10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to

Commission file number: 000-53002

Raphael Pharmaceutical Inc.

(Exact name of registrant as specified in its charter)

Nevada	26-0204284

| (State or other jurisdiction of | (I.R.S. Employer |

| incorporation or organization) | Identification No.) |

4 Lui Paster Street

Tel Aviv-Jaffa, Israel 6803605

(Address of principal executive offices)

(Zip Code)

(+972) 52-775-5072

(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	N/A	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. 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 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, 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	☐

| Non-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 10, 2022: 15,225,540

TABLE OF CONTENTS

		Page
	PART I
Item 1.	Financial Statements	F-1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6
Item 4.	Controls and Procedures	6
	PART II
Item 1.	Legal Proceedings	7
Item 1A.	Risk Factors	7
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7
Item 6.	Exhibits	8

i

RAPHAEL PHARMACEUTICAL INC. AND ITS SUBSIDIARY

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2022

UNAUDITED

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U.S. DOLLARS IN THOUSANDS

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INDEX

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	Page
Condensed Consolidated Interim Balance Sheets	F-2
Condensed Consolidated Interim Statements of Comprehensive Loss	F-3
Condensed Consolidated Interim Statements of Changes in Stockholders’ Equity	F-4
Condensed Consolidated Interim Statements of Cash Flows	F-5
Notes to Condensed Consolidated Interim Financial Statements	F-6 – F-8

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F-1

RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY

CONDENSEDCONSOLIDATED INTERIM BALANCE SHEETS

U.S dollars in thousands (except for shareand per share data)

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			As of<br><br> December 31,
			2021
			(Audited)
Assets
Current assets:
Cash and cash equivalents	135		$	153
Other current assets	61			269
Total current assets	196			422
Total assets	196		$	422
Liabilities and stockholders’ equity
Current liabilities:
Other account payables and accrued expenses	64			272
Payable to related party	14			22
Total current liabilities	78			294
Stockholders’ equity:
Common<br> stock, 0.01 par value:
Authorized:<br> 21,020,560 shares at June 30, 2022 and December 31, 2021
Issued and outstanding: 14,225,540 and 12,970,540 at June 30, 2022 and December 31, 2021, respectively;	143			130
Additional paid-in capital	3,454			2,665
Accumulated deficit	(3,479	)		(2,667	)
Total stockholders’ equity	118			128
Total liabilities and stockholders’ equity	196		$	422

All values are in US Dollars.

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

F-2

RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY

CONDENSEDCONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS

U.S dollars in thousands (except for shareand per share data)

	Six months ended<br> <br>June 30,				Three months ended<br> <br>June 30,
	2022		2021		2022		2021
	Unaudited				Unaudited
Research and development expenses	$	170	$	391	$	84	$	222
General and administrative expenses		617		246		528		163
Operating loss		787		637		612		385
Total financial expense		25		5		15		2
Net loss		812		642		627		387
Basic and diluted net loss per share		0.06		0.06		0.05		0.04
Weighted average number of shares of common stock used in computing basic and diluted net loss per share		13,342,679		10,136,451		13,647,151		10,813,649

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

F-3

RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY

CONDENSEDCONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

U.S dollars in thousands (except for shareand per share data)

****	Common stock				Additional paid-in		Accumulated		****	Total		****
****	Number		Amount		capital		deficit		****	equity		****
Balance as of January 1, 2022		12,970,540	$	130	$	2,665	$	(2,667	)	$	128
Issuance of common stock and warrants		320,000		3		157		-			161
Net loss		-		-		-		(185	)		(185	)
Balance as of March 31, 2022		13,290,540	$	133	$	2,822	$	(2,852	)	$	103
Issuance of common stock and warrants		655,000		7		345		-			352
Issuance of common stock in exchange for services		280,000		3		287		-			290
Net loss		-		-		-		(627	)		(627	)
Balance as of June 30, 2022		14,225,540		143	$	3,454	$	(3,479	)	$	118
****	Common stock				Additional paid-in		Accumulated		****	Total		****
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****	Number		Amount		capital		deficit		****	equity		****
Balance as of January 1, 2021 (*)		9,459,253	$	9	$	991	$	(1,043	)	$	(43	)
Net loss		-		-		-		(255	)		(255	)
Balance as of March 31, 2021		9,459,253	$	9	$	991	$	(1,298	)	$	(298	)
Issuance of share capital		1,542,497		2		368		-			370
Effect of reverse recapitalization transaction		1,051,028		1		505		-			506
Net loss		-		-		-		(387	)		(387	)
Balance as of June 30, 2021		12,052,778	$	12	$	1,864	$	(1,685	)	$	191
(*)	Number of shares has been retroactively adjusted based on the<br>equivalent number of shares received by the accounting acquirer in the reverse recapitalization transaction and to reflect adjustment<br>to the share par value (refer to Note 1a).
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The accompanying notes are an integral part of the condensed consolidated interim financial statements.

