RAPH 10-Q
Raphael Pharmaceutical Inc. (RAPH)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended:
OR
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
(Address of principal executive offices)
(Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A |
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.
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 during the preceding
12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the 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 | ☐ |
| ☒ | Smaller reporting company | ||
| 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
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
No
The number of shares of the registrant’s common stock, $0.01
par value, outstanding as of August 14, 2026:
TABLE OF CONTENTS
| Page | |||
| PART I | |||
| Item 1. | Financial Statements | 1 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 2 | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 10 | |
| Item 4. | Controls and Procedures | 10 | |
| PART II | |||
| Item 1. | Legal Proceedings | 11 | |
| Item 1A. | Risk Factors | 11 | |
| Item 6. | Exhibits | 11 |
i
Item 1. Financial Statements
RAPHAEL PHARMACEUTICAL INC. AND ITS SUBSIDIARY
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
AS OF JUNE 30, 2026
UNAUDITED
U.S. DOLLARS IN THOUSANDS
INDEX
- - - - - - - - - - -
1
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS
U.S dollars in thousands (except for share and per share data)
| As of June 30, | As of December 31, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Fixed assets, net | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Short-term credit from a related party | ||||||||
| Other account payables and accrued expenses | ||||||||
| Payable to related party | ||||||||
| Total current liabilities | ||||||||
| Stockholders’ equity (deficit): | ||||||||
| Common stock, $ | ||||||||
| Authorized: | ||||||||
| Issued and outstanding: | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity (deficit) | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ equity (deficit) | $ | $ | ||||||
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
F-1
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS
U.S dollars in thousands (except for share and per share data)
| Six months ended June 30, | Three months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Unaudited | Unaudited | |||||||||||||||
| Research and development expenses | $ | $ | $ | $ | ||||||||||||
| General and administrative expenses | ||||||||||||||||
| Operating loss | ||||||||||||||||
| Total financial expense | ||||||||||||||||
| Net loss | ||||||||||||||||
| Basic and diluted net loss per share | ||||||||||||||||
| Weighted average number of shares of common stock used in computing basic and diluted net loss per share | ||||||||||||||||
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
F-2
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
U.S dollars in thousands (except for share and per share data)
| Common stock | Additional paid-in | Accumulated | Total | |||||||||||||||||
| Number | Amount | capital | deficit | equity | ||||||||||||||||
| Balance as of January 1, 2025, | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Issuance of common stock and warrants | ||||||||||||||||||||
| Share based compensation | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Share based compensation | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance as of June 30, 2025 | $ | $ | ( | ) | $ | ( | ) | |||||||||||||
| Common stock | Additional paid-in | Accumulated | Total | |||||||||||||||||
| Number | Amount | capital | deficit | equity | ||||||||||||||||
| Balance as of January 1, 2026, | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance as of March 31, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance as of June 30, 2026 | $ | $ | ( | ) | $ | ( | ) | |||||||||||||
| (*) | Less than 1 thousand. |
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
F-3
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
U.S dollars in thousands (except for share and per share data)
| Six months ended June 30 | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Share-based payment in exchange for services | ||||||||
| Interest accrued on short term loan | ||||||||
| Depreciation | ||||||||
| Changes in: | ||||||||
| Other current assets | ( | ) | ||||||
| Related parties | ||||||||
| Account payables and accrued expenses | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Issuance of common stock and warrants | ||||||||
| Net cash provided by financing activities | ||||||||
| Change in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at the beginning of the period | ||||||||
| Cash and cash equivalents at the end of the period | $ | $ | ||||||
| (*) |
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
F-4
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
U.S dollars in thousands (except for share and per share data)
NOTE 1:- GENERAL
| a. |
Raphael Pharmaceutical Inc (formerly Easy Energy, Inc.) (the “Company”) was incorporated under the laws of the State of Nevada on May 17, 2007. The Company is headquartered in Tel Aviv-Jaffa, Israel.
