on investments - Hedge Funds | (251) | 243 |
| &nbsp;&nbsp;&nbsp;Realized gain on available-for-sale securities | (154) |  |
| &nbsp;&nbsp;&nbsp;Amortization of discount on available-for-sale securities | (220) |  |
| &nbsp;&nbsp;&nbsp;Impairment of investments - Other Pharmaceuticals | 223 |  |
| &nbsp;&nbsp;&nbsp;Impairment of cost method investment - Cornerstone Pharmaceuticals |  | 79141 |
| &nbsp;&nbsp;&nbsp;Provision for loss on receivable from Cornerstone Pharmaceuticals pursuant to line of credit |  | 25000 |
| &nbsp;&nbsp;&nbsp;Equity in loss of RP Finance |  | 575 |
| &nbsp;&nbsp;&nbsp;Provision for losses on related party receivables |  | 10095 |
| &nbsp;&nbsp;&nbsp;Provision for doubtful accounts |  | 37 |
| &nbsp;&nbsp;&nbsp;Stock-based compensation, net | 1057 | (3095) |
| &nbsp;&nbsp;&nbsp;Amortization of debt issuance costs |  | 250 |
| Change in assets and liabilities, net of effects from discontinued operations: |  |  |
| &nbsp;&nbsp;&nbsp;Trade accounts receivable | (111) | (418) |
| &nbsp;&nbsp;&nbsp;Interest receivable | (174) |  |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 822 | 172 |
| &nbsp;&nbsp;&nbsp;Other assets | (26) | 107 |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | (155) | 5360 |
| &nbsp;&nbsp;&nbsp;Other current liabilities | 30 | 98 |
| &nbsp;&nbsp;&nbsp;Due to related parties | (69) | (79) |
| &nbsp;&nbsp;&nbsp;Due from Cornerstone Pharmaceuticals |  | (120) |
| &nbsp;&nbsp;&nbsp;Other liabilities | 9 | 36 |
| &nbsp;&nbsp;&nbsp;Net cash used in continuing operations | (7437) | (13486) |
| &nbsp;&nbsp;&nbsp;Net cash used in discontinued operations | (687) | (325) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities | (8124) | (13811) |
| **Investing activities** |  |  |
| &nbsp;&nbsp;&nbsp;Payment to Cornerstone Pharmaceuticals pursuant to Line of Credit |  | (25000) |
| &nbsp;&nbsp;&nbsp;Purchases of property and equipment |  | (2) |
| &nbsp;&nbsp;&nbsp;Payment to fund RP Finance Line of Credit |  | (1875) |
| &nbsp;&nbsp;&nbsp;Purchases of available-for-sale securities | (113137) |  |
| &nbsp;&nbsp;&nbsp;Proceeds from the sale and maturities of available-for-sale securities | 71383 |  |
| &nbsp;&nbsp;&nbsp;Net cash used in investing activities of continuing operations | (41754) | (26877) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sale of 520 Property - discontinued operations | 49400 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of transaction costs for sale of 520 Property - discontinued operations | (1229) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases of property and equipment - discontinued operations |  | (60) |
| &nbsp;&nbsp;&nbsp;Net cash provided by (used in) investing activities of discontinued operations | 48171 | (60) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) investing activities | 6417 | (26937) |
| **Financing activities** |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of common stock |  | 104167 |
| &nbsp;&nbsp;&nbsp;Payment of transaction costs incurred in connection with sale of common stock |  | (6228) |
| &nbsp;&nbsp;&nbsp;Payments for taxes related to shares withheld for employee taxes | (157) | (71) |
| Net cash (used in) provided by continuing operations | (157) | 97868 |
| Payment of Note Payable in connection with sale of 520 Property - discontinued operations | (15000) |  |
| Net cash (used in) provided by financing activities | (15157) | 97868 |
| Effect of exchange rate changes on cash and cash equivalents | (3) | 51 |
| Net (decrease) increase in cash and cash equivalents and restricted cash | (16867) | 57171 |
| Cash and cash equivalents, and restricted cash, beginning of period | 26537 | 12854 |
| Cash and cash equivalents, and restricted cash, end of period | $9670 | $70025 |
| **Reconciliation of cash and restricted cash** |  |  |
| Cash and cash equivalents | $9670 | $65025 |
| Restricted cash |  | 5000 |
| Total cash and cash equivalents and restricted cash shown in statement of cash flows | $9670 | $70025 |

---

See accompanying notes to the unaudited consolidated interim financial statements.

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

**NOTE 1 – DESCRIPTION OF BUSINESS**

 

*Description of Business*

Rafael Holdings, Inc. (NYSE:RFL), ("Rafael Holdings", "we" or the "Company"), a Delaware corporation, is a holding company with interests in clinical and early-stage pharmaceutical companies (the "Pharmaceutical Companies"), including an investment in Cornerstone Pharmaceuticals, Inc., formerly known as Rafael Pharmaceuticals Inc., a cancer metabolism-based therapeutics company, a majority equity interest in LipoMedix Pharmaceuticals Ltd. ("LipoMedix"), a clinical stage pharmaceutical company, the activities of the Barer Institute Inc. ("Barer"), a wholly-owned preclinical cancer metabolism research operation, and Rafael Medical Devices, Inc., a wholly owned orthopedic-focused medical device company developing instruments to advance minimally invasive surgeries ("Rafael Medical Devices" and together with the Pharmaceutical Companies, the "Healthcare 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. The Company's primary focus is to invest in, fund, and develop novel cancer therapies. We further seek to expand our portfolio through opportunistic investments in therapeutics which address high unmet medical needs including through acquisitions and strategic investments.

Historically, the Company owned multiple 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"). See Note 3 for further details on the sale transaction. Currently, the Company holds a portion of a commercial building in Jerusalem, Israel as its remaining real estate asset.

The Company holds debt and equity investments in Cornerstone Pharmaceuticals that includes preferred and common equity interests and a warrant to purchase additional equity. On June 17, 2021, the Company entered into a merger agreement to acquire full ownership of Cornerstone Pharmaceuticals in exchange for issuing Company Class B common stock to the other stockholders of Cornerstone Pharmaceuticals. On October 28, 2021, the Company announced that the AVENGER 500 Phase 3 clinical trial for CPI-613® (devimistat), Cornerstone Pharmaceuticals' lead product candidate, did not meet its primary endpoint of significant improvement in overall survival in patients with metastatic adenocarcinoma of the pancreas. In addition, following a pre-specified interim analysis, the independent data monitoring committee for the ARMADA 2000 Phase 3 study for devimistat recommended the trial to be stopped due to a determination that it was unlikely to achieve the primary endpoint (the "Data Events"). In connection with the preparation of the Company's financial statements for the first quarter ended October 31, 2021, accounting principles generally accepted in the United States of America ("U.S. GAAP") required that the Company assess the impact of the Data Events and determine whether the carrying values of the Company's assets were impaired based upon the Company's expectations to realize future value. In light of the Data Events, the Company concluded that the likelihood of further development of and prospects for CPI-613 is uncertain and fully impaired in the first quarter ended October 31, 2021 the value of its loans, receivables, and investment in Cornerstone Pharmaceuticals based upon its valuation of Cornerstone Pharmaceuticals. On February 2, 2022, the Company terminated the Merger Agreement with Cornerstone Pharmaceuticals, effective immediately, in accordance with its terms. Subsequently, on February 2, 2022, the Company withdrew its Registration Statement on Form S-4 related to the proposed Merger.

In 2019, the Company established Barer, a preclinical cancer metabolism research operation, to focus on developing a pipeline of novel therapeutic compounds, including compounds 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 subsidiary, Farber Partners, LLC ("Farber"), was formed around one such agreement with Princeton University's Office of Technology Licensing 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 the Barer Institute.

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

The "Company" in these consolidated financial statements refers to Rafael Holdings and its subsidiaries on a consolidated basis. All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying consolidated financial statements reflect the activity related to the 520 Property as discontinued operations.

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

---

| | | | |
|:---|:---|:---|:---|
| **Company** | **Country of Incorporation** | **Percentage**<br> **Owned** |  |
| Rafael Holdings, Inc. | United States – Delaware | 100 | % |
| 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 | %\* |
| The Barer Institute, LLC | United States – Delaware | 100 | %\* |
| Hillview Avenue Realty, JV | United States – Delaware | 100 | % |
| Hillview Avenue Realty, LLC | United States – Delaware | 100 | % |
| Rafael Medical Devices, Inc. | United States – Delaware | 100 | % |
| Levco Pharmaceuticals Ltd. | Israel | 95 | %\*\*\* |
| Farber Partners, LLC | United States – Delaware | 93 | % |
| Pharma Holdings, LLC | United States – Delaware | 90 | % |
| LipoMedix Pharmaceuticals Ltd. | Israel | 84 | % |
| Altira Capital & Consulting, LLC | United States – Delaware | 67 | % |
| CS Pharma Holdings, LLC | United States – Delaware | 45 | %\*\* |

---

\* 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 in Pharma Holdings, LLC and, therefore, an effective 45% interest in CS Pharma Holdings, LLC. The Company, along with CS Pharma and Pharma Holdings, collectively own securities representing 51% of the outstanding capital stock of Cornerstone Pharmaceuticals and 42% of the capital stock on a fully diluted basis (excluding the remainder of the Warrant). Refer to Note 4 for further details.

\*\*\* During Fiscal 2022, the Company discontinued further material investment in Levco.

On March 15, 2022, the Company dissolved IDT 225 Old NB Road, LLC.

**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 financial statements. In the opinion of management, all adjustments, which include only normal recurring adjustments, considered necessary for a fair presentation have been included.

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

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 2022 refers to the fiscal year ended July 31, 2022).

Operating results for the three and six months ended January 31, 2023 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, 2023. The balance sheet at July 31, 2022 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 financial statements. Therefore, these financial statements should be read in conjunction with the Company's audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended July 31, 2022, or the 2022 Form 10-K, as filed with the U.S. Securities and Exchange Commission (the "SEC").

*Use of Estimates&nbsp;&nbsp;&nbsp;&nbsp;*

The preparation of 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 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 January 31, 2023, the Company had cash and cash equivalents of approximately $9.7 million, and available-for-sale securities valued at approximately $79.2 million. On August 22, 2022, the Company received net proceeds of approximately $33 million in connection with the sale of the 520 Property (see Note 3 for further details). The Company expects the balance of cash and cash equivalents, and available-for-sale securities to be sufficient to meet our obligations for at least the next 12 months from the issuance of these consolidated financial statements.

*Risks and Uncertainties - COVID-19, War in Ukraine*

In late 2019, a novel strain of coronavirus, SARS-CoV, which causes COVID-19, was identified and has proved to be highly contagious. It has since spread extensively throughout the world, including the United States, and was declared a global pandemic by the World Health Organization in March 2020. The Company actively monitors the outbreak, including the spread of new variants of interest, and its potential impact on the Company's operations and those of the Company's holdings.

Even with growing availability of testing and vaccines and the relaxation of public health measures that were implemented to limit the spread of the pandemic, there continues to be uncertainty around the COVID-19 pandemic and its impact.

The Company had implemented a number of measures to protect the health and safety of the Company's workforce including a voluntary work-from-home policy for the Company's workforce who can perform their jobs from home as well as restrictions on discretionary business travel. Most of our employees have returned to working from the office on a part-time basis.

The full impact of the COVID-19 pandemic on the Company will depend on factors such as the length of time of the pandemic; the responses of federal, state and local governments; the impact of future variants that may emerge; vaccination rates among the population; the efficacy of the COVID-19 vaccines; the longer-term impact of the pandemic on the economy and consumer behavior; and the effect on our employees, vendors, and other partners.

The short and long-term implications of Russia's invasion of Ukraine are difficult to predict at this time. The imposition of sanctions and counter sanctions may have an adverse effect on the economic markets generally and could impact our business and the companies in which we have investments, financial condition, and results of operations. Because of the highly uncertain and dynamic nature of these events, it is not currently possible to estimate the impact of the Russian – Ukraine war on our business and the companies in which we have invested.

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

*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. For the three and six months ended January 31, 2023, including revenue from discontinued operations, related parties represented 39% and 43% of the Company's revenue, respectively, and as of January 31, 2023, there were no customers that were a concentration of the Company's accounts receivable balance. For the three and six months ended January 31, 2022, including revenue from discontinued operations, related parties represented 57% and 63% of the Company's revenue, respectively, and as of January 31, 2022, two customers, one of which is a related party, represented 65% and 15% of the Company's accounts receivable balance, respectively.

*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 Company evaluates accounts receivable, loans, interest and fees receivable for impairment under Accounting Standards Codification ("ASC") 310, *Receivables*. The Company also evaluates the reserve for losses and estimates collectability of accounts receivable, loans, interest and fees receivable based on historical bad debt experience, management's assessment of the financial condition of individual companies with which the Company conducts business, current market conditions, and reasonable and supportable forecasts of future economic conditions.

