Rafael Holdings, Inc 8-K/A, filed May 23, 2024

Rafael Holdings, Inc. (RFL)

8-K/A 2024-05-23 For: 2024-03-13

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Added on April 08, 2026

About this 8-K/A

Rafael Holdings, Inc filed this 8-K/A on May 23, 2024, reporting on events of March 13, 2024.

Items reported

Item 9.01: Financial statements and exhibits

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Exhibit No.		Document
23.1		Consent of CohnReznick LLP
99.1		Audited Financial statements of Cornerstone Pharmaceuticals, Inc. as of and for the year ended July 31, 2023.
99.2		Unaudited Financial statements of Cornerstone Pharmaceuticals, Inc. as of and for the three months ended October 31, 2023
99.3		The unaudited proforma condensed combined financial statements of the Company.
104		Cover Page Interactive Data File, formatted in Inline XBRL document.

RAFAEL HOLDINGS, INC.

By:	/s/ William Conkling
	Name:	William Conkling
	Title:	Chief Executive Officer

Exhibit No.		Document
23.1		Consent of CohnReznick LLP
99.1		Audited Financial statements of Cornerstone Pharmaceuticals, Inc. as of and for the year ended July 31, 2023.
99.2		Unaudited Financial statements of Cornerstone Pharmaceuticals, Inc. as of and for the three months ended October 31, 2023
99.3		The unaudited proforma condensed combined financial statements of the Company.
104		Cover Page Interactive Data File, formatted in Inline XBRL document.

	Page

INDEPENDENT AUDITOR’S REPORT	1

FINANCIAL STATEMENTS:

Balance Sheets as of July 31, 2023 and 2022	3

Statements of Operations for the Years Ended July 31, 2023 and 2022	4

Statements of Stockholders’ Deficit for the Years Ended July 31, 2023 and 2022	5

Statements of Cash Flows for the Years Ended July 31, 2023 and 2022	6

Notes to Financial Statements as of and for the Years Ended July 31, 2023 and 2022	7

	July 31,			July 31,
	2023			2022
ASSETS
CURRENT ASSETS
Cash	$	5,918		$	11,149
Marketable securities		78			75
Prepaid expenses and other current assets		116			1,067
Total current assets		6,112			12,291
NON-CURRENT ASSETS
Property and equipment, net		72			154
Deferred debt issuance costs		11,712			19,442
TOTAL ASSETS	$	17,896		$	31,887

LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable	$	4,856		$	15,588
Accrued expenses		4,970			5,991
Deferred officers’ salaries		27			27
Advances payable - related parties		1,289			1,289
Note payable		-			217
Line of credit - related parties		29,178			-
Convertible promissory note - related parties		2,053			-
Convertible notes		12,239			12,239
Total current liabilities		54,612			35,351

LONG-TERM LIABILITIES
Note payable - long-term		-			598
Accounts payable - long-term		8,542			-
Line of credit - long-term		21,875			46,875
Derivative liabilities		3,832			25,534
TOTAL LIABILITIES		88,861			108,358

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ DEFICIT
Convertible Preferred stock, $0.001 par value; 300,000,000 shares authorized; 95,506,059 shares issued and outstanding as of July 31, 2023 and 2022, respectively		97			97
Common stock, $0.01 par value; 31,000,000 shares authorized; 2,442,034 shares issued and outstanding as of July 31, 2023 and 2022, respectively		24			24
Additional paid-in capital		189,898			188,587
Accumulated deficit		(260,984	)		(265,179	)
Total stockholders’ deficit		(70,965	)		(76,471	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	17,896		$	31,887

	July 31,			July 31,
	2023			2022
OPERATING EXPENSES
Research and development	$	8,238			35,054
General and administrative		2,796			3,434
TOTAL OPERATING EXPENSES		11,034			38,488
LOSS FROM OPERATIONS		11,034			38,488

OTHER INCOME AND (EXPENSE)
Interest income		5			-
Interest expense		(12,390	)		(8,159	)
Change in fair value of derivative liabilities		21,702			30,907
Forgiveness of loan		815			599
TOTAL OTHER INCOME AND (EXPENSE)		10,132			23,347
LOSS BEFORE INCOME TAXES		902			15,141
INCOME TAX BENEFIT		(5,096	)		(4,925	)
NET (INCOME) LOSS	$	(4,194	)	$	10,216