F-4

RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY

CONDENSEDCONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

U.S dollars in thousands (except for shareand per share data)

	Six months Ended June 30,
	2022			2021
Cash flows from operating activities
Net loss	$	(812	)	$	(642	)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based payment in exchange for services		290			-
Changes in:
Other current assets		258			199
Account payables		(66	)		9
Net cash used in operating activities		(330	)		(434	)
Cash flows from investing activities
Net cash provided by investing activities		-			-
Cash flows from financing activities
Receipt of a loan		-			174
Proceeds from issuance of common stock and warrants		312			370
Cash acquired in the reverse recapitalization		-			13
Net cash provided by financing activities		312			557
Change in cash and cash equivalents		(18	)		123
Cash and cash equivalents at the beginning of the period		153			95
Cash and cash equivalents at the end of the period	$	135		$	218
Supplement disclosure of non-cash activities:
Current assets (excluding cash and cash equivalents)		-			(531	)
Current liabilities		-			38
Reverse recapitalization effect on equity		-			506
Cash acquired in connection with reverse recapitalization transaction		-			13

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

F-5

RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY

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NOTES TOCONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S dollars in thousands (except for shareand per share data)

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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. From April 1, 2011 until December 31, 2019, the Company was not active.<br> <br><br> <br>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 90% of the issued and outstanding common stock of the Company, and the existing shareholders of the Company will hold the remaining 10% of the issued and outstanding common stock.<br> <br><br> <br>On May 14, 2021, the Company’s board of directors and stockholders approved a 1-for-100 reverse split of the Company’s common stock, which was implemented and became effective as of May 14, 2021. The reverse split combined each one hundred (100) shares of the Company’s issued and outstanding Common stock into one share of common stock. No fractional shares were issued in connection with the reverse split, and any fractional shares resulting from the reverse split were rounded up to the nearest whole share.<br> <br><br> <br>On May 14, 2021, Raphael and the Company, completed the Share Exchange pursuant to which 9,459,253 common stock were issued to the shareholders of Raphael so that they became the holders of 90% of the issued and outstanding common stock of the Company immediately after the Share Exchange while the Company’s shareholders hold, following the Share Exchange, 1,051,028 common stock which represents 10% of the Company. On May 19, 2021, as agreed by the parties to the Share Exchange, the Company changed its name to Raphael Pharmaceutical Inc. Following such Share Exchange, Raphael’s activities are the sole activities of the Company.<br> <br><br> <br>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.
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, 2022, the Company's accumulated deficit was $3,479. The Company has funded its operations to date primarily through equity financing and the issuance of a loan.  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-6

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RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY

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NOTES TOCONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S dollars in thousands (except for shareand per share data)

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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. In the event the Company is unable to have its loan converted as planned or its repayment date deferred, the Company will not have sufficient cash flows and liquidity to finance its business operations as currently contemplated. If such sufficient financing or payment deferral is not received timely, the Company 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:-	SIGNIFICANTACCOUNTING POLICIES

These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited financial statements and accompanying notes for the year ended December 31, 2021. The significant accounting policies applied in the annual financial statements of the Company as of December 31, 2021, are applied consistently in these interim financial statements.