*Investments*

 

The method of accounting applied to long-term investments, whether consolidated, equity or cost, 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 businesses that the Company does not control, but in which the Company has the ability to exercise significant influence over operating and financial matters, are accounted for using the equity method. 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 (loss) gain on investments – 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 released from accumulated other comprehensive loss and into earnings on the consolidated statements of operations and comprehensive loss.

 

 

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

 

*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.

*Cost Method Investments* - The Company has determined that Cornerstone Pharmaceuticals (see Note 4) 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 Cornerstone Pharmaceuticals that most significantly impact Cornerstone Pharmaceuticals' economic performance. Due to the Data Events on October 28, 2021, the Company recorded an impairment related to the cost method investment in Cornerstone Pharmaceuticals during the three months ended October 31, 2021, and did not report a balance in this investment as of January 31, 2023.

*Equity Method Investments* - The Company has determined that RP Finance, LLC ("RP Finance"), (see Note 5), 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 RP Finance that most significantly impact RP Finance's economic performance and, therefore, is not required to consolidate RP Finance. The Company accounts for its investment in RP Finance using the equity method of accounting.

 

*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 during the three months ended October 31, 2022. See Note 3 for additional information regarding the results, major classes of assets and liabilities, significant non-cash operating items, and capital expenditures of discontinued operations.

 

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

*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. As an owner and operator of real estate, the Company derives the majority of its 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, 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. 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.

The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of tenants to make required rent payments or parking customers to pay amounts due.

*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.

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.

 

*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 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.

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

*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.

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.

*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 income from continuing operations as the "control number" or benchmark to determine whether potential common shares are dilutive or anti-dilutive for purposes of reporting earnings (loss) per share for discontinued operations.

*Recently Issued Accounting Standards Not Yet Adopted*

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("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.

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

In June 2016, the FASB issued Accounting Standards Update ("ASU") 2016-13, *Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments*, which changes the impairment model for most financial assets and certain other instruments. For receivables, loans and other instruments, entities will be required to use a new forward-looking "expected loss" model that generally will result in the earlier recognition of allowance for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except the losses will be recognized as allowances instead of reductions in the amortized cost of the securities. In addition, an entity will have to disclose significantly more information about allowances, credit quality indicators and past due securities. The new standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and will be applied as a cumulative-effect adjustment to retained earnings. 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 on August 1, 2023.

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 financial statements and intends to adopt the standard as of August 1, 2024.

 

**NOTE 3 – 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.

 

On August 22, 2022, Broad Atlantic Associates, LLC, a wholly-owned subsidiary of the Company, 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. Refer to Note 12 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.

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

The carrying value of major classes of assets and liabilities related to discontinued operations at July 31, 2022 was as follows ($ in thousands):

---

| | |
|:---|:---|
|  | **As of<br> July 31, <br> 2022** |
| **Current assets held-for-sale** | |
| Building and Improvements | $45437 |
| Land | 10412 |
| Furniture and Fixtures | 1145 |
| Other | 205 |
| &nbsp;&nbsp;&nbsp;Property and equipment | 57199 |
| Less Accumulated Depreciation | (17005) |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | 40194 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets held-for-sale | 40194 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets held-for-sale | $40194 |
| **Current liabilities held-for-sale** |  |
| Total current liabilities | $15000 |

---

The current portion of deferred rental income included in Prepaid Expenses and Other Current Assets was approximately $0 and $150 thousand as of January 31, 2023 and July 31, 2022, respectively. The noncurrent portion of deferred rental income included in Other Assets was approximately $0 and $1.3 million as of January 31, 2023 and July 31, 2022, respectively. The deferred rental income pertains to the 520 Property and was settled at the date of the sale of the 520 Property with the other working capital accounts of 520 Broad Street.

Discontinued operations includes (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.

The following table details the components comprising net loss from our discontinued operations ($ in thousands):

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended<br> January 31,** | **Three Months Ended<br> January 31,** |
|  | **2023** | **2022** |
| **Revenue from discontinued operations:** |  |  |
| &nbsp;&nbsp;&nbsp;Rental – Third Party | $— | $187 |
| &nbsp;&nbsp;&nbsp;Rental – Related Party |  | 676 |
| &nbsp;&nbsp;&nbsp;Parking |  | 173 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenue from discontinued operations |  | 1036 |
| **Costs and expenses from discontinued operations:** |  |  |
| &nbsp;&nbsp;&nbsp;General and administrative | 157 | 784 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization |  | 363 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss from discontinued operations | (157) | (111) |
| &nbsp;&nbsp;&nbsp;Interest expense |  | (397) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Loss from discontinued operations** | $(157) | $(508) |

---

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **Six Months Ended<br> January 31,** | **Six Months Ended<br> January 31,** |
|  | **2023** | **2022** |
| **Revenue from discontinued operations:** |  |  |
| &nbsp;&nbsp;&nbsp;Rental – Third Party | $68 | $339 |
| &nbsp;&nbsp;&nbsp;Rental – Related Party | 115 | 1169 |
| &nbsp;&nbsp;&nbsp;Parking | 66 | 363 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenue from discontinued operations | 249 | 1871 |
| **Costs and expenses from discontinued operations:** |  |  |
| &nbsp;&nbsp;&nbsp;General and administrative | 403 | 1402 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization |  | 726 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss from discontinued operations | (154) | (257) |
| Interest expense | (87) | (794) |
| **Loss from discontinued operations** | (241) | (1051) |
| Gain on disposal of discontinued operations | 6784 |  |
| &nbsp;&nbsp;&nbsp;**Gain (loss) from discontinued operations** | $6543 | $(1051) |

---

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 4 – INVESTMENT IN CORNERSTONE PHARMACEUTICALS**

*Equity Investment in Cornerstone Pharmaceuticals and Impairment of Cost Method Investment*

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

The Company owns debt and equity interests and rights in Cornerstone Pharmaceuticals through a 90%-owned non-operating subsidiary, Pharma Holdings, LLC, or Pharma Holdings.

Pharma Holdings owns 50% of CS Pharma Holdings, LLC, or CS Pharma, a non-operating entity that owns equity interests in Cornerstone Pharmaceuticals. Accordingly, the Company holds an effective 45% indirect interest in the assets held by CS Pharma.

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 Pharmaceuticals) holds a financial instrument (the "Instrument") that owns 10% of Pharma Holdings.

Pharma Holdings holds 44.0 million shares of Cornerstone Pharmaceuticals' Series D Convertible Preferred Stock and a warrant to increase the combined ownership of Pharma Holdings and CS Pharma to up to 56% of the fully diluted equity interests in Cornerstone Pharmaceuticals (the "Warrant"). The exercise price of the Warrant is the lower of 70% of the price sold in an equity financing, or $1.25 per share, subject to certain adjustments.

On March 25, 2020, the Board of Directors of Cornerstone Pharmaceuticals extended the expiration date of the Warrant held by Pharma Holdings to purchase shares of the Warrant from December 31, 2020 to June 30, 2021, and on August 31, 2020 the Board of Directors of Cornerstone Pharmaceuticals further extended the expiration date of the Warrant held by Pharma Holdings, LLC to purchase shares of the Warrant to August 15, 2021. In connection with the Merger Agreement, the Warrant expiration was extended to April 1, 2022. The Company has asserted that it may be entitled to a further extension of the Warrant. At this time, the Company does not intend to exercise the Warrant.

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

Pharma Holdings also holds certain governance rights in Cornerstone Pharmaceuticals including appointment of directors. Pharma Holdings is not the primary beneficiary of Cornerstone Pharmaceuticals as it does not control or direct the activities of Cornerstone Pharmaceuticals that most significantly impact Cornerstone Pharmaceuticals' economic performance.

CS Pharma holds 16.7 million shares of Cornerstone Pharmaceuticals Series D Convertible Preferred Stock. CS Pharma owned a $10 million Series D Convertible Note, with 3.5% interest, in Cornerstone Pharmaceuticals which was converted to shares of Series D Preferred Stock in January 2019.

The Company and its subsidiaries collectively own securities representing 51% of the outstanding capital stock of Cornerstone Pharmaceuticals and 42% of the capital stock on a fully diluted basis (excluding the remainder of the Warrant).

The Series D Convertible Preferred Stock has a stated value of $1.25 per share (subject to appropriate adjustment to reflect any stock split, combination, reclassification or reorganization of the Series D Preferred Stock or any dilutive issuances, as described below). Holders of Series D Stock are entitled to receive non-cumulative dividends when, as and if declared by the Board of Cornerstone Pharmaceuticals, prior to any dividends to any other class of capital stock of Cornerstone Pharmaceuticals. In the event of any liquidation, dissolution or winding up of Cornerstone Pharmaceuticals, or in the event of any deemed liquidation, proceeds from such liquidation, dissolution or winding up shall be distributed first to the holders of Series D Stock. Except with respect to certain major decisions, or as required by law, holders of Series D Stock vote together with the holders of the other preferred stock and common stock and not as a separate class.

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 Pharmaceuticals 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.

The Company evaluated its investments in Cornerstone Pharmaceuticals in accordance with ASC 323, *Investments - Equity Method and Joint Ventures,* to establish the appropriate accounting treatment for its investment and has concluded that its investment did not meet the criteria for the equity method of accounting or consolidation and is carried at cost.

The Company has determined that Cornerstone Pharmaceuticals is a VIE; however, the Company has determined that it is not the primary beneficiary as it does not have the power to direct the activities of Cornerstone Pharmaceuticals that most significantly impact Cornerstone Pharmaceuticals' economic performance. In addition, the interests held in Cornerstone Pharmaceuticals are Series D Convertible Preferred Stock and do not represent in-substance common stock.

The Instrument holds a contractual right to receive additional shares of Cornerstone Pharmaceuticals capital stock equal to 10% of the fully diluted capital stock of Cornerstone Pharmaceuticals (the "Bonus Shares") upon the achievement of certain milestones. The additional 10% is based on the fully diluted capital stock of Cornerstone Pharmaceuticals, excluding the remainder for the Warrant, at the time of issuance. If any of the milestones are met, the Bonus Shares are to be issued without any additional payment.

Pharma Holdings holds the Warrant as well as other equity and governance rights in Cornerstone Pharmaceuticals. The Company currently owns 51% of the issued and outstanding equity in Cornerstone Pharmaceuticals. Approximately 8% of the issued and outstanding equity is owned by the Company's subsidiary CS Pharma and 43% is held by the Company's subsidiary Pharma Holdings. The Company's subsidiary Pharma Holdings holds the Warrant. The Instrument holds 10% of the interest in Pharma Holdings and would need to contribute 10% of any cash necessary to exercise any portion of the Warrant. Following any exercise, a portion of the Company's interest in Cornerstone Pharmaceuticals would continue to be held for the benefit of the other equity holders in Pharma Holdings and CS Pharma. Cornerstone Pharmaceuticals may also issue additional equity interests, such as employee stock options, which will require the Company to pay additional cash to maintain the Company's ownership percentage or exercise the Warrant in full. The terms of the Warrant provide that it expired on April 1, 2022; however, the Company has asserted that it may be entitled to a further extension of the Warrant. At this time, the Company does not intend to exercise the Warrant.

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

Due to the Data Events, on October 28, 2021, the Company recorded an impairment charge of approximately $79.1 million related to the cost method investment in Cornerstone Pharmaceuticals representing the total amount of the Company's cost method investment. The impairment loss was included in "Impairment of cost method investment – Cornerstone Pharmaceuticals" in the consolidated statements of operations and comprehensive loss for the three months ended October 31, 2021.

Approximately $17.3 million of the total impairment loss of $79.1 million was applicable to noncontrolling interests in certain of the Company's subsidiaries and was allocated to the holders of interests in CS Pharma and Pharma Holdings in the approximate amounts of $10.4 million and $6.9 million, respectively.

*Line of Credit to Cornerstone Pharmaceuticals and Impairment of Related Receivable*

On September 24, 2021, the Company entered into a Line of Credit Loan Agreement (the "Line of Credit Agreement") with Cornerstone Pharmaceuticals under which Cornerstone Pharmaceuticals borrowed $25 million from the Company. The first advance was in the amount of $1.9 million on September 24, 2021. On October 1, 2021, a second advance was made in the amount of $23.1 million. The Line of Credit Agreement accrues interest at 9% per annum. The maturity date of the Line of Credit Agreement was June 17, 2022, and the amounts due on that date were not paid. The Company is in discussions with Cornerstone Pharmaceuticals and is evaluating its rights and plan of action with respect to the Line of Credit Agreement (in the contexts of all of its interests in Cornerstone Pharmaceuticals).

Due to the Data Events, the Company recorded a full reserve on the amounts due the Company from Cornerstone Pharmaceuticals related to the Line of Credit Agreement for $25 million during the three months ended October 31, 2021.

The Company also recorded a loss on related party receivables of approximately $0.6 million and $1.5 million related to other amounts owed by Cornerstone Pharmaceuticals during the three and six months ended January 31, 2022, respectively. There were no amounts recorded during the six months ended January 31, 2023.

