Equibles

8-K/A

Rafael Holdings, Inc. (RFL)

8-K/A 2025-04-28 For: 2025-03-25
View Original
Added on April 08, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934

Date of Report (Date of earliest event reported):

March 25, 2025

RAFAEL HOLDINGS, INC.

(Exact name of registrant as specified in itscharter)

Delaware 1-38411 82-2296593
(State or other jurisdiction<br><br> <br>of Incorporation) (Commission File Number) (IRS Employer<br><br> <br>Identification No.)
520 Broad Street<br><br> <br>Newark, New Jersey 07102
--- ---
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including

area code: 212 658-1450

Not Applicable

(Former name or former address, if changed sincelast report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
--- ---
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
--- ---
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
--- ---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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.   ☐

Securities registered pursuant to Section 12(b)-2 of the Exchange Act:

Title of each class Trading Symbol Name of each exchange on which registered
Class B common stock, par value $0.1 per share RFL New York Stock Exchange
Warrant to Purchase Class B common stock RFL-W NYSE American

EXPLANATORY NOTE

On March 26, 2025, Rafael Holdings, Inc. (the “Company”) filed a Current Report on Form 8-K (the “Initial Form 8-K”) to report the completion of the previously announced business combination transaction with Cyclo Therapeutics, Inc., a Nevada corporation (“Cyclo”), contemplated by that certain Agreement and Plan of Merger, dated as of August 21, 2024, and as amended as of December 18, 2024 and February 4, 2025 (the “Merger Agreement”), by and among the Company; Cyclo; Tandem Therapeutics, Inc., a Nevada corporation and a wholly-owned subsidiary of the Company (“First Merger Sub”); and Tandem Therapeutics, LLC, a Nevada limited liability company and a wholly-owned subsidiary of the Company (“Second Merger Sub”), pursuant to which: (i) First Merger Sub merged with and into the Cyclo, with Cyclo being the surviving entity (the “First Merger”), and (ii) immediately following the First Merger, Cyclo merged with and into Second Merger Sub, with Second Merger Sub being the surviving entity of the subsequent merger (the “Second Merger” and together with the First Merger, the “Merger”).

The Initial Form 8-K stated that the audited financial statements of Cyclo and unaudited pro forma condensed combined financial information related to the Merger would be filed by amendment to the Initial Form 8-K.

This amendment to the Initial Form 8-K on Form 8-K/A amends and supplements the Initial Form 8-K to include the audited financial information of Cyclo as described in Item 9.01(a) and the unaudited pro forma condensed combined financial information as described in Item 9.01(b). No other amendments are being made to the Initial Form 8-K. This Current Report on Form 8-K/A should be read in conjunction with the Initial Form 8-K, which provides a more complete description of the Merger.

The unaudited pro forma condensed combined financial information included in this Form 8-K/A has been presented for informational purposes only, is based on various adjustments and assumptions and is not necessarily indicative of what the Company’s consolidated statement of operations or consolidated statement of financial condition would have been had the Merger been completed as of the dates indicated or will be for any future periods.

Item 9.01. Financial Statements and Exhibits

(a) Financial Statements of Business Acquired

The audited consolidated financial statements of Cyclo as of and for the years ended December 31, 2024 and 2023

and the related notes are set forth in Exhibit 99.1 and are incorporated herein by reference.

(b) Pro Forma Financial Information.

The unaudited pro forma condensed combined financial information of the Company as of and for the six months ended January 31, 2025 and for the year ended July 31, 2024 is set forth in Exhibit 99.2 hereto and is incorporated herein by reference.

1

(d) Exhibits.

Exhibit No Document
99.1 Audited consolidated financial statements of Cyclo Therapeutics, Inc. as of and for the years ended December 31, 2024 and 2023.
99.2 Unaudited pro forma condensed combined consolidated balance sheet as of January 31, 2025, and unaudited pro forma condensed combined statements of operations for the six months ended January 31, 2025 and for the year ended July 31, 2024.
104 Cover Page Interactive Data File, formatted in Inline XBRL document. 
2

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 hereunto duly authorized.

RAFAEL HOLDINGS, INC.
By: /s/ William Conkling
Name: William Conkling
Title: Chief Executive Officer
Dated: April 28, 2025 
3

EXHIBIT INDEX

Exhibit Number Document
99.1 Audited consolidated financial statements of Cyclo Therapeutics, Inc. as of and for the years ended December 31, 2024 and 2023.
99.2 Unaudited pro forma condensed combined consolidated balance sheet as of January 31, 2025, and unaudited pro forma condensed combined statements of operations for the six months ended January 31, 2025 and for the year ended July 31, 2024.
104 Cover Page Interactive Data File, formatted in Inline XBRL document.

4

Exhibit 99.1

CYCLO THERAPEUTICS, INC.

FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

TABLE OF CONTENTS

Page
Report of Independent Registered Public Accounting Firm F-2
Consolidated Balance Sheets as of December 31, 2024 and 2023 F-3
Consolidated Statements of Operations for the Years Ended December 31, 2024 and 2023 F-4
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2024 and 2023 F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023 F-6
Notes to Consolidated Financial Statements F-7 –<br> F-27 
F-1

REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholder and Board Member of

Cyclo Therapeutics, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Cyclo Therapeutics, Inc. and Subsidiaries, (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2024, and the related consolidated notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company's auditor since 2011.

/s/ WithumSmith+Brown, PC

East Brunswick, New Jersey

April 28, 2025

PCAOB ID Number 100

F-2

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents 539,174 $ 9,246,592
Accounts receivable, net of allowances of 0 and 10,272, respectively 244,713 122,379
Inventory 229,485 254,352
Prepaid insurance and services 100,761 384,889
Prepaid clinical expenses 1,586,524 2,310,045
Total current assets 2,700,657 12,318,257
FURNITURE AND EQUIPMENT, NET 17,811 38,332
RIGHT-OF-USE LEASE ASSET, NET 21,860 890,949
NON-CURRENT PREPAID CLINICAL EXPENSES 1,950,670 -
TOTAL ASSETS 4,690,998 $ 13,247,538
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Current portion of lease liabilities 20,680 $ 1,010,631
Convertible notes payable 13,199,000 -
Accounts payable and accrued expenses 6,320,499 7,457,416
Total current liabilities 19,540,179 8,468,047
LONG-TERM LIABILITIES
Lease liabilities,<br> net of current portion 1,805 22,484
Total long-term liabilities 1,805 22,484
Commitments and contingencies (Note 16)
STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred stock, par value .0001 per share, 5,000,000 shares authorized; 0 outstanding at December 31, 2024 and 2023 - -
Common stock, par value .0001 per share, 250,000,000 shares authorized at December 31, 2024 and 2023, 32,919,184 and 28,556,072 shares issued and outstanding at December 31, 2024 and 2023, respectively 3,146 2,856
Additional paid-in capital 92,335,108 88,610,832
Accumulated deficit (107,189,240 ) (83,856,681 )
Total stockholders’ equity (deficit) (14,850,986 ) 4,757,007
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 4,690,998 $ 13,247,538

All values are in US Dollars.

See accompanying Notes to Consolidated Financial Statements.

F-3

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended <br> December 31,
2024 2023
REVENUES
Product sales $ 878,477 $ 1,076,405
Cost of goods sold (exclusive of direct and indirect overhead and handling costs) 63,868 84,367
GROSS PROFIT 814,609 992,038
EXPENSES
Personnel 3,491,550 3,382,938
Research and development 16,634,587 14,181,769
Repairs and maintenance 17,124 14,091
Professional fees 3,268,790 1,943,757
Office and other 2,652,018 1,161,094
Board of Directors fees and costs 433,957 335,268
Depreciation 8,708 19,276
Freight and shipping 3,245 3,902
Loss on disposal of equipment 11,813 -
Total expenses 26,521,792 21,042,095
LOSS FROM OPERATIONS (25,707,183 ) (20,050,057 )
OTHER INCOME (EXPENSE)
Investment and other income (expense), net 592,108 (7,245 )
Lease income 1,481,516 -
Gain on change in fair value of convertible notes 301,000 -
Total other income (expense), net 2,374,624 -
LOSS BEFORE PROVISION FOR INCOME TAXES (23,332,559 ) (20,057,302 )
PROVISION FOR INCOME TAXES - -
NET LOSS $ (23,332,559 ) $ (20,057,302 )
BASIC AND DILUTED NET LOSS PER COMMON SHARE $ (0.81 ) $ (1.23 )
WEIGHTED AVERAGE NUMBER OF COMMON SHARES BASIC AND DLITUED OUTSTANDING 28,800,568 16,329,713

See accompanying Notes to Consolidated Financial Statements.

F-4

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’EQUITY

YEARS ENDED DECEMBER 31, 2024 and 2023

Common Stock Additional<br><br>Paid-In Accumulated Total<br><br>Stockholders’
Shares Par Value Capital Deficit Equity
Balance, December 31, 2022 8,481,848 $ 849 $ 64,533,074 $ (63,799,379 ) $ 734,544
Sale of stock and warrants 9,007,853 900 9,738,140 - 9,739,040
Issuance of stock in merger recapitalization 4,795,306 573 8,805,665 -8,806,238
Sale of warrants 930,000 - 2,407,849 - 2,407,849
Exercise of warrants 5,037,993 504 2,387,741 - 2,388,245
Exercise of stock options 1,155 - 1,478 - 1,478
Stock issued to nonemployees 301,917 30 344,768 - 344,798
Stock-based compensation - - 390,108 - 390,108
Assumed stock options in connection with merger recapitalization - - 2,009 - 2,009
Net loss - - - (20,057,302 ) (20,057,302 )
Balance, December 31, 2023 28,556,072 2,856 88,610,832 (83,856,681 ) 4,757,007
Merger recapitalization transaction costs - - (95,911 ) - (95,911 )
Adjustment to merger recapitalization liability - - 214,169 - 214,169
Conversion of convertible note 3,968,254 250 2,499,750 - 2,500,000
Stock issued to nonemployees 394,8584 40 408,103 - 408,143
Stock-based compensation - - 698,165 - 698,165
Net loss (23,332,559 ) (23,332,559 )
Balance, December 31, 2024 32,919,184 $ 3,146 $ 92,335,108 $ (107,189,240 ) $ (14,850,986 )

See accompanying Notes to Consolidated Financial Statements.

F-5

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended <br> December 31,
2024 2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (23,332,559 ) $ (20,057,302 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 8,708 19,276
Loss on disposal of equipment 11,813 -
Provision for inventory obsolescence - 52,922
Provision for credit losses (10,272 ) -
Stock compensation to employees - 39,617
Stock compensation to nonemployees 408,143 305,181
Stock-based compensation 698,165 392,117
Gain on change in fair value of convertible promissory note (301,000 ) -
Increase or decrease in:
Accounts receivable (112,062 ) (67,388 )
Inventory 24,867 (52,783 )
Prepaid clinical expenses (1,227,149 ) (105,525 )
Prepaid insurance and services 142,587 41,201
Other - 2,037
Accounts payable and accrued expenses (922,748 ) 3,245,621
Total adjustments (1,278,948 ) 3,872,276
NET CASH USED IN OPERATING ACTIVITIES (24,611,507 ) (16,185,026 )
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of furniture and equipment - (2,420 )
NET CASH USED IN INVESTING ACTIVITIES - (2,420 )
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from sale of stock - 9,739,040
Net proceeds from merger recapitalization - 10,042,488
Merger recapitalization transaction costs (95,911 ) (688,480 )
Exercise of stock options - 1,478
Net from sale of warrants - 2,407,849
Exercise of warrants 2,388,245
Proceeds from issuance of convertible notes 16,000,000 -
- -
NET CASH PROVIDED BY FINANCING ACTIVITIES 15,904,089 23,890,620
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS (8,707,418 ) 7,703,174
CASH AND CASH EQUIVALENTS, beginning of year 9,246,592 1,543,418
CASH AND CASH EQUIVALENTS, end of year $ 539,174 $ 9,246,592
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest $ 2,318 $ 10,056
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Issuance of common stock for services $ 408,143 $ 344,798
Liabilities assumed, net of non-cash assets received in merger recapitalization $ 214,169 $ 406,171
Conversion of convertible note into common stock $ 2,500,000 $ -

See accompanying Notes to Consolidated Financial Statements.

F-6

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

(1) ORGANIZATION AND DESRIPTION OF BUSINESS:

Cyclo Therapeutics, Inc. (the “Company,” “we,” “our” or “us”) was incorporated in August 1990 as a Florida corporation, under the name Cyclodextrin Technologies Development, Inc. with operations beginning in July 1992. In conjunction with a restructuring in 2000, we changed our name to CTD Holdings, Inc. We changed our name to Cyclo Therapeutics, Inc. in September 2019 to better reflect our current business and, on November 6, 2020, we reincorporated from the State of Florida to the State of Nevada.

On December 27, 2023, the Company, completed a strategic combination pursuant to that certain Agreement and Plan of Merger, dated as of September 21, 2023, by and among the Company, Cameo Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), and Applied Molecular Transport Inc., a Delaware corporation (“AMTI”), providing for the merger of Merger Sub with and into AMTI, with AMTI surviving the merger as a wholly-owned subsidiary of the Company (the “AMTI Merger”).

We are a clinical stage biotechnology company that develops cyclodextrin-based products for the treatment of neurodegenerative diseases. We filed a Type II Drug Master File with the U.S. Food and Drug Administration (“FDA”) in 2014 for our lead drug candidate, Trappsol® Cyclo™ (hydroxypropyl beta cyclodextrin) as a treatment for Niemann-Pick Type C disease (“NPC”). NPC is a rare and fatal autosomal recessive genetic disease resulting in disrupted cholesterol metabolism that impacts the brain, lungs, liver, spleen, and other organs. In 2015, we launched an International Clinical Program for Trappsol® Cyclo™ as a treatment for NPC. In 2016, we filed an Investigational New Drug application (“IND”) with the FDA, which described our Phase I clinical plans for a randomized, double blind, parallel group study at a single clinical site in the U.S. The Phase I study evaluated the safety and pharmacokinetics of Trappsol® Cyclo™ along with markers of cholesterol metabolism and markers of NPC during a 12-week treatment period of intravenous administration of Trappsol® Cyclo™ every two weeks to participants 18 years of age and older. The IND was approved by the FDA in September 2016, and in January 2017 the FDA granted Fast Track designation to Trappsol® Cyclo™ for the treatment of NPC. Initial patient enrollment in the U.S. Phase I study commenced in September 2017, and in May 2020 we announced top line data showing Trappsol® Cyclo™ was well tolerated in this study.