NOTE 3:-	UNAUDITEDINTERIM 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, 2021. Operating results for the six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

NOTE 4:-	SHAREHOLDERS’EQUITY
a.	On<br>March 2, 2022, the Company raised $10 and issued 50,000 shares of common stock and 30,000 warrants to purchase common stock at an exercise<br>price of $1.25 per share to certain investors of the Company. The warrants were classified as equity and are exercisable until February<br>28, 2023.
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b.	On March 15, 2022, the Company issued 270,000 shares of common stock and 180,000 warrants to purchase common stock at an exercise price of $1.13 per share to Company’s service provider in consideration of past services at the amount of $150. The warrants were classified as equity and are exercisable until December 31, 2023.

F-7

RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY

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NOTES TOCONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

U.S dollars in thousands (except for shareand per share data)

NOTE 4:-	SHAREHOLDERS’EQUITY (Cont.)

c.	On April 28, 2022, the Company signed an agreement to raise $50 and to issue 300,000 shares of common stock and 100,000 warrants to purchase common stock at an exercise price of $0.7 per share to certain investor of the Company. The warrants are exercisable until April 30, 2024.The funds were received in July 2022.

d.	On April 28, 2022 the Company and a certain investor signed a finder fee agreement according to which the Company will issue to the investor 70,000 shares of common stock and 100,000 warrants to purchase common stock at an exercise price of $0.5 per share. The warrants will be exercisable until April 30, 2024. The agreement will become effective once the investor will provide the Company with an equity investment of $550.
e.	On May 2, 2022, the Company signed several agreements to raise $250 and to issue 250,000 shares of common stock and 100,000 warrants to purchase common stock at an exercise price of $1.13 per share to certain investors of the Company. The warrants are exercisable until April 30, 2024. The funds were received in May 2022.<br> <br><br> <br>In addition, it was agreed that the Company will issue 250,000 shares of common stock and 100,000 warrants to purchase common stock at an exercise price of $1.13 per share to a certain investor in consideration of additional $250 if the Company’s stock will be publicly traded on the OTC market prior to August 15, 2022. The additional warrants once issued will be exercisable for 2 years.
f.	On June 27, 2022, the Company signed an agreement to raise $50 and to issue 35,000 shares of common stock to certain investor of the Company.
g.	On June 30, 2022, the Company issued 280,000 shares of common stock and 105,000 warrants to purchase common stock at an exercise price of $1.12 per share to Company’s former director for his services. The warrants will be exercisable until June 30, 2024.

F-8

Item 2. Management’s Discussion and Analysisof Financial Condition and Results of Operations

The following discussionand analysis of our financial condition and results of operations should be read in conjunction with the accompanying condensed consolidatedfinancial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q.

On May 14, 2021, RaphaelPharmaceutical Ltd., an Israeli company, and Easy Energy, Inc., a Nevada corporation, completed a share exchange agreement, or the ShareExchange, pursuant to which the shareholders of Raphael Pharmaceutical Ltd. became the holders of 90% of the issued and outstanding sharecapital 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. Unlessotherwise mentioned or unless the context requires otherwise, when used in this prospectus, the terms “Raphael,” “Company,”“we,” “us,” and “our” refer to Raphael Pharmaceutical Inc. and its subsidiary, Raphael PharmaceuticalLtd., or Raphael Israel. References to Easy Energy are to Easy Energy, Inc. Unless otherwise mentioned or unless the context requiresotherwise, 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,” which include 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 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;

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●	our expectations regarding the supply of the active pharmaceutical ingredient 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;
●	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;
●	our expectations regarding the impact of the COVID-19 pandemic, including on our planned clinical trials, operations and financial position;

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. For a discussion of these and other risks that relate to our business and investing in our common stock, you should carefully review the risks and uncertainties described in this Quarterly Report on Form 10-Q, and those described from time to time in our future reports filed with the Securities and Exchange Commission. The forward-looking statements contained in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by this cautionary statement. We do not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events.

Overview

We are a pharmaceutical drug research and development company focused on the discovery and clinical development of life-improving drug therapies based on cannabinoids, including cannabidiol, or CBD, oil. Unless indicated otherwise, we plan on using oil derived from cannabidiol, or CBD, strains with low levels of Tetrahydrocannabinol, or THC. All references to the use of CBD in our product candidates refer to CBD strains with less than 0.3% of THC.