	Preferred Stock
	Series A				Series B				Series C				Series D				Common Stock				Additional					Total
	Shares		Par Value		Shares		Par Value		Shares		Par Value		Shares		Par Value		Shares		Par Value		Paid-in Capital		Accumulated Deficit			Stockholders’ Deficit
Balance as of July 31, 2021		3,057,500	$	3		26,454,278	$	27		6,321,194	$	6		60,673,087	$	61		2,441,784	$	24	$	186,731	$	(254,963	)	$	(68,111	)
Stock-based compensation resulting from stock options granted to non-employees and employees		-		-		-		-		-		-		-		-		-		-		1,850		-			1,850
Common stock issued for exercise of options		-		-		-		-		-		-		-		-		250		-		6		-			6
Net loss		-		-		-		-		-		-		-		-		-		-		-		(10,216	)		(10,216	)
Balance as of July 31, 2022		3,057,500	$	3		26,454,278	$	27		6,321,194	$	6		60,673,087	$	61		2,442,034	$	24	$	188,587	$	(265,179	)	$	(76,471	)

Balance as of July 31, 2022		3,057,500	$	3		26,454,278	$	27		6,321,194	$	6		60,673,087	$	61		2,442,034	$	24	$	188,587	$	(265,179	)	$	(76,471	)
Stock-based compensation resulting from stock options granted to non-employees and employees		-		-		-		-		-		-		-		-		-		-		1,311		-			1,311
Net income		-		-		-		-		-		-		-		-		-		-		-		4,194			4,194
Balance as of July 31, 2023		3,057,500	$	3		26,454,278	$	27		6,321,194	$	6		60,673,087	$	61		2,442,034	$	24	$	189,898	$	(260,985	)	$	(70,965	)

	For the Years Ended July 31,
	2023		2022
General and administrative	$	175	$	218
Research and development		1,136		1,632
Total	$	1,311	$	1,850

	Carrying		Fair Value Measurement as of July 31, 2023
	Value		Level 1		Level 2		Level 3
Assets:
Cash	$	5,918	$	5,918	$	-	$	-
Marketable securities		78		78		-		-

Liabilities:
Convertible notes	$	12,239	$	-	$	-	$	12,239
Convertible promissory note - related parties		2,053		-		-		2,053
Account payable – long-term		8,542		-		-		8,542
Derivative liabilities		3,832		-		-		3,832

	Derivative Liabilities
Balance as of July 31, 2021	$	56,441
Change in fair value		(30,907	)
Balance as of July 31, 2022		25,534
Change in fair value		(21,702	)
Balance as of July 31, 2023	$	3,832

	Total		C Notes (1) (2)
Balance as of July 31, 2022	$	12,239	$	12,239
Converted during 2023		-		-
Balance as of July 31, 2023	$	12,239	$	12,239

	July 31, 2023			July 31, 2022
Market value of common stock	$	0.03		$	0.3
Expected volatility		75.9	%		77.5	%
Expected term (in years)		1.51			2.51
Risk-free interest rate		5.03	%		2.70	%

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contract Terms (Years)
Options outstanding - July 31, 2021		12,145,914			2.31		6.6
Granted		-			-		-
Forfeited		(1,488,750	)		2.61		-
Exercised		(2,500	)		2.50		-
Options outstanding - July 31, 2022		10,654,664			2.38		5.7
Granted		-			-		-
Forfeited		(261,250	)		2.50		-
Expired		(100,000	)		1.25
Exercised		-			-		-
Options outstanding - July 31, 2023		10,293,414			2.39		5.7
Options vested and expected to vest - July 31, 2023		10,158,211			2.38		-
Options exercisable - July 31, 2023		8,941,373			2.31		-

		Page
FINANCIAL STATEMENTS:

Balance Sheets as of October 31, 2023 and July 31, 2023		1

Statements of Operations for Three Months Ended October 31, 2023 and 2022		2

Statements of Stockholders’ Deficit for Three Months Ended October 31, 2023 and 2022		3