We have also completed a Phase I/II clinical study approved by European regulatory bodies with clinical trial centers in the United Kingdom, Sweden, and Israel. The Phase I/II study evaluated the safety, tolerability and efficacy of Trappsol® Cyclo™ through a range of clinical outcomes, including neurologic, respiratory, and measurements of cholesterol metabolism and markers of NPC. Consistent with the 12-week Phase 1 study (single U.S. site), the European/Israel study administered Trappsol® Cyclo™ intravenously to NPC patients every two weeks in a double-blind, randomized trial, but differs in that the study period was for 48 weeks (24 doses). In March of 2021 we announced that 100% of patients who completed the trial (9 out of 12) improved or remained stable, and 89% met the outcome measure in at least two domains of the 17-domain NPC severity scale. We did not conduct a Phase II trial in the U.S. and instead relied on the data obtained from our Phase I/II trial abroad to support the commencement of our Phase III trial in the U.S

In February 2020 we had a face-to-face “Type C” meeting with the FDA with respect to the initiation of our pivotal Phase III clinical trial of Trappsol® Cyclo™ based on the clinical data obtained to date. At that meeting, we also discussed with the FDA submitting a New Drug Application (NDA) under Section 505(b)(1) of the Federal Food, Drug, and Cosmetic Act for the treatment of NPC in pediatric and adult patients with Trappsol® Cyclo™. A similar request was submitted to the European Medicines Agency (“EMA”) in February 2020, seeking scientific advice and protocol assistance from the EMA for proceeding with a Phase III clinical trial in Europe. In October 2020 we received a “Study May Proceed” notification from the FDA with respect to the proposed Phase III clinical trial, and in June of 2021 we commenced enrollment in TransportNPC, a pivotal Phase III study of Trappsol® Cyclo™ for the treatment of NPC. In May 2024, we enrolled the last of the 104 patients enrolled in the Phase III study.

F-7

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

(1) ORGANIZATION AND DESRIPTION OF BUSINESS: (CONTINUED)

We are also exploring the use of cyclodextrins in the treatment of Alzheimer’s disease. In January 2018, the FDA authorized a single patient IND expanded access program using Trappsol® Cyclo™ for the treatment of Alzheimer’s disease. Based on the data collected from this patient combined with the data from our NPC studies, we prepared a synopsis for an early-stage protocol using Trappsol® Cyclo™ intravenously to treat Alzheimer’s disease that was presented to the FDA in January of 2021. We received feedback from the FDA on this synopsis in April 2021 and incorporated the feedback into an IND for a Phase II study for the treatment of Alzheimer’s disease with Trappsol® Cyclo™ that we submitted to the FDA in November 2021. In December of 2021, we received IND clearance from the FDA, allowing us to proceed with our Phase II study of Trappsol® Cyclo™ for the treatment of Alzheimer’s disease. U.S. sites for the study were activated during the second half of 2022, with patient dosing beginning in the first quarter of 2023.

We also continue to operate our legacy fine chemical business, consisting of the sale of cyclodextrins and related products to the pharmaceutical, nutritional, and other industries, primarily for use in diagnostics and specialty drugs. However, our core business has transitioned to a biotechnology company primarily focused on the development of cyclodextrin-based biopharmaceuticals for the treatment of disease from a business that had been primarily reselling basic cyclodextrin products.

Acquisition by Rafael Holdings

On August 21, 2024, the Company entered into an Agreement and Plan of Merger which was amended on December 18, 2024 and February 4, 2025 (the "Merger Agreement”) with Rafael Holdings, Inc. ("Rafael”), a Delaware corporation; and Tandem Therapeutics, Inc., a Nevada corporation and a wholly-owned subsidiary of Rafael ("First Merger Sub”); and Tandem Therapeutics, LLC, a Nevada limited liability company and a wholly-owned subsidiary of Rafael ("Second Merger Sub”). Pursuant to the terms of the Merger Agreement, First Merger Sub and the Company will be merged (the "First Merger”), with the Company surviving the Merger as a wholly-owned subsidiary of Rafael. Immediately following the First Merger, the Company will merge with and into the Second Merger Sub (the "Second Merger”, and together with the First Merger, the ("Merger”) with Second Merger Sub being the surviving entity (the “Surviving Entity”) of the Second Merger as a wholly-owned subsidiary of Rafael. The name of the Surviving Entity will be changed to Cyclo Therapeutics, LLC.

At the closing of the Merger, each outstanding share of Company common stock will be converted into the right to receive a number of shares of Rafael Class B common stock calculated in accordance with the Merger Agreement (the "Exchange Ratio”). The Exchange Ratio was initially estimated to be 0.3112 shares of Rafael Class B common stock for each share of Company common stock. The final actual exchange ratio of 0.3535 at the time of closing was based on valuing Company common stock at $0.95 per share and Rafael at the combined value of its cash, cash equivalents, marketable securities, real estate and certain other financial holdings plus amounts loaned by Rafael to the Company between the signing of the Merger Agreement and the closing of the Merger, less certain of Rafael’s current liabilities. In addition, the cash value will take into account the funding of the Company’s operations by Rafael with convertible notes through closing, as discussed at Note (8). Any fractional share of Rafael Class B common stock will be rounded up to the nearest whole share.

All compensatory options to purchase Company common stock will be converted into an option to acquire Rafael Class B common stock, as described in the Merger Agreement.

Unless otherwise provided for in outstanding warrant agreements, all outstanding warrants to purchase Cyclo common stock (other than those held by Rafael which will be cancelled) will automatically be converted into warrants to purchase a number of shares of Rafael Class B common stock, at an adjusted exercise price per share based upon the Exchange Ratio. Certain holders of Cyclo warrants, representing 5,498,914 Cyclo warrant shares, have the right to elect to receive cash payment in an amount equal to the Black Sholes Value of the unexercised portion of their warrants on the date of consummation of the Merger in lieu of receiving warrants to purchase Rafael Class B common stock.

Holders of Cyclo Public Warrants will receive Rafael Public Warrants in exchange for their Cyclo Public Warrants.

The Merger Agreement contains specified termination rights of each of the Company and Rafael. In connection with a termination of the Merger Agreement in specified circumstances, the terminating party will be reimbursed for transaction costs of up to $250,000. If the Merger Agreement is terminated by Company due to the Company’s board of directors making an adverse change recommendation, the Company will be required to pay a $400,000 termination fee to Rafael.

F-8

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

(1) ORGANIZATION AND DESRIPTION OF BUSINESS: (CONTINUED)

The boards of directors of each of the Company and Rafael have approved the Merger Agreement and the transactions contemplated thereby, subject to the satisfaction or waiver of customary conditions, including the requisite approval by the Company’s and Rafael’s stockholders and the effectiveness of a registration statement to register the shares of Rafael Class B common stock to be issued in connection with the transaction. The transaction closed on March 25, 2025.

Sources of Liquidity

For the years ended December 31, 2024 and 2023, the Company incurred net losses of $23,332,559 and $20,057,302 respectively. The Company has an accumulated deficit of $107,189,240 at December 31, 2024. Our recent losses have predominantly resulted from research and development expenses for our Trappsol® Cyclo™ product and other general operating expenses, including personnel expenses and board advisory fees. We believe our expenses will continue to increase as we continue to conduct clinical trials and seek regulatory approval for the use of Trappsol® Cyclo™ in the treatment of NPC and Alzheimer’s disease.

For the year ended December 31, 2024, the Company’s operations used $24,611,507 in cash, and at December 31, 2024, the Company had a cash and cash equivalents balance of $539,174 and negative working capital of $16,839,522. We will need to raise additional capital for the foreseeable future to fund the development of our drug product candidates through clinical development, manufacturing, and commercialization.

Rafael had agreed to fund the Company through the earlier of the consummation of the Merger or termination of the Merger Agreement in such amounts as may be necessary for the Company to operate its business and pay its debts and obligations as they become due, provided that the Company is not in active discussions regarding an acquisition proposal and is being operated in a manner consistent with the terms of the Merger Agreement and the financial forecast previously shared with Rafael. As discussed in Note 8, the Company has borrowed $21,000,000 from Rafael through March 25, 2025.

On March 25, 2025 the Company upon shareholder approval the Company completed its merger, merging Cyclo Therapeutics Inc, into Cyclo Therapeutics, LLC a wholly owned subsidiary of Rafael Holdings, Inc. As of January 31, 2025 Rafael had approximately $48,000,000 in cash and cash equivalents. Additionally, as per the merger Rafael had agreed to forgive the $21,000,000 in debt that had been loaned to the Cyclo.

F-9

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The following is a summary of the more significant accounting policies of the Company that affect the accompanying consolidated financial statements:

(a) BASIS OF PRESENTATION––The consolidated financial statements include the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

(b) CASH AND CASH EQUIVALENTS––Cash and cash equivalents consist of cash and any highly liquid investments with an original purchased maturity of three months or less. The Company maintains deposits in financial institutions in excess of federally insured limits of $250,000, in the amount of $539,174 at December 31, 2024.

(c) ACCOUNTS RECEIVABLE––Accounts receivable are unsecured and non-interest bearing and stated at the amount we expect to collect from outstanding balances. Customer account balances with invoices dated over 90 days old are considered past due. The Company does not accrue interest on past-due accounts. Customer payments are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, applied to the oldest unpaid invoices. Accounts receivable at January 1, 2023 were $54,991.

The carrying amount of accounts receivable is reduced by an allowance for credit losses that reflects management’s best estimate of expected credit losses. The Company reviews each customer balance where all or a portion of the balance exceeds 90 days from the invoice date. Based on the Company’s assessment of the customer’s current and forecasted creditworthiness, the Company estimates the portion, if any, of the balance that will not be collected, and writes off receivables as a charge to the allowance for credit losses when, in management’s estimation, it is probable that the receivable is worthless. The Company has determined that an allowance for credit losses was not necessary as of December 31, 2024. The allowance for credit losses at December 31, 2023 was $10,272.

The Company develops and documents its allowance for credit losses on its trade receivables based on portfolio segments, which include domestic and international customers. The determination of portfolio segments is based primarily on the customers’ geographical location. Our quantitative allowance for credit loss estimates was determined using the method that uses an aging schedule. The Company also considers qualitative adjustments that may relate to unique risks, changes in current economic conditions and reasonable and supported forecasts that may not be reflected in quantitatively derived results, or other relevant factors to further inform our estimate of the allowance for credit losses.

(d) INVENTORY AND COST OF PRODUCTS SOLD––Inventory consists of cyclodextrin products and chemical complexes purchased for resale recorded at the lower of cost (first-in, first-out) or net realizable value. Cost of products sold includes the acquisition cost of the products sold and does not include any allocation of inbound or outbound freight charges, indirect overhead expenses, warehouse and distribution expenses, or depreciation and amortization expense. The Company records a specific reserve for inventory items that are determined to be obsolete. The Company determined that no reserve for obsolete inventory was necessary as of December 31, 2024 and 2023.

The Company’s reserve for obsolete inventory is based on the Company’s best estimates of product sales and customer demands. It is reasonably possible that the estimates used by the Company to determine its provisions for inventory write-downs will be materially different from actual write-downs. These differences could result in materially higher than expected inventory provisions and related costs, which could have a materially adverse effect on the Company’s results of operations and financial condition in the near term.

(e) PREPAID CLINICAL EXPENSES––Prepaid clinical expenses consist of our active pharmaceutical ingredients and other raw materials for our pharmaceutical drug Trappsol® Cyclo™ expected to be used in our clinical trial program recorded at cost. In addition, advance payments for goods or services for future research and development activities are included as prepaid clinical expenses. Prepaid clinical expenses are expensed as research and development costs as the goods are delivered or the related services are performed. Prepaid clinical expenses expected to be utilized beyond one year from the balance sheet date are classified as non-current assets.

(f) FURNITURE AND EQUIPMENT––Furniture and equipment are recorded at cost, less accumulated depreciation. Depreciation is computed using primarily the straight-line method over the estimated useful lives of the assets (generally three to five years for computers and vehicles and seven to ten years for machinery, equipment and office furniture). We periodically review our long-lived assets to determine if the carrying value of assets may not be recoverable. If an impairment is identified, we recognize a loss for the difference between the carrying amount and the estimated fair value of the asset.

F-10

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)

(g) LEASES––The Company leases office and warehouse space. The Company determines if an arrangement is a lease at inception. Contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type or direct financing lease where the Company is a lessor, based on their terms. Operating leases are included in right-of-use (ROU) lease assets and lease liabilities on the Company’s consolidated balance sheets. The Company subleased office space under one existing lease to a third-party, through August 2024, the end of the lease term. Sublease income is reported as other income in the consolidated statement of operations.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The lease ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Variable lease payments are expensed as incurred. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

In evaluating contracts to determine if they qualify as a lease, the Company considers factors such as whether the Company has obtained substantially all of the rights to the underlying asset through exclusivity, if it can direct the use of the asset by making decisions about how and for what purpose the asset will be used and if the lessor has substantive substitution rights. This evaluation may require significant judgment.

(h) REVENUE RECOGNITION––Revenues are recognized when our customer obtains control of promised goods or services in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. We recognize revenues following the five step model prescribed under Accounting Standards Update (“ASU”) No. 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.

Product revenues

The majority of our revenue is garnered in North America from companies in the pharmaceutical industry that are manufacturing or conducting research with our fine chemical products. In other countries, we sell our products primarily to wholesale distributors and other third-party distribution partners.

Revenues from product sales are recognized when the customer obtains control of our product, which occurs at a point in time, typically upon delivery to the customer. We expense incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that we would have recognized is one year or less or the amount is immaterial. We treat shipping and handling costs performed after a customer obtains control of the product as a fulfillment cost. We have identified one performance obligation in our contracts with customers which is the delivery of product to our customers.  The transaction price is recognized in full when we deliver the product to our customer, which is the point at which we have satisfied our performance obligation.

For additional information on our revenues, please read Note 3, Revenues, to these consolidated financial statements.

(i) SHIPPING AND HANDLING FEES––Shipping and handling fees, if billed to customers, are included in product sales. Shipping and handling costs associated with inbound and outbound freight are expensed as incurred and included in freight and shipping expense.

(j) ADVERTISING––Advertising costs are charged to operations when incurred. We incur minimal advertising expenses.

F-11

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)

(k) RESEARCH AND DEVELOPMENT COSTS––Research and development costs are expensed as incurred. The Company records amounts paid in advance of the service being rendered as a prepaid asset, and the expense recognized when the service is performed. Research and development costs are primarily comprised of materials used in our clinical trials, personnel-related expenses and external research and development expenses incurred under arrangements with third parties, such as contract research organizations and consultants. At the end of each reporting period, the Company compares the payments made to each service provider to the estimated progress towards completion of the related project. Factors that the Company considers in preparing these estimates include the number of patients enrolled in studies, milestones achieved, and other criteria related to the efforts of its vendors. These estimates will be subject to change as additional information becomes available. Depending on the timing of payments to vendors and estimated services provided, the Company will record prepaid or accrued expenses related to these costs. Prepaid clinical expenses represent valid future economic benefits based on our contracts with our vendors and are realized in the ordinary course of business

(l) INCOME TAXES––Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In addition, tax benefits related to positions considered uncertain are recognized only when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions shall initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. As of December 31, 2024 and 2023, the Company has recorded a full valuation allowance against its deferred tax assets.

(m) NET LOSS PER COMMON SHARE––Basic and fully diluted net loss per common share is computed using a simple weighted average of common shares outstanding during the periods presented, as outstanding warrants to purchase 15,324,537 and 13,476,554 shares of common stock were antidilutive for the years ended December 31, 2024 and 2023, respectively. Additionally, outstanding options to purchase 1,670,286 and 899,820 shares of common stock were antidilutive for the years ended December 31, 2024 and 2023, respectively, and therefore also excluded.