**NOTE 5 – INVESTMENT IN RP FINANCE, LLC**

On February 3, 2020, Cornerstone Pharmaceuticals entered into a Line of Credit with RP Finance ("RPF Line of Credit") which provides a revolving commitment of up to $50,000,000 to fund clinical trials and other capital needs.

The Company owns 37.5% of the equity interests in RP Finance and is required to fund 37.5% of funding requests from Cornerstone Pharmaceuticals under the RPF Line of Credit. The Instrument owns 37.5% of the equity interests in RP Finance, and is required to fund 37.5% of funding requests from Cornerstone Pharmaceuticals under the RPF Line of Credit. The remaining 25% equity interests in RP Finance are owned by other stockholders of Cornerstone Pharmaceuticals.

Under the RPF Line of Credit, all funds borrowed will bear interest at the mid-term Applicable Federal Rate published by the U.S. Internal Revenue Service. The maturity date is the earliest of February 3, 2025, upon a change of control of Cornerstone Pharmaceuticals or a sale of Cornerstone Pharmaceuticals or its assets. Cornerstone Pharmaceuticals can draw on the facility on 60 days' notice. The funds borrowed under the RPF Line of Credit must be repaid out of certain proceeds from equity sales by Cornerstone Pharmaceuticals.

In connection with entering into the RPF Line of Credit, Cornerstone Pharmaceuticals agreed to issue to RP Finance shares of its common stock representing 12% of the issued and outstanding shares of Cornerstone Pharmaceuticals common stock, with such interest subject to anti-dilution protection as set forth in the RPF Line of Credit.

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

The Company has determined that RP Finance 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 RP Finance that most significantly impact RP Finance's economic performance and, therefore, is not required to consolidate RP Finance. Therefore, the Company will use the equity method of accounting to record its investment in RP Finance. The Company has recognized $0 in earnings from its ownership interests of 37.5% in RP Finance for the three months ended January 31, 2023 and 2022, respectively, and a loss of $0 and $575 thousand from its ownership interests of 37.5% in RP Finance for the six months ended January 31, 2023 and 2022, respectively. The assets and operations of RP Finance are not significant and the Company has identified the equity investment in RP Finance as a related party transaction (see Note 13).

In August 2020, Cornerstone Pharmaceuticals called for a $5 million draw on the RPF Line of Credit and the facility was funded by RP Finance in the amount of $5 million. In November 2020, Cornerstone Pharmaceuticals called for a second $5 million draw on the RPF Line of Credit and the facility was funded by RP Finance in the amount of $5 million. In June 2021 and July 2021, Cornerstone Pharmaceuticals called for a total aggregate of $10 million in draws on the line of RPF Line of Credit and the facility was funded by RP Finance in the amount of $10 million. In September 2021, Cornerstone Pharmaceuticals called for a $5 million draw on the RPF Line of Credit and the facility was funded by RP Finance LLC in the amount of $5 million.

As of January 31, 2023, the Company has funded a cumulative total of $9.375 million in accordance with its 37.5% ownership interests in RP Finance.

*Impairment of Equity Method Investment* 

 

Due to the Data Events, during the three months ended October 31, 2021, the Company recorded equity in the loss of RP Finance of $575 thousand. As of January 31, 2023, the equity method investment on the Company's balance sheet was $0, and no additional equity loss of RP Finance was recorded during the six months ended January 31, 2023. The Company was not obligated to guarantee obligations of RP Finance and is not committed to provided further financial support for RP Finance. Additionally, during the six months January 31, 2022, the Company recorded a loss on related party receivables of $9.375 million related to amounts owed by RP Finance.

**NOTE 6 – 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.

As of January 31, 2023, the Company held 84% of the issued and outstanding ordinary shares of LipoMedix and has consolidated this investment from the second quarter of fiscal 2018.

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.

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

**NOTE 7 – INVESTMENTS IN MARKETABLE SECURITIES**

The Company has classified its investments in corporate 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 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 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 January 31, 2023 and July 31, 2022 are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **January 31, 2023** | **Amortized<br> cost** | **Gross<br> unrealized<br> gains** | **Gross<br> unrealized<br> (losses)** | **Fair value** |
|  | ***(in thousands)*** | ***(in thousands)*** | ***(in thousands)*** | ***(in thousands)*** |
| Available-for-sale securities: |  |  |  |  |
| U.S. Treasury Bills | $16194 | $185 | $— | $16379 |
| Corporate bonds | 62695 | 3483 | (3360) | 62818 |
| &nbsp;&nbsp;&nbsp;Total available-for-sale securities | $78889 | $3668 | $(3360) | $79197 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **July 31, 2022** | **Amortized cost** | **Gross<br> unrealized<br> gains** | **Gross<br> unrealized<br> (losses)** | **Fair value** |
|  | ***(in thousands)*** | ***(in thousands)*** | ***(in thousands)*** | ***(in thousands)*** |
| Available-for-sale securities: |  |  |  |  |
| Corporate bonds | $36761 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 81 | $(144) | $36698 |
| Total available-for-sale securities | $36761 | $81 | $(144) | $36698 |

---

During the three and six months ended January 31, 2023, the Company reclassified approximately $139 thousand and $154 thousand of unrealized gains out of accumulated other comprehensive loss related to the sale of available-for-sale securities into consolidated net loss in the consolidated statements of operations and comprehensive loss in realized gain on available-for-sale securities.

Maturities of corporate bonds and U.S. Treasury Bills held as of January 31, 2023 were all due within one year.

Marketable securities in an unrealized loss position as of January 31, 2023 were not deemed impaired at acquisition and subsequent declines in fair value are not deemed attributed to declines in credit quality. The Company believes that it is more likely than not that it will receive a full recovery of par value on the securities, although there can be no assurance that such recovery will occur.

**NOTE 8 – 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;

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

**●** **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.

The following is a listing of 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 January 31, 2023 and July 31, 2022:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **January 31, 2023** | **January 31, 2023** | **January 31, 2023** | **January 31, 2023** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Assets: | ***(in thousands)*** | ***(in thousands)*** | ***(in thousands)*** | ***(in thousands)*** |
| Available-for-sale securities - Corporate Bonds | $— | $62818 | $— | $62818 |
| Available-for-sale securities - U.S. Treasury Bills | 16379 |  |  | 16379 |
| Hedge funds |  |  | 5015 | 5015 |
| Total | $16379 | $62818 | $5015 | $84212 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **July 31, 2022** | **July 31, 2022** | **July 31, 2022** | **July 31, 2022** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Assets: | ***(in thousands)*** | ***(in thousands)*** | ***(in thousands)*** | ***(in thousands)*** |
| Available-for-sale securities | $— | $36698 | $— | $36698 |
| Hedge funds |  |  | 4764 | 4764 |
| Total | $— | $36698 | $4764 | $41462 |

---

As of January 31, 2023 and July 31, 2022, the Company did not have any liabilities measured at fair value on a recurring basis.

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):

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended<br> January 31,** | **Three Months Ended<br> January 31,** | **Six Months Ended <br> January 31,** | **Six Months Ended <br> January 31,** |
|  | **2023** | **2022** | **2023** | **2022** |
|  | ***(in thousands)*** | ***(in thousands)*** | ***(in thousands)*** | ***(in thousands)*** |
| Balance, beginning of period | $4637 | $5479 | $4764 | $5268 |
| Total gain (loss) included in earnings | 378 | (454) | 251 | (243) |
| Balance, end of period | $5015 | $5025 | $5015 | $5025 |

---

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.

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

The Company holds $0.3 million 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 is accounted for under ASC 321, *Investments - Equity Securities*, using the measurement alternative as defined within the guidance, and the Company recorded an impairment loss of $67 thousand and $0 for the three months ended January 31, 2023 and 2022, and $223 thousand and $0 for the six months ended January 31, 2023 and 2022, respectively.

*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.

*Marketable securities.* The Company's available-for-sale securities are comprised of investments in fixed income corporate bonds and U.S. treasury bills which are recorded in available-for-sale securities on the consolidated balance sheet. These securities are recorded at fair value using market prices at January 31, 2023. The fair value estimates for corporate bonds and U.S treasury bills were classified as Level 2 and Level 1, respectively.

*Other assets and other liabilities.* At January 31, 2023 and July 31, 2022, the carrying amount of these assets and liabilities approximated fair value. The fair values were estimated based on the Company's assumptions, which were classified as Level 3 of the fair value hierarchy.

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 9 – TRADE ACCOUNTS RECEIVABLE**

Accounts receivable consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **January 31,<br> 2023** | **July 31,<br> 2022** |
|  | ***(in thousands)*** | ***(in thousands)*** |
| Accounts Receivable - Third Party | $295 | $196 |
| Accounts Receivable - Related Party | 157 | 158 |
| Less Allowance for Doubtful Accounts | (180) | (197) |
| Accounts Receivable, net | $272 | $157 |

---

**NOTE 10 – PROPERTY AND EQUIPMENT**

Property and equipment consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **January 31,**<br>**2023** | **July 31,**<br>**2022** |
|  | ***(in thousands)*** | ***(in thousands)*** |
| Building and Improvements | $2505 | $2505 |
| Other | 68 | 68 |
|  | 2573 | 2573 |
| Less Accumulated Depreciation | (841) | (803) |
| Total | $1732 | $1770 |

---

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

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

Depreciation expense pertaining to property and equipment was approximately $19 thousand and $18 thousand for the three months ended January 31, 2023 and 2022, respectively. Depreciation expense pertaining to property and equipment was approximately $41 thousand and $37 thousand for the six months ended January 31, 2023 and 2022, respectively.

The Company's headquarters are located at 520 Broad Street in Newark, New Jersey, where it occupies office space and which was previously owned by the Company. The table above excludes the assets of the 520 Property which were classified as held-for-sale as of July 31, 2022 and subsequently sold on August 22, 2022. Refer to Note 3 for further information on the 520 Property.

**NOTE 11 – 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 includes potentially dilutive securities such as stock options, unvested restricted stock, warrants to purchase common stock, and other convertible instruments unless the result of inclusion would be anti-dilutive.

The securities set forth below have been excluded from the calculation of diluted net loss per share for the three and six months ended January 31, 2023 and 2022 because inclusion of all such securities would have been anti-dilutive for all periods presented.

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

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended<br> January 31,** | **Three Months Ended<br> January 31,** | **Six Months Ended <br> January 31,** | **Six Months Ended <br> January 31,** |
|  | **2023** | **2022** | **2023** | **2022** |
| Shares issuable upon exercise of stock options | 953347 | 1026777 | 953347 | 1026777 |
| Shares issuable upon vesting of restricted stock | 994179 | 79600 | 994179 | 79600 |
| Shares issuable upon exercise of warrants to purchase Class B common stock |  | 26189 |  | 26189 |
|  | 1947526 | 1132566 | 1947526 | 1132566 |

---

The diluted loss per share computation equals basic loss per share for the three and six months ended January 31, 2023 and 2022 because the Company had a net loss from continuing operations in all such periods and the impact of the assumed exercise of non-vested restricted shares, stock options, and warrants would have been anti-dilutive.

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

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

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended<br> January 31,** | **Three Months Ended<br> January 31,** | **Six Months Ended<br> January 31,** | **Six Months Ended<br> January 31,** |
|  | **2023** | **2022** | **2023** | **2022** |
| **Numerator:** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net loss from continuing operations | $(3252) | $(2057) | $(8459) | $(130925) |
| &nbsp;&nbsp;&nbsp;Net loss attributable to noncontrolling interests | (159) | (244) | (258) | (17631) |
| Numerator for net loss from continuing operations | (3093) | (1813) | (8201) | (113294) |
| Numerator for discontinued operations | (157) | (508) | 6543 | (1051) |
| Net loss attributable to Rafael Holdings, Inc. | $(3250) | $(2321) | $(1658) | $(114345) |
| **Denominator:** |  |  |  |  |
| Weighted average basic and diluted shares outstanding | 23155018 | 19713127 | 23085612 | 19332630 |
| **Loss per share attributable to common shareholders** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Basic and diluted: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Continuing operations | $(0.13) | $(0.09) | $(0.36) | $(5.86) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Discontinued operations | (0.01) | (0.03) | 0.28 | (0.05) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total basic and diluted earnings (loss) per share | $(0.14) | $(0.12) | $(0.08) | $(5.91) |

---

**NOTE 12 – 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 Associates, LLC, 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.

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. Refer to Note 3 for further details on the subsequent sale of the 520 Property.

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

Interest expense under the Note Payable, which is recognized in loss on discontinued operations, amounted to $0 and $87 thousand for the three and six months ended January 31, 2023, respectively, and $272 thousand and $544 thousand for the three and six months ended January 31, 2022, respectively.

Unamortized debt issuance costs on the Note Payable totaled approximately $0 and $222 thousand as of January 31, 2023 and 2022, respectively. Amortization of the debt discount on the Note Payable totaled approximately $0 and $125 thousand for the three months ended January 31, 2023 and 2022, and $0 thousand and $250 thousand for the six months ended January 31, 2023 and 2022, respectively.