On October 8, 2020, the Company and its stockholders entered into a Share Exchange Agreement (the “Share Exchange”) with an Israeli pharmaceutical company (“Raphael”), according to which, among other matters, all shareholders of Raphael will sell and convey the entire holdings in Raphael to the Company such that following the Share Exchange, the shareholders of Raphael will hold
On May 14, 2021,
On May 14, 2021, Raphael and the Company completed the Share Exchange pursuant to which
The Share Exchange was accounted for as a reverse recapitalization which is outside the scope ASC 805, “Business Combinations” (“ASC 805”), as the Company, the legal acquirer, is considered a non-operating public shell, and is therefore not a business as defined in ASC 805. As the shareholders of Raphael received the largest ownership interest in the Company, Raphael was determined to be the “accounting acquirer” in the Share Exchange. As a result, the historical financial statements of the Company were replaced with the financial statement of Raphael for all periods presented.
Company’s common stock began public trading on the over-the-counter market in the U.S. in January 2023 under the symbol “RAPH”. | |
| b. | Going concern and management plans |
The accompanying financial statements have been
prepared on a going-concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of
business. Since its inception, the Company has devoted substantially all of its efforts to research and development, clinical trials,
and raising capital. The Company is still in its development and clinical stage and has not yet generated revenues. The extent of the
Company’s future operating losses and the timing of becoming profitable are uncertain. As of June 30, 2026, the Company’s
accumulated deficit was $
Additional funding will be required to complete the Company’s research and development and clinical trials, to attain regulatory approvals, to begin the commercialization efforts of the Company’s product and to achieve a level of sales adequate to support the Company’s cost structure.
F-5
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
U.S dollars in thousands (except for share and per share data)
NOTE 1: GENERAL (Cont.)
Management’s plans include, but are not limited to, raising capital in the United States. There can be no assurance that it will be able to successfully raise additional financing, including in a public offering, or obtain additional financing on a timely basis or on terms acceptable to the Company, or at all.
Management expects that the Company will continue to generate losses from the development, clinical development and regulatory activities of its product, which will result in negative cash flow from operating activity. This has led management to conclude that substantial doubt about the Company’s ability to continue as a going concern exists in the event that additional funding does not occur. If such sufficient financing is not received timely, the Company will not have sufficient cash flows and liquidity to finance its business operations as currently contemplated and would then need to pursue a plan to license its assets, seek to be acquired by another entity, cease operations and/or seek bankruptcy protection. The Company’s financial statements do not reflect any adjustments that might result from the outcome of this uncertainty.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
These unaudited interim financial statements should be read in conjunction with the audited financial statements and accompanying notes for the year ended December 31, 2025. The significant accounting policies applied in the annual financial statements of the Company as of December 31, 2025, are applied consistently in these interim financial statements.
NOTE 3:- UNAUDITED INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included (consisting only of normal recurring adjustments except as otherwise discussed). For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Operating results for the six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.
F-6
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
U.S dollars in thousands (except for share and per share data)
NOTE 4:- SHAREHOLDERS’ EQUITY
During the first and the second quarters
of 2026, there were no new issuances of common stock, warrants or share-based compensation. As of June 30, 2026, the Company had
NOTE 5:- RELATED PARTY BALANCES AND TRANSACTIONS
| A. | Balances |
The following related party payables are included in accounts payable and accrued expenses.
| As of June 30, | As of December 31, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Audited) | |||||||
| Payables to related party - Officers (*) | ||||||||
| Short-term credit from related party (**) | ||||||||
| (*) |
| (**) |
The Company’s CEO and CFO are guarantees for the repayment of the loan.
| B. | Transactions |
| Six months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Consulting services | ||||||||
| Stock-based compensation | ||||||||
| CFO fee | ||||||||
NOTE 6:- SUBSEQUENT EVENTS
In accordance with ASC 855-10, the Company’s management reviewed all material events through the date of these consolidated financial statements. Effective July 16, 2026, Guy Ofir resigned from his positions as Chief Financial Officer, General Counsel and Director of the Company, and Uri Tadelis was appointed Chief Financial Officer. These changes were reported by the Company on Form 8-K. Except for the foregoing, management determined that there are no additional material subsequent events to report.
F-7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, or the quarterly Report...