Statements of Cash Flows for Three Months Ended October 31, 2023 and 2022		4

Notes to Financial Statements as of and for Three Months Ended October 31, 2023 and 2022		5

	October 31,			July 31,
	2023			2023
	(Unaudited)			(Note 2)
ASSETS

CURRENT ASSETS
Cash	$	3,414		$	5,918
Marketable securities		79			78
Prepaid expenses and other current assets		144			116
Total current assets		3,637			6,112

NON-CURRENT ASSETS
Property and equipment, net		21			72
ROU asset, net		55			-
Deferred debt issuance costs		9,763			11,712

TOTAL ASSETS	$	13,476		$	17,896

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES
Accounts payable	$	2,391		$	4,856
Accrued expenses		4,691			4,970
Deferred officers’ salaries		27			27
Advances payable - related parties		1,289			1,289
Line of credit - related parties		29,753			29,178
Convertible promissory note - related parties		2,091			2,053
Convertible notes		12,189			12,239
Operating lease liability		28			-
Total current liabilities		52,459			54,612

LONG-TERM LIABILITIES
Accounts payable - long-term		8,542			8,542
Line of credit - long-term		21,875			21,875
Derivative liabilities		5,190			3,832
Operating lease liability - long-term		27			-

TOTAL LIABILITIES		88,093			88,861

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ DEFICIT

Convertible Preferred stock, $0.001 par value; 300,000,000 shares authorized; 96,554,287 shares issued and outstanding as of October 31, 2023 and 95,506,059 as of July 31, 2023, respectively		97			97
Common stock, $0.01 par value; 31,000,000 shares authorized; 2,442,034 shares issued and outstanding as of October 31, 2023 and July 31, 2023, respectively		24			24
Additional paid-in capital		190,212			189,898
Accumulated deficit		(264,950	)		(260,984	)
Total stockholders’ deficit		(74,617	)		(70,965	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	13,476		$	17,896

	July 31,			July 31,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net (income) loss	$	4,194		$	(10,216	)
Adjustments to reconcile net (income) loss to net cash used in operating activities:
Depreciation and amortization		82			88
Amortization of debt discount		7,730			7,730
Interest expense on convertible promissory note - related parties		4,232			-
Noncash stock-based compensation		1,311			1,850
Gain on forgiveness of loan		(815	)		(599	)
Change in fair value of derivative liabilities		(21,702	)		(30,907	)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		951			4,483
Accounts payable		(10,732	)		8,774
Accounts payable - long-term		8,542			-
Accrued expenses		(1,021	)		(501	)
Deferred officers’ salaries		-			(146	)
Due to related party		-			120
NET CASH USED IN OPERATING ACTIVITIES		(7,228	)		(19,324	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		-			(12	)
Investment in marketable securities		(3	)		-
NET CASH PROVIDED BY INVESTING ACTIVITIES		(3	)		(12	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit - related party		-			30,000
Proceeds from convertible promissory note - related parties		2,000			-
Common stock issued for exercise of options		-			6
NET CASH USED IN FINANCING ACTIVITIES		2,000			30,006
NET (DECREASE) INCREASE IN CASH		(5,231	)		10,670
CASH AT BEGINNING OF YEAR		11,149			479
CASH AT END OF YEAR	$	5,918		$	11,149

	July 31,
	2023			2022
Laboratory equipment	$	1,004		$	1,004
Computer and office equipment		150			150
Leasehold improvements		2,089			2,089
		3,243			3,243
Less: Accumulated depreciation and amortization		(3,171	)		(3,089	)
	$	72		$	154

	July 31,
	2023		2022
Interest (due to convertible note holders)	$	3,993	$	3,565
Compensation		50		50
Clinical and research costs		746		2,077
Other		155		240
Legal and professional fees		26		59
Total	$	4,970	$	5,991