**NOTE 13 – RELATED PARTY TRANSACTIONS**

*IDT Corporation*

The Company has historically maintained an intercompany balance due to/from related parties that relates to cash advances for investments, loan repayments, charges for services provided to the Company by IDT Corporation, or IDT, and payroll costs for the Company's personnel that were paid by IDT. The Company receives rental income from IDT and various companies that may be deemed to be under common control with IDT. The Company recorded expense of approximately $20 thousand and $80 thousand in related party services to IDT for the three months ended January 31, 2023 and 2022, respectively. The Company recorded expense of approximately $88 thousand and $156 thousand in related party services to IDT for the six months ended January 31, 2023 and 2022, respectively, of which $0 and $80 thousand is included in Due to Related Parties at January 31, 2023 and 2022, respectively.

IDT leased approximately 80,000 square feet of office space plus parking at 520 Broad Street, Newark, New Jersey and leases approximately 3,600 square feet of office space in Jerusalem, Israel. The Company invoiced IDT $27 thousand for the three months ended January 31, 2023. The Company invoiced IDT approximately $175 thousand of which approximately $147 thousand is included in discontinued operations for office rent and parking during the three months ended January 31, 2022. The Company invoiced IDT approximately $156 thousand of which approximately $102 thousand is included in discontinued operations during the six months ended January 31, 2023. The Company invoiced IDT approximately $644 thousand of which approximately $589 thousand is included in discontinued operations for office rent and parking during the six months ended January 31, 2022. As of January 31, 2023 and July 31, 2022, IDT owed the Company approximately $156 thousand and $157 thousand, respectively, for office rent and parking.

*Cornerstone Pharmaceuticals* 

Until October 31, 2021, the Company had provided Cornerstone Pharmaceuticals with administrative, finance, accounting, tax and legal services. Howard S. Jonas currently serves on the Board of Directors of Cornerstone Pharmaceuticals and owns an equity interest in Cornerstone Pharmaceuticals. The Company billed Cornerstone Pharmaceuticals $120 thousand for the six months ended January 31, 2022. As of January 31, 2023 and July 31, 2022, Cornerstone Pharmaceuticals owed the Company $720 thousand, for which a full allowance for uncollectibility has been recorded.

Due to the Data Events, in the six months ended January 31, 2022, the balance owed to the Company by Cornerstone Pharmaceuticals was fully reserved, resulting in a loss on related party receivable of $720 thousand (see Note 4).

*Related Party Rental Income*

The Company leased space to related parties (including IDT Corporation - see above) which represented approximately 39% and 63% of the Company's total revenue for the three months ended January 31, 2023 and 2022, respectively. The Company leased space to related parties (including IDT Corporation - see above) which represented approximately 43% and 57% of the Company's total revenue for the six months ended January 31, 2023 and 2022, 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 three and six months ended January 31, 2023 and 2022.

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

*RP Finance*

 

For the three months ended January 31, 2023 and 2022 respectively, the Company recognized $0 from its ownership interests of 37.5% in RP Finance, respectively. For the six months ended January 31, 2023 and 2022, respectively, the Company recognized $0 and loss of $575 thousand in income from its ownership interests of 37.5% in RP Finance, respectively.

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

In December 2020, two entities, on whose Boards of Directors Howard Jonas, the Company's Chairman of the Board and Executive Chairman and former Chief Executive Officer serves, each purchased 218,245 shares of Class B common stock for consideration of $5 million each. In connection with the purchases, each purchaser was granted warrants (the "Issued Warrants") to purchase twenty percent (20%) of the shares of Class B common stock purchased by such purchaser. The Issued Warrants have an exercise price of $22.91 per share and expired on June 6, 2022. The Issued Warrants were not exercised. The shares and Issued 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.

On June 22, 2022, the Company entered into a Stock Purchase Agreement (the "I9 SPA") with I9 Plus, LLC. On July 6, 2022, pursuant to the I9 SPA, 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.

*LipoMedix Pharmaceuticals, Ltd.*

 

As of the date of the LipoMedix SPA, on November 15, 2021, 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 the note from March 2021. The amount due on the loan was netted against the $3.0 million aggregate purchase price due 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%.

 

**NOTE 14 – INCOME TAXES**

During the three months ended January 31, 2023 and 2022, the Company recognized an income tax provision of $5 thousand on loss from continuing operations before income tax of $3.2 million, and $4 thousand on a loss from continuing operations before income tax of $2.1 million, respectively. During the six months ended January 31, 2023 and 2022, the Company recognized an income tax provision of $10 thousand on loss from continuing operations before income tax of $8.4 million, and $4 thousand on a loss from continuing operations before income tax of $130.3 million, respectively. The change in income tax expense in relation to the loss before income tax during the three and six months ended January 31, 2023 compared to the three and six months ended January 31, 2022 was primarily due to differences in the amount of taxable (loss) income in the various taxing jurisdictions and the associated valuation allowances. As of January 31, 2023 and 2022, the Company recorded valuation allowances for the total deferred tax asset balances.

The Company anticipates that its assumptions and estimates may change as a result of future guidance and interpretation from the Internal Revenue Service, the SEC, the FASB, and various other taxing jurisdictions. In particular, the Company anticipates that the U.S. state jurisdictions will continue to determine and announce their conformity with or decoupling from the Tax Act, either in its entirety or with respect to specific provisions. Legislative and interpretive actions could result in adjustments to the Company's balances.

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

**NOTE 15 – BUSINESS SEGMENT INFORMATION**

The Company conducts business as two operating segments, Healthcare 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 and the chief operating decision-maker.

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 Real Estate segment based primarily on results of operations. All investments in Cornerstone Pharmaceuticals and assets and expenses associated with LipoMedix, Barer, Farber, and Rafael Medical Devices are tracked separately in the Healthcare segment.

The Healthcare segment is comprised of preferred and common equity interests and the Warrant to purchase equity interests in Cornerstone Pharmaceuticals, a majority equity interest in LipoMedix, Barer, Farber, and Rafael Medical Devices. To date, the Healthcare segment has not generated any revenues.

The Real Estate segment consists of the Company's real estate holdings, comprised of a portion of a commercial building in Israel.

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

 

---

| | | | |
|:---|:---|:---|:---|
| ***(in thousands)*** | **Healthcare** | **Real Estate** | **Total** |
| **Three Months Ended January 31, 2023** | | | |
| Revenues | $— | $70 | $70 |
| (Loss) income from operations | (4281) | 22 | (4259) |
| (Loss) income before income taxes | (3269) | 22 | (3247) |
| **Three Months Ended January 31, 2022** |  |  |  |
| Revenues | $— | $74 | $74 |
| (Loss) income from operations | (1620) | 21 | (1599) |
| (Loss) income before income taxes | (2074) | 21 | (2053) |

---

---

| | | | |
|:---|:---|:---|:---|
| ***(in thousands)*** | **Healthcare** | **Real Estate** | **Total** |
| **Six Months Ended January 31, 2023** | | | |
| Revenues | $— | $140 | $140 |
| (Loss) income from operations | (9445) | 44 | (9401) |
| (Loss) income before income taxes | (8493) | 44 | (8449) |
| **Six Months Ended January 31, 2022** |  |  |  |
| Revenues | $— | $265 | $265 |
| (Loss) income from operations | (51091) | 142 | (50949) |
| (Loss) income before income taxes | (130488) | 142 | (130346) |

---

 

*Geographic Information*

Revenues from tenants located outside of the United States were generated entirely from related parties located in Israel. Revenues from these non-United States 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):

---

| | | |
|:---|:---|:---|
| **Three Months Ended January 31,** | **2023** | **2022** |
| Revenue from tenants located in Israel | 100% | 7% |

---

---

| | | |
|:---|:---|:---|
| **Six Months Ended January 31,** | **2023** | **2022** |
| Revenue from tenants located in Israel | 36% | 7% |

---

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

Net long-lived assets and total assets held outside of the United States, which are located in Israel, were as follows:

---

| | | | |
|:---|:---|:---|:---|
| ***(in thousands)*** | **United States** | **Israel** | **Total** |
| **January 31, 2023** | | | |
| Long-lived assets, net | $299 | $1433 | $1732 |
| Total assets | 95185 | 3365 | 98550 |
| **July 31, 2022** |  |  |  |
| Long-lived assets, net | $305 | $1465 | $1770 |
| Total assets | 114053 | 4267 | 118320 |

---

**NOTE 16 – 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.

In December 2022, the Company's subsidiary Broad Atlantic Associates, LLC entered into a settlement agreement with a vendor providing for the payment by the Company of $113,000 representing payment in full for repair work done on the premises prior to our sale of the 520 Property. This amount is included in discontinued operations on the consolidated statements of operations and comprehensive loss.

 ****

**NOTE 17 – EQUITY**

*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.

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

On August 19, 2021, the Company entered into a Securities Purchase Agreement (the "Institutional Purchase Agreement") with 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 was $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 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 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 January 31, 2023, there were 953,812 shares still available for issuance under the 2021 Plan.

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

*Stock Options* 

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

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Number of**<br> **Options** | **Weighted**<br> **Average**<br> **Exercise**<br> **Price** | **Weighted**<br> **Average**<br> **Remaining**<br> **Contractual**<br> **Term<br> (in years)** | **Aggregate**<br> **Intrinsic Value**<br> **(in thousands)** |
| Outstanding at July 31, 2022 | 1021277 | $12.11 | 4.47 | $— |
| Granted | 150000 | 2.10 | 9.98 |  |
| Cancelled / Forfeited | (217930) |  |  |  |
| **Outstanding at January 31, 2023** | **953347** | $**8.88** | **3.81** | $**—**  |
| **Exercisable at January 31, 2023** | **642740** | $**6.53** | **1.18** | $**—**  |

---

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

At January 31, 2023, there is unrecognized compensation costs related to non-vested stock options of $1.5 million, which are expected to be recognized over the next 3.7 years.

The value of option grants is calculated using the Black-Scholes option pricing model with the following assumptions for options granted during the six months ended January 31, 2023:

---

| | |
|:---|:---|
| Risk-free interest rate | 3.60% |
| Expected term (in years) | 6.11 |
| Expected volatility | 95.00% |
| Expected dividend yield | —% |

---

The options granted had a $1.59 weighted average grant date fair value during the six months ended January 31, 2023.

 

*Rafael Medical Devices, Inc. Stock Options*

 

The Rafael Medical Devices, Inc. 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. There are 4,734 shares available for issuance under the RMD 2022 Plan as of January 31, 2023.

A summary of stock option activity for Rafael Medical Devices, Inc. is as follows:

 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Number of**<br> **Options** | **Weighted**<br> **Average**<br> **Exercise**<br> **Price** | **Weighted**<br> **Average**<br> **Remaining**<br> **Contractual**<br> **Term (in years)** | **Aggregate**<br> **Intrinsic Value**<br> **(in thousands)** |
| Outstanding at July 31, 2022 | 5266 | $3.82 | 9.76 | $&nbsp;&nbsp;&nbsp;&nbsp; — |
| Granted |  |  |  |  |
| **Outstanding at January 31, 2023** | **5266** | $**3.82** | **9.26** | **—**  |
| **Exercisable at January 31, 2023** | **2633** | $**3.82** | **9.26** | $**—**  |

---

At January 31, 2023, there are unrecognized compensation costs related to non-vested stock options of $8 thousand, which are expected to be recognized over the next 1.93 years.

 

*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 from under 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 statement of operations and comprehensive loss.

On February 1, 2022, the Company issued 986,835 shares of Class B restricted stock to two members of the executive team. Approximately 24% of the restricted shares vest 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.

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

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 new Chief Financial Officer.

During January 2023, 296,384 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.

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 selling, general and administrative expense on the consolidated statement of operations and comprehensive loss for the three and six months ended January 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 that was previously recorded to selling, general and administrative expense.

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

---

| | | |
|:---|:---|:---|
|  | **Number of**<br> **Non-vested**<br> **Shares** | **Weighted**<br> **Average**<br> **Grant Date Fair Value** |
| Outstanding at July 31, 2022 | 1507373 | $4.22 |
| Granted | 220019 | 1.99 |
| Vested | (436829) | 3.55 |
| Cancelled / Forfeited | (296384) | (5.05) |
| **Non-vested shares at January 31, 2023** | 994179 | $3.77 |

---

At January 31, 2023, there was $2.5 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.

On November 21, 2021, Ameet Mallik resigned as Chief Executive Officer of the Company, effective January 31, 2022. In connection with his resignation, there was a material forfeiture of the former CEO's Class B restricted shares, resulting in a reversal of approximately $19.0 million in stock-based compensation expense that was previously recorded to selling, general and administrative expense. Additionally, pursuant to the terms of his employment agreement, the Company paid $5.0 million relating to his severance payout, which is included in selling, general and administrative expense on the consolidated statement of operations and comprehensive loss for the three and six months ended January 31, 2022.