On May 14, 2021, Raphael Pharmaceutical Ltd., an Israeli company, and Easy Energy, Inc., a Nevada corporation, completed a share exchange agreement, or the Share Exchange, pursuant to which the shareholders of Raphael Pharmaceutical Ltd. became the holders of 90% of the issued and outstanding share capital of Easy Energy, Inc., while Easy Energy, Inc.’s shareholders hold, following the share exchange, 10% of Easy Energy, Inc. On May 19, 2021, as agreed by the parties to the Share Exchange, Easy Energy, Inc. changed its name to Raphael Pharmaceutical Inc. Unless otherwise mentioned or unless the context requires otherwise, when used in this Quarterly Report, the terms “Raphael,” “Company,” “we,” “us,” and “our” refer to Raphael Pharmaceutical Inc. and its subsidiary, Raphael Pharmaceutical Ltd., or Raphael Israel. References to Easy Energy are to Easy Energy, Inc. Unless otherwise mentioned or unless the context requires otherwise, the information provided in this Quarterly Report on Form 10-Q relates to Raphael Israel.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws, which includes information relating to future events, future financial performance, strategies, expectations, competitive environment and regulation. Words such as “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information we have when those statements are made or our management’s good faith belief as of that time with respect to future events and are subject to significant risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:
| ● | the regulatory pathways that we may elect to utilize in seeking U.S. Food and Drug Administration, or FDA, European Medicines Agency, or EMA, and other regulatory approvals, if any; | |
| ● | obtaining (and the cost thereof) FDA and EMA approval of, or other regulatory action in Europe or the United States and elsewhere with respect to our product candidates; | |
| ● | the commercial launch and future sales of our product candidates and our advancement of product candidates for other indications in our pipeline; | |
| ● | the potential cost of our rheumatoid arthritis product candidate, or RA and RA product candidate, respectively, for patients; | |
| ● | our expectations regarding the timing of commencing clinical trials; |
| ● | our expectations regarding the supply of the active pharmaceutical ingredients for our product candidates; | |
| ● | third-party payor reimbursement for our product candidates; | |
| ● | our estimates regarding anticipated expenses, capital requirements and our needs for additional financing; | |
| ● | completion and receiving favorable results of clinical trials for our product candidates; and | |
| ● | the filing by us, and the subsequent issuance of patents to us, by the U.S. Patent and Trademark Office and other governmental patent agencies. |
2
The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that may cause our actual results to differ from those anticipated in our forward-looking statements. Please see “Item 1A. Risk Factors” in Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, for additional risks that could adversely impact our business and financial performance.
Moreover, new risks regularly emerge and it is not possible for our management to predict or articulate all the risks we face, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. All forward-looking statements included in this Quarterly Report are based on information available to us on the date of this Quarterly Report. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout this Quarterly Report.
In this Quarterly Report, unless otherwise specified, all dollar amounts are expressed in United States dollars. Except as otherwise indicated by the context, references in this Quarterly Report to “Raphael,” “Company”, “we,” “us” and “our” are references to Raphael Pharmaceutical Inc., a Nevada corporation, together with its consolidated subsidiaries.
Overview
We are a pharmaceutical research and development company focused on the discovery and clinical development of life-improving therapies based on purified cannabinoids. Our lead rheumatoid arthritis, or RA, formulation and our RaphaWell product are based on 98% purified cannabigerol, or CBG, formulated with sesame oil as the carrier.
In December 2024 we completed a proof-of-concept clinical study, or Study, for our lead product candidate for the treatment of RA in the United States. Encouraged by the promising results of the Study, we will continue to investigate our product for the treatment of autoimmune diseases.
In addition, we are aiming to develop a novel treatment for asthma. At Rambam Health Care Campus, Rambam Med-Tech Ltd., or Rambam, we have successfully conducted studies using human-derived immune cells and mouse models to advance our understanding of both COVID-19 and RA products. Due to the similarity of COVID-19 and asthma symptoms, such studies also advance our understanding of asthma and its treatment. Since the volume of COVID-19 testing has been decreasing, we decided to leverage our knowledge and understanding of COVID-19 to study asthma as well.
On February 9, 2022, we filed an application for a clinical trial with the Medical Cannabis Unit of the Ministry of Health of Israel, or MOH. On February 16 2022, we submitted an application with the Helsinki Committee at Rambam for a clinical trial in COVID-19 patients.
In November 2022, we submitted a proposal to the Ministry of Health of Israel, or MOH for a clinical trial of a cannabis-based drug intended to alleviate the deterioration of COVID-19 patients.
On March 27, 2023, the MOH accepted our proposal for a clinical trial of a cannabis-based drug intended to alleviate the deterioration of COVID-19 patients.