	July 31,
	2023						2022
Series	Shares Authorized		Shares Issued		Liquidation Preference		Shares Authorized		Shares Issued		Liquidation Preference
A		6,050,000		3,057,500	$	3,057,500		6,050,000		3,057,500	$	3,057,500
B-1		1,892,072		1,513,658		1,892,073		1,892,072		1,513,658		1,892,072
B-2		17,500,000		10,000,000		10,000,000		17,500,000		10,000,000		10,000,000
B-3		30,000,000		10,000,000		10,000,000		30,000,000		10,000,000		10,000,000
B-4		10,400,000		4,940,600		6,175,750		10,400,000		4,940,620		6,175,775
C		25,000,000		6,321,312		7,901,640		25,000,000		6,321,194		-
D		131,000,000		60,673,087		75,841,359		161,000,000		60,673,087		-
		221,842,072		96,506,157	$	114,868,321		251,842,072		96,506,059	$	31,125,347

	For The Three Months Ended October 31,
	2023			2022

OPERATING EXPENSES
Research and development	$	1,277			2,392
General and administrative		729			527
TOTAL OPERATING EXPENSES		2,006			2,919

LOSS FROM OPERATIONS		2,006			2,919

OTHER INCOME AND (EXPENSE)
Interest income		1			1
Interest expense		(2,661	)		(4,528	)
Change in fair value of derivative liabilities		(1,358	)		5,426
Forgiveness of accounts payable		2,101			-
Foreign exchange loss		(43	)		-
TOTAL OTHER INCOME AND (EXPENSE)		(1,960	)		899

LOSS BEFORE INCOME TAXES		3,966			2,020

INCOME TAX BENEFIT		-			-

NET LOSS	$	3,966		$	2,020

	Preferred Stock																	Common Stock				Additional					Total
	Series A				Series B					Series C				Series D								Paid-in		Accumulated			Stockholders’
	Shares		Par Value		Shares			Par Value		Shares		Par Value		Shares		Par Value		Shares		Par Value		Capital		Deficit			Deficit
Balance as of July 31, 2022		3,057,500	$	3		26,454,278		$	27		6,321,194	$	6		60,673,087	$	61		2,442,034	$	24	$	188,587	$	(265,179	)	$	(76,471	)
Stock-based compensation resulting from stock options granted to non-employees and employees		-		-		-			-		-		-		-		-		-		-		328		-			328
Net Loss		-		-		-			-		-		-		-		-		-		-		-		(2,020	)		(2,020	)
Balance as of October 31, 2022		3,057,500	$	3		26,454,278		$	27		6,321,194	$	6		60,673,087	$	61		2,442,034	$	24	$	188,915	$	(267,199	)	$	(78,163	)

Balance as of July 31, 2023		3,057,500	$	3		26,454,278		$	27		6,321,194	$	6		60,673,087	$	61		2,442,034	$	24	$	189,898	$	(260,984	)	$	(70,965	)
Stock-based compensation resulting from stock options granted to non-employees and employees		-		-		-			-		-		-		-		-		-		-		254		-			254
Preferred stock issued for exercise of warrants		-		-		(20	)		-		48,248		-		-		-		-		-		60					60
Net Loss		-		-		-			-		-		-		-		-		-		-		-		(3,966	)		(3,966	)
Balance as of October 31, 2023		3,057,500	$	3		26,454,258		$	27		6,369,442	$	6		60,673,087	$	61		2,442,034	$	24	$	190,212	$	(264,950	)	$	(74,617	)

	For the Three Months ended October 31,
	2023		2022
General and administrative	$	43	$	44
Research and development		211		284
Total	$	254	$	328

	Carrying		Fair Value Measurement as of October 31, 2023
	Value		Level 1		Level 2		Level 3
Assets:
Cash	$	3,414	$	3,414	$	-	$	-
Marketable securities		79		79		-		-
Liabilities:
Convertible notes	$	12,189	$	-	$	-	$	12,189
Convertible promissory note - related parties		2,091		-		-		2,091
Account payable – long-term		8,542		-		-		8,542
Derivative liabilities		5,190		-		-		5,190