A summary of the stock-based compensation expense for the Company's equity incentive plans is presented below:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **For the Three Months Ended January 31,** | **For the Three Months Ended January 31,** | **For the Six Months Ended January 31,** | **For the Six Months Ended January 31,** |
|  | **2023** | **2022** | **2023** | **2022** |
| General and administrative | $884 | $7758 | $1967 | $15426 |
| Research and development | 43 | 274 | 140 | 457 |
| Forfeiture of RSUs within general and administrative | (931) | (18978) | (931) | (18978) |
| Forfeiture of RSUs within research and development | $(119) | $— | $(119) | $— |
| Net stock-based compensation expense | $(123) | $(10946) | $1057 | $(3095) |

---

 

**RAFAEL HOLDINGS, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

 

**NOTE 18 – 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 $0.1 million and $0.1 million for the three months ended January 31, 2023 and 2022, respectively, and $0.1 million and $0.1 million for the six months ended January 31, 2023 and 2022, respectively. During the three and six months ended January 31, 2023 and 2022, 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 January 31, 2023, under non-cancellable operating leases which expire on various dates through 2028 are as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Year ending July 31,** | **Related Parties** | **Other** | **Total** |
|  | *(in thousands)* | *(in thousands)* | *(in thousands)* |
| 2023 (remaining) | $38 | $— | $38 |
| 2024 | 77 |  | 77 |
| 2025 | 78 |  | 78 |
| Total Minimum Future Rental Income | $193 | $— | $193 |

---

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

**NOTE 19 – SUBSEQUENT EVENTS** 

*Investment in LipoMedix Pharmaceuticals Ltd.*

On February 9, 2023, the Company entered into a Share Purchase Agreement with LipoMedix Pharmaceuticals Ltd. in which LipoMedix sold 70,000,000 ordinary shares to the Company at a price per share of $0.03 and an aggregate sale price of approximately $2.1 million.

**Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations**

**Overview**

Rafael Holdings, Inc. (NYSE:RFL), ("Rafael Holdings," "we" or the "Company"), a Delaware corporation, is a holding company with interests in clinical and early-stage pharmaceutical companies (the "Pharmaceutical Companies"), including an investment in Cornerstone Pharmaceuticals, Inc., formerly known as Rafael Pharmaceuticals Inc., a cancer metabolism-based therapeutics company, a majority equity interest in LipoMedix Pharmaceuticals Ltd. ("LipoMedix"), a clinical stage pharmaceutical company, the activities of the Barer Institute Inc. ("Barer"), a wholly-owned preclinical cancer metabolism research operation, and Rafael Medical Devices, Inc., a wholly-owned orthopedic-focused medical device company developing instruments to advance minimally invasive surgeries ("Rafael Medical Devices" and together with the Pharmaceutical Companies, the "Healthcare Companies"). In November 2022, we resolved to curtail our early-stage development efforts, including pre-clinical research at the Barer. The decision was taken to reduce spending as we focus on exploring strategic opportunities. The Company's primary focus is to invest in, fund, and develop novel cancer therapies. We further seek to expand our portfolio through opportunistic investments in therapeutics which address high unmet medical needs including through acquisitions and strategic investments. We are currently evaluating external opportunities to acquire or strategically invest in later stage assets which have the potential to achieve meaningful clinical milestones, improve the lives of patients and increase our shareholder value.

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 and an associated public garage. Currently, the Company holds a portion of a commercial building in Jerusalem, Israel as its remaining real estate asset.

The Company holds debt and equity investments in Cornerstone Pharmaceuticals, Inc., or Cornerstone Pharmaceuticals, that include preferred and common equity interests and a warrant to purchase additional equity. On June 17, 2021, the Company entered into a merger agreement to acquire full ownership of Cornerstone Pharmaceuticals in exchange for issuing Company Class B common stock to the other stockholders of Cornerstone Pharmaceuticals. On October 28, 2021, the Company announced that the AVENGER 500 Phase 3 clinical trial for CPI-613® (devimistat), Cornerstone Pharmaceuticals' lead product candidate, did not meet its primary endpoint of significant improvement in overall survival in patients with metastatic adenocarcinoma of the pancreas. In addition, following a pre-specified interim analysis, the independent data monitoring committee for the ARMADA 2000 Phase 3 study for devimistat recommended the trial to be stopped due to a determination that it was unlikely to achieve the primary endpoint (the "Data Events"). In light of the Data Events, the Company concluded that the prospects for CPI-613 were uncertain and fully impaired in its financial statements for the year ended July 31, 2022, the value of its loans, receivables, and investment in Cornerstone Pharmaceuticals based upon its valuation of Cornerstone Pharmaceuticals.

On September 24, 2021, the Company entered into a Line of Credit Loan Agreement (the "Line of Credit Agreement") with Cornerstone Pharmaceuticals under which Cornerstone Pharmaceuticals borrowed $25 million from the Company. Due to the Data Events, the Company recorded a full reserve on the $25 million due the Company from Cornerstone Pharmaceuticals.

On February 2, 2022, the Company terminated the Merger Agreement with Cornerstone Pharmaceuticals, effective immediately, in accordance with its terms. Subsequently, on February 2, 2022, the Company withdrew its Registration Statement on Form S-4 related to the proposed Merger.

In 2019, the Company established the Barer Institute Inc., an early-stage small molecule research operation focused on developing a pipeline of novel therapeutic compounds, including compounds to regulate cancer metabolism with potentially broader application in other indications beyond cancer. Barer was led by a team of scientists and academic advisors considered to be among the leading 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. Farber Partners, LLC ("Farber") was formed to support agreements with Princeton University's Office of Technology Licensing for technology from the laboratory of Professor Joshua Rabinowitz, in the Department of Chemistry, Princeton University, including an exclusive worldwide license to its SHMT (serine hydroxymethyltransferase) inhibitor program. The Company also holds a majority equity interest in LipoMedix Pharmaceuticals Ltd., a clinical stage oncological pharmaceutical company based in Israel. In addition, the Company has invested in other early-stage pharmaceutical ventures.

As of January 31, 2023, the Company's commercial real estate holdings consisted of a portion of a commercial building in Israel. On August 22, 2022, the Company completed the sale of the building at 520 Broad Street in Newark, New Jersey that serves as headquarters for the Company for a purchase price of approximately $49.4 million and realized net proceeds of approximately $33 million.

On July 1, 2022, the Company determined that the 520 Property met the held-for-sale criteria and the Company has 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 represents 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 has ceased on July 1, 2022, as a result of the 520 Property being classified as held-for-sale. See Note 3 to our accompanying consolidated financial statements for further information regarding discontinued operations.

On February 9, 2023, the Company entered into a Share Purchase Agreement with LipoMedix Pharmaceuticals Ltd. in which LipoMedix sold 70,000,000 ordinary shares to the Company at a price per share of $0.03 and an aggregate sale price of approximately $2.1 million.

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 we shall pay Mr. Fabbio severance in the amount of $307,913, which is included in selling, general and administrative expense on the consolidated statement of operations and comprehensive loss for the three and six months ended January 31, 2023.

In connection with the termination of Mr. Fabbio's position as Chief Financial Officer, 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 that was previously recorded to selling, general and administrative expense.

On November 21, 2021, Ameet Mallik resigned as Chief Executive Officer, effective January 31, 2022. In connection with his resignation, there was a material forfeiture of the former CEO's Class B restricted shares, resulting in a reversal of approximately $19.0 million in stock-based compensation expense that was previously recorded to selling, general and administrative expense. Additionally, pursuant to the terms of his employment agreement, we paid $5.0 million relating to his severance payout, which is included in selling, general and administrative expense on the consolidated statement of operations and comprehensive loss for the three and six months ended January 31, 2022.

*Business Update - COVID-19, War in Ukraine*

In late 2019, a novel strain of coronavirus, SARS-CoV, which causes COVID-19, was identified and has proved to be highly contagious. It has since spread extensively throughout the world, including the United States, and was declared a global pandemic by the World Health Organization in March 2020. The Company actively monitors the outbreak, including the spread of new variants of interest, and its potential impact on the Company's operations and those of the Company's holdings.

Even with growing availability of testing and vaccines and the relaxation of public health measures that were implemented to limit the spread of the pandemic, there continues to be uncertainty around the COVID-19 pandemic and its impact.

The Company had implemented a number of measures to protect the health and safety of the Company's workforce including a voluntary work-from-home policy for the Company's workforce who can perform their jobs from home as well as restrictions on discretionary business travel. Most of our employees have returned to working from the office on a part-time basis.

The full impact of the COVID-19 pandemic on the Company will depend on factors such as the length of time of the pandemic; the responses of federal, state and local governments; the impact of future variants that may emerge; vaccination rates among the population; the efficacy of the COVID-19 vaccines; the longer-term impact of the pandemic on the economy and consumer behavior; and the effect on our employees, vendors, and other partners.

The short and long-term implications of Russia's invasion of Ukraine are difficult to predict at this time. The imposition of sanctions and counter-sanctions may have an adverse effect on the economic markets generally and could impact our business and the companies in which we have investments, financial condition, and results of operations. Because of the highly uncertain and dynamic nature of these events, it is not currently possible to estimate the impact of the Russian - Ukraine War on our business and the companies in which we have invested.

**Results of Operations**

Our business consists of two reportable segments - Healthcare and Real Estate. We evaluate the performance of our Healthcare segment based primarily on research and development efforts and results of clinical trials, and our Real Estate segment based primarily on results of operations. Accordingly, the income and expense line items below loss from operations are only included in the discussion of consolidated results of operations.

 

*Healthcare Segment*

 

Our consolidated expenses for our Healthcare segment were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Three Months Ended<br> January 31,** | **Three Months Ended<br> January 31,** | **Change** |
|  | **2023** | **2022** | **%** |
|  | *(in thousands)* | *(in thousands)* |  |
| General and administrative | $(2053) | $1715) | 220% |
| Research and development | (2225) | (3335) | 33% |
| Depreciation | (3) |  | —% |
| Loss from continuing operations | $(4281) | $(1620) | (164)% |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Six Months Ended <br> January 31,** | **Six Months Ended <br> January 31,** | **Change** | **Change** |
|  | **2023** | **2022** | **$** | **%** |
|  | *(in thousands)* | *(in thousands)* |  |  |
| General and administrative | $(5130) | $(10507) |  | 51% |
| Research and development | (4306) | (5488) |  | 22% |
| Depreciation | (9) | (1) |  | —% |
| Provision for loss on receivable from Cornerstone Pharmaceuticals pursuant to line of credit |  | (25000) |  | (100)% |
| Provision for losses on related party receivables |  | (10095) |  | (100)% |
| Loss from continuing operations | $(9445) | $(51091) |  | 82% |

---

 

 

To date, the Healthcare segment has not generated any revenues. The entirety of the expenses in the Healthcare segment relate to the activities of LipoMedix, Barer, Farber, and Rafael Medical Devices. As of January 31, 2023, we held a 100% interest in Barer, an 84% interest in LipoMedix, a 93% interest in Farber, and a 100% interest in Rafael Medical Devices.

*General and administrative expenses*. General and administrative expenses consist mainly of payroll, stock-based compensation expense, benefits, facilities, consulting and professional fees. The increase in general and administrative expenses during the three months ended January 31, 2023 compared to the three months ended January 31, 2022 is primarily due to a net increase in stock-based compensation of approximately $11.2 million due to a material forfeiture in the three months ended January 31, 2022, partially offset by a decrease in severance pay of approximately $5.1 million, a decrease in payroll expense of approximately $1.7 million, a decrease of approximately $0.4 million in legal expense, a decrease of approximately $0.1 million in other general and administrative expenses, and a decrease in professional fees of approximately $0.1 million.

The decrease in general and administrative expenses during the six months ended January 31, 2023 compared to the six months ended January 31, 2022 is primarily due to a decrease in severance expense of approximately $5.1 million, a decrease in payroll expense of approximately $2.5 million, a decrease in legal expense of approximately $1.0 million, a decrease in professional fees of approximately $0.8 million, and a decrease in other general and administrative expenses of approximately $0.5 million, offset by a net increase in stock based compensation expense of approximately $4.5 million due to a material forfeiture in the six months ended January 31, 2022.

*Research and development expenses.* Research and development expenses decreased for the three and six months ended January 31, 2023 as compared to the corresponding period in fiscal 2022. Research and development expenses are derived from activity at Barer, LipoMedix, Farber, and Rafael Medical Devices. In November 2022, the Company resolved to curtail its early-stage development efforts, including pre-clinical research at the Barer Institute. The decision was taken to reduce spending as the Company focuses on exploring strategic opportunities.

*Loss on line of credit.* Due to the Data Events, in the six months ended January 31, 2022, the Company recorded a full reserve on the $25 million due to the Company from Cornerstone Pharmaceuticals related to the Line of Credit Agreement.

*Loss on related party receivables.* Due to the Data Events, in the six months ended January 31, 2022, the Company recorded a loss of approximately $10.1 million related to the full reserve recorded on the RP Finance receivable of $9.375 million, and a full reserve recorded on the Cornerstone Pharmaceuticals receivable of $720 thousand.