(n) STOCK BASED COMPENSATION––The Company periodically awards stock to employees, directors, and consultants. In the case of employees and consultants, an expense is recognized equal to the fair value of the stock determined using the closing trading price of the stock on the award date. With respect to directors, the Company accrues stock compensation expense on a quarterly basis based on the Company’s historical director compensation policies, and each quarter recognizes such expense based on the trading price of the common stock during such quarter. This expense is then trued up at the time the shares are issued to directors based on the trading price at the time of issuance.

The Company periodically issues stock options under its 2021 Equity Incentive Plan. The Company uses the Black-Scholes valuation method to estimate the fair value of stock options at grant date. Compensation expense is recognized on the straight-line basis over the requisite service period, which is generally the vesting period.

(o) FAIR VALUE MEASUREMENTS AND DISCLOSURES––Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures,” requires companies to determine fair value based on the price that would be received to sell the asset or paid to transfer the liability to a market participant. ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement.

The guidance requires that assets and liabilities carried at fair value be classified and disclosed in one of the following categories:

● Level 1: Quoted market prices in active markets for identical assets or liabilities.
● Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
● Level 3: Unobservable inputs that are not corroborated by market data.

Long-lived assets are measured at fair value on a non-recurring basis and are subject to fair value adjustments when there is evidence of impairment.

For short-term classes of our financial instruments, which include cash and cash equivalents, accounts receivable, inventory, prepaid insurance and services prepaid clinical expenses and accounts payable and accrued expenses, approximate fair value due to their short-term nature.

F-12

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)

As of December 31, 2024, convertible notes payable were the only financial instrument measured and recorded at fair value on a recurring basis on the Company’s consolidated balance sheets. We classified the convertible notes payable as a Level 3 fair value measurement and used the Black-Scholes model to calculate the fair value as of the date of issuance, and for each reporting period. Key inputs for the simulation are summarized below. The Black-Scholes simulation uses inputs such as the stock price, volatility, the contractual term of the convertible notes payable, risk free interest rates and dividend yields. The following table presents money market funds and the convertible notes payable at their level within the fair value hierarchy for the years indicated. As of December 31, 2023, money market funds were the only financial instrument measured and recorded at fair value on a recurring basis on the Company’s consolidated balance sheets with cash and cash equivalents.

**** Fair Value Hierarchy Level Amortized Cost Gross Unrealized Gains Gross Unrealized Losses **** Fair Value
December 31, 2024
Liabilities:
Convertible notes payable (Note 8) Level 3 $ 13,500,000 $ - $ (301,000 ) $ 13,199,000
Total $ 13,500,000 $ - $ (301,000 ) $ 13,199,000
December 31, 2023
--- --- --- --- --- --- --- --- --- ---
Cash equivalents:
Money market funds invested in U.S. government obligations Level 1 $ 4,792,338 $ - $ - $ 4,792,338
Total $ 4,792,338 $ - $ - $ 4,792,338

The range of key inputs for the Black-Scholes simulation for the year ended December 31, 2024, were as follows:

Key Inputs
Stock Price $0.59 - $1.27
Term (years) 0.04 - 0.42
Risk-Free 4.4 - 5.40
Volatility 53% - 110%
Dividend yield -

The following table sets forth a summary of the changes in the fair value of our convertible notes payable categorized within Level 3 of the fair value hierarchy:

Balance as of December 31, 2023 $ -
Issuance of convertible notes 16,000,000
Conversion of convertible note to Common Stock (2,500,000 )
Change in fair value of Note (301,000 )
Balance as of December 31, 2024 $ 13,199,000 
F-13

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)

(p) USE OF ESTIMATES––The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions, including regarding contingencies, that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company’s most significant estimates relate to inventory obsolescence, stock-based compensation, fair value of convertible notes, warranty liability valuation, fair value of warrants issued, assumed liabilities, allowance for credit losses, prepaid clinical expenses and accrued expenses related to research and development activities. Although management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, actual results could significantly differ from these estimates.

(q) RECENT ACCOUNTING PRONOUNCEMENTS––In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosures.” The new guidance is intended to enhance the transparency and decision usefulness of income tax disclosures by requiring disaggregated information about a reporting entity’s effective tax rate reconciliation and information on income taxes paid. The amendment is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendment in this update should be applied on a prospective basis, with retrospective application permitted. The Company is in the process of evaluating the impact that the adoption of ASU 2023-09 will have on the consolidated financial statements and related disclosures.

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures,” which is intended to improve reportable segment disclosure requirements, primarily through additional and more detailed information about a reportable segment’s expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with retrospective application required and early adoption permitted. As the Company is no longer a public company, this guidance is not required to be adopted in these consolidated financial statements.

In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”) which clarifies guidance for fair value measurement of an equity security subject to a contractual sale restriction and establishes new disclosure requirements for such equity securities. ASU 2022-03 is effective for fiscal years beginning after December 15, 2023, and for interim periods within those fiscal years, with early adoption permitted. The Company adopted the new guidance as of January 1, 2024, and it did not have a material impact on its consolidated financial statements.

(r) WARRANTS––The Company accounts for its warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants considering the authoritative guidance in ASC 480*,* “Distinguishing Liabilities from Equity” (“ASC 480”), and ASC 815*,* “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants meet the definition of a liability pursuant to ASC 480 and meet all of the requirements for equity classification under ASC 815*,* including whether the warrants are indexed to the Company’s own common stock and satisfy additional conditions for equity classification. Warrants that are liability-classified are measured at fair value at each reporting date in accordance with the guidance in ASC 820*,“Fair Value Measurement,” with any subsequent changes in fair value recognized in the statement of operations in the period of change. The fair value of liability classified warrants was not material to the financial statements as of December 31, 2024 and 2023.*

(3) REVENUES:

The Company operates in one business segment, which primarily focuses on the development and commercialization of innovative cyclodextrin-based products for the treatment of people with serious and life-threatening rare diseases and medical conditions. However, substantially all of the Company’s revenues are derived from the sale of cyclodextrins and related products to the pharmaceutical, nutritional, and other industries, primarily for use in diagnostics and specialty drugs. The Company does not recognize revenue from reimbursement accounts for the use of it clinical stage asset Trappsol® Cyclo™.

The Company considers there to be revenue concentration risks for regions where net product revenues exceed 10% of consolidated net product revenues. During 2024 and 2023, approximately 5% and 12%, respectively, of the Company’s net product revenues were made to foreign customers. The concentration of the Company’s net product revenues within the regions may have a material adverse effect on the Company’s revenues and results of operations if sales in the respective regions experience difficulties. As of December 31, 2024 and 2023, approximately 11% and 39%, respectively, of the Company’s total accounts receivable were due from one foreign customer.

F-14

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

(3) REVENUES: (CONTINUED)

Revenues by product are summarized as follows:

Year Ended
December 31,
2024 2023
Trappsol^®^ HPB $ 459,114 $ 649,863
Trappsol^®^ Fine Chemical 415,130 412,686
Aquaplex^®^ 658 10,216
Other 3,575 3,640
Total revenues $ 878,477 $ 1,076,405

(4) MAJOR CUSTOMERS AND SUPPLIERS:

Our revenues are derived primarily from chemical supply and pharmaceutical companies located primarily in the United States and Canada. In 2024, four major customers accounted for 83% of total revenues. Accounts receivable balances for two customers accounted for 95% of total accounts receivable at December 31, 2024.

In 2023, two major customers accounted for 72% of total revenues. Accounts receivable balances for three customers accounted for 91% of total accounts receivable at December 31, 2023.

The Company purchases inventory primarily from four vendors; however, the Company believes it can maintain purchases at similar levels through other readily available vendors in the marketplace. The Company maintains vendors both domestically and internationally.

For the year ended December 31, 2024, the product mix of our revenues consistent of 100% basic natural and chemically modified cyclodextrins. For the year ended December 31 2023, the product mix of our revenues consisted of 99% basic natural and chemically modified cyclodextrins and 1% cyclodextrin complexes.

(5) CONCENTRATIONS OF CREDIT RISK:

Significant concentrations of credit risk for all financial instruments owned by the Company are as follows:

The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. Cash equivalents represent highly liquid investments with maturities of 90 days or less at the date of purchase. Credit risk related to cash and cash equivalents is based on the creditworthiness of the financial institutions at which these funds are held. The Company has cash balances at financial institutions which throughout the year may exceed the federally insured limit of $250,000. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company’s financial condition, results of operations, and cash flows. To reduce its risk associated with the failure of such financial institution, the Company evaluates the rating of the financial institution in which it holds deposits. Any material loss that the Company may experience in the future could have an adverse effect on its ability to pay its operational expenses or make other payments and may require the Company to move its cash to other high quality financial institutions. Currently, the Company is reviewing its bank relationships in order to mitigate its risk to ensure that its exposure is limited or reduced to the Federal Deposit Insurance Corporation protection limits.

The Company extends credit to customers in the normal course of business.  Concentrations of credit risk with respect to accounts receivable exist to the full extent of amounts presented in the consolidated financial statements. The Company does not require collateral from its customers to secure accounts receivable.

The Company has no significant off-balance sheet risk such as foreign exchange contracts, option contracts, or other hedging arrangements.

F-15

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

(6) FURNITURE AND EQUIPMENT:

Furniture and equipment consist of the following as of December 31:

2024 2023
Machinery and equipment $ 24,510 $ 75,137
Office furniture 84,010 84,010
108,520 159,147
Less: accumulated depreciation 90,709 120,815
Furniture and equipment, net $ 17,811 $ 38,332

Depreciation expense for the years ended December 31, 2024 and 2023 was $8,708 and $19,276, respectively.

(7) ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

Accounts payable and accrued expenses consist of the following as of December 31:

Year Ended
December 31,
2024 2023
Accounts payable (a) $ 5,262,212 $ 4,856,530
Accrued bonus compensation 821,191 1,590,776
Accrued board expense 132,000 92,110
Sub-lease deposit liability - 243,742
Merger liabilities 96,838 487,402
Other 8,258 186,856
Total accounts payable and accrued expenses $ 6,320,499 $ 7,457,416

(a) During the year ended December 31, 2024, under its agreementwith a clinical research organization (“CRO”), the Company was billed $2,000,000 for the funds held by the CRO on behalf ofthe Company to pay for the clinical trial activities with the organizations performing them. As of December 31, 2024 the Company has notyet paid $1,443,833 of the invoice. While this amount is due and payable, because it has not been paid as of year-end, it is not includedin prepaid clinical expenses and therefore accounts payable as of December 31, 2024 but it is an obligation of the Company.

(8) CONVERTIBLE NOTES PAYABLE:

On June 11, 2024, the Company entered into a Note Purchase Agreement (the "Initial NPA”) with Rafael Holdings, Inc., a Delaware corporation ("Rafael”), the holder of approximately 31.5% of our common stock, pursuant to which the Company issued and sold a convertible note in the principal amount of $2,000,000 (the "June Note”) to Rafael. The Initial NPA matures on November 11, 2024 and bears interest at a rate of 5% per annum, payable until maturity.

On July 16, 2024, the Company entered into an Amended and Restated Note Purchase Agreement (the "Amended NPA”) with Rafael, which amended and restated the Initial NPA in its entirety, pursuant to which the Company issued and sold a second convertible note in the principal amount of $2,000,000 (the "July Note,” [and together with the June Note, the "Notes,” and each a "Note”]) to Rafael. Each Note matures on November 11, 2024 and bears interest at a rate of 5% per annum, payable upon maturity.

On August 21, 2024, the Company entered into a Second Amended and Restated Note Purchase Agreement (the "Second Amended NPA”) with Rafael, which amended and restated the Amended NPA dated July 16, 2024 in its entirety, pursuant to which the Company issued and sold a third convertible note in the principal amount of $3,000,000 (the "August Note,” [and together with the June Note and July Note, the "Notes,” and each a "Note”]) to Rafael. Each Note matures on December 21, 2024 and bears interest at a rate of 5% per annum, payable upon maturity.

F-16

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

(8) CONVERTIBLE NOTES PAYABLE: (CONTINUED)

On September 9, 2024, the Company entered into a Third Amended and Restated Note Purchase Agreement (the "Third Amended NPA”) with Rafael, which amended and restated the Second Amended NPA dated August 21, 2024 in its entirety, pursuant to which the Company issued and sold a fourth convertible note in the principal amount of $3,000,000 (the "September Note,” [and together with the June Note, July Note, August Note, the "Notes,” and each a "Note”]) to Rafael. Each Note matures on December 21, 2024 and bears interest at a rate of 5% per annum, payable upon maturity.

On October 8, 2024, the Company entered into a Fourth Amended and Restated Note Purchase Agreement (the "Fourth Amended NPA”) with Rafael, which amended and restated the Third Amended NPA dated September 9, 2024 in its entirety, pursuant to which the Company issued and sold a fourth convertible note in the principal amount of $3,000,000 (the "October Note,” [and together with the June Note, July Note, August Note and September Note, the "Notes,” and each a "Note”]) to Rafael. Each Note matures on December 21, 2024 and bears interest at a rate of 5% per annum, payable upon maturity.

On November 7, 2024, the Company entered into a Fifth Amended and Restated Note Purchase Agreement (the "Fifth Amended NPA”) with Rafael, which amended and restated the Fourth Amended NPA dated October 8, 2024 in its entirety, pursuant to which the Company issued and sold a fifth convertible note in the principal amount of $2,000,000 (the "November Note,” [and together with the June Note, July Note, August Note, September Note, and October Note, the "Notes,” and each a "Note”]) to Rafael. Each Note matures on December 21, 2024 and bears interest at a rate of 5% per annum, payable upon maturity.

On December 5, 2024, the Company entered into a Sixth Amended and Restated Note Purchase Agreement (the "Sixth Amended NPA”) with Rafael, which amended and restated the Fifth Amended NPA dated November 7, 2024 in its entirety, pursuant to which the Company issued and sold a sixth convertible note in the principal amount of $1,000,000 (the "December Note,” [and together with the June Note, July Note, August Note, September Note, October Note, and November Note, the "Notes,” and each a "Note”]) to Rafael. Each Note matures on December 21, 2024 and bears interest at a rate of 5% per annum, payable upon maturity.

On December 21, 2024, the Company entered into an Amendment to Convertible Promissory Notes (the "Amendment to Notes”) with Rafael, pursuant to which each of the Notes were amended to extend each notes original maturity date to February 15, 2025. All other terms of the Notes, including the principal amounts, interest rate of 5% per annum, and lender counterparty, remained unchanged.

Management evaluated the terms of the Amendment in accordance with ASC 470-50, Debt—Modifications and Extinguishments, and determined that the amendment represented a modification rather than an extinguishment. In making this assessment, management considered that:

● The<br>lender remained the same under the amended arrangement;
● The<br>stated interest rate of 5% and all other contractual terms were unchanged;
--- ---
● The<br>modification resulted in an extension of maturity by fewer than two months;
--- ---
● The<br>present value of cash flows under the amended terms did not differ from the original terms by more than 10%.
--- ---

As such, no gain or loss was recognized in connection with the amendment, and the carrying value of the Notes was not adjusted. The Company will continue to recognize interest expense based on the original effective interest rate through the revised maturity date of February 15, 2025.

F-17

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

(8) CONVERTIBLE NOTES PAYABLE: (CONTINUED)

On December 23, 2024, the Company received a notice from Rafael that Rafael had elected to convert $2,500,000 of the outstanding balance of the August Note into 3,968,254 shares of the Company’s common stock, at a conversion price of $0.63 (the “Conversion”). The conversion price was based on the closing price of the Company’s common stock on The Nasdaq Capital Market on December 20, 2024, the trading date immediately preceding the date of Conversion. The remaining principal balance of $500,000 as of December 31, 2024, was fair valued at $490,000 and continues to be accounted for under the fair value option in accordance with ASC 825. The Company has elected the fair value option for all outstanding notes; however, the August Note is the only note with a partial conversion as of year-end and is therefore presented separately here.

See Note 18 for additional information including further extension of the Notes to March 31, 2025 as well as the ultimate conversion of the Notes subsequent to year end.

Each Note may be prepaid by the Company in full at any time. The principal amount of each Note is convertible into shares of our common stock, prior to the repayment of such Note, at the option of Rafael; automatically if the Company enters into a Qualified Financing (as defined) and at the option of Rafael if a Sale Transaction (as defined) occurs prior to repayment of such Note, all at the price and on the terms and conditions set forth in such Note. Upon the occurrence of an Event of Default (as defined) under any Note, including the failure of the Company to pay the principal or interest under any Note, when due, the obligations of the Company under each Note may be accelerated. The Company intends to use the proceeds of the Notes for working capital and general corporate purposes.

Due to these embedded features within the Notes, the Company elected to account for the Notes and the embedded features at fair value at inception. Subsequent changes in fair value are recorded as a component of other income (loss) in the condensed consolidated statements of operations.

Interest expense on the Notes totaled $295,068 for the year ended December 31, 2024 and is included in the fair value of the notes.

The following table presents the Notes as of December 31, 2024:

Balance as of December 31, 2023 $ -
Issuance of Convertible Notes 16,000,000
Conversion of Convertible Note to common stock (2,500,000 )
Change in fair value of Notes (301,000 )
Balance as of December 31, 2024 $ 13,199,000

(9) LEASES:

The Company entered into an operating lease in January 2023 for office and warehouse space, which has a lease term expiring in January 2026, with an option to extend for an additional three years. As it is not reasonably certain the Company will exercise the option to extend, the additional three years have not been included in the lease term. This lease replaced an existing operating lease which expired January 2023. The Company also assumed an operating lease for office space which is being subleased to a third party. The assumed lease and sublease agreement expired in August 2024.

Right-of-use lease assets are recorded net of accumulated amortization of $21,860 and $17,242 as of December 31, 2024 and 2023, respectively. Lease expense for lease payments is recognized on a straight-line basis over the lease term.  Lease expense was $1,457,799 and $28,353 for the years ended December 31, 2024 and 2023, respectively. Sublease income recognized during the year ended December 31, 2024 was $1,481,516. There was no sublease income recognized during the year ended December 31, 2023.

Other information related to leases for the years ended December 31, 2024 and 2023 was as follows:

2024 2023
Cash paid for amounts included in the measurement of lease liabilities $ 1,020,604 $ 17,000
Operating lease assets obtained in merger recapitalization - 850,542
Operating lease liability assumed in merger recapitalization - 992,141
Weighted-average remaining lease term—operating leases 1.08 years .72
Weighted-average discount rate—operating leases 8 % 3 % 
F-18

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

(9) LEASES: (CONTINUED)

As the sublease term ended in August 2024, there is no future sublease income for the year ending December 31, 2024.

Future minimum lease payments under non-cancellable operating leases as of December 31, 2024 were as follows:

Year Ending December 31, Amount
2025 $ 21,590
2026 1,804
Total future minimum lease payments 23,394
Less: Imputed interest (909 )
$ 22,485

(10) EQUITY TRANSACTIONS:

In 2024, the Company issued 45,434 shares with a value of $30,000 to a director for consulting fees. In 2023, the Company issued 42,599 shares to a director for consulting fees of $39,617.

The Company accrues stock compensation expense over the period earned. Stock compensation expense for board members is included in “Board of Directors fees and costs” on our consolidated statement of operations. In 2024, the Company issued 349,485 shares to board members with a value of $378,143, at the time of issuance, in addition to $92,110 of accrued stock compensation as of December 31, 2023. In 2023, the Company issued 259,318 shares to board members with a value of $305,181, at the time of issuance, in addition to $30,750 of accrued compensation as of December 31, 2022.

The following table presents the number of common stock warrants outstanding:

Warrants
Warrants outstanding, December 31, 2022 2,045,846
Issued 18,825,700
Exercised (5,037,993 )
Expired (87,707 )
Warrants outstanding, December 31, 2023 15,745,846
Issued -
Exercised -
Expired (421,309 )
Warrants outstanding, December 31, 2024 15,324,537

The following table presents the number of common stock warrants outstanding, their exercise price, and expiration dates at December 31, 2024:

Warrants Issued Exercise Price Expiration Date
80,000 $ 25 April 2025
35,200 $ 65 December 2025
2,223 $ 11 September 2025
283,111 $ 15 August 2027
1,078,796 $ 5 December 2025
57,500 $ 6.25 December 2025
2,608,696 $ 1.36 January 2026
156,522 $ 2.02 December 2027
2,608,596 1.36 January 2028
3,695,227 $ 0.95 October 2028
718,566 $ 0.71 April 2030
4,000,000 $ 1.25 August 2030
15,324,537 
F-19

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

(11) PREFERRED STOCK:

The Company’s Articles of Incorporation provide for 5,000,000 shares of “blank check” preferred stock. At December 31, 2024 and 2023, no shares of preferred stock were outstanding or designated.

(12) INCOME TAXES:

Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of net deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Under ASC 740, deferred tax assets must be reduced by a valuation allowance if it is likely that all or a portion of it will not be realized. At December 31, 2024, we have determined it is more likely than not that we will not realize our temporary deductible differences and net operating loss carryforwards, and have provided a 100% valuation allowance on our net deferred tax asset.

Positive evidence we evaluated in the order of significance and weighting in our evaluation includes the amount of net operating loss carryforward utilized against current income tax liabilities in four of the prior ten years, and the length of time the net operating loss carryforwards are available before they expire. Negative evidence we considered in the order of significance and weighting in our evaluation include our recent net losses, our plans for continued clinical trial and product development expenses, the timing of expiration of the net operating loss carryforwards prior to being utilized, unpredictability of future sales and profitability, competition from others, and new government regulations. We determined greatest weight should be given to our plans for continued clinical trial and product development expenses, trend of increasing expenses, and net operating losses in our evaluation. We re-measure our valuation allowance each quarter based on changes in our current and expected future sales and margins, and changes in the other factors of both positive and negative evidence.

At December 31, 2024, we have unused federal and state net operating loss carryforwards totaling approximately $138,012,000 that may be applied against future taxable income.

If not used, the net operating loss carryforwards will expire as follows:

Year Ending December 31, Amount
2028 $ 14,000
2030 320,000
2031 73,000
2032 119,000
2034 1,477,000
2035 3.963,000
2036 5,757,000
2037 4,962,000
Indefinite 121,327,000
Total $ 138,012,000

The utilization of NOLs and tax credit carryforwards to offset future taxable income may be subject to an annual limitation as a result of ownership changes that have occurred previously or may occur in the future. Under Sections 382 and 383 of the Internal Revenue Code (“IRC”), a corporation that undergoes an ownership change may be subject to limitations on its ability to utilize its pre-change NOLs and other tax attributes otherwise available to offset future taxable income and/or tax liability. An ownership change is defined as a cumulative change of 50% or more in the ownership positions of certain stockholders during a rolling three-year period. The Company has not completed a formal study to determine if any ownership changes within the meaning of IRC Sections 382 and 383 have occurred. If an ownership change has occurred, the Company’s ability to use its NOLs or tax credit carryforwards may be restricted, which could require the Company to pay federal or state income taxes earlier than would be required if such limitations were not in effect.

The Company has expenses that qualify for the Orphan Drug Credit. The Orphan Drug Credit may be used to offset any current tax liabilities. Unused credits may be carried forward for 20 years. If the credit has not been used by the end of the 20 year carryforward period, it can be deducted as an expense for federal income tax purposes. The cumulative unused credit carryforward was $18,058,000 at December 31, 2024, which is reduced by an uncertain tax position of $9,029,000 as the Company has not yet performed a study of related expenses.

F-20

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

(12) INCOME TAXES: (CONTINUED)

For 2024 we did not recognize a benefit or provision for income taxes. The net deferred tax asset before the valuation allowance increased $5,301,000 from 2023 to 2024, which is primarily the result of an additional net operating loss for 2024. These deferred tax assets were fully offset by an increase in the valuation allowance. For 2023 we did not recognize a benefit or provision for income taxes. The net deferred tax asset before the valuation allowance increased $1,659,000 from 2022 to 2023, which is primarily the result of an additional net operating loss for 2023. We increased our valuation allowance to offset this increase in our deferred tax asset.

In connection with the acquisition of AMTI, the Company identified additional capitalized research and development costs of approximately $79,830,000 during the measurement period allowed under ASC 805, Business Combinations. This resulted in the recognition of an additional deferred tax asset of $18,274,000 as of December 31, 2023, fully offset by an increase in the valuation allowance. In 2024 and 2023, there was no impact on consolidated financial position, results of operations, or cash flows in connection with the measurement period adjustments.

Significant components of our deferred Federal income taxes were as follows:

2024 2023 (As Adjusted)
Deferred tax assets:
Net operating loss carryforwards $ 18,624,000 $ 12,624,000
Tax credits 9,029,000 6,950,000
Impairment allowances 9,000 3,000
Stock-based compensation 83,000 68,000
Other 175,000 167,000
Accrued bonuses - 242,000
Accrued legal - 95,000
Right-of-use liabilities 5,000 262,000
Convertible notes payable 68,000 -
Research and development expenses, net 20,423,000 22,920,000
Less valuation allowance (48,402,000 ) (43,101,000 )
Deferred tax asset, net of valuation allowance 14,000 230,000
Deferred tax liabilities:
Property and equipment (2,000 ) (3,000 )
Right-of-use assets (6,000 ) (227,000 )
Intangibles (6,000 ) -
Deferred tax liabilities (14,000 ) (230,000 )
Net deferred tax assets $ - $ -

The table below reflects the presentation of deferred tax components as of December 31, 2023. For 2023, amounts are presented both as initially reported in the Company’s 2023 financial statements and as adjusted to reflect measurement period adjustments identified and recorded in 2024 in connection with the acquisition of AMTI.

F-21

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

(12) INCOME TAXES: (CONTINUED)

Deferred tax assets: 2023 (As Initially Reported) Measurement Period Adjustment 2023 (As Adjusted)
Net operating loss carryforwards $ 12,624,000 - $ 12,624,000
Tax credits 6,950,000 - 6,950,000
Impairment allowances 3,000 - 3,000
Stock-based compensation 68,000 - 68,000
Other 167,000 - 167,000
Accrued bonuses 242,000 - 242,000
Accrued legal 95,000 - 95,000
Right-of-use liabilities 262,000 - 262,000
Convertible notes payable - - -
Research and development expenses, net 4,646,000 18,274,000 22,920,000
Total deferred tax assets 25,057,000 18,274,000 43,331,000
Less valuation allowance (24,827,000 ) (18,274,000 ) (43,101,000 )
Deferred tax assets, net of valuation allowance 230,000 - 230,000
Deferred tax liabilities:
Property and equipment (3,000 ) - (3,000 )
Right-of-use assets (227,000 ) - (227,000 )
Intangibles - - -
Total deferred tax liabilities (230,000 ) - (230,000 )
Net deferred tax assets - - - 
F-22

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

(12) INCOME TAXES: (CONTINUED)

The differences between the effective income tax rate reflected in the benefit (provision) for income taxes and the amounts, which would be determined by applying federal statutory income tax rate of 21% at December 31, 2024 and 2023, is summarized as follows:

2024 2023
Tax benefit (expense) at Federal statutory rate 21 % 21 %
Effect of State taxes 2 % 4 %
Change in apportionment affecting States (7 )% -
Other - 66 %
Tax credits 9 % 9 %
Nondeductible expenses (2 )% (1 )%
Valuation allowance – deferred tax assets (23 )% (99 )%
Total tax benefit (provision) $ - $ -

The Company files income tax returns in the U.S. Federal jurisdiction, and three states. Company is subject to U.S. federal and state income tax examination for calendar tax years beginning in 2008 due to NOLs that are being carried forward for tax purposes.

Effective for tax years beginning after December 31, 2021, taxpayers are required to capitalize any expenses they incurred that are considered incidental to research and experimentation (“R&E”) activities under IRC Section 174. While taxpayers historically had the option of deducting these expenses under IRC Section 174, the Tax Act mandates capitalization and amortization beginning with tax years after December 31, 2021. Expenses incurred in connection with R&E activities must be amortized over a 5-year period if incurred in the US or over a 15-year period if incurred outside of the United States. R&E activities are broader in scope than the calculation of qualified research activities under IRC Section 41 (for research and development tax credit purposes). For the year ended December 31, 2024, the Company performed an analysis based on all the guidance available and has determined that it will continue to be in a loss position after considering the R&E capitalization. The Company will continue to monitor the effects of this legislation, however, the Company does not expect to pay cash taxes as a result of this change as the remaining operating expenses excluding R&E expense are significant and expect to continue to generate losses for tax purposes in the near future.

The Company has reviewed and evaluated the relevant technical merits of each of its tax positions in accordance with accounting principles generally accepted in the United States of America for accounting for uncertainty in income taxes.

The following table summarizes our changes in uncertain tax positions:

2024 2023
Balance, January 1 $ 6,950,000 $ -
Additions based on tax positions related to the current year 2,079,000 6,950,000
Balance, December 31 $ 9,029,000 $ 6,950,000

When applicable, interest and penalties will be reflected as a component of income tax expense.

F-23

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

(13) EMPLOYEE BENEFIT PLAN:

The Company’s employees who have satisfied certain eligibility requirements are entitled to participate in a 401(k) plan through the Company’s professional employer organization. Employee contributions are discretionary. The Company may match employee contributions and may also make discretionary contributions for all eligible employees based upon their total compensation. For 2024 and 2023, the Company elected to match the employee’s contribution, not to exceed 4% of compensation. The Company’s 401(k) contributions were $78,457 and $66,505 for 2024 and 2023, respectively.

(14) EQUITY INCENTIVE PLANS:

On August 29, 2019, the Company’s stockholders approved the Company’s 2019 Omnibus Equity Incentive Plan at a special meeting of stockholders (the “2019 Plan”). The 2019 Plan provides for the issuance of up to 68,437 shares of common stock pursuant to the grant of shares of common stock, stock options or other awards, to employees, officers or directors of, and consultants to, the Company and its subsidiary. Options granted under the Incentive Plan may either be intended to qualify as incentive stock options under the Internal Revenue Code of 1986, or may be non-qualified options, and are exercisable over periods not exceeding ten years from date of grant. As of December 31, 2024, we had awarded 68,437 shares of common stock as awards under the 2019 Plan, with no shares of common stock remaining available for future awards under the 2019 Plan.

On June 24, 2021, the Company’s stockholders approved the Company’s 2021 Equity Incentive Plan at its annual meeting of stockholders (the “2021 Plan”). The 2021 Plan provides for the issuance of up to 3,000,000 shares of common stock pursuant to the grant of shares of common stock, stock options or other awards, to employees, officers or directors of, and consultants to, the Company and its subsidiary. Options granted under the Incentive Plan may either be intended to qualify as incentive stock options under the Internal Revenue Code of 1986, or may be non-qualified options, and are exercisable over periods not exceeding ten years from date of grant. During the year ended December 31, 2023 we awarded 301,805 shares of common stock and granted 459,281 stock options under the 2021 plan, and 92,827 options were forfeited. During the year ended December 31, 2024, we had awarded 394,858 shares of common stock and granted 879,341 stock options under the 2021 Plan, and no options were forfeited in 2024, with 536,864 shares of common stock remaining available for future awards. In 2023,the Company assumed 108,875 stock options which were valued using the Black-Sholes option pricing model. In 2024, these assumed options expired.

The Company uses the Black-Scholes valuation model to estimate the fair value of stock options at grant date. This valuation model uses the option exercise price as well as estimates and assumptions related to the expected price volatility of the Company’s stock, the rate of return on risk-free investments, the expected period during which the options will be outstanding, and the expected dividend yield for the Company’s common stock to estimate the fair value of a stock option at the date of grant. The valuation assumptions were determined as follows:

● Expected stock price volatility: There is a limited<br>market for the Company’s common stock providing a basis to estimate the expected volatility of the Company’s stock prices<br>for the purpose of valuing stock options granted. Alternatively, the Company uses the historical volatility of certain publicly traded<br>companies that represents the primary industry sector within which the Company operates.
● Risk-free interest rate: The Company bases the risk-free<br>interest rate on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate<br>with the assumed expected option term.
--- ---
● Expected term of options: The expected term of options<br>represents the period of time options are expected to be outstanding.
--- ---
● Expected annual dividends: The estimate for annual<br>dividends is $0 because the Company has not historically paid and does not intend to pay dividends in the foreseeable future.
--- ---

Share-based compensation expense is recorded on a straight-line basis over the requisite service period, which is generally the vesting period.

F-24

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

(14) EQUITY INCENTIVE PLANS: (CONTINUED)

The following table summarizes weighted-average assumptions used in our calculations of fair value for the years ended December 31, 2024 and 2023:

2024 2023
Dividend yield - % - %
Expected volatility 102.97 – 111.25 % 100.27 – 103.58 %
Risk-free interest rate 4.41 % 3.36 – 5.36 %
Expected lives (years) 3 – 6.25 1 – 6.25

The weighted-average fair value of options granted during the year ended December 31, 2024, as determined under the Black-Scholes valuation model, was $0.83

  • $1.10 per share. The weighted-average fair value of options granted during the year ended December 31, 2023, as determined under the Black-Scholes valuation model, was $0.69 - $1.06 per share.

In 2023, in conjunction with the merger of AMTI the Company assumed 108,875 stock option which were valued using the Black Sholes option pricing model. These assumed options expired in 2024. The fair value of the stock options assumed were estimated using the following assumptions:

Dividend yield - %
Expected volatility 90.3 – 93.3 %
Risk-free interest rate 4.79 %
Expected lives (years) 1 year

The estimated total fair value of the AMTI options assumed in 2023 and options expired in 2024 was not material to the consolidated financial statements.

The following is a summary of the stock option activity for the years ended December 31, 2024 and 2023:

Weighted Weighted
Average Aggregate Average
Exercise Intrinsic Remaining
Shares Price Value Contractual Life
Stock options outstanding at December 31, 2022 425,626 $ 5.17 $ - 8.9
Granted 459,281 1.91 -
Options assumed 108,875 2.96
Exercised (1,155 ) 1.28 $ -
Expired - - $ -
Forfeited (92,827 ) 3.15 -
Stock options outstanding at December 31, 2023 899,820 3.12 $ - 7.7
Granted 879,341 1.28 -
Exercised - - $ -
Expired (108,875 ) 2.96 -
Forfeited - - -
Stock options outstanding at December 31, 2024 1,670,286 $ 2.16 $ - 8.6
Stock options exercisable at December 31, 2024 808,661 $ 2.78 $ - 8.1

Unrecognized compensation expense related to unvested stock options was $1,169,200 as of December 31, 2024, which is expected to be recognized over a weighted-average period of 8.6 years and will be adjusted for forfeitures as they occur.

F-25

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

(15) NET LOSS PER SHARE:

The following table sets forth the computation of basic and diluted net loss per common share.

Years Ended
December 31,
2024 2023
Numerator
Net loss $ (23,332,559 ) $ (20,057,302 )
Denominator
Weighted-average common shares outstanding, basic and diluted 28,800,568 16,329,713
Net loss per share, basic and diluted $ (0.81 ) $ (1.23 )

The Company reported a net loss in 2024 and 2023, therefore, the basic and diluted net loss per share are the same in the respective periods because of the inclusion of potential common shares would have an anti-dilutive effect. Potential shares of common stock that are excluded from the computation of diluted weighted-average shares outstanding are as follows:

For the Year Ended
December 31,
2024 2023
Stock options 1,670,286 899,820
Warrants 15,324,537 13,476,553
Shares issuable upon conversion of convertible notes 22,881,000 -

(16) COMMITMENTS AND CONTINGENCIES:

From time to time, the Company is a party to claims and legal proceedings arising in the ordinary course of business. Our management evaluates our exposure to these claims and proceedings individually and in the aggregate and records an expense for potential losses on such litigation if it is possible to estimate the amount of loss and if the amount of the loss is probable.

In connection with an agreement executed in January 2022 with Ashland, Inc., the Company committed to purchase the minimum amounts of goods used in its normal operations based on completion of certain milestones. The first milestone was met during the first quarter of 2023, and $980,000 of goods were purchased and received. In the second quarter of 2023, the Company was invoiced for the second milestone and began to receive product during the first quarter of 2024. Milestone three was achieved in the third quarter of 2024 and final payment was made. No future minimum purchases remain as of December 31, 2024.

(17) RELATED PARTY TRANSACTIONS:

Since October 2016, we have paid a monthly fee of $5,000 a portion of this which was paid in shares for the year 2024 to a non-profit organization of which C.E. Rick Strattan is the Executive Director, in consideration of consulting services provided to us by Mr. Strattan. Mr. Strattan is our founder, former Chief Executive Officer and one of our directors.

In June 2019, we engaged Joshua M. Fine, the son of our Chief Executive Officer, to serve as our Chief Financial Officer. Mr. Fine received an annual salary of $345,855 and $335,780 in 2024 and 2023, respectively. In addition, he was awarded a cash bonus of $138,341 and $134,312 in 2024 and 2023, respectively. Joshua Fine was awarded stock options with a value of $121,473 in 2024 and $42,808 in 2023 that vest over 4 years.

Kevin J. Strattan, the son of C.E. Rick Strattan, has been employed by us since 2008, and since 2014 has been our Vice President, Finance – Compensation. His annual salary was $190,164 and $180,250 in 2024 and 2023, respectively. In addition, he received cash bonuses of $57,049 and $54,075 in 2024 and 2023, respectively. In 2024 and 2023 Mr. Strattan was also awarded stock options with a value of $65,661 and $21,140, respectively, that vest over 4 years.

F-26

CYCLO THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024 and 2023

(17) RELATED PARTY TRANSACTIONS: (CONTINUED)

Corey E. Strattan, the daughter-in-law of C.E. Rick Strattan, has been employed by us since 2011 as a documentation specialist and logistics coordinator, at an annual salary of $93,481 in 2024 and $92,700 in 2023. In addition, she received a cash bonus of $14,322 in 2024 and $13,905 in 2023.

On August 21, 2024, the Company entered into a Merger Agreement with Rafael Holdings, a significant shareholder. As of March 25, 2025, the Company has borrowed $21,000,000 from Rafael. Please see notes 1, 8, and 18 for additional information.

On April 20, 2023, Scott Fine, Chief Executive Officer and certain board members and an affiliate purchased 784,436 shares of common stock and we issued 784,436 warrants to purchase 784,436 shares of common stock.

On October 20, 2023, Scott Fine, Chief Executive Officer and certain board members exercised warrants and in exchange were issued new warrants.

(18) SUBSEQUENT EVENTS:

On January 10, 2025, the Company received a letter from Nasdaq stating that the Company was not in compliance with Nasdaq Listing Rules 5620(a) and 5810(c)(2)(G) for continued listing because it had not yet held an annual meeting of shareholders within twelve months of the end of the Company’s fiscal year end. Pursuant to the Nasdaq Listing Rules, the Company had 45 calendar days (until February 24, 2025) to submit a plan to regain compliance with the Nasdaq Listing Rules, and if the plan was accepted, Nasdaq could grant the Company an exception of up to 180 calendar days (until June 30, 2025) to regain compliance with the Nasdaq Listing Rules.

On January 3, 2025, the Company entered into a Seventh Amended and Restated Note Purchase Agreement with Rafael, pursuant to which the Company issued and sold a convertible promissory note in the principal amount of $3,000,000 to Rafael (the “January Note”). On February 4, 2025, the Company entered into an Eighth Amended and Restated Note Purchase Agreement with Rafael, pursuant to which the Company issued and sold a convertible promissory note in the principal amount of $2,000,000 to Rafael (the “February Note”). On March 6, 2025, the Company entered into a Ninth Amended and Restated Note Purchase Agreement with Rafael, pursuant to which the Company issued and sold a convertible promissory note in the principal amount of $2,500,000 to Rafael (the “March Note”, and together with the January Note and the February Note, the “Notes”). Each note was set to mature on March 31, 2025 and had an interest rate of 5% per annum, payable upon maturity. For additional information on these convertible promissory notes, please read Note 8, Convertible Notes Payable, to these consolidated financial statements.

On February 4, 2025, the Company and Rafael entered into an Amendment No. 2 to Agreement and Plan of Merger, pursuant to which the end date under the Merger Agreement was extended from February 15, 2025 to March 31, 2025.

On February 27, 2025, the Company issued 298,478 shares to board members with a value of $229,530, which was accrued as stock compensation expense as of December 31, 2024.

On March 25, 2025, the Company completed the previously announced strategic combination contemplated by the Merger Agreement with Rafael, First Merger Sub and Second Merger Sub, pursuant to which: (i) First Merger Sub merged with and into the Company (the “First Merger”), causing First Merger Sub to cease to exist and the Company to become a wholly owned subsidiary of Rafael; and (b) immediately following the First Merger, the Company merged with and into Second Merger Sub, with Second Merger Sub being the surviving entity of the subsequent merger (the “Second Merger” and together with the First Merger, the “Merger”).

At the effective time of the First Merger (“Effective Time”):

a) Each share of Company common stock that was issued and outstanding immediately prior to the Effective<br>Time (other than (i) treasury shares, and (ii) any shares of Company common stock held directly by Rafael or Merger Subs) was automatically<br>converted into the right to receive a number of shares of Rafael Class B common stock equal to 0.3525 (the “Exchange Ratio”).<br>No fractional shares of Rafael Class B common stock were issued in connection with the Merger and the number of shares of Rafael Class<br>B common stock issued to the Company’s stockholders was rounded up to the nearest whole share.
b) Each warrant to purchase Company common stock (other than those held by Rafael, which were cancelled)<br>(“Company Warrants”) was automatically converted into warrants to purchase Rafael Class B common stock (“Rafael Warrants”),<br>at an adjusted exercise price per share based upon the Exchange Ratio. Certain holders of Company Warrants representing 5,498,914 Company<br>Warrant shares had the right to elect to receive cash payment in an amount equal to the Black Scholes Value of the unexercised portion<br>of their Company Warrants on the date of consummation of the Merger in lieu of receiving Rafael Warrants. Holders of public warrants to<br>purchase shares of Company common stock that are currently listed on Nasdaq under the ticker symbol “CYTHW” (“Company<br>Public Warrants”) received newly registered warrants to purchase shares of Rafael Class B common stock (“Rafael Public Warrants”)<br>in exchange for their Company Public Warrants.
--- ---
c) Each compensatory option to purchase shares of Company common stock (each, a “Company Option”)<br>that was outstanding immediately prior to the Effective Time was automatically converted into options to acquire, on substantially similar<br>terms and conditions, a number of shares of Rafael Class B common stock (rounded down to the nearest whole share), at an adjusted exercise<br>price per share based upon the Exchange Ratio (rounded up to the nearest whole cent).
--- ---

For additional information on the Merger, please read Note 1, Organization and Description of Business – Acquisition by Rafael Holdings, to these consolidated financial statements.

F-27

Exhibit 99.2

UNAUDITEDPRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

IntroductoryNote

On March 25, 2025, Rafael Holdings, Inc. (“Rafael” or the “Company”), Cyclo Therapeutics, Inc. (“Cyclo”), Tandem Therapeutics, Inc., a wholly-owned subsidiary of the Company (“First Merger Sub”), and Tandem Therapeutics, LLC, a wholly-owned subsidiary of the Company (“Second Merger Sub”), completed a business combination transaction pursuant to which: (i) First Merger Sub merged with and into Cyclo, with Cyclo being the surviving entity (the “First Merger”), and (ii) immediately following the First Merger, Cyclo merged with and into Second Merger Sub, with Second Merger Sub being the surviving entity (the “Surviving Entity”) of the subsequent merger (the “Second Merger” and together with the First Merger, the “Merger”). As a result of the Merger, Rafael owns 100% of the outstanding equity interests in the Surviving Entity owning the business of Cyclo. The Merger was accounted for as a business combination pursuant to Accounting Standard Codification Topic 805, Business Combinations (“ASC 805”), where Rafael was the acquirer and the assets and liabilities of Cyclo are preliminarily measured and recognized based on their estimated fair values as of the date of the Merger. Refer to Note 1 to the unaudited pro forma condensed combined financial information below.

UnauditedPro Forma Combined Financial Information

The following unaudited pro forma condensed combined financial information presents the combination of the financial information of Rafael Holdings, Inc. and Subsidiaries (“Rafael”), and Cyclo Therapeutics, Inc. (“Cyclo”) adjusted to give effect to the Merger, as defined in Note1 to the unaudited pro forma condensed combined financial information below, and the related Financing Transactions, as defined in Note 6 to the unaudited pro forma condensed combined financial information below, between Rafael and Cyclo. The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X.

Rafael previously acquired Cornerstone Pharmaceuticals, Inc. (“Cornerstone”), which was a significant acquisition pursuant to Article 11 of Regulation S-X. The acquisition of Cornerstone closed on March 13, 2024. The Cornerstone Acquisition, and the related transactions, including the Cornerstone Restructuring and RP Finance Consolidation, are defined and detailed in Note 2 and the accompanying pro forma adjustments are discussed in Note 8 to the unaudited pro forma condensed combined financial information below.

Rafael and Cyclo have different fiscal year ends. Rafael’s fiscal year end is July 31 and Cyclo’s fiscal year end is December 31. The following unaudited pro forma condensed combined financial information has been prepared to present first, the combination on a pro forma basis of the historical financial statements of Rafael and Cornerstone, after giving effect to the Cornerstone Restructuring, the Cornerstone Acquisition, and the RP Finance Consolidation and second, the historical financial statements of Cyclo, after giving effect to the Financing Transactions and the Merger. All financial information has been prepared in accordance with U.S. GAAP. The unaudited pro forma condensed combined financial information includes:

(a) the unaudited pro forma condensed combined balance sheet as of January 31, 2025 which combines (i) the unaudited consolidated balance sheet of Rafael as of January 31, 2025, which is included in Rafael’s Form 10-Q filed with the SEC on March 14, 2025 (and which already reflects the Cornerstone Acquisition, Cornerstone Restructuring and RP Finance Consolidation) and (ii) the audited balance sheet of Cyclo as of December 31, 2024, as derived from its historical financial statements included in Exhibit No. 99.1 to this Form 8-K amendment, and gives pro forma effect to the Financing Transactions and Merger as if they had collectively occurred on January 31, 2025; and

(b) the unaudited pro forma condensed combined statement of operations for the six month period ended January 31, 2025 which combines, on a pro forma basis and in accordance with the requirements of Article 11 of Regulation S-X:

(1) (i) the unaudited interim consolidated statement of operations of Rafael for the six month period ended January 31, 2025, which is included in Rafael’s Form 10-Q filed with the SEC on March 14, 2025, and (ii) the unaudited interim statement of operations of Cyclo for the six month period ended December 31, 2024, as calculated by (A) subtracting the amounts in the unaudited interim consolidated statement of operations of Cyclo for the six months ended June 30, 2024, which is included in Cyclo’s Form 10-Q filed with the SEC on August 14, 2024, from (B) the audited consolidated statement of operations of Cyclo for the fiscal year ended December 31, 2024, as derived from its historical financial statements included in Exhibit No. 99.1 to this Form 8-K amendment; and

(2) the pro forma effect of the Cornerstone Restructuring, Cornerstone Acquisition, RP Finance Consolidation, Financing Transactions and Merger as if they had each occurred on August 1, 2023.

(c) the unaudited pro forma condensed combined statement of operations for the fiscal year ended July 31, 2024 which combines, on a pro forma basis and in accordance with the requirements of Article 11 of Regulation S-X:

(1) (i) the audited consolidated statement of operations of Rafael for the fiscal year ended July 31, 2024, which is included in Rafael’s Form 10-K filed with the SEC on November 7, 2024, as amended by Rafael’s Form 10-K/As filed with the SEC on December 20, 2024 and January 8, 2025, (ii) the unaudited interim consolidated statement of operations of Cornerstone for the period from August 1, 2023 through March 13, 2024, the date after which Cornerstone is reflected in Rafael’s operations, as derived from Cornerstone’s historical financial statements; Rafael has included Cornerstone’s unaudited historical financial statements as of and for the six months ended January 31, 2024, as Exhibit No. 99.5 to the registration statement on Form S-4 (File No. 333-282558) filed by Rafael with the U.S. Securities and Exchange Commission (the “SEC”) and declared effective on February 13, 2025 (the “Registration Statement”), and (iii) the unaudited statement of operations of Cyclo for the twelve month period ended June 30, 2024, as calculated by (A) adding the amounts in the unaudited interim consolidated statement of operations of Cyclo for the six months ended June 30, 2024, which is included in Cyclo’s Form 10-Q filed with the SEC on August 14, 2024, to (B) the unaudited interim consolidated statement of operations of Cyclo for the six months ended December 31, 2023, as calculated by subtracting the amounts in the unaudited interim consolidated statement of operations of Cyclo for the six months ended June 30, 2023, which is included in Cyclo’s Form 10-Q filed with the SEC on August 14, 2023, from the amounts in the audited annual consolidated statement of operations of Cyclo for the fiscal year ended December 31, 2023, which is included in Cyclo’s Form 10-K filed with the SEC on March 18, 2024, as amended in Cyclo’s Form 10-K/As filed with the SEC on April 29, 2024, November 26, 2024, and December 18, 2024; and

(2) the pro forma effect of the Cornerstone Restructuring, Cornerstone Acquisition, RP Finance Consolidation, Financing Transactions and Merger as if they had each occurred on August 1, 2023.

The unaudited pro forma condensed combined financial information should be read in conjunction with the audited and unaudited historical financial statements and related notes of Rafael, Cornerstone and Cyclo, as referred to above, which are incorporated by reference in, or included as an exhibit to, this Form 8-K amendment. Management has performed a comprehensive review of the accounting policies of Rafael and Cyclo and did not identify any differences that would have a material impact on the unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined financial information is based on the assumptions and adjustments that are described in the accompanying notes to this unaudited pro forma condensed combined financial information. The unaudited pro forma condensed combined financial statements and pro forma adjustments have been prepared based on preliminary estimates of fair value of consideration, and assets acquired and liabilities assumed. Differences between these preliminary estimates and the final amounts are likely to occur and these differences could be material as compared to the accompanying unaudited pro forma condensed combined financial statements and the combined companies’ future results of operations and financial position.

The unaudited pro forma condensed combined financial information is provided for illustrative and information purposes only and is not intended to represent or necessarily be indicative of the combined companies’ results of operations or financial condition had the Cornerstone Restructuring, Cornerstone Acquisition, RP Finance Consolidation, Financing Transactions and Merger been completed on the dates indicated, nor does it purport to project our results of operations or financial condition for any future period or as of any future date. The unaudited pro forma condensed combined financial information does not include any cost savings or operating synergies, which may be realized subsequent to the Cornerstone Restructuring, Cornerstone Acquisition, RP Finance Consolidation, Financing Transactions or Merger, or the impact of any integration-related items. Moreover, the pro forma adjustments reflected within the unaudited pro forma condensed combined balance sheet as of January 31, 2025, and within the unaudited pro forma condensed combined statements of operations for the six months ended January 31, 2025 and for the fiscal year ended July 31, 2024, represent best estimates based upon the information available to date and are preliminary and subject to change after more detailed information is obtained.

2

UNAUDITED PRO FORMA CONDENSEDCOMBINED BALANCE SHEET

AS OF JANUARY 31, 2025

(in thousands, exceptshare and per share data)

As of<br> <br>December 31, 2024<br><br> <br>Cyclo Transaction Accounting Adjustments
Therapeutics,<br><br> Inc. Financing<br><br> Transactions Merger Pro Forma Combined
ASSETS
CURRENT ASSETS
Cash and cash equivalents 48,319 539 $ (4,500 ) A $ (3,586 ) C9 $ 48,272
7,500 B
Accounts receivable, net of allowance for credit losses 200 245 — — 445
Convertible notes receivable, due from Cyclo 16,589 — 4,500 A (21,472 ) F —
— 383 E1
Inventory — 229 — — 229
Prepaid expenses and other current assets 725 1,687 — — 2,412
Total current assets 65,833 2,700 7,500 (24,675 ) 51,358
Property and equipment, net 1,933 18 — — 1,951
Investments - Cyclo Therapeutics Inc. 10,759 — — (10,759 ) C —
Convertible note receivable classified as available-for-sale 1,135 — — — 1,135
Goodwill — — — 16,147 C1 16,147
Intangible assets, net 1,787 — — 1,170 C2 2,957
In-process research and development 1,575 — — 38,200 C3 39,775
Prepaid expenses, noncurrent — 1,951 — — 1,951
Other assets 20 22 — — 42
TOTAL ASSETS 83,042 $ 4,691 $ 7,500 $ 20,083 $ 115,316
LIABILITIES AND EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable 2,546 5,262 $ — $ — $ 7,808
Accrued expenses 1,412 1,058 — 496 D 2,966
Convertible notes payable 614 — — — 614
Convertible notes payable, due to Rafael — 13,199 7,500 B 773 E —
— (21,472 ) F
Installment note payable 1,700 — — — 1,700
Other current liabilities 107 21 — — 128
Due to related parties 731 — — — 731
Total current liabilities 7,110 19,540 7,500 (20,203 ) 13,947
Accrued expenses, noncurrent 3,294 — — — 3,294
Convertible notes payable, noncurrent 75 — — — 75
Deferred income tax liabilities, net — — — 11,417 C4 11,417
Other liabilities — 2 — — 2
TOTAL LIABILITIES 10,479 19,542 7,500 (8,786 ) 28,735
EQUITY (DEFICIT)
Class A common stock, 0.01 par value; 35,000,000 shares authorized, 787,163 shares issued and outstanding as of January 31, 2025 8 — — — 8
Class B common stock, 0.01 par value; 200,000,000 shares authorized, 24,227,096 issued and 24,125,609 outstanding (excluding treasury shares of 101,487) as of January 31, 2025 241 — — 71 C5 312
Cyclo Common stock, par value .0001 per share — 3 — (3 ) C6 —
Additional paid-in capital 280,831 92,335 — (92,335 ) C6 296,284
14,621 C5
360 C7
472 C8
Accumulated deficit (215,390 ) (107,189 ) — (1,393 ) C (216,896 )
107,962 C6
(496 ) D
(773 ) E
383 E1
Treasury stock, at cost; 101,487 Class B shares as of January 31, 2025 (168 ) — — — (168 )
Accumulated other comprehensive income related to unrealized loss on available-for-sale securities 135 — — — 135
Accumulated other comprehensive income related to foreign currency translation adjustment 3,724 — — — 3,724
Total equity (deficit) attributable to controlling shareholders 69,381 (14,851 ) — 28,869 83,399
Noncontrolling interests 3,182 — — — 3,182
TOTAL EQUITY (DEFICIT) 72,563 (14,851 ) — 28,869 86,581
TOTAL LIABILITIES AND EQUITY (DEFICIT) 83,042 $ 4,691 $ 7,500 $ 20,083 $ 115,316

All values are in US Dollars.

3

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JANUARY 31, 2025

(in thousands, except share and per share data)

For<br> the Six Months Ended January 31, 2025 Transaction<br> Accounting Adjustments Rafael<br> Holdings, Inc. Pro Forma Prior to<br><br> Financing For<br> the Six Months Ended December 31, 2024<br><br> Cyclo Transaction<br> Accounting Adjustments ****
Rafael<br><br> Holdings, Inc. Cornerstone<br> Restructuring Cornerstone<br> Acquisition RP<br> Finance Consolidation Transactions<br> <br><br>and Merger Therapeutics,<br><br><br> Inc. Financing<br> Transactions Merger **** Pro<br> Forma <br><br>Combined
REVENUE ****
Product<br> Sales $ — $ — $ — $ — $ — $ 553 $ — $ — **** $ 553
Infusion<br> Technology 51 — — — 51 — — — **** 51
Rental<br> – Third Party 98 — — — 98 — — — **** 98
Rental<br> – Related Party 56 — — — 56 — — — **** 56
Total<br> revenue 205 — — — 205 553 — — **** 758
COSTS<br> AND EXPENSES ****
Cost<br> of sales — — — — — 38 — — **** 38
Cost<br> of Infusion Technology Revenue 75 — — — 75 — — — **** 75
General<br> and administrative 5,114 — — — 5,114 5,163 — (1,847 )CC 8,430
Research<br> and development 2,273 — — — 2,273 10,298 — — **** 12,571
Depreciation<br> and amortization 176 — — — 176 4 — 73 AA1 253
Loss<br> on impairment of goodwill 3,050 — — — 3,050 — — — **** 3,050
Loss<br> from operations (10,483 ) — — — (10,483 ) (14,950 ) — 1,774 **** (23,659 )
Interest<br> expense (325 ) — — — (325 ) — — — **** (325 )
Interest<br> income 1,057 — — — 1,057 550 — — **** 1,607
Realized<br> gain on available-for-sale securities 178 — — — 178 — — — **** 178
Unrealized<br> loss on investment - Cyclo Therapeutics Inc. (3,751 ) — — — (3,751 ) — — 3,751 AA —
Unrealized<br> loss on convertible notes receivable, due from Cyclo Therapeutics Inc. (1,102 ) — — — (1,102 ) — — 1,102 EE —
Loss<br> on change in fair value of convertible promissory note — — — — — 1,012 — (1,012) EE —
Other<br> income (80 ) — — — (80 ) 380 — — **** 300
Loss<br> from continuing operations before income taxes (14,506 ) — — — (14,506 ) (13,008 ) — 5,615 **** (21,899 )
Provision<br> for income taxes (32 ) — — — (32 ) — — — **** (32 )
Net<br> loss from continuing operations (14,538 ) — — — (14,538 ) (13,008 ) — 5,615 **** (21,931 )
Net<br> loss attributable to noncontrolling interests (891 ) — — — (891 ) — — — **** (891 )
Net<br> loss from continuing operations attributable to controlling shareholders $ (13,647 ) $ — $ — $ — $ (13,647 ) $ (13,008 ) $ — $ 5,615 **** $ (21,040 )
Loss<br> per share from continuing operations attributable to common stockholders ****
Basic<br> and diluted loss from continuing operations per share $ (0.57 ) $ (0.57 ) **** $ (0.67 )
Weighted<br> average number of shares used in calculation of loss per share ****
Basic<br> and diluted 24,121,186 24,121,186 7,132,228 FF 31,253,414 
4

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE FISCAL YEAR ENDED JULY 31, 2024

(in thousands, except share and per share data)

**** For the Fiscal Year Ended July 31, 2024 Rafael **** For the period from August 1, 2023 to March 13, 2024 Cornerstone **** Transaction Accounting Adjustments Rafael Holdings, Inc. Pro Forma Prior to Financing Transactions **** For the Twelve Months Ended June 30, 2024 Cyclo **** Transaction Accounting Adjustments **** **** ****
**** Holdings, Inc. **** Pharmaceuticals, Inc. **** Cornerstone Restructuring **** Cornerstone Acquisition **** RP Finance Consolidation and Merger **** Therapeutics, Inc. **** Financing Transactions Merger **** Pro Forma Combined ****
REVENUE **** **** ****
Product Sales $ — $ — $ — **** $ — **** $ — $ — $ 1,132 $ — $ — **** $ 1,132
Infusion Technology 355 — — **** — **** — 355 — — — **** 355
Rental – Third Party 174 — — **** — **** — 174 — — — **** 174
Rental – Related Party 108 — — **** — **** — 108 — — — **** 108
Total revenue 637 — — **** — **** — 637 1,132 — — **** 1,769
COSTS AND EXPENSES **** **** ****
Cost of sales — — — **** — **** — — 79 — — **** 79
Cost of Infusion Technology Revenue 154 — — **** — **** — 154 — — — **** 154
General and administrative 8,854 2,150 — **** — **** — 11,004 8,256 — 53 BB 21,656
**** **** 2,343 CC
Research and development 4,170 2,183 — **** — **** — 6,353 13,951 — — **** 20,304
In-process research and development expense 89,861 — — **** — **** — 89,861 — — — **** 89,861
Depreciation and amortization 225 — — **** — **** — 225 13 — 146 AA1 384
Loss from operations (102,627 ) (4,333 ) — **** — **** — (106,960 ) (21,167 ) — (2,542 ) (130,669 )
Interest expense (248 ) (6,519 ) 1,406 GG (415 ) KK — (673 ) — — — **** (673 )
92 HH **** ****
248 II **** ****
(2 ) II1 **** ****
4,765 JJ **** ****
Interest income 2,383 4 (92 ) HH1 — **** — 2,295 38 — — **** 2,333
Loss on initial investment in Day Three upon acquisition (1,633 ) — — **** — **** — (1,633 ) — — — **** (1,633 )
Realized gain on available-for-sale securities 1,772 — — **** — **** — 1,772 — — — **** 1,772
Realized loss on investment in equity securities (46 ) — — **** — **** — (46 ) — — — **** (46 )
Realized gain on investment - Cyclo Therapeutics Inc. 424 — — **** — **** — 424 — — (424 )DD —
Unrealized gain on investment - Cyclo Therapeutics Inc. 37 — — **** — **** — 37 — — (37 ) AA —
Unrealized gain on convertible notes receivable, due from Cyclo Therapeutics Inc. 1,191 — — **** — **** — 1,191 — — (1,191 ) EE —
Unrealized gain on investments - Hedge Funds 63 — — **** — **** — 63 — — — **** 63
Recovery of receivables from Cornerstone Pharmaceuticals 31,305 — — **** — **** — 31,305 — — — **** 31,305
Change in fair value of derivative liabilities — (2,076 ) 2,076 JJ — **** — — — — — **** —
Loss on sale of fixed assets — (43 ) — **** — **** — (43 ) — — — **** (43 )
Gain on forgiveness of accounts payable — 2,102 — **** — **** — 2,102 — — — **** 2,102
Loss on change in fair value of convertible promissory note — — — **** — **** — — (711 ) — 711 EE —
Other income 118 — — **** — **** — 118 1,102 — — **** 1,220
Loss from continuing operations before income taxes (67,261 ) (10,865 ) 8,493 **** (415 ) — (70,048 ) (20,738 ) — (3,483 ) (94,269 )
Benefit from income taxes 2,680 — — **** — **** — 2,680 — — — **** 2,680
Equity in loss of Day Three (422 ) — — **** — **** — (422 ) — — — **** (422 )
Net loss from continuing operations (65,003 ) (10,865 ) 8,493 **** (415 ) — (67,790 ) (20,738 ) — (3,483 ) (92,011 )
Net loss attributable to noncontrolling interests (30,593 ) — — **** (889 ) LL — (31,482 ) — — — **** (31,482 )
Net loss from continuing operations attributable to controlling shareholders $ (34,410 ) $ (10,865 ) $ 8,493 **** $ 474 **** $ — $ (36,308 ) $ (20,738 ) $ — $ (3,483 ) $ (60,529 )
Loss per share from continuing operations attributable to common stockholders **** **** ****
Basic and diluted loss from continuing operations per share $ (1.45 ) **** **** $ (1.53 ) **** $ (1.96 )
Weighted average number of shares used in calculation of loss per share **** **** ****
Basic and diluted 23,745,516 **** **** 23,745,516 7,132,228 FF 30,877,744 
5

NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL INFORMATION

Note 1. Description of the Merger and FinancingTransactions

The Merger

On March 25, 2025, Rafael Holdings, Inc. (“Rafael” or the “Company”), Cyclo Therapeutics, Inc. (“Cyclo”), Tandem Therapeutics, Inc., a wholly-owned subsidiary of the Company (“First Merger Sub”), and Tandem Therapeutics, LLC, a wholly-owned subsidiary of the Company (“Second Merger Sub”), completed a business combination transaction pursuant to which: (i) First Merger Sub merged with and into the Cyclo, with Cyclo being the surviving entity (the “First Merger”), and (ii) immediately following the First Merger, Cyclo merged with and into Second Merger Sub, with Second Merger Sub being the surviving entity (the “Surviving Entity”) of the subsequent merger (the “Second Merger” and together with the First Merger, the “Merger”). As part of the Merger:

a) Rafael issued 7,132,228 shares of Class B common stock of<br>Rafael (“Rafael Class B Common Stock”) in exchange for 20,234,468 shares of common stock of Cyclo (“Cyclo Common Stock”)<br>that were issued and outstanding immediately prior to March 25, 2025 (the “Closing Date”), based on an exchange ratio equal<br>to 0.3525 (the “Exchange Ratio”);
b) All compensatory options (the “Cyclo Options”)<br>to purchase Cyclo Common Stock that were outstanding immediately prior to the Merger were converted into options to acquire, on substantially<br>similar terms and conditions, a number of shares, adjusted based on the Exchange Ratio, of Rafael Class B Common Stock (rounded down<br>to the nearest whole share), at an adjusted exercise price per share based upon the Exchange Ratio (rounded up to the nearest whole cent)<br>(the “Rollover Options”);
--- ---
c) Unless otherwise provided for in outstanding warrant agreements,<br>all outstanding warrants to purchase Cyclo Common Stock (the “Cyclo Warrants”), other than those held by Rafael (the “Rafael-Owned<br>Cyclo Warrants”, as defined below, which were cancelled) converted into warrants to purchase a number of shares, adjusted based<br>on the Exchange Ratio, of Rafael Class B Common Stock, at an adjusted exercise price per share based upon the Exchange Ratio (the “Replacement<br>Warrants”). Certain Cyclo Warrants were settled through a payment of $3.6 million in cash, as these certain Cyclo Warrants provided<br>the holder with the right to elect to receive cash payment in lieu of receiving warrants to purchase Rafael Class B Common Stock; and
--- ---
d) The outstanding principal and accrued interest on the Cyclo<br>Convertible Notes, as defined below, due to Rafael from Cyclo, were forgiven.
--- ---

Following the consummation of the Merger, Rafael owns 100% of the outstanding equity interests in the Surviving Entity owning the business of Cyclo. Rafael has been determined to be the accounting acquirer in the Merger for financial reporting purposes as Rafael became the primary beneficiary of Cyclo, a VIE that constitutes a business. In accordance with Accounting Standards Codification (“ASC”) Topic 810, Consolidations, (“ASC 810”), the initial consolidation of a VIE that is a business is a business combination and shall be accounted for in accordance with the provisions in ASC 805.

For U.S. federal income tax purposes, the Merger qualifies as a “reorganization” within the meaning of Section 368(a)(1) of the Internal Revenue Code of 1986, as amended.

Rafael’s Prior Investment in Cyclo Therapeutics,Inc. as of January 31, 2025

On May 2, 2023, Rafael entered into a Securities Purchase Agreement (the “Cyclo SPA”) with Cyclo. Rafael purchased from Cyclo (i) 2,514,970 shares of Cyclo Common Stock (the “Purchased Shares”) and (ii) a warrant to purchase 2,514,970 shares of Cyclo Common Stock with an exercise price of $0.71 per share (the “Cyclo I Warrant”), at a combined purchase price equal to $0.835 per Purchased Share and Cyclo I Warrant to purchase one share, for an aggregate purchase price of $2.1 million. The Cyclo I Warrant is exercisable until August 1, 2030.

On August 1, 2023, pursuant to a Securities Purchase Agreement (the “Cyclo II SPA”) dated June 1, 2023, Rafael purchased an additional 4,000,000 shares of Cyclo Common Stock (the “Cyclo II Shares”), and received a warrant to purchase an additional 4,000,000 shares of Cyclo Common Stock (the “Cyclo II Warrant”), for an aggregate purchase price of $5,000,000. The Cyclo II Warrant has an exercise price of $1.25 per share and is exercisable until August 1, 2030.

On October 20, 2023, Rafael exercised the Cyclo I Warrant to purchase 2,514,970 shares of Cyclo Common Stock at an exercise price of $0.71 per share, pursuant to a Securities Purchase Agreement dated October 20, 2023, and received a new warrant (the “Cyclo III Warrant”) to purchase 2,766,467 shares of Cyclo Common Stock at an exercise price of $0.95 per share. The Cyclo III Warrant is exercisable until October 20, 2027. Both the Cyclo II Warrant and Cyclo III Warrant (collectively, the “Rafael-Owned Cyclo Warrants”) are subject to the restriction that exercise(s) do not convey more than 49% ownership of Cyclo Common Stock to Rafael (the “Cyclo Blocker”).

6

NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL INFORMATION

On December 23, 2024, Rafael exercised its discretionary conversion option under the Cyclo Convertible Notes (as defined in Note 6 to this unaudited pro forma condensed combined financial information) converting $2.5 million in outstanding principal amount of the Cyclo Convertible Note III, issued on August 21, 2024, into 3,968,254 shares of Cyclo Common Stock (the “Conversion”) at a conversion price of $0.63 per share, which was the closing price of Cyclo’s Common Stock on The NASDAQ Capital Market on December 20, 2024, the trading date immediately preceding the date of the Conversion. Following the Conversion, Rafael’s ownership increased to 12,998,194 shares, representing 39.1% ownership of outstanding Cyclo Common Stock.

Rafael’s ownership of 12,998,194 shares of outstanding Cyclo Common Stock and the Rafael-Owned Cyclo Warrants are collectively referred to herein in the unaudited pro forma condensed combined financial information as “Rafael’s Prior Investment in Cyclo.” The total aggregate fair value of Rafael’s Prior Investment in Cyclo, included as ‘Investments - Cyclo Therapeutics Inc.’ on Rafael’s historical balance sheet, was $10.8 million as of January 31, 2025.

Cyclo Securities held by Rafael

Cyclo Common Stock and warrants held by Rafael were cancelled and retired and ceased to exist upon consummation of the Merger.

The Cyclo Convertible Notes (as defined below) which were outstanding at the closing of the Merger were forgiven at the closing of the Merger.

Funding Commitment

Rafael has agreed to fund Cyclo’s TransportNPC™ clinical trial to its 48-week interim analysis up to a maximum amount, when added to the pre-closing funding, of $25 million. The aggregate pre-closing funding that has taken place through the Closing Date of the Merger, are referred to herein as the “Financing Transactions” which is described in Notes 6, 7 and 8 to this unaudited pro forma combined financial information.

Descriptionof the Financing Transactions

Between June 11, 2024 and March 6, 2025, Rafael purchased in aggregate, $23.5 million in principal for ten (10) Cyclo Convertible Notes (as defined in Note 6 to this unaudited pro forma condensed combined financial information) each with a maturity date of March 31, 2025, as amended, and each of which bears interest at a rate of 5% per annum payable upon maturity.

On December 23, 2024, Rafael exercised its discretionary conversion option under the Cyclo Convertible Notes, converting $2.5 million in outstanding principal amount of the Cyclo Convertible Note III, issued on August 21, 2024, into 3,968,254 shares of Cyclo Common Stock (the “Conversion”) at a conversion price of $0.63 per share, which was the closing price of Cyclo’s Common Stock on The NASDAQ Capital Market on December 20, 2024, the trading date immediately preceding the date of the Conversion.

The accounting treatment for the Cyclo Convertible Notes, and the related unaudited pro forma condensed combined transaction accounting adjustments, are described in Notes 6, 7 and 8, respectively, to this unaudited pro forma condensed combined financial information.

Note 2. Description of the Cornerstone Restructuring,Cornerstone Acquisition, and RP Finance Consolidation

On March 13, 2024, Rafael, Cornerstone, and other holders of debt and equity securities of Cornerstone agreed to various transactions which effected a recapitalization and restructuring of Cornerstone (the “Cornerstone Restructuring”), as disclosed in Rafael’s July 31, 2024 Form 10-K which is incorporated by reference herein, and for which certain aspects of the Cornerstone Restructuring affecting the unaudited pro forma condensed combined statements of operations for the fiscal year ended July 31, 2024 are detailed below.

In the Cornerstone Restructuring, Rafael purchased shares of Cornerstone’s common stock that gave Rafael control over approximately 67% of the issued and outstanding common stock of Cornerstone, which became a consolidated subsidiary of Rafael on March 13, 2024 (the “Cornerstone Acquisition”). For accounting purposes, Rafael was determined to be the acquirer, as Rafael has been determined to be the primary beneficiary of Cornerstone, a VIE, in accordance with ASC 810, that is not a business in accordance with U.S. GAAP as substantially all of the fair value of Cornerstone’s gross assets was concentrated within in-process research and development (“IPR&D”), an intangible asset. Accordingly, the Cornerstone Acquisition was accounted for as an asset acquisition and the fair value of the IPR&D asset acquired with no alternative future use was charged to expense at the acquisition date. Rafael’s historical consolidated statement of operations for the fiscal year ended July 31, 2024 included IPR&D expense of $89.9 million, related to the IPR&D asset acquired with no alternative future use. For Rafael, the Cornerstone Acquisition is the result of the Cornerstone Restructuring.

7

NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL INFORMATION

In conjunction with the Cornerstone Acquisition, Rafael reassessed its relationship with RP Finance and, as a result of the Cornerstone Restructuring and resulting Cornerstone Acquisition, determined that RP Finance is still a VIE and that Rafael is now considered the primary beneficiary of RP Finance as Rafael now holds the ability to control repayment of the RPF Line of Credit, which directly impacts RP Finance’s economic performance. Therefore, Rafael has consolidated RP Finance as a result of the Cornerstone Acquisition on March 13, 2024 (the “RP Finance Consolidation”). The RP Finance Consolidation is accounted for as an acquisition of a VIE that is not a business in accordance with U.S. GAAP as RP Finance does not meet the definition of a business under U.S. GAAP.

Background of Rafael’s prior investments in Cornerstone

Prior to the Cornerstone Restructuring, Rafael (individually and together with its subsidiaries, and through an equity method investment in RP Finance) held certain debt and equity investments in Cornerstone which are detailed in Rafael’s July 31, 2024 Form 10-K.

Cornerstone Restructuring

On March 13, 2024, Cornerstone completed the Cornerstone Restructuring. Rafael incurred transaction costs of approximately $0.7 million which are included in Rafael’s historical consolidated statement of operations for the fiscal year ended July 31, 2024 and Cornerstone incurred transaction costs of approximately $0.6 million which are included in Cornerstone’s historical consolidated statement of operations for the period from August 1, 2023 to March 13, 2024. The Cornerstone Restructuring transaction costs are non-recurring. The Cornerstone Restructuring included the following certain transactions that affected the unaudited pro forma condensed combined statements of operations for the fiscal year ended July 31, 2024:

(i) Cornerstone offered shares of Cornerstone’s common stock to all holders of Cornerstone’s promissory notes convertible into the Cornerstone Series C Preferred Stock (the “Series C Convertible Notes”) with the purchase price to be paid through conversion of the outstanding principal amount and accrued interest on their Series C Convertible Notes held by each holder into Cornerstone’s common stock (the “Series C Convertible Notes Exchange”). Rafael notes that approximately 94% of the Series C Convertible Notes participated in the Series C Convertible Notes Exchange and were converted into shares of Cornerstone’s common stock in the Cornerstone Restructuring. Of the Series C Convertible Notes that did not participate in the Series C Convertible Notes Exchange, a portion of the Series C Convertible Notes were amended in the Cornerstone Restructuring to (i) extend the maturity date thereof to May 31, 2028, and (ii) provide that, on conversion thereof, the converting holder will receive shares of Cornerstone’s common stock. The remaining Series C Convertible Notes remain outstanding and were not amended in connection with the Cornerstone Restructuring. Refer to adjustments II and II1 in Note8 to this unaudited pro forma condensed combined financial information.

(ii) Rafael converted the outstanding principal and accrued interest under a loan by it to Cornerstone under a line of credit agreement (the “RFL Line of Credit”) into shares of Cornerstone’s common stock. The conversion of the RFL Line of Credit, inclusive of accrued interest, into equity in Cornerstone represented a recovery of a previously written-off asset, and Rafael recorded the recovery in accordance with ASC 326, by recognizing a gain of $30.6 million in the fiscal year ended July 31, 2024, in conjunction with and immediately prior to the Cornerstone Restructuring equal to the fair value of the Cornerstone’s common stock, up to the amount of principal and accrued interest on the instrument, that was received in settlement of the RFL Line of Credit in connection with the Cornerstone Restructuring. Refer to adjustment GG in Note 8 to this unaudited pro forma condensed combined financial information for the elimination of interest expense recorded on this RFL Line of Credit in Cornerstone’s historical financial statements.

(iii) Rafael converted the outstanding principal and accrued interest under a loan by Rafael to Cornerstone pursuant to a promissory note (the “2023 Promissory Note”) into shares of Cornerstone’s common stock. Rafael recognized a gain of $0.6 million in the fiscal year ended July 31, 2024 for the realization of previously unrealized gains on the fair value of the 2023 Promissory Note in other comprehensive loss. Refer to adjustments HH and HH1 in Note 8 to this unaudited pro forma condensed combined financial information for the elimination of interest expense recorded on this 2023 Promissory Note in Cornerstone’s historical financial statements and the elimination of interest income recorded on this 2023 Promissory Note in Rafael’s historical financial statements, respectively.

(iv) Cornerstone and RP Finance amended the historical line of credit (“RPF Line of Credit”) to (i) extend the maturity date to May 31, 2028, (ii) limit the number of shares to be issued thereunder in respect of anti-dilution protection provided for therein in connection with the Cornerstone Restructuring and to provide RP Finance shares of Cornerstone’s common stock so that following the Cornerstone Restructuring, RP Finance holds six percent (6%) of the outstanding common stock of Cornerstone (the “RPF 6% Top Up Shares”), (iii) terminate any anti-dilution protection in respect of such ownership interest following consummation of the Cornerstone Restructuring, and (iv) terminate all future lending obligations of RP Finance under the RPF Line of Credit (as so amended, the “Amended RPF Line of Credit”). In recognizing the effects of the modification, Cornerstone’s historical deferred offering costs and the historical derivative liability (related to anti-dilution protection under the RPF Line of Credit) were eliminated. Refer to adjustments JJ in Note 8 to this unaudited pro forma condensed combined financial information.

(v) Rafael recognized a gain in the amount of $720 thousand in the fiscal year ended July 31, 2024 on the reversal of a reserve on a receivable due from Cornerstone, which was previously fully reserved for by Rafael. This gain when taken with the $30.6 million gain described in (ii) above resulted in the total recovery of $31.3 million recorded in Rafael’s historical financial statements for the fiscal year ended July 31, 2024.

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NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL INFORMATION

Note 3. Basis of Presentation of Pro FormaFinancial Information

The Merger was accounted for as a business combination pursuant to ASC 805, where Rafael was the acquirer and the assets and liabilities of Cyclo are preliminarily measured and recognized based on their estimated fair values as of the Closing Date of the Merger. The unaudited pro forma condensed combined balance sheet was prepared as if the Merger and Financing Transactions occurred on January 31, 2025, and the unaudited pro forma condensed combined statements of operations for the six months ended January 31, 2025, and for the fiscal year ended July 31, 2024 were prepared as if the Merger and Financing Transactions occurred on August 1, 2023. The fair value measurements utilize estimates based on key assumptions as of the Closing Date of the Merger, including historical and current market data. The unaudited pro forma adjustments included herein are preliminary and will be adjusted as additional information becomes available and as additional analyses are performed.

As detailed in Note 2 above, Rafael acquired Cornerstone on March 13, 2024, which was a significant acquisition pursuant to Rule 3-05 of Regulation S-X and for which pro-forma effect is required in this Form 8-K amendment pursuant to Article 11 of Regulation S-X. The Cornerstone Acquisition, and the related transactions including the Cornerstone Restructuring and RP Finance Consolidation are detailed in Note 2 and Note 8 to this unaudited pro forma condensed combined financial information.

Rafael and Cyclo have different fiscal year ends. Rafael’s fiscal year end is July 31 and Cyclo’s fiscal year end is December 31. The following unaudited pro forma condensed combined financial statements have been prepared to present first, the combination on a pro forma basis of the historical financial statements of Rafael and Cornerstone, after giving effect to the Cornerstone Restructuring, the Cornerstone Acquisition, and the RP Finance Consolidation, as defined in Note 2 to the unaudited pro forma condensed combined financial information and second, the historical financial statements of Cyclo, after giving effect to the Financing Transactions and the Merger.

The unaudited pro forma condensed combined balance sheet as of January 31, 2025 combines (i) the unaudited consolidated balance sheet of Rafael as of January 31, 2025, included in Rafael’s Form 10-Q filed with the SEC on March 14, 2025 (and which already reflected the Cornerstone Acquisition, the Cornerstone Restructuring and the RP Finance Consolidation) and (ii) the audited balance sheet of Cyclo as of December 31, 2024, as derived from its historical financial statements included in Exhibit No. 99.1 to this Form 8-K amendment, and gives pro forma effect to the Merger and the Financing Transactions as if they had collectively occurred on January 31, 2025.

The unaudited pro forma condensed combined statement of operations for the six month period ended January 31, 2025 combines, on a pro forma basis and in accordance with the requirements of Article 11 of Regulation S-X:

(1) (i) the unaudited interim consolidated statement of operations of Rafael for the six month period ended January 31, 2025, which is included in Rafael’s Form 10-Q filed with the SEC on March 14, 2025, and (ii) the unaudited interim statement of operations of Cyclo for the six month period ended December 31, 2024, as calculated by (A) subtracting the amounts in the unaudited interim consolidated statement of operations of Cyclo for the six months ended June 30, 2024, which is included in Cyclo’s Form 10-Q filed with the SEC on August 14, 2024, from (B) the audited consolidated statement of operations of Cyclo for the twelve months ended December 31, 2024, as derived from its historical financial statements included in Exhibit No. 99.1 to this Form 8-K amendment; and

(2) the pro forma effect of the Cornerstone Restructuring, Cornerstone Acquisition, RP Finance Consolidation, Financing Transactions and Merger (collectively, the “Transactions”) as if they had collectively occurred on August 1, 2023.

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NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL INFORMATION

The unaudited pro forma condensed combined statement of operations for the fiscal year ended July 31, 2024 combines, on a pro forma basis and in accordance with the requirements of Article 11 of Regulation S-X:

(1) (i) the audited consolidated statement of operations of Rafael for the fiscal year ended July 31, 2024, which is included in Rafael’s Form 10-K filed with the SEC on November 7, 2024, and as amended which is included in Rafael’s Form 10-K/As filed with the SEC on December 20, 2024 and January 8, 2025, (ii) the unaudited interim consolidated statement of operations of Cornerstone for the period from August 1, 2023 through March 13, 2024, the date after which Cornerstone is reflected in Rafael’s operations, as derived from Cornerstone’s historical financial statements; Rafael has included Cornerstone’s unaudited historical financial statements as of and for the six months ended January 31, 2024 included in Exhibit No. 99.5 to the Registration Statement, and (iii) the unaudited statement of operations of Cyclo for the twelve month period ended June 30, 2024, as calculated by (A) adding the amounts in the unaudited interim consolidated statement of operations of Cyclo for the six months ended June 30, 2024, which is included in Cyclo’s Form 10-Q filed with the SEC on August 14, 2024, to (B) the unaudited interim consolidated statement of operations of Cyclo for the six months ended December 31, 2023, as calculated by subtracting the amounts in the unaudited interim consolidated statement of operations of Cyclo for the six months ended June 30, 2023, which is included in Cyclo’s Form 10-Q filed with the SEC on August 14, 2023, from the amounts in the audited annual consolidated statement of operations of Cyclo for the fiscal year ended December 31, 2023, which is included in Cyclo’s Form 10-K filed with the SEC on March 18, 2024, as amended in Cyclo’s Form 10-K/As filed with the SEC on April 29, 2024, November 26, 2024, and December 18, 2024; and

(2) the pro forma effect of the Cornerstone Restructuring, Cornerstone Acquisition, RP Finance Consolidation, Financing Transactions and Merger (collectively, the “Transactions”) as if they had collectively occurred on August 1, 2023.

The unaudited pro forma condensed combined financial information should be read in conjunction with the audited and unaudited historical financial statements and related notes of Rafael, Cornerstone, and Cyclo, as referred to above, which are incorporated by reference in this Form 8-K amendment, or attached hereto.

The pro forma adjustments reflecting the consummation of the Merger are based on currently available information and certain assumptions and methodologies that Rafael management believes are reasonable under the circumstances. The unaudited pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is possible that the actual adjustments will differ from the pro forma adjustments, and it is possible that the differences may be material. Rafael management believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Merger based on information available to management at this time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings or cost savings that may be associated with the Transactions. The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Transactions taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of Rafael following the Transactions.

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NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL INFORMATION

Note 4. Conforming Accounting Policies

Management has performed a comprehensive review of the accounting policies of Rafael and Cyclo. Based on this review, management did not identify any differences that would have a material impact on the unaudited pro forma condensed combined financial information. As a result, the unaudited pro forma condensed combined financial information does not assume any differences in accounting policies.

Note 5. Conversion of Cyclo Options and Warrants

Conversion of Stock Options

Cyclo accounts for stock-based compensation arrangements with employees, non-employee directors, and non-employee consultants using a fair value method which requires the recognition of compensation expense for costs related to all stock-based awards, including stock options, over the vesting period of the award. At the closing of the Merger, all compensatory Cyclo options (the “Cyclo Options”) to purchase Cyclo Common Stock, immediately prior to the Merger, that were then outstanding and unexercised were converted into options to acquire, on substantially similar terms and conditions, a number of shares, adjusted based on the Exchange Ratio, of Rafael Class B Common Stock (rounded down to the nearest whole share), at an adjusted exercise price per share based upon the Exchange Ratio (rounded up to the nearest whole cent) (the “Rollover Options”).

Exchanges of share options or other share-based payment awards in conjunction with a business combination are modifications of share-based payment awards in accordance with Accounting Standard Codification Topic 718, Compensation — Stock Compensation (“ASC 718”). Pursuant to ASC 805, when an acquirer is obligated to replace an acquiree’s compensatory stock-based awards, either all or a portion of the fair-value-based measure of the acquirer’s replacement awards, on an award-by-award basis, shall be included in measuring the consideration transferred in the business combination. The acquirer is obligated to replace the acquiree awards if the acquiree or its grantees have the ability to enforce replacement. The fair-value-based measure of both the Cyclo Options and the Rollover Options were measured, on an award-by-award basis, as of the closing of the Merger, and allocated between consideration transferred and compensation for post-Merger services. As described in Note 7 and Note 8 to this unaudited pro forma condensed combined financial information, the fair-value based measure of the Cyclo Options attributable to pre-Merger vesting, not to exceed the fair-value based measure of the Rollover Options, is included in the Merger Consideration, and if the fair-value based measure of the Rollover Options exceeds the fair-value based measure of the Cyclo Options attributable to pre-Merger vesting, the difference between the fair-value based measure of the Rollover Options and the fair-value based measure of the Cyclo Options attributable to pre-Merger vesting is recorded as post-Merger compensation costs in the consolidated financial statements of Rafael subsequent to the Closing Date of the Merger.

Conversion of Warrants, cash paid to satisfycertain Cyclo Warrants and cancellation of Rafael’s Cyclo Warrants

In accordance with the Merger Agreement, unless otherwise provided for in outstanding warrant agreements, all outstanding warrants to purchase Cyclo Common Stock, (the “Cyclo Warrants”), other than those held by Rafael (the “Rafael-Owned Cyclo Warrants”, as defined above) which were cancelled, were automatically converted into warrants to purchase a number of shares, adjusted based on the Exchange Ratio, of Rafael Class B Common Stock, at an adjusted exercise price per share based upon the Exchange Ratio (the “Replacement Warrants”). Certain Cyclo warrants provide the holder with the right to elect to receive cash payment in lieu of receiving warrants to purchase Rafael Class B Common Stock. The terms of the Replacement Warrants are substantially similar to those of the Cyclo Warrants.

Pursuant to ASC 805, the total purchase consideration in a business combination shall include the fair value on the date of the closing of the Merger of the acquirer’s previously held equity interests in the acquiree. Prior to the execution of the Merger Agreement, Rafael owned 6,766,467 Cyclo Warrants. The fair value of these Cyclo Warrants held by Rafael immediately prior to the closing of the Merger, is included in the total purchase consideration, representing the fair value on the Closing Date of the Merger, of Rafael’s previously held equity interests in Cyclo. Refer to Note 7 and Note 8 to this unaudited pro forma condensed combined financial information for further information.

Pursuant to ASC 805, equity interests issued by the acquirer, such as the Replacement Warrants, were included within the total purchase consideration and measured at fair value on the Closing Date of the Merger. Additionally, pursuant to ASC 805, the fair value of the cash payout to the holders of certain Cyclo Warrants which elected to receive cash payments in lieu of receiving Replacement Warrants were included within the total purchase consideration measured at fair value on the Closing Date of the Merger. As described in Note 7 and Note 8 to this unaudited pro forma condensed combined financial information, the fair value of the Replacement Warrants and the fair value of the aforementioned cash payments, are included in the Merger Consideration.

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NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL INFORMATION

Note 6. AccountingTreatment for the Financing Transactions

On June 11, 2024, Rafael entered into a Note Purchase Agreement with Cyclo, pursuant to which Cyclo issued and sold a convertible promissory note in the principal amount of $2 million (the “Cyclo Convertible Note I”) to Rafael for $2 million in cash. The Cyclo Convertible Note I was issued with a maturity date of November 11, 2024 and was amended to a maturity date of March 31, 2025 as described below, and bears interest at a rate of 5% per annum, payable upon maturity. The principal amount of the Cyclo Convertible Note I is convertible into shares of Cyclo Common Stock at the option of Rafael unless converted automatically upon certain events, as defined in the Note Purchase Agreement.

On July 16, 2024, Rafael entered into an Amended and Restated Note Purchase Agreement with Cyclo, pursuant to which Cyclo issued and sold a convertible promissory note in the principal amount of $2 million (the “Cyclo Convertible Note II”) to Rafael for $2 million in cash. The Cyclo Convertible Note II was issued with a maturity date of November 11, 2024, and was amended to a maturity date of March 31, 2025 as described below, and bears interest at a rate of 5% per annum, payable upon maturity. The principal amount of the Cyclo Convertible Note II is convertible into shares of Cyclo Common Stock at the option of Rafael unless converted automatically upon certain events, as defined in the Note Purchase Agreement.

On August 21, 2024, Rafael entered into a Second Amended and Restated Note Purchase Agreement with Cyclo, pursuant to which Cyclo issued and sold a convertible promissory note in the principal amount of $3 million (the “Cyclo Convertible Note III”) to Rafael for $3 million in cash. The Cyclo