	Carrying		Fair Value Measurement as of J uly 31, 2023
	Value		Level 1		Level 2		Level 3
Assets:
Cash	$	5,918	$	5,918	$	-	$	-
Marketable securities		78		78		-		-
Liabilities:
Convertible notes	$	12,239	$	-	$	-	$	12,239
Convertible promissory note - related parties		2,053		-		-		2,053
Account payable – long-term		8,542		-		-		8,542
Derivative liabilities		3,832		-		-		3,832

	October 31, 2023		July 31, 2023
Deposits with vendors and service providers	$	91	$	49
Insurance		53		67
Total	$	144	$	116

	October 31, 2023		July 31 2023
Interest (due to convertible note holders)	$	4,082	$	3,993
Compensation		50		50
Clinical and research costs		217		746
Other		258		155
Legal and professional fees		84		26
Total	$	4,691	$	4,970

	October 31, 2023						July 31, 2023
Series	Shares Authorized		Shares Issued		Liquidation Preference		Shares Authorized		Shares Issued		Liquidation Preference
A		6,050,000		3,057,500	$	3,057,500		6,050,000		3,057,500	$	3,057,500
B-1		1,892,072		1,513,658		1,892,073		1,892,072		1,513,658		1,892,073
B-2		17,500,000		10,000,000		10,000,000		17,500,000		10,000,000		10,000,000
B-3		30,000,000		10,000,000		10,000,000		30,000,000		10,000,000		10,000,000
B-4		10,400,000		4,940,600		6,175,750		10,400,000		4,940,600		6,175,750
C		25,000,000		6,369,442		7,961,803		25,000,000		6,321,312		7,901,640
D		131,000,000		60,673,087		75,841,359		131,000,000		60,673,087		75,841,359
		221,842,072		96,554,287	$	114,928,485		221,842,072		96,554,287	$	114,686,322

						Weighted
				Weighted		Average
				Average		Remaining
	Number of Options			Exercise Price		Contract Terms (Years)
Options outstanding - July 31, 2022		10,654,664			2.38		5.7
Granted		-			-		-
Forfeited		(261,250	)		2.50		-
Expired		(100,000	)		1.25
Options outstanding - July 31, 2023		10,293,414			2.39		5.7
Granted		-			-		-
Forfeited		-			-		-
Expired		(250,000	)		1.25
Exercised		-			-		-
Options outstanding - October 31, 2023		10,043,414			2.42		4.6
Options vested and expected to vest - October 31, 2023		9,930,055			2.41		-
Options exercisable - October 31, 2023		8,909,814			2.34		-

Maturity of Lease Liabilities
For the 12 months ended October 31,:	Total

2024	$	23
2025		31
2026		5
Total undiscounted operating lease payments		59
Less: Imputed interest		4
Present value of operating lease liabilities		55
Less: current portion		27
Non-current portion	$	28

	Rafael			Cornerstone			Transaction Accounting Adjustments
	Holdings, Inc.			Pharmaceuticals, Inc.			Restructuring Adjustments				Acquisition of Cornerstone				RP Finance Consolidation				Pro Forma Combined
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	13,197		$	3,414		$	1,500		E	$	—			$	—			$	16,611
								(1,500	)	E1
Available-for-sale securities		58,894			—			—				—				—				58,894
Marketable securities		—			79			—				—				—				79
Interest receivable		420			—			—				—				—				420
Due from Cornerstone - 2023 Promissory Note		1,858			—			(1,858	)	C1		—				—				—
Accounts receivable, net of allowance for doubtful accounts		231			—			—				—				—				231
Prepaid expenses and other current assets		2,866			144			—				—				—				3,010
Total current assets		77,466			3,637			(1,858	)			—				—				79,245

Property and equipment, net		1,671			21			—				—				—				1,692
Deferred debt issuance costs		—			9,763			(9,763	)	F		(4,603	)	H		—				—
								4,603		F
Due from Cornerstone - RPF Line of Credit		—			—			—				—				15,336		K1		—
																(15,336	)	L
Due from Cornerstone - RFL Line of Credit		—			—			29,753		B1		—				—				—
								(29,753	)	B1
Investments - Cornerstone Pharmaceuticals		—			—			—		A1		(33,111	)	H		4,931		K1		—
								29,753		B1						(4,931	)	L
								1,858		C1
								1,500		E1
Investments – Hedge Funds		2,318			—			—				—				—				2,318
Investment - Day Three Labs Inc.		2,581			—			—				—				—				2,581
Investments - Cyclo Therapeutics Inc.		9,849			—			—				—				—				9,849
In-process research and development		1,575			—			—				—				—				1,575
Other assets		42			55			—				—				—				97
TOTAL ASSETS	$	95,502		$	13,476		$	26,093			$	(37,714	)		$	—			$	97,357