*Real Estate Segment*

 

The revenue and expenses 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, and the sale of the 520 Property on August 22, 2022. The Real Estate segment consists of a portion of a commercial building in Israel. Our consolidated income and expenses for our Real Estate segment were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended<br> January 31,** | **Three Months Ended<br> January 31,** | **Change** | **Change** |
|  | **2023** | **2022** | **$** | **%** |
|  | *(in thousands)* | *(in thousands)* | *(in thousands)* | *(in thousands)* |
| Rental – Third Party | $43 | $45) |  | (4)% |
| Rental – Related Party | 27 | 29) |  | (7)% |
| General and administrative | (32) | (35) |  | 9% |
| Depreciation and amortization | (16) | (18) |  | 11% |
| Income from continuing operations | $22 | $21 |  | (5)% |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Six Months Ended <br> January 31,** | **Six Months Ended <br> January 31,** | **Change** |
|  | **2023** | **2022** | **%** |
|  | *(in thousands)* | *(in thousands)* | *(in thousands)* |
| Rental – Third Party | $86 | $89) | (3)% |
| Rental – Related Party | 54 | 56) | (4)% |
| Other – Related Party |  | 120) | (100)% |
| General and administrative | (64) | (87) | 26% |
| Depreciation and amortization | (32) | (36) | 11% |
| Income from continuing operations | $44 | $142 | 69% |

---

 

*Other - Related Party.* Other – related party revenues decreased by approximately $120 thousand during the six months ended January 31, 2023, compared to the six months ended January 31, 2022. During the year ended July 31, 2022, the Company only billed Cornerstone Pharmaceuticals $120 thousand for the first quarter of 2022 for administrative, finance, accounting, tax, and legal services. As of July 31, 2022, Cornerstone Pharmaceuticals owed the Company $720 thousand, for which a full allowance for uncollectibility has been recorded.

 

*General and administrative expenses*. General and administrative expenses consist mainly of payroll, benefits, facilities, consulting and professional fees. The decrease in general and administrative expenses of approximately $3 thousand and $23 thousand during the three and six months ended January 31, 2023 compared to the three and six months ended January 31, 2022 is primarily due to a decrease in professional fees.

*Consolidated Operations*

Our consolidated income and expense line items below loss from operations were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Three Months Ended<br> January 31,** | **Three Months Ended<br> January 31,****Change** | **Change** |
|  | **2023** | **2022** | **%** |
|  | *(in thousands)* | *(in thousands)* | *(in thousands)* |
| **Loss from continuing operations** | $(4259) | $(1599) | (166)% |
| &nbsp;&nbsp;&nbsp;Interest income | 562 |  | (100)% |
| &nbsp;&nbsp;&nbsp;Impairment of investments - Other Pharmaceuticals | (67) | —) | (100)% |
| &nbsp;&nbsp;&nbsp;Realized gain on available-for-sale securities | 139 |  | (100)% |
| &nbsp;&nbsp;&nbsp;Unrealized gain (loss) on investments - Hedge Funds | 378 | (454) | (183)% |
| **Loss from continuing operations before income taxes** | (3247) | (2053) | (58)% |
| Provision for income taxes | (5) | (4) | (25)% |
| **Consolidated net loss from continuing operations** | (3252) | (2057) | (58)% |
| Loss from discontinued operations related to 520 Property | (157) | (508) | 69% |
| Net loss attributable to noncontrolling interests | (159) | (244) | 35% |
| **Net loss attributable to Rafael Holdings, Inc.** | $(3250) | $(2321) | (40)% |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Six Months Ended<br> January 31,** | **Six Months Ended<br> January 31,****Change** | **Change** |
|  | **2023** | **2022** | **%** |
|  | *(in thousands)* | *(in thousands)* | *(in thousands)* |
| **Loss from continuing operations** | $(9401) | $(50949) | 82% |
| &nbsp;&nbsp;&nbsp;Interest expense |  | (13) | 100% |
| &nbsp;&nbsp;&nbsp;Interest income | 770 |  | (100)% |
| &nbsp;&nbsp;&nbsp;Impairment of investments - Other Pharmaceuticals | (223) | —) | (100)% |
| &nbsp;&nbsp;&nbsp;Impairment of cost method investment - Cornerstone Pharmaceuticals |  | (79141) | (100)% |
| &nbsp;&nbsp;&nbsp;Realized gain on available-for-sale securities | 154 |  | (100)% |
| &nbsp;&nbsp;&nbsp;Unrealized gain (loss) on investments - Hedge Funds | 251 | (243) | (203)% |
| **Loss from continuing operations before income taxes** | (8449) | (130346) | 94% |
| Provision for income taxes | (10) | (4) | (150)% |
| Equity in loss of RP Finance |  | (575) | (100)% |
| **Consolidated net loss from continuing operations** | (8459) | (130925) | 94% |
| Income (loss) from discontinued operations related to 520 Property | 6543 | (1051) | 723% |
| Net loss attributable to noncontrolling interests | (258) | (17631) | 99% |
| **Net loss attributable to Rafael Holdings, Inc.** | $(1658) | $(114345) | 99% |

---

*Interest income.* Interest income was $562 thousand and $0 for three months ended January 31, 2023 and 2022, respectively. Interest income was $770 thousand and $0 for the six months ended January 31, 2023 and 2022, respectively. The increase is primarily due to the interest income earned on our investments in available-for-sale securities.

*Impairment of investments - Other Pharmaceuticals*. We recorded an impairment loss of $67 thousand and $223 thousand for the three and six months ended January 31, 2023, respectively, related to our investment in Nanovibronix using the measurement alternative.

*Impairment of cost method investment - Cornerstone Pharmaceuticals.* In connection with the Data Events, during the six months ended January 31, 2022, we recorded a full impairment charge to our cost method investment in Cornerstone Pharmaceuticals in the amount of $79 million.

*Realized gain on available-for-sale securities*. We recorded a realized gain of approximately and $139 thousand and $154 thousand related to the sale of available-for-sale securities for the three and six months ended January 31, 2023, respectively.

*Unrealized (loss) gain on investments - Hedge Fund*s. We recorded unrealized losses of approximately $378 thousand and gains of $454 thousand for three months ended January 31, 2023 and 2022, respectively. We recorded unrealized losses of approximately $251 thousand and gains of $243 thousand for the six months ended January 31, 2023 and 2022, respectively.

*Equity in (loss) earnings of RP Finance.* We recognized a loss of $575 thousand from our ownership interest in RP Finance for the six months ended January 31, 2022. As of July 31, 2022, the equity method investment in RP Finance on our balance sheet was $0, and no additional equity loss of RP Finance was recorded subsequent to the year ended July 31, 2022.

*Income (loss) from discontinued operations related to 520 Property.* Discontinued operations include: (i) rental and parking revenues, (ii) payroll, benefits, facilities, consulting and professional fees dedicated to 520 Property, (iii) depreciation and amortization expenses, (iv) interest (including amortization of debt issuance costs) on the note payable on the Property, and (v) gain on the disposal of the building. The operating results of these items are presented in our consolidated statements of operations and comprehensive loss as discontinued operations for all periods presented. The decrease in the net loss attributable to discontinued operations for the three months ended January 31, 2023 as compared to the three months ended January 31, 2022 was due to a $1.0 million decrease in rental revenue, slightly offset by an approximate $397 thousand decrease in interest expense, a $627 thousand decrease in general and administrative expenses (which is primarily comprised of a decrease in real estate taxes, utilities, other building related repairs and maintenance expenses totaling approximately $615 thousand), and a $363 thousand decrease in depreciation and amortization expense due to no depreciation expense during the three months ended January 31, 2023 as depreciation stopped as of July 1, 2022 when the 520 Property was classified as held-for-sale.

The increase in the net income attributable to discontinued operations for the six months ended January 31, 2023 as compared to the six months ended January 31, 2022 was due to a gain on the sale of the 520 Property of $6.8 million, an approximate $707 thousand decrease in interest expense, partially offset by a $1.6 million decrease in rental revenue, a $999 thousand decrease in general and administrative expenses (which is primarily comprised of a decrease in real estate taxes, utilities other building related repairs, maintenance expenses, and other expenses totaling approximately $1.1 million, slightly offset by a $129 thousand increase in expense related to the write-off of deferred rental income), and a $726 thousand decrease in depreciation and amortization expense due to no depreciation expense during the six months ended January 31, 2023 as depreciation stopped as of July 1, 2022 when the 520 Property was classified as held-for-sale.

See Note 3 to our accompanying consolidated financial statements for further information regarding discontinued operations.

*Net loss attributable to noncontrolling interests.* The change in the net loss attributable to noncontrolling interests was due to an approximate $17.3 million loss related to the Cornerstone Pharmaceuticals impairment loss (the total impairment loss was approximately $79 million) which was applicable to noncontrolling interests in certain of the Company's subsidiaries and was allocated to the holders of interests in CS Pharma and Pharma Holdings in the approximate amounts of $10.4 million and $6.9 million, respectively, for the six months ended January 31, 2022.

**Liquidity and Capital Resources**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | | **Change** | **Change** |
|  | **January 31,**<br>**2023** | **July 31,**<br>**2022** | **$** | **%** |
| **Balance Sheet Data:** | *(in thousands)* | *(in thousands)* |  |  |
| Cash and cash equivalents | $9670 | $26537) |  | (64)% |
| Working capital | 87999 | 87321 |  | 1% |
| Total assets | 98550 | 118320) |  | (17)% |
| Note payable, net of debt issuance costs, held-for-sale |  | 15000) |  | (100)% |
| Total equity attributable to Rafael Holdings, Inc. | 100102 | 100515) |  | —% |
| Noncontrolling interests | (3567) | (3309) |  | 8% |
| Total equity | 96535 | 97206) |  | (1)% |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **For the Six Months<br> Ended January 31,** | **For the Six Months<br> Ended January 31,** | **Change** |
|  | **2023** | **2022** | **%** |
| **Cash flows (used in) provided by** | *(in thousands)* | *(in thousands)* |  |
| Operating activities from continuing operations | $(7437) | $(13486) | (45)% |
| Investing activities from continuing operations | (41754) | (26877) | 55% |
| Financing activities from continuing operations | (157) | 97868) | (100)% |
| Effect of exchange rates on cash and cash equivalents | (3) | 51) | (106)% |
| Operating, investing, and financing activities from discontinued operations | 32484 | (385) | (8537)% |
| **(Decrease) increase in cash and cash equivalents** | $(16867) | $57171 |  |

---

**Capital Resources**

As of January 31, 2023, we held cash and cash equivalents of approximately $9.7 million, and available-for-sale securities valued at approximately $79.2 million. On August 22, 2022, the Company received net proceeds of approximately $33 million in connection with the sale of the 520 Property (see Note 3 for further details). The Company expects the balance of cash and cash equivalents, and available-for-sale-securities, to be sufficient to meet our obligations for at least the 12 months from the filing of this Quarterly Report in Form 10-Q.

**Operating Activities**

The decrease in cash used in operating activities for the six months ended January 31, 2023 as compared to the six months ended January 31, 2022 was primarily related to lower net loss from continuing operations of $8.5 million in fiscal 2023 as compared to the corresponding period in fiscal 2022, and the impact from non-cash items, primarily stock-based compensation of $1.1 million, an impairment loss of $0.2 million on our investment in Nanovibronix, and a net unrealized loss on investments - Hedge Funds of $0.3 million. This is coupled with an increase in accounts payable and accrued expenses of $0.2 million, a decrease in prepaid expenses and other current assets of $0.8 million, as well as other changes in assets and liabilities.

Cash used in operating activities for the six months ended January 31, 2022 was primarily related to the net loss from continuing operations of $130.9, offset by the impact from non-cash items, primarily the impairment of cost method investment in Cornerstone Pharmaceuticals of $79 million, the reserve on the amounts due to the Company from Cornerstone Pharmaceuticals related to the Line of Credit Agreement for $25 million, the reserve on receivables due from Cornerstone Pharmaceuticals totaling $10.1 million, and stock-based compensation, net of $(3.1) million, as well as other changes in assets and liabilities.

**Investing Activities**

Cash used in investing activities for the six months ended January 31, 2023 was primarily due to purchases of available-for-sale securities of approximately $113.1 million, partially offset by proceeds of $71.4 million from the sale of available-for-sale securities.

 

Cash used in investing activities for the six months ended January 31, 2022 was primarily related to amounts loaned to Cornerstone Pharmaceuticals of approximately $25 million pursuant to the Line of Credit Agreement and the payments to fund our portion of advances under the line of credit between RP Finance and Cornerstone Pharmaceuticals in the amount of approximately $1.9 million.

**Financing Activities**

Cash used in financing activities for the six months ended January 31, 2023 was primarily related to payments for taxes related to shares withheld for employee taxes.

