Rafael Holdings Reports Third Quarter Fiscal Year 2020 Results

RAFAEL HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share data)

April 30,

July 31,

2020

2019

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

8,430

$

12,024

Trade accounts receivable, net of allowance for doubtful accounts of $143
and $122 at April 30, 2020 and July 31, 2019, respectively

261

450

Due from Rafael Pharmaceuticals

135

280

Prepaid expenses and other current assets

336

507

Total current assets

9,162

13,261

Property and equipment, net

47,811

48,733

Investments – Rafael Pharmaceuticals

70,018

70,018

Investments – Other Pharmaceuticals

1,705

2,000

Investments – Hedge Funds

5,617

5,125

Equity investment – RP Finance

53

—

Deferred income tax assets, net

6

19

In-process research and development and patents

1,575

1,575

Other assets

1,484

1,412

TOTAL ASSETS

$

137,431

$

142,143

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Trade accounts payable

$

700

$

795

Accrued expenses

728

605

Other current liabilities

57

27

Total current liabilities

1,485

1,427

Due to Related Party

27

65

Convertible note, net of discount of $0 and $54 – Related Party

—

14,946

Other liabilities

92

292

Accrued interest on convertible note – Related Party

—

649

TOTAL LIABILITIES

1,604

17,379

COMMITMENTS AND CONTINGENCIES

EQUITY

Class A common stock, $0.01 par value; 50,000,000 shares authorized,
787,163 shares issued and outstanding as of April 30, 2020 and July 31,
2019

8

8

Class B common stock, $0.01 par value; 200,000,000 shares authorized,
15,034,931 issued and 15,028,869 outstanding as of April 30, 2020 and
13,142,502 shares issued and outstanding as of July 31, 2019

149

131

Additional paid-in capital

128,998

112,898

Accumulated deficit

(10,850)

(5,840)

Accumulated other comprehensive income related to foreign currency translation adjustment

3,752

3,784

Total equity attributable to Rafael Holdings, Inc.

122,057

110,981

Noncontrolling interests

13,770

13,783

TOTAL EQUITY

135,827

124,764

TOTAL LIABILITIES AND EQUITY

$

137,431

$

142,143

RAFAEL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

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

Three Months Ended
April 30,

Nine Months Ended
April 30,

2020

2019

2020

2019

REVENUE:

Rental – Third Party

$

360

$

588

$

1,076

$

1,277

Rental – Related Party

523

521

1,570

1,564

Parking

221

268

664

688

Other – Related Party

120

—

360

—

Total Revenue

1,224

1,377

3,670

3,529

COSTS AND EXPENSES

Selling, general and administrative

2,081

2,059

6,343

5,228

Research and development

634

300

1,327

949

Depreciation and amortization

474

436

1,413

1,296

Loss from Operations

(1,965)

(1,418)

(5,413)

(3,944)

Interest (expense) income, net

—

(221)

(31)

647

Net gain (loss) resulting from foreign exchange transactions

—

19

(5)

19

Gain on sales of marketable securities, net

—

—

—

330

Impairment of investments – Other Pharmaceuticals

(295)

—

(295)

—

Unrealized (loss) gain on investments – Hedge Funds

(28)

466

492

414

Loss Before Income Taxes

(2,288)

(1,154)

(5,252)

(2,534)

(Provision for) benefit from income taxes

(8)

7

(24)

21

Equity in earnings of RP Finance

53

—

53

—

Consolidated Net Loss

(2,243)

(1,147)

(5,223)

(2,513)

Net loss attributable to noncontrolling interests

(84)

(142)

(213)

(6)

Net Loss Attributable to Rafael Holdings, Inc.

$

(2,159)

$

(1,005)

$

(5,010)

$

(2,507)

OTHER COMPREHENSIVE LOSS

Net Loss

$

(2,243)

$

(1,147)

$

(5,223)

$

(2,513)

Foreign currency translation adjustments

(4)

(54)

(32)

(52)

Total Comprehensive Loss

(2,247)

(1,201)

(5,255)

(2,565)

(3)

(18)

(19)

5

Total Comprehensive Loss attributable to Rafael Holdings, Inc.

$

(2,244)

$

(1,183)

$

(5,236)

$

(2,570)

Loss Per Share:

Basic and diluted

$

(0.14)

$

(0.07)

$

(0.32)

$

(0.19)

Weighted average number of shares used in calculation of
loss per share:

Basic and diluted

15,813,679

13,924,691

15,747,709

13,055,037

RAFAEL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

Nine Months Ended
April 30,

2020

2019

Operating activities

Net loss

$

(5,223)

$

(2,513)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

1,413

1,296

Deferred income taxes

13

(24)

Interest income on Series D Convertible Note

—

(848)

Net gain on sales of marketable securities

—

(330)

Impairment of investments – Other Pharmaceuticals

295

—

Unrealized gain on investments – Hedge Funds

(492)

(414)

Equity in earnings of RP Finance

(53)

—

Provision for doubtful accounts

48

86

Non-cash compensation

546

269

Amortization of debt discount

54

11

Change in assets and liabilities:

Trade accounts receivable

141

(471)

Prepaid expenses and other current assets

171

(419)

Other assets

(72)

(180)

Accounts payable and accrued expenses

28

91

Due to/from related parties

107

473

Accrued interest – Related Party

19

418

Other current liabilities

—

(5)

Other liabilities

30

22

Net cash used in operating activities

(2,975)

(2,538)

Investing activities

Purchases of property and equipment

(491)

(364)

Proceeds from sale and maturity of marketable securities, net

—

25,031

Investment in Rafael Pharmaceuticals

—

(55,870)

Net cash used in investing activities

(491)

(31,203)

Financing activities

Contribution from noncontrolling interest of consolidated entity

—

4,587

Repayment of Loan from Rafael Pharmaceuticals

—

3,300

Proceeds from exercise of options

29

190

Proceed from sale of shares

—

7,777

Proceeds from convertible notes payable - Related Party

—

15,000

Payments for taxes related to shares withheld for employee taxes

(125)

—

Net cash (used in) provided by financing activities

(96)

30,854

Effect of exchange rate changes on cash and cash equivalents

(32)

53

Net decrease in cash and cash equivalents

(3,594)

(2,834)

Cash and cash equivalents at beginning of period

12,024

15,803

Cash and cash equivalents at end of period

$

8,430

$

12,969

Supplemental Schedule of Non-Cash Investing and Financing Activities

Adoption effect of ASU 2016-01

$

—

$

39

Beneficial conversion feature of convertible debt – Related Party

$

—

$

71

Debt and accrued interest converted to Series D Preferred Stock

$

—

$

10,848

Related Party deposit utilized to purchase Class B Common Stock

$

—

$

864

Conversion of LipoMedix Bridge Note

$

200

$

—

Conversions of Related Party convertible notes payable and accrued interest

$

15,668

$

—