In April 2024 we began the Study in the U.S., leveraging insights from the pre-clinical experiments we conducted at Rambam. The Study evaluated the Company’s purified CBG-based formula, or Raphael’s Formula, in patients with active RA. The single-group Study was managed by MindMate, Inc. dba Citruslabs, or Citruslabs, and conducted in Santa Monica, California, U.S., under Institutional Review Board, or IRB, approval and in accordance with applicable FDA regulations and industry standards governing the Study. An IRB is an appropriately constituted group that has been formally designated to review and monitor biomedical research involving human subjects.
3
On December 23, 2024, upon a successful completion of the Study, we received the Study results with overall findings that emphasize the clinical potential of Raphael’s Formula and suggest that it may have beneficial effects on symptom management and overall well-being for individuals with RA. For more information about the Study results, see “Item 1. Business - Research and Clinical Development Strategy”.
In August 2025, we announced the completion of product development and the launch of our proprietary natural formula under the “RaphaWell” brand for RA support in the U.S. This followed the completion of a clinical study conducted under IRB approval, including participants with severe RA. The finalized RaphaWell formulation consists of 98% purified CBG with sesame oil as the carrier and is intended to be sold as a standalone, clinically tested dietary supplement targeting the wellness market. The formulation is plant-derived and was associated with no reported side effects during the Study. RaphaWell has undergone clinical testing in the Study described above; these study results do not constitute FDA approval of RaphaWell as a drug.
In November 2025, we, jointly with the Medical Cannabis Research and Innovation Center and Rambam, filed a provisional patent application with the USPTO titled “Raphael Pharmaceutical, Inc. / Rambam MedTech Formula for Treating Neutrophil-Dominant Autoimmune Diseases (including RA)” (Application No. 63/911,729). The application is directed to the use of a formulation centered on highly purified CBG and sesame oil in connection with neutrophil-dominant autoimmune diseases, including our lead RA program, as well as psoriatic arthritis, inflammatory bowel disease, systemic lupus erythematosus with neutrophil involvement, and gout.
As we move forward, our focus will be on further investigating mechanisms and refining Raphael’s Formula through continued pre-clinical research. Our goal is to ensure that the formula meets all the necessary standards and regulations set forth by the FDA, allowing us to progress towards clinical treatments.
Our vision is to emerge as a pioneering company at the forefront of developing pharmaceutical and wellness formulations that harness the potential of purified CBG and related cannabinoid science. Our primary mission is to address unmet needs associated with inflammatory conditions, with a particular focus on autoimmune diseases and RA.
By leveraging our expertise in this field, we are committed to providing innovative solutions to improve the lives of those afflicted with these challenging medical conditions. Through our dedication to research, development, and compassionate care, we aim to contribute significantly to the well-being of patients worldwide, offering them much-needed relief and hope for a better future.
In order to achieve our goal, we have and will continue to build an experienced team of senior executives and scientists, with experience in all facets of pharmaceutical research and development, drug formulation, clinical trial execution and regulatory submissions. We intend to leverage the knowledge of our team in order to complete the clinical trials needed to receive approvals of our product candidates from applicable regulatory authorities.
Initially, we intend to obtain approvals for our product candidates from the FDA, and the Medical Cannabis Unit of the MOH. Upon obtaining FDA approvals, or in the event that we are not successful in obtaining such approvals, we intend to apply for European Medicines Agency, or EMA, and other countries’ governmental regulatory agencies approvals for our product candidates. If we are successful in obtaining FDA approvals for our product candidates, we intend to enter into royalty agreements with good manufacturing practice, or GMP, approved medical manufactures and distributors, having them use our medical formulas for the purpose of growing, cultivating, manufacturing, and distributing Raphael Pharmaceutical medical indications in their designated territories.
4
For this purpose, in October 2022, we entered into an agreement with the Medical Cannabis Research and Innovation Center at Rambam for the development of a new, patentable formulation that combines purified cannabinoids to treat rheumatoid diseases.
The overall objective of this study is to identify a novel cannabinoid based patentable formulation to treat Rheumatoid diseases. Specifically, to investigate combination of purified cannabinoids to downregulate inflammation related to Rheumatoid diseases. We propose to base our study on data derived from Dr. Igal Louria-Hayon’s studies (Helsinki # 0442-20-RMB) on the evaluation of the immune regulation properties of cannabinoids on the immune system and the data derived from the cannabinoids receptors study (Helsinki # 0331-20-RMB). We will analyze the activation of cannabinoid receptors on mouse models and will study the role of purified cannabinoid as a potential to develop a novel patentable formulation to treat RA.
Our current RA development platform focuses on highly purified CBG as the principal cannabinoid component, formulated with sesame oil. Our research program has included pre-clinical work at Rambam and a U.S. proof-of-concept clinical study in patients with active RA. We intend to continue evaluating the formulation, its mechanism of action and its potential applications through additional research and, where applicable, regulatory pathways.
Our development strategy is centered on our proprietary purified CBG formulation and the scientific data generated through our research collaborations and clinical work.
We believe that our purified CBG-based platform may offer a differentiated approach for further research and product development. The results of our prior studies do not guarantee that we will receive regulatory approval for any pharmaceutical product candidate or that any future study will produce favorable results.
After four successful years of pre-clinical research at the laboratories of Rambam, which paved the way for the Study in RA patients, we are now advancing our efforts to further develop our product candidates.
Following the completion of the Study, we intend to submit an Investigational New Drug, or IND, application to the FDA and MOH. See “Item 1. Business - Research and Clinical Development Strategy - Clinical Development Plan” for additional information on the ongoing pre-clinical trial and our planned clinical trial for our RA product candidate.
In addition, with respect to our COVID-19 product candidate, our clinical research partners have focused on the effect of cannabinoids and cannabis extracts on immune cells that induce acute inflammation. This work began at the pre-clinical level in immune cell models and, following positive findings showing downregulation of pro-inflammatory cytokines, was completed successfully. Following completion of the pre-clinical study, a mouse model was conducted to analyze acute inflammation resembling the immunopathology of COVID-19. The mouse model was successfully completed, and we registered for a clinical trial in patients with the MOH. As a pharmaceutical research and clinical development company, we do not own or operate, and currently do not intend to create, an in-house team to manufacture and commercialize our pharmaceutical drug products, if any, that receive regulatory approval allowing for commercialization. We currently rely, and expect to continue to rely, on third parties for the manufacturing of our product candidates for preclinical and clinical testing, as well as for commercial manufacturing of any pharmaceutical drug products for which we may receive regulatory approval. Subject to the receipt of such regulatory approvals, we intend to cooperate with manufacturers and other third parties to manufacture and commercialize approved pharmaceutical drug products.
Critical Accounting Estimates
Our financial statements are prepared in accordance with U.S. GAAP. There are no critical accounting estimates for the years ended December 31, 2025, and 2024. Also, please see Note 2 of Part I, Item 1 of this Quarterly Report on Form 10-Q for the summary of significant accounting policies.
5
Results of Operations
Three months ended June 30, 2026, compared to the three months ended June 30, 2025
Revenues. We had no revenues during the three months ended June 30, 2026, and June 30, 2025.
Research and Development Expenses. Our research and development expenses totaled $40,000 for the three months ended June 30, 2026, representing a decrease of $101,000, or 72%, compared to $141,000 for the three months ended June 30, 2025. The decrease was primarily attributable to decrease in CTO service expenses and expenses due to the research agreement with Rambam.
General and Administrative Expenses. Our general and administrative expenses totaled $159,000 for the three months ended June 30, 2026, representing a decrease of $15,000, or 9%, compared to $174,000 for the three months ended June 30, 2025. The decrease was primarily due to decrease in professional services in the second quarter.
Operating Loss. Our operating loss totaled $199,000 for the three months ended June 30, 2026, representing a decrease of $116,000, or 37%, compared to $315,000 for the three months ended June 30, 2025. The decrease was primarily due to the decrease in our research and development expenses and in our general and administrative expenses.
Financial Expense, net. We recognized financial expense, net, of $24,000 for the three months ended June 30, 2026, representing an increase of $17,000, or 243%, compared to financial expense, net, of $7,000 for the three months ended June 30, 2025. The increase was primarily due to a risk premium expense on a loan from a related party and exchange-rate differences.
Net Loss. As a result of the foregoing, our net loss totaled $223,000 for the three months ended June 30, 2026, representing a decrease of $99,000, or 31%, compared to $322,000 for the three months ended June 30, 2025. The decrease was primarily due to decreases in our research and development expenses and our general and administrative expenses, partially offset by higher financial expense.
Six months ended June 30, 2026 compared to the six months ended June 30, 2025
Revenues. We had no revenues during the six months ended June 30, 2026 and June 30, 2025.
Research and Development Expenses. Our research and development expenses totaled $77,000 for the six months ended June 30, 2026, representing a decrease of $136,000, or 64%, compared to $213,000 for the six months ended June 30, 2025. The decrease was primarily attributable to decrease in CTO service expenses and expenses due to the research agreement with Rambam.
General and Administrative Expenses. Our general and administrative expenses totaled $345,000 for the six months ended June 30, 2026, representing a decrease of $182,000, or 35%, compared to $527,000 for the six months ended June 30, 2025. The decrease was primarily due to decrease in professional services.
Operating Loss. Our operating loss totaled $422,000 for the six months ended June 30, 2026, representing a decrease of $318,000, or 43%, compared to $740,000 for the six months ended June 30, 2025. The decrease was due to the decrease in our research and development expenses and a decrease in our general and administrative expenses.
Financial Expense, net. We recognized financial expense, net of $30,000 for the six months ended June 30, 2026, representing an increase of $19,000, or 173%, compared to $11,000 for the six months ended June 30, 2025. The increase was primarily due to a risk premium expense of a loan from a related party and exchange differences.
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Net Loss. As a result of the foregoing, our net loss totaled $452,000 for the six months ended June 30, 2026, representing a decrease of $299,000, or 40%, compared to $751,000 for the six months ended June 30, 2025. The decrease was primarily due to lower research and development expenses and lower general and administrative expenses, partially offset by higher financial expense.
Liquidity and Capital Resources
Since inception, we have funded our operations primarily through our founder’s capital and capital received from Easy Energy, Inc. As of June 30, 2026, we had $1,000 in cash and cash equivalents and have invested most of our available cash funds in ongoing cash accounts.
Net cash used in operating activities was $44,000 for the six months period ended June 30, 2026, compared with net cash used in operating activities of $239,000 for the corresponding period in 2025. The $195,000 decrease in the net cash used in operating activities during the six months period ended June 30, 2026, compared to the same period in 2025, was primarily due to a decrease in net loss for the period in the amount of $299,000, an increase in account payables and accrued expenses in the amount of $60,000, an increase in account payables of related parties in the amount of $28,000 and offset by a decrease in Share-based payment in exchange for services in the amount of $205,000.
There was no net cash used in investing activities for the six months period ended June 30, 2026 and for the same period in 2025.
Net cash provided by financing activities for the six months period ended June 30, 2026 was $0 compared to $240,000 for the same period in 2025. The decrease in net cash provided by financing activities during the six months period ended June 30, 2026, compared to the corresponding period in 2025, was mainly due to a decrease in funds received from issuance of shares and warrants.
On December 24, 2024, we received a short-term loan from certain lender in a total of NIS 150 thousand ($41 thousand, based on the NIS-USD exchange rate on December 24, 2024, the date the agreement was signed). The loan was originally repayable within four months and included a risk premium of NIS 12 thousand, exclusive of value-added tax (VAT). Since we did not repay the loan within the original timeframe, the total interest and penalties incurred amounted to NIS 54 thousand.
During the year ended December 31, 2025, we repaid an aggregate amount of NIS 96.9 thousand. As of December 31, 2025, the remaining balance of the loan, including accrued interest, is NIS 107.1 thousand ($34 thousand, based on the NIS-USD exchange rate on December 31, 2025), and is included within short-term credit from a related party in the consolidated balance sheets.
Our Chief Executive Officer and Chief Financial Officer are guarantors for the repayment of the loan.
Our Chief Executive Officer occasionally makes repayments of the loan on behalf of the company.
During the Period ended June 30, 2026, we accrued an aggregate amount of NIS 20.1 thousand. As of June 30, 2026, the remaining balance is NIS 127.2 thousand ($42.7 thousand, based on the NIS-USD exchange rate on June 30, 2026).
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Off Balance Sheet Arrangements
Rambam Research Agreement
On July 17, 2019, we entered into a sponsored Research Agreement with Rambam, pursuant to which the Company agreed to fund a research project, to be performed by Rambam, with a research plan aimed at identifying the effects of different cannabis strains on the function of immune cells. On October 28, 2020, the Company and Rambam agreed to expand the research plan to study the anti-inflammatory activities of cannabis extracts in an RA mouse model. On February 15, 2021, the Company and Rambam agreed to further expand the research plan to study the effect of cannabis extracts on the immunopathology of the COVID-19 disease. The sponsored Researched Agreement is for an initial term of 48 months. On October 23, 2022, the Company and Rambam entered into a supplement to the Research Agreement, or the Supplement Agreement, pursuant to which the Company exercised an option to extend the Research Agreement by additional two years until December 31, 2024.Pursuant to the Research Agreement, we agreed to pay Rambam $1.4 million in four equal payments, due on the first day of August on each successive year from 2019 through 2022. Pursuant to the Supplement Agreement, we agreed to pay Rambam $960,000 plus VAT in four biannual payments from May 2023 through December 2024. Such amount was later amended to $470,000 plus VAT out of which we paid $120,000. Furthermore, in accordance with the terms of the Research Agreement, we and Rambam will have joint ownership of any IP created as a result of research programs covered by such agreement. In connection with the Research Agreement, Rambam agreed not to work, study or develop any technologies with other entities that compete with our work with Rambam for our COVID-19 product candidate or RA product candidate for a term of three and seven years, respectively, from the end of the parties’ collaboration with respect to the COVID-19 product candidate and seven years from the end of the term of the Research Agreement with respect to the RA product candidate. Subject to commercial sales of any product candidate using the IP created as a part of the research covered by such agreement, Raphael Israel is required to pay Rambam a royalty in an amount equal to 6% of all net sales, subject to certain deductions, such as taxes paid by any purchaser, transportation and shipping costs, and other customary deductions.
On December 25, 2023, the Company received an extension to pay the remaining $350,000 pursuant to the Research Agreement until the end of June 2024, however, since the remaining amount was not paid on time, an additional amount of $57,000 was added to the remaining balance. On July 28, 2025, the Company received an extension to pay the remaining balance until the end of April 2026. As of the date of this Quarterly Report, the Company has made all four of the four equal payments due pursuant to the Research Agreement, for a total amount of $1.4 million and $295,000 for the Supplement Agreement (out of the remaining $577,000). As of the date of this Quarterly Report, the outstanding balance is approximately $319,000 and VAT (based on the NIS-USD exchange rate on June 30, 2026).
Service Agreement with our Chief Technology Officer
Our Chief Technology Officer, Dr. Igal Louria Hayon, provides services to our Company pursuant to a service agreement, by and between the Company and Dr. Igal Louria Hayon. Pursuant to the terms thereof Dr. Hayon provides consulting services the Company to engage with an array of science consultants and to coordinate collaborations with hospitals on medical cannabis research. Pursuant to such agreement, we agreed to pay our Chief Technology Officer 15% of the Company’s net royalty’s income from worldwide sales of any of the Company’s cannabis-based medical indications treating COVID-19. Pursuant to Dr. Hayon’s service agreement, in the event we will apply for any clinical trial of cannabis-based treatment or will begin any other new cannabis related research, the Corporation will grant Dr. Hayon warrants to purchase up to 350,000 shares of Common Stock at an exercise price of $0.01. On May 1, 2024, the milestone was met and the Company granted to Dr. Igal Louria Hayon warrants to purchase up to 350,000 shares of Common Stock of the Company at an exercise price of $0.01. The warrants were exercised in November 2025.
On March 3, 2025, we entered into a new service agreement with our Chief Technology Officer, substantially on the same terms as the agreement described above, effective as of January 1, 2025 Pursuant to such service agreement, we agreed to pay our Chief Technology Officer a monthly fee of $24,000 and to reimburse him with certain expenses related to his scientific work.
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On December 27, 2025 we extended such service agreement with our Chief Technology Officer, effective as of January 1, 2026 and until December 31, 2027. Pursuant to the extension to such service agreement, we agreed to pay our Chief Technology Officer a monthly fee of $12,000 and to reimburse him with certain expenses related to his scientific work.
The Company may terminate the service agreement prior to the expiration of its term upon 120 days advance notice and the payment to Dr. Hayon of a termination fee equal to the monthly fees payable through the expiration of its term.
Except for the above, we have not engaged in any off-balance sheet arrangements, such as the use of unconsolidated subsidiaries, structured finance, special purpose entities or variable interest entities.
We do not believe that our off-balance sheet arrangements and commitments have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Current Outlook
We have financed our operations to date primarily through proceeds from our founder’s capital and issuance of shares and warrants. We have incurred losses and generated negative cash flows from operations since inception. To date we have not generated revenue, and we do not expect to generate significant revenues from the sale of our products in the near future.
We do not believe that our current cash on hand will be sufficient to fund our projected operating requirements. This raises substantial doubt about our ability to continue as a going concern. At this time, there is no guarantee that we will be able to obtain an adequate level of financial resources required for the short and long-term support of our operations or that we will be able to obtain additional financing as needed, or meet the conditions of such financing, or that the costs of such financing may not be prohibitive. These conditions raise substantial doubt about our ability to continue as a going concern for a period within one year from the date of the financial statements included elsewhere in this Quarterly Report.
As of June 30, 2026, our cash and cash equivalents were $1,000. We believe that our existing cash and cash equivalents will not be sufficient to fund our projected cash requirements through the third quarter of 2026. Therefore, we will require significant additional financing in the near future to fund our operations. We currently anticipate that we will require approximately $1 million for research and development activities over the course of the next 12 months. We also anticipate that we will require approximately $1 million for additional clinical development, commercialization preparation and general Company operating costs over such 12-month period.
In addition, our operating plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than planned. Our future capital requirements will depend on many factors, including:
| ● | our research and development efforts, including our ability to finish research and development projects or product development within the allotted or expected timeline; |
| ● | the cost, timing and outcomes of seeking to commercialize our products in a timely manner; |
| ● | our ability to generate cash flows; |
| ● | economic weakness, including inflation, or political instability in particular foreign economies and markets; |
| ● | government regulation in our industry, and more specifically, the costs and timing of obtaining regulatory approval or permits to launch our technology in various geographical markets; and |
| ● | the costs of, and timing for, establishing and strengthening manufacturing, packaging and distribution arrangements for our product candidates and RaphaWell. |
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Until we can generate significant revenues, if ever, we expect to satisfy our future cash needs through our existing cash, cash equivalents and short-term deposits, loans, or debt or equity financings. We cannot be certain that additional funding will be available to us on acceptable terms, if at all. If funds are not available, we may be required to delay, reduce the scope of, or eliminate research or development plans for, or commercialization efforts with respect to, one or more applications of our products. This may raise substantial doubts about our ability to continue as a going concern.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 4. Controls and Procedures
Management’s Conclusions Regarding Effectiveness of Disclosure Controls and Procedures
As of June 30, 2026, we conducted an evaluation, under the supervision and participation of management including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended). There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.
Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level as of June 30, 2026.
Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the fiscal quarter ended June 30, 2026, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even internal controls determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. The effectiveness of our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the possibility of human error, and the risk of fraud. The projection of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies may deteriorate. Because of these limitations, there can be no assurance that any system of internal control over financial reporting will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.
This Quarterly Report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to rules of the Commission that exempt from this requirement issuers that are neither accelerated filers nor large accelerated filers.
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PART II -
Item 1. Legal Proceedings
There have been no material changes to our legal proceedings as described in “Item 3. Legal Proceedings” in our Annual Report on Form 10-K, as filed with the SEC on March 31, 2026.
Item 1A. Risk Factors
There have been no material changes to our risk factors from those disclosed in “Item 1A. Risk Factors” in our Annual Report on Form 10-K, as filed with the SEC on March 31, 2026.
Item 6. Exhibits
EXHIBIT INDEX
| Exhibit No. | Description | |
| 31.1* | Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a). | |
| 31.2* | Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a). | |
| 32.1* | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350. | |
| 32.2* | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350. | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104* | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) |
| * | Filed herewith. |
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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.
| RAPHAEL PHARMACEUTICAL INC. | ||
| Date: August 14, 2026 | By: | /s/ Shlomo Pilo |
| Name: | Shlomo Pilo | |
| Title: | Chief
Executive Officer (Principal Executive Officer) | |
| Date: August 14, 2026 | By: | /s/ Uri Tadelis |
| Name: | Uri Tadelis | |
| Title: | Chief Financial Officer | |
| (Principal Financial Officer) | ||
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