 

Cash provided by financing activities for the six months ended January 31, 2022 was primarily related to proceeds of approximately $104.2 million related to the sale of our common stock to investors and a related party, partially offset by payment of transaction costs of $6.2 million.

We do not anticipate paying dividends on our common stock until we achieve sustainable profitability and retain certain minimum cash reserves. The payment of dividends in any specific period will be at the sole discretion of our Board of Directors.

**Operating, Financing, and Investing Activities from Discontinued Operations**

The cash flows from discontinued operations - 520 Property represents the net income excluding non-cash depreciation and amortization, as well as the proceeds from the sale of the 520 Property. For the six months ended January 31, 2023, net cash used in operating activities totaled $0.7 million. Net cash provided in investing activities of $48.2 million related to proceeds from sale of the 520 Property of $49.4 million, slightly offset by payment of transaction costs of $1.2 million. Net cash used in financing activities of $15.0 million related to the payment of the Note Payable in connection with sale of the 520 Property. For the six months ended January 31, 2022, net cash used in operating activities totaled $0.3 million. Net cash used in investing activities totaled $60 thousand.

**Trends and Uncertainties – COVID-19, War in Ukraine**

In late 2019, a novel strain of coronavirus, SARS-CoV, which causes COVID-19, was identified and has proved to be highly contagious. It has since spread extensively throughout the world, including the United States, and was declared a global pandemic by the World Health Organization in March 2020. The Company actively monitors the outbreak, including the spread of new variants of interest, and its potential impact on the Company's operations and those of the Company's holdings.

Even with growing availability of testing and vaccines and the relaxation of public health measures that were implemented to limit the spread of the pandemic, there continues to be uncertainty around the COVID-19 pandemic and its impact.

The Company had implemented a number of measures to protect the health and safety of the Company's workforce including a voluntary work-from-home policy for the Company's workforce who can perform their jobs from home as well as restrictions on discretionary business travel. Most of our employees have returned to working from the office on a part-time basis.

The full impact of the COVID-19 pandemic on the Company will depend on factors such as the length of time of the pandemic; the responses of federal, state and local governments; the impact of future variants that may emerge; vaccination rates among the population; the efficacy of the COVID-19 vaccines; the longer-term impact of the pandemic on the economy and consumer behavior; and the effect on our employees, vendors, and other partners.

The short and long-term implications of Russia's invasion of Ukraine are difficult to predict at this time. The imposition of sanctions and counter-sanctions may have an adverse effect on the economic markets generally and could impact our business and the companies in which we have investments, financial condition, and results of operations. Because of the highly uncertain and dynamic nature of these events, it is not currently possible to estimate the impact of the Russian – Ukraine war on our business and the companies in which we have investments.

**Critical Accounting Estimates**

We have chosen accounting policies that we believe are appropriate to accurately and fairly report our operating results and financial condition in conformity with U.S. GAAP. We apply these accounting policies in a consistent manner. Our significant accounting policies are discussed in Note 1, "Description of Business and Summary of Significant Accounting Policies," in our consolidated financial statements included in our Annual Report on Form 10-K, for fiscal 2022 ("2022 Form 10-K").

The application of critical accounting policies requires that we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. These estimates and assumptions are based on historical and other factors believed to be reasonable under the circumstances. We evaluate these estimates and assumptions on an ongoing basis and may retain outside consultants to assist in our evaluation. If actual results ultimately differ from previous estimates, the revisions are included in results of operations in the period in which the actual amounts become known. The critical accounting policies that involve the most significant management judgments and estimates used in preparation of our consolidated financial statements, or are the most sensitive to change from outside factors, are discussed in "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Company's 2022 Form 10-K. There have been no material changes in our critical accounting policies and procedures during the six months ended January 31, 2023.

**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.

**Discontinued Operations**

In accordance with the Financial Accounting Standards Board, ASC 205-20, *Presentation of Financial Statements - Discontinued Operations*, the results of operations of a component of an entity or a group or component of an entity that represents a strategic shift that has, or will have, a major effect on the reporting company's operations that has either been disposed of or is classified as held-for-sale are required to be reported as discontinued operations in a company's consolidated financial statements. In order to be considered a discontinued operation, both the operations and cash flows of the discontinued component must 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. 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. See Note 3 to our consolidated financial statements for additional information regarding the results, major classes of assets and liabilities, significant non-cash operating items, and capital expenditures of discontinued operations.

**Item 3. Quantitative and Qualitative Disclosures about Market Risk**

There have been no significant changes in our market risk exposures from those described in Item 7A of our 2022 Form 10-K.

We are monitoring the potential impacts of the COVID-19 pandemic and the war in Ukraine on our business and the companies in which we have investments. While the potential economic impact brought by, and the duration of, the COVID-19 pandemic is difficult to assess or predict, the impact on the global financial markets may reduce our ability to access capital, which could negatively impact our long-term liquidity.

**Item 4. Controls and Procedures**

*Evaluation of Disclosure Controls and Procedures.* Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of January 31, 2023.

*Changes in Internal Control over Financial Reporting.* There were no changes in our internal control over financial reporting during the quarter ended January 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

**Part II. OTHER INFORMATION**

**Item 1. Legal Proceedings**

Legal proceedings in which we are involved are more fully described in Note 16 to the Consolidated Financial Statements included in Item 1 to Part I of this Quarterly Report on Form 10-Q.

**Item 1A. Risk Factors**

There were no material changes from the risk factors previously disclosed in Item 1A to Part I of our Annual Report on Form 10-K for fiscal 2022.

**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds**

None.

**Item 3. Defaults Upon Senior Securities**

None.

**Item 4. Mine Safety Disclosures**

Not applicable.

**Item 5. Other Information**

None.

**Item 6. Exhibits**

---

| | |
|:---|:---|
| **Exhibit<br> Number** | **Description** |
| 31.1\* | [Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](f10q0123ex31-1_rafaelhold.htm) |
| 31.2\* | [Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](f10q0123ex31-2_rafaelhold.htm) |
| 32.1\* | [Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](f10q0123ex32-1_rafaelhold.htm) |
| 32.2\* | [Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](f10q0123ex32-2_rafaelhold.htm) |
| 101.INS\* | Inline XBRL Instance Document |
| 101.SCH\* | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL\* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.LAB\* | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE\* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 101.DEF\* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 104\* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |

---

\* Filed or furnished herewith.

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

---

| | | |
|:---|:---|:---|
| Date: March 14, 2023 | **Rafael Holdings, Inc.** | **Rafael Holdings, Inc.** |
|  | By: | /s/ William Conkling |
|  |  | **William Conkling** <br> **Chief Executive Officer** |
|  | By: | /s/ David Polinsky |
|  |  | **David Polinsky**<br> **Chief Financial Officer**  |