We are currently in the pre-clinical development stage for our lead product candidate, our rheumatoid arthritis, or RA, product candidate for the treatment of RA. In addition, we are aiming to develop a pharmaceutical drug product for the treatment of hyperinflammatory syndrome inflammation related to COVID-19, or our COVID-19 product candidate, which may be based on data or studies related to our RA product candidate. Our goal is to become a leader in development of CBD oil-based pharmaceutical drug products for the treatment of indications in which we believe there is a high unmet medical need in a range of disorders, including those related to inflammation in the body, including RA and COVID-19.

The Company was incorporated in the State of Nevada in May 2007 and was formerly known as Easy Energy, Inc. On May 14, 2021, Easy Energy and Raphael Israel completed the Share Exchange, as a result of which, Raphael Israel’s shareholders own 90% of our Company and Easy Energy’s shareholders hold the remaining 10%. Raphael Israel was incorporated in 2019 in the State of Israel and has focused to date on developing its lead product candidate for the treatment of RA. Easy Energy did not have any ongoing business or operations before the Share Exchange and following the Share Exchange we adopted Raphael Israel’s business plan.

Initially, we intend to obtain approvals for our product candidates from the FDA and Medical Cannabis Unit of the Ministry of Health of Israel. Upon obtaining FDA approvals, or in the event that we are not successful in obtaining such approvals, we intend to apply for 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 using our medical formulas strains for the purpose of growing, cultivating, manufacturing, and distributing Raphael Pharmaceutical medical indications in their designated territories.

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Critical Accounting Policies

Our financial statements are prepared in accordance with US GAAP. There are no critical accounting estimates for the years ended December 31, 2021 and 2020. 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.

Results of Operations

Three months ended June 30, 2022 compared tothe three months ended June 30, 2021

Revenues. We had no revenues during the three months ended June 30, 2022 and June 30, 2021.

Research and DevelopmentExpenses. Our research and development expenses totaled $84,000 for the three months ended June 30, 2022, representing a decrease of $138,000, or 62%, compared to $222,000 for the three months ended June 30, 2021. The decrease was primarily attributable to a decrease in pre-clinical trial expenses, mainly due to the conclusion of the pre-clinical study in mice for Company’s RA product candidate in 2021.

General and AdministrativeExpenses. Our general and administrative expenses totaled $528,000 for the three months ended June 30, 2022, representing an increase of $365,000, or 223%, compared to $163,000 for the three months ended June 30, 2021. The increase was primarily due to retirement fees paid in stock to one of the Company’s directors in the three months ended June 30, 2022, which was partially offset by lower professional services expenses in the corresponding period in 2021.

Operating Loss. Our operating loss totaled $612,000 for the three months ended June 30, 2022, representing an increase of $227,000, or 58%, compared to $385,000 for the three months ended June 30, 2021.

Financial Expense. We recognized financial expense of $15,000 for the three months ended June 30, 2022, representing an increase of $13,000, or 650%, compared to $2,000 for the three months ended June 30, 2021. The increase was primarily due to an increase in exchange rate differences.

Net Loss. As a result of the foregoing, our net loss totaled $627,000 for the three months ended June 30, 2022, representing an increase of $240,000, or 62%, compared to $387,000 for the three months ended June 30, 2021.

Six months ended June 30, 2022 compared tothe six months ended June 30, 2021

Revenues. We had no revenues during the six months ended June 30, 2022 and June 30, 2021.

Research and DevelopmentExpenses. Our research and development expenses totaled $170,000 for the six months ended June 30, 2022, representing a decrease of $221,000, or 56%, compared to $391,000 for the six months ended June 30, 2021. The decrease was primarily attributable to a decrease in pre-clinical trial expenses, mainly due to the conclusion of the pre-clinical study in mice for Company’s RA product candidate in 2021.