LIABILITIES AND EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable	$	471		$	2,391		$	—			$	—			$	—			$	2,862
Accrued expenses		325			4,691			(3,863	)	D	$	—			$	—				1,980
								(23	)	D1
								428		G
								422		G1
Deferred officers’ salaries		—			27		$	—			$	—				—				27
Advances payable to related parties		—			1,289		$	—			$	(720	)	J		—				569
RFL Line of Credit		—			29,753			(29,753	)	B	$	—				—				—
2023 Promissory Note payable		—			2,091			(2,091	)	C	$	—				—				—
Series C Convertible Notes		—			12,189			(11,506	)	D		—				—				613
								(70	)	D1
Other current liabilities		115			28			—				—				—				143
Due to related parties		23			—			—				—				—				23
Total current liabilities		934			52,459			(46,456	)			(720	)			—				6,217

Other liabilities		56			27			—				—				—				83
Fortrea payable		—			8,542			—				(5,797	)	H		—				2,745
Series C Convertible Notes L/T		—			—			93		D1		(23	)	H		—				70
RPF Line of Credit		—			21,875			—				(6,539	)	H		(15,336	)	L		—
Derivative liabilities		—			5,190			(5,190	)	F		—				—				—
TOTAL LIABILITIES		990			88,093			(51,553	)			(13,079	)			(15,336	)			9,115

EQUITY (DEFICIT)
Class A common stock, $0.01 par value; 35,000,000 shares authorized, 787,163 shares issued and outstanding as of October 31, 2023		8			—			—				—				—				8
Class B common stock, $0.01 par value; 200,000,000 shares authorized, 23,882,117 issued and 23,668,315 outstanding (excluding treasury shares of 50,700) as of October 31, 2023		238			—			—				—				—				238
Cornerstone Convertible Preferred Stock, $0.001 par value		—			97			(97	)	A		—				—				—
Cornerstone Common Stock, $0.01 par value		—			24			97		A		(652	)	H		—				—
								301		B
								21		C
								157		D
								15		E
								37		F
Additional paid-in capital		265,487			190,212			29,452		B		(256,678	)	H		7,600		K1		280,135
								2,070		C		8,897		H		(1,849	)	L
								33,466		D
								1,485		E
								4,566		F
								(4,573	)	F
Accumulated deficit		(170,971	)		(264,950	)		—		A1		283,632		H		—				(200,059	)
								29,753		B1		(58,997	)	I
								(142	)	C1		720		J
								(18,254	)	D
								(428	)	G
								(422	)	G1
Treasury stock, at cost; 50,700 and 0 Class B shares as of October 31, 2023		(79	)		—			—				—				—				(79	)
Accumulated other comprehensive loss related to unrealized loss on available-for-sale securities		(146	)		—			142		C1		—				—				(4	)
Accumulated other comprehensive income related to foreign currency translation adjustment		3,668			—			—				—				—				3,668
Total equity		98,205			(74,617	)		77,646				(23,078	)			5,751				83,907
Non-controlling interest		(3,693	)					—				27,501		H		12,667		K1		4,335
												(29,058	)	I		(3,082	)	L
TOTAL EQUITY (DEFICIT) ATTRIBUTABLE TO PARENT		94,512			(74,617	)		77,646				(24,635	)			15,336				88,242
TOTAL LIABILITIES AND EQUITY (DEFICIT)	$	95,502		$	13,476		$	26,093			$	(37,714	)		$	—			$	97,357

							Transaction Accounting Adjustments
	Rafael Holdings, Inc.			Cornerstone Pharmaceuticals, Inc.			Restructuring Adjustments				Acquisition of Cornerstone				RP Finance Consolidation		Pro Forma Combined
REVENUE
Rental – Third Party	$	171		$	—		$	—			$	—			$	—	$	171
Rental – Related Party		108			—			—				—				—		108
Total revenue	$	279		$	—		$	—			$	—			$	—	$	279

COSTS AND EXPENSES
General and administrative	$	8,932		$	2,796		$	1,247		GG	$	—			$	—	$	12,975
In-process research and development		—			—			—				88,055		II		—		88,055
Research and development		6,312			8,238			—				—				—		14,550
Depreciation and amortization		78			—			—				—				—		78
Loss from operations	$	(15,043	)	$	(11,034	)	$	(1,247	)		$	(88,055	)		$	—	$	(115,379	)

Interest expense		—			(12,390	)		4,178		BB		(596	)	HH		—		(624	)
								53		CC
								403		DD
								(3	)	DD1
								7,730		FF
Interest income		3,253			5			(53	)	CC1		—				—		3,205
Impairment of investments - Other Pharmaceuticals		(334	)		—			—				—				—		(334	)
Realized gain (loss) on available-for-sale securities		154			—			—				—				—		154
Realized gain on investment in equity securities		309			—			—				—				—		309
Unrealized gain on investment in equity securities		33			—			—				—				—		33
Unrealized gain on investments - Cyclo Therapeutics Inc.		2,663			—			—				—				—		2,663
Unrealized gain (loss) on investments - Hedge Funds		220			—			—				—				—		220
Change in fair value of derivative liabilities		—			21,702			(21,702	)	FF		—				—		—
Recovery of receivable from Cornerstone Pharmaceuticals pursuant to RFL Line of Credit		—			—			29,753		BB1		—				—		29,753
Gain on forgiveness of loan		—			815			—				—				—		815
Loss from continuing operations before income taxes	$	(8,745	)	$	(902	)	$	19,112			$	(88,651	)		$	—	$	(79,185	)
Benefit from income taxes		255			5,096			—				—				—		5,351
Equity in loss of Day Three Labs Inc.		(203	)		—			—				—				—		(203	)
Net (loss) income from continuing operations	$	(8,693	)	$	4,194		$	19,112			$	(88,651	)		$	—	$	(74,037	)
Net loss attributable to noncontrolling interests		(339	)		—			—				(30,924	)	JJ		—		(31,263	)
Net (loss) income from continuing operations attributable to Parent	$	(8,354	)	$	4,194		$	19,112			$	(57,727	)		$	—	$	(42,774	)

Loss per share attributable to common stockholders
Basic and diluted loss from continuing operations per share		(0.36	)															(1.84	)
Weighted average number of shares used in calculation of loss per share
Basic and diluted		23,263,211																23,263,211

Fair value of consideration paid
Fair value of RFL Line of Credit	$	37,845
Fair value of 2023 Promissory Note		2,663
Cash consideration		1,500
(i) Total fair value of consideration paid		42,008
(ii) Fair value of noncontrolling interests		27,501
(iii) Reported value of previously held interests⁽¹⁾		—
Sum of (i), (ii), and (iii)	$	69,509

Assets acquired and liabilities assumed
Cash		4,914
Marketable securities		79
Prepaid expenses and other current assets		144
Property and equipment, net		21
Other assets		55
Acquired In Process Research & Development		88,055
Accounts payable		(2,391	)
Accrued expenses		(2,549	)
Series C Convertible Notes		(613	)
Other current liabilities		(28	)
Series C Convertible Notes L/T		(70	)
Fortrea payable		(2,745	)
Amended RPF Line of Credit		(15,336	)
Other liabilities		(27	)
Total	$	69,509

(i) Fair value of consideration paid	$	—
(ii) Fair value of noncontrolling interests	$	12,667
(iii) Reported value of previously held interests⁽¹⁾	$	—
Sum of (i), (ii), and (iii)	$	12,667

A.	Reflects the conversion, on a one-for-one basis, of all series of Cornerstone’s Preferred Stock, including 60,673,087 Series D Preferred Stock effectively owned by Rafael, pursuant to the Restructuring. The aggregate of Cornerstone’s Preferred Stock will convert into 9,655,425 shares, post-Reverse Stock Split, of Cornerstone’s Common Stock.