---

0.09 0.13 0.36 5.86 0.01 0.03 0.05 0.28 0.08 0.12 0.14 5.91 19332630 19713127 23085612 23155018 19332630 19713127 23085612 23155018 false --07-31 Q2 0001713863 0001713863 2022-08-01 2023-01-31 0001713863 us-gaap:CommonClassAMember 2023-03-10 0001713863 us-gaap:CommonClassBMember 2023-03-10 0001713863 2023-01-31 0001713863 2022-07-31 0001713863 us-gaap:CommonClassAMember 2023-01-31 0001713863 us-gaap:CommonClassAMember 2022-07-31 0001713863 us-gaap:CommonClassBMember 2023-01-31 0001713863 us-gaap:CommonClassBMember 2022-07-31 0001713863 2022-11-01 2023-01-31 0001713863 2021-11-01 2022-01-31 0001713863 2021-08-01 2022-01-31 0001713863 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2022-10-31 0001713863 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2022-10-31 0001713863 us-gaap:AdditionalPaidInCapitalMember 2022-10-31 0001713863 us-gaap:RetainedEarningsUnappropriatedMember 2022-10-31 0001713863 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-10-31 0001713863 us-gaap:NoncontrollingInterestMember 2022-10-31 0001713863 2022-10-31 0001713863 us-gaap:RetainedEarningsUnappropriatedMember 2022-11-01 2023-01-31 0001713863 us-gaap:NoncontrollingInterestMember 2022-11-01 2023-01-31 0001713863 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2022-11-01 2023-01-31 0001713863 us-gaap:AdditionalPaidInCapitalMember 2022-11-01 2023-01-31 0001713863 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-11-01 2023-01-31 0001713863 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2023-01-31 0001713863 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2023-01-31 0001713863 us-gaap:AdditionalPaidInCapitalMember 2023-01-31 0001713863 us-gaap:RetainedEarningsUnappropriatedMember 2023-01-31 0001713863 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-01-31 0001713863 us-gaap:NoncontrollingInterestMember 2023-01-31 0001713863 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2022-07-31 0001713863 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2022-07-31 0001713863 us-gaap:AdditionalPaidInCapitalMember 2022-07-31 0001713863 us-gaap:RetainedEarningsUnappropriatedMember 2022-07-31 0001713863 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-07-31 0001713863 us-gaap:NoncontrollingInterestMember 2022-07-31 0001713863 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2022-08-01 2023-01-31 0001713863 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2022-08-01 2023-01-31 0001713863 us-gaap:AdditionalPaidInCapitalMember 2022-08-01 2023-01-31 0001713863 us-gaap:RetainedEarningsUnappropriatedMember 2022-08-01 2023-01-31 0001713863 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-08-01 2023-01-31 0001713863 us-gaap:NoncontrollingInterestMember 2022-08-01 2023-01-31 0001713863 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2022-08-01 2022-10-31 0001713863 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2022-08-01 2022-10-31 0001713863 us-gaap:AdditionalPaidInCapitalMember 2022-08-01 2022-10-31 0001713863 us-gaap:RetainedEarningsUnappropriatedMember 2022-08-01 2022-10-31 0001713863 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-08-01 2022-10-31 0001713863 us-gaap:NoncontrollingInterestMember 2022-08-01 2022-10-31 0001713863 2022-08-01 2022-10-31 0001713863 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2021-10-31 0001713863 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2021-10-31 0001713863 us-gaap:AdditionalPaidInCapitalMember 2021-10-31 0001713863 us-gaap:RetainedEarningsUnappropriatedMember 2021-10-31 0001713863 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-10-31 0001713863 us-gaap:NoncontrollingInterestMember 2021-10-31 0001713863 2021-10-31 0001713863 us-gaap:RetainedEarningsUnappropriatedMember 2021-11-01 2022-01-31 0001713863 us-gaap:NoncontrollingInterestMember 2021-11-01 2022-01-31 0001713863 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2021-11-01 2022-01-31 0001713863 us-gaap:AdditionalPaidInCapitalMember 2021-11-01 2022-01-31 0001713863 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-11-01 2022-01-31 0001713863 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2022-01-31 0001713863 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2022-01-31 0001713863 us-gaap:AdditionalPaidInCapitalMember 2022-01-31 0001713863 us-gaap:RetainedEarningsUnappropriatedMember 2022-01-31 0001713863 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-01-31 0001713863 us-gaap:NoncontrollingInterestMember 2022-01-31 0001713863 2022-01-31 0001713863 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2021-07-31 0001713863 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2021-07-31 0001713863 us-gaap:AdditionalPaidInCapitalMember 2021-07-31 0001713863 us-gaap:RetainedEarningsUnappropriatedMember 2021-07-31 0001713863 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-07-31 0001713863 us-gaap:NoncontrollingInterestMember 2021-07-31 0001713863 2021-07-31 0001713863 us-gaap:CommonClassAMember us-gaap:CommonStockMember 2021-08-01 2022-01-31 0001713863 us-gaap:CommonClassBMember us-gaap:CommonStockMember 2021-08-01 2022-01-31 0001713863 us-gaap:AdditionalPaidInCapitalMember 2021-08-01 2022-01-31 0001713863 us-gaap:RetainedEarningsUnappropriatedMember 2021-08-01 2022-01-31 0001713863 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-08-01 2022-01-31 0001713863 us-gaap:NoncontrollingInterestMember 2021-08-01 2022-01-31 0001713863 rfl:CSPharmaHoldingsLLCMember 2022-08-01 2023-01-31 0001713863 rfl:PharmaHoldingsLLCMember 2022-08-01 2023-01-31 0001713863 rfl:CSPharmaHoldingsLLCMember 2023-01-31 0001713863 rfl:RafaelHoldingsIncMember 2022-08-01 2023-01-31 0001713863 rfl:BroadAtlanticAssociatesLLCMember 2022-08-01 2023-01-31 0001713863 rfl:IDTREHoldingsLtdMember 2022-08-01 2023-01-31 0001713863 rfl:RafaelRealtyHoldingsIncMember 2022-08-01 2023-01-31 0001713863 rfl:BarerInstituteIncMember 2022-08-01 2023-01-31 0001713863 rfl:TheBarerInstituteLLCMember 2022-08-01 2023-01-31 0001713863 rfl:HillviewAvenueRealtyJVMember 2022-08-01 2023-01-31 0001713863 rfl:HillviewAvenueRealtyLLCMember 2022-08-01 2023-01-31 0001713863 rfl:RafaelMedicalDevicesIncMember 2022-08-01 2023-01-31 0001713863 rfl:LevcoPharmaceuticalsLtdMember 2022-08-01 2023-01-31 0001713863 rfl:FarberPartnersLLCMember 2022-08-01 2023-01-31 0001713863 rfl:LipoMedixPharmaceuticalsLtdMember 2022-08-01 2023-01-31 0001713863 rfl:AltiraCapitalConsultingLLCMember 2022-08-01 2023-01-31 0001713863 2022-08-01 2022-08-22 0001713863 rfl:OneCustomersMember 2021-11-01 2022-01-31 0001713863 srt:MaximumMember 2021-11-01 2022-01-31 0001713863 srt:MinimumMember 2021-11-01 2022-01-31 0001713863 2022-08-22 2022-08-22 0001713863 us-gaap:ThirdPartyPayorMember 2022-11-01 2023-01-31 0001713863 us-gaap:ThirdPartyPayorMember 2021-11-01 2022-01-31 0001713863 rfl:RentalRelatedPartyMember 2022-11-01 2023-01-31 0001713863 rfl:RentalRelatedPartyMember 2021-11-01 2022-01-31 0001713863 us-gaap:ParkingMember 2022-11-01 2023-01-31 0001713863 us-gaap:ParkingMember 2021-11-01 2022-01-31 0001713863 us-gaap:ThirdPartyPayorMember 2022-08-01 2023-01-31 0001713863 us-gaap:ThirdPartyPayorMember 2021-08-01 2022-01-31 0001713863 rfl:RentalRelatedPartyMember 2022-08-01 2023-01-31 0001713863 rfl:RentalRelatedPartyMember 2021-08-01 2022-01-31 0001713863 us-gaap:ParkingMember 2022-08-01 2023-01-31 0001713863 us-gaap:ParkingMember 2021-08-01 2022-01-31 0001713863 rfl:RafaelPharmaceuticalsMember 2022-08-01 2023-01-31 0001713863 rfl:CSPharmaHoldingsLLCMember 2022-08-01 2023-01-31 0001713863 rfl:CSPharmaHoldingsLLCMember 2023-01-31 0001713863 rfl:CSPharmaHoldingsLLCMember rfl:SeriesDConvertiblePreferredStockMember 2022-08-01 2023-01-31 0001713863 rfl:PharmaHoldingsMember 2020-03-25 2020-03-25 0001713863 rfl:CSPharmaHoldingsLLCMember rfl:SeriesDConvertiblePreferredStockMember 2019-01-31 2019-01-31 0001713863 2019-01-31 2019-01-31 0001713863 rfl:CSPharmaHoldingsLLCMember 2019-01-31 0001713863 rfl:SeriesDConvertiblePreferredStockMember 2022-08-01 2023-01-31 0001713863 rfl:PharmaHoldingsMember 2022-08-01 2023-01-31 0001713863 rfl:RafaelPharmaceuticalsMember 2023-01-31 0001713863 rfl:RafaelPharmaceuticalsMember rfl:HowardJonasMember 2023-01-31 0001713863 rfl:RafaelPharmaceuticalsMember 2021-10-01 2021-10-28 0001713863 rfl:CSPharmaAndPharmaHoldingsMember 2022-08-01 2023-01-31 0001713863 rfl:PharmaHoldingsMember 2021-09-01 2021-09-24 0001713863 rfl:PharmaHoldingsMember rfl:FirstAdvanceMember 2021-09-01 2021-09-24 0001713863 rfl:PharmaHoldingsMember rfl:SecondAdvanceMember 2021-10-01 2021-10-01 0001713863 rfl:PharmaHoldingsMember 2021-08-01 2021-10-31 0001713863 rfl:PharmaHoldingsMember 2021-11-01 2022-01-31 0001713863 rfl:PharmaHoldingsMember 2021-08-01 2022-01-31 0001713863 us-gaap:LineOfCreditMember 2020-02-03 0001713863 us-gaap:LineOfCreditMember 2022-08-01 2023-01-31 0001713863 rfl:RPFinanceMember 2022-08-01 2023-01-31 0001713863 rfl:RPFinanceMember 2021-08-01 2022-01-31 0001713863 2020-11-30 0001713863 rfl:RafaelPharmaceuticalsMember 2020-11-30 0001713863 2021-06-30 0001713863 2021-09-30 0001713863 rfl:RafaelPharmaceuticalsMember 2021-09-30 0001713863 rfl:RPFinanceMember 2021-08-01 2021-10-31 0001713863 rfl:RPFinanceMember 2022-10-31 0001713863 rfl:RafaelPharmaceuticalsMember 2021-08-01 2021-10-31 0001713863 rfl:LipomedixPharmaceuticalsLtdMember 2021-03-01 2021-03-31 0001713863 2021-09-01 2021-09-01 0001713863 2021-11-15 0001713863 2021-11-15 2021-11-15 0001713863 us-gaap:WarrantMember 2022-11-11 0001713863 us-gaap:WarrantMember 2022-11-11 2022-11-11 0001713863 rfl:LipomedixPharmaceuticalsLtdMember 2023-01-31 0001713863 rfl:LipomedixPharmaceuticalsLtdMember 2022-08-01 2023-01-31 0001713863 srt:MaximumMember 2022-08-01 2023-01-31 0001713863 srt:MinimumMember 2022-08-01 2023-01-31 0001713863 us-gaap:USTreasuryBillSecuritiesMember 2022-08-01 2023-01-31 0001713863 rfl:CorporateBondsMember 2022-08-01 2023-01-31 0001713863 rfl:TotalAvailableforSaleSecuritiesMember 2022-08-01 2023-01-31 0001713863 rfl:CorporateBondsMember 2021-08-01 2022-07-31 0001713863 rfl:TotalAvailableforSaleSecuritiesMember 2021-08-01 2022-07-31 0001713863 us-gaap:FairValueInputsLevel1Member 2023-01-31 0001713863 us-gaap:FairValueInputsLevel2Member 2023-01-31 0001713863 us-gaap:FairValueInputsLevel3Member 2023-01-31 0001713863 us-gaap:FairValueInputsLevel1Member 2022-07-31 0001713863 us-gaap:FairValueInputsLevel2Member 2022-07-31 0001713863 us-gaap:FairValueInputsLevel3Member 2022-07-31 0001713863 us-gaap:PropertyPlantAndEquipmentMember 2022-11-01 2023-01-31 0001713863 us-gaap:PropertyPlantAndEquipmentMember 2021-11-01 2022-01-31 0001713863 us-gaap:PropertyPlantAndEquipmentMember 2023-01-31 0001713863 us-gaap:PropertyPlantAndEquipmentMember 2022-07-31 0001713863 2021-07-09 0001713863 2022-07-29 2022-07-29 0001713863 2022-08-22 0001713863 country:IL 2023-01-31 0001713863 rfl:IDTMember 2022-11-01 2023-01-31 0001713863 rfl:IdtRafaelHoldingsLlcMember 2022-11-01 2023-01-31 0001713863 rfl:IDTOwedMember 2022-08-01 2023-01-31 0001713863 rfl:IDTOwedMember 2022-07-01 2022-07-31 0001713863 rfl:RafaelPharmaceuticalsMember 2021-08-01 2022-01-31 0001713863 rfl:RafaelPharmaceuticalsMember 2023-01-31 0001713863 rfl:RafaelPharmaceuticalsMember 2022-07-31 0001713863 rfl:RPFinanceMember 2023-01-31 0001713863 rfl:PurchaseAgreementMember 2020-12-01 2020-12-31 0001713863 2020-12-01 2020-12-31 0001713863 2022-06-01 2022-06-06 0001713863 2022-06-01 2022-06-22 0001713863 rfl:LipomedixPharmaceuticalsLtdMember 2021-11-15 0001713863 rfl:LipomedixPharmaceuticalsLtdMember 2021-11-01 2021-11-15 0001713863 rfl:RPFinanceMember 2021-11-15 0001713863 us-gaap:HealthcareSectorMember 2022-11-01 2023-01-31 0001713863 us-gaap:RealEstateMember 2022-11-01 2023-01-31 0001713863 us-gaap:HealthcareSectorMember 2021-11-01 2022-01-31 0001713863 us-gaap:RealEstateMember 2021-11-01 2022-01-31 0001713863 us-gaap:RealEstateMember 2022-08-01 2023-01-31 0001713863 us-gaap:HealthcareSectorMember 2022-08-01 2023-01-31 0001713863 us-gaap:RealEstateMember 2021-08-01 2022-01-31 0001713863 us-gaap:HealthcareSectorMember 2021-08-01 2022-01-31 0001713863 country:US 2023-01-31 0001713863 country:US 2022-01-31 0001713863 country:IL 2022-01-31 0001713863 2022-12-01 2022-12-31 0001713863 us-gaap:CommonClassBMember 2021-05-27 0001713863 us-gaap:CommonClassBMember 2021-06-01 2021-06-01 0001713863 2021-08-01 2021-08-24 0001713863 us-gaap:CommonClassBMember 2021-08-19 0001713863 rfl:TwoThousandEighteenEquityIncentivePlanMember 2022-08-01 2023-01-31 0001713863 us-gaap:CommonClassBMember 2022-01-19 2022-01-19 0001713863 us-gaap:CommonClassBMember 2022-11-28 2022-11-28 0001713863 rfl:PlanMember us-gaap:CommonClassBMember 2022-08-01 2023-01-31 0001713863 us-gaap:StockOptionMember 2023-01-31 0001713863 us-gaap:StockOptionMember 2022-08-01 2023-01-31 0001713863 rfl:RMD2022PlanMember 2022-08-01 2023-01-31 0001713863 rfl:RMD2022PlanMember 2023-01-31 0001713863 srt:BoardOfDirectorsChairmanMember 2021-08-01 2022-01-31 0001713863 srt:BoardOfDirectorsChairmanMember rfl:EquityIncentivePlanMember 2021-08-01 2022-01-31 0001713863 rfl:EquityIncentivePlanMember 2022-08-01 2023-01-31 0001713863 2022-02-01 2022-02-01 0001713863 2022-06-14 2022-06-14 0001713863 us-gaap:RestrictedStockMember 2023-01-31 0001713863 us-gaap:RestrictedStockMember 2022-08-01 2023-01-31 0001713863 rfl:RafaelMedicalDevicesLLCMember 2022-07-31 0001713863 rfl:RafaelMedicalDevicesLLCMember 2022-08-01 2023-01-31 0001713863 rfl:RafaelMedicalDevicesLLCMember 2023-01-31 0001713863 srt:MinimumMember rfl:RafaelMedicalDevicesLLCMember 2022-08-01 2023-01-31 0001713863 rfl:RelatedPartiesMember 2022-07-31 0001713863 rfl:OtherMember 2022-07-31 0001713863 us-gaap:SubsequentEventMember 2023-02-01 2023-02-09 xbrli:shares iso4217:USD iso4217:USD xbrli:shares xbrli:pure utr:sqft

## Exhibit 31.1

**EXHIBIT 31.1**

**CERTIFICATION OF CHIEF EXECUTIVE OFFICER**

**PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a)**

**AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, William Conkling, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this Quarterly Report on Form 10-Q of Rafael Holdings, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 14, 2023

---

| |
|:---|
| /s/ William Conkling |
| William Conkling |
| Chief Executive Officer |

---

## Exhibit 31.2

**EXHIBIT 31.2**

**CERTIFICATION OF CHIEF FINANCIAL OFFICER**

**PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a)**

**AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, David Polinsky, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this Quarterly Report on Form 10-Q of Rafael Holdings, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 14, 2023

---

| |
|:---|
| /s/ David Polinsky |
| David Polinsky |
| Chief Financial Officer |

---

## Exhibit 32.1

**EXHIBIT 32.1**

**Certification Pursuant to**

**18 U.S.C. Section 1350**

**(as Adopted Pursuant to Section 906 of**

**the Sarbanes-Oxley Act Of 2002)**

In connection with the Quarterly Report of Rafael Holdings, Inc. (the "Company") on Form 10-Q for the quarter ended January 31, 2023 as filed with the Securities and Exchange Commission (the "Report"), I, William Conkling, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 14, 2023

---

| |
|:---|
| /s/ William Conkling |
| William Conkling |
| Chief Executive Officer |

---

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Rafael Holdings, Inc. and will be retained by Rafael Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

## Exhibit 32.2

**EXHIBIT 32.2**

**Certification Pursuant to**

**18 U.S.C. Section 1350**

**(as Adopted Pursuant to Section 906 of**

**the Sarbanes-Oxley Act Of 2002)**

In connection with the Quarterly Report of Rafael Holdings, Inc. (the "Company") on Form 10-Q for the quarter ended January 31, 2023 as filed with the Securities and Exchange Commission (the "Report"), I, David Polinsky, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 14, 2023

---

| |
|:---|
| /s/ David Polinsky |
| David Polinsky |
| Chief Financial Officer |

---

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Rafael Holdings, Inc. and will be retained by Rafael Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.