General and AdministrativeExpenses. Our general and administrative expenses totaled $617,000 for the six months ended June 30, 2022, representing an increase of $371,000, or 150%, compared to $246,000 for the six months ended June 30, 2021. The increase was primarily due to retirement fees paid in stock to one of the Company’s directors in the three months ended June 30, 2022, which was partially offset by lower professional services expenses in the corresponding period in 2021.

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Operating Loss. Our operating loss totaled $787,000 for the six months ended June 30, 2022, representing an increase of $170,000, or 26%, compared to $637,000 for the six months ended June 30, 2021.

Financial Expense. We recognized financial expense of $25,000 for the six months ended June 30, 2022, representing an increase of $20,000, or 400%, compared to $5,000 for the six months ended June 30, 2021. The increase was primarily due to an increase in exchange rate differences.

Net Loss. As a result of the foregoing, our net loss totaled $812,000 for the six months ended June 30, 2022, representing an increase of $170,000, or 26%, compared to $642,000 for the six months ended June 30, 2021.

Liquidity and Capital Resources

Since inception, we have funded our operations primarily through our founder’s capital and capital received from Easy Energy. As of June 30, 2022, we had $135,000 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 $330,000 for the six months period ended June 30, 2022, compared with net cash used in operating activities of $434,000 for the same period in 2021. The $104,000 decrease in the net cash used in operating activities during 2022, compared to 2021, was primarily the result of a decrease in pre-clinical trial expenses.

There was no net cash used in investing activities for the six months period ended June 30, 2022 and for the same period in 2021.

Net cash provided by financing activities for the six months period ended June 30, 2022 was $312,000 compared to $557,000 for the same period in 2021. The decrease in net cash provided by financing activities during 2022 compared to 2021 was mainly due to decrease in proceeds from issuance of common stock and due to decrease in receipt of loan funds.

Off Balance Sheet Arrangements

Rambam Research Agreement

Pursuant to the Research Agreement with Rambam MT, the Company agreed to fund a research project, to be performed by Rambam MT, 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 MT 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 MT agreed to further expand the research plan to study the effect of cannabis extracts on the immunopathology of the COVID-19 disease. The Research Agreement is for an initial term of 48 months.

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. Furthermore, in accordance with the terms of the Research Agreement, we and Rambam MT 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 MT agreed not to work, study or develop any technologies with other entities that compete with our work with Rambam MT 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.

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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 MT 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.

As of June 30, 2022, the Company has made three of the four equal payments due pursuant to the Research Agreement, for a total amount of $1,050,000.

Way of Life Cannabis Agreement

In October 2020, Raphael Israel entered into an engagement agreement with Wolc, pursuant to which, subject to its completing the Share Exchange with Easy Energy, Raphael Israel will be provided with up to 15 liters of CBD oil, from a strain of cannabis during a term of 18 months, to be provided in two to three deliveries of between one to seven milliliters of CBD oil. In accordance with Raphael Israel’s agreement with Wolc, Raphael Israel has agreed to issue to certain persons affiliated with Wolc 3% of Raphael’s issued and outstanding share capital as of the date of the Share Exchange, to be provided in three equal issuances; provided, however, that such persons may elect to receive a cash payment of $100,000 instead of any one issuance of Raphael’s shares. In addition to the issuance of shares, Raphael Israel has also agreed to pay Wolc a royalty fee equal to 15% of the net royalties generated from sales of Raphael Israel’s pharmaceutical drug products that are developed at Rambam hospital in Israel.

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 capital received from Easy Energy. We have incurred losses and generated negative cash flows from operations since inception in 2019. 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 prospectus.

As of June 30, 2022, our cash and cash equivalents were $135,000. We believe that our existing cash and cash equivalents will not be sufficient to fund our projected cash requirements through September 2022. 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 $2 million for capital expenditures over such 12-month period, which consists primarily of expenditures for clinical trials and general Company operating costs.

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;

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●	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, strengthening our manufacturing agreements for production of our wave energy systems.

In addition to the foregoing, based on our current assessment, we do not expect any material impact on our long-term liquidity due to the COVID-19 pandemic. However, we will continue to assess the effect of the pandemic to our operations. The extent to which the COVID-19 pandemic will impact our business and operations will depend on future developments that are highly uncertain and cannot be predicted with confidence, such as the duration of the COVID-19 pandemic, any restrictions on the ability of hospitals and trial sites to conduct trials that are not designed to address the COVID-19 pandemic and the perceived effectiveness of actions taken in Israel, the United States and Europe and other countries to contain and treat the disease. While the potential economic impact brought by COVID-19 may be difficult to assess or predict, a widespread pandemic could result in significant disruption of global financial markets, reducing our ability to access capital in the future. In addition, a recession or long-term market correction resulting from the spread of COVID-19 could materially affect our business and the value of our common stock.

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 DisclosuresAbout Market Risk.

Not applicable.

Item 4. Controls and Procedures

Management’s Conclusions Regarding Effectivenessof Disclosure Controls and Procedures

As of June 30, 2022, 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, 2022.

Changes in Internal Control over FinancialReporting

There were no changes in our internal control over financial reporting during the fiscal quarter ended June 30, 2022, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

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 filed with the SEC on March 30, 2022.

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 filed with the SEC on March 30, 2022.

Item 2. Unregistered Sales of Equity Securitiesand Use of Proceeds.

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Set forth below are the sales of all securities by the Company in the three months ended June 30, 2022, which were not registered under the Securities Act of 1933, as amended, or the Securities Act. The Company believes that each of such issuances was exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act and/or Regulation S under the Securities Act.

On April 28, 2022, the Company signed an agreement to raise $50,000 and to issue 300,000 shares of common stock and 100,000 warrants to purchase common stock at an exercise price of $0.7 per share to a certain investor of the Company. The warrants are exercisable until April 30, 2024. The funds for the shares were received in July 2022.

On May 2, 2022, the Company signed several agreements to raise $250,000 and to issue 250,000 shares of common stock and 100,000 warrants to purchase common stock at an exercise price of $1.13 per share to certain investors of the Company. The warrants are exercisable until April 30, 2024. The funds for the shares were received in May 2022.

On June 27, 2022, the Company signed an agreement to raise $50,000 and to issue 35,000 shares of common stock to a certain investor of the Company.

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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<br>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 12, 2022	By:	/s/ Shlomo<br> Pilo
	Name:	Shlomo Pilo
	Title:	Chief Executive Officer<br><br>(Principal Executive Officer)
Date: August 12, 2022	By:	/s/ Guy Ofir
	Name:	Guy Ofir
	Title:	Chief Financial Officer<br><br> <br>(Principal Financial Officer)

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Exhibit 31.1

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CERTIFICATION PURSUANT TO RULE 13a-14(a) AND15d-14(a)

UNDER THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED

I, Shlomo Pilo, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Raphael Pharmaceutical Inc.;

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;

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;

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:

(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;

(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;

(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

(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

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):

(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

(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: August 12, 2022	By:	/s/ Shlomo Pilo
		Shlomo Pilo
		Chief Executive Officer

Exhibit 31.2

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CERTIFICATION PURSUANT TO RULE 13a-14(a) AND15d-14(a)

UNDER THE SECURITIES EXCHANGE ACT OF 1934, ASAMENDED

I, Guy Ofir, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Raphael Pharmaceutical Inc.;

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;

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;

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:

(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;

(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;

(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

(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

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):

(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

(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: August 12, 2022	By:	/s/ Guy Ofir
		Guy Ofir
		Chief Financial Officer

Exhibit 32.1

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the quarterly report of Raphael Pharmaceutical Inc., or the Company, on Form 10-Q for the period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof, or the Report, I, Shlomo Pilo, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, that to my knowledge:

1.	The Report fully complies with<br>the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the<br>Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Dated: August 12, 2022	/s/ Shlomo Pilo
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	Shlomo Pilo
	Chief Executive Officer

Exhibit 32.2

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the quarterly report of Raphael Pharmaceutical Inc., or the Company, on Form 10-Q for the period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof, or the Report, I, Guy Ofir, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, that to my knowledge:

1.	The Report fully complies with<br>the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the<br>Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Dated: August 12, 2022	/s/ Guy Ofir
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	Guy Ofir
	Chief Financial Officer