A1.	Reflects Rafael’s conversion of the 60,673,087 shares of Cornerstone’s Series D Preferred Stock into 6,067,306 shares, post-Reverse Stock Split, of Cornerstone Common Stock at the reported value of the Series D Preferred Stock, or $0. Upon the consummation of the Acquisition, the investment will be eliminated as Cornerstone will become a majority owned subsidiary of Rafael (see entry H).

B.	Reflects the conversion of the $29.8 million, inclusive of $25.0 million of principal and $4.8 million of accrued interest, pursuant to the RFL Line of Credit into 30,080,747 shares, post-Reverse Stock Split, of Cornerstone’s Common Stock.

B1.	Reflects a $29.8 million gain recognized by Rafael, in conjunction with and immediately prior to the Restructuring, reflected as an adjustment to accumulated deficit, for the recovery of the principal and accrued interest on the RFL Line of Credit previously written off as part of the Data Events. The gain is based on the value of Cornerstone Common Stock received in settlement of the RFL Line of Credit in the Restructuring to the extent of principal and interest due through October 31, 2023. Upon consummation of the Restructuring, reflects the conversion of the $29.8 million value of the RFL Line of Credit into 30,080,747 shares, post-Reverse Stock Split, of Cornerstone’s Common Stock. Upon the consummation of the Acquisition, the investment will be eliminated as Cornerstone will become a majority owned subsidiary of Rafael and the difference between the investment’s carrying value and its fair value included in purchase consideration, which is based on the value of Cornerstone’s Common Stock, results in a gain that is recorded to the Company’s additional paid-in capital given the related party nature of the transaction (see entry H).

C.	Reflects the conversion of the $2.1 million due Rafael in principal plus accrued interest pursuant to the 2023 Promissory Note into 2,116,932 shares, post-Reverse Stock Split, of Cornerstone’s Common Stock.

C1.	Reflects the conversion of the 2023 Promissory Note receivable, carried at its fair value of $1.9 million, by Rafael into 2,116,932 shares, post-Reverse Stock Split, of Cornerstone’s Common Stock. In addition, reflects the recognition of the $142 thousand of unrealized losses on the fair value of the 2023 Promissory Note in other comprehensive income. Upon the consummation of the Acquisition, the investment will be eliminated as Cornerstone will become a majority owned subsidiary of Rafael (see entry H).

D.	Reflects the conversion of $11.5 million of principal, and $3.9 million of accrued interest thereon, of Series C Convertible Notes issued by Cornerstone into 15,739,661 shares, post-Reverse Stock Split, of Cornerstone’s Common Stock. As the Series C Convertible Notes converted into Cornerstone’s Common Stock pursuant to an inducement offer in the Restructuring, reflects the effect of Cornerstone recording a loss of $18.3 million on inducement to convert Series C Notes assumed to have been incurred on August 1, 2022. Cornerstone’s loss on inducement is reflected in accumulated deficit and additional paid in capital. Upon the consummation of the Acquisition, Cornerstone’s equity will be eliminated as Cornerstone will become a majority owned subsidiary of Rafael (see entry H).

D1.	Reflects the reclassification of $70 thousand of principal, and $23 thousand of accrued interest thereon, of Series C Convertible Notes issued by Cornerstone where the maturity date was extended in the Restructuring from short-term to long-term liabilities. Upon the consummation of the Acquisition, the principal and accrued interest on the Series C Convertible Notes issued by Cornerstone where the maturity date was extended in the Restructuring will be remeasured to their fair values as Cornerstone will become a majority owned subsidiary of Rafael (see entry H).

E.	Reflects the issuance of 1,546,391 shares, post-Reverse Stock Split, of Cornerstone’s Common Stock in exchange for cash of $1.5 million.

E1.	Reflects Rafael’s cash consideration paid of $1.5 million for 1,546,391 shares, post-Reverse Stock Split, of Cornerstone’s Common Stock. Upon the consummation of the Acquisition, the investment will be eliminated as Cornerstone will become a majority owned subsidiary of Rafael (see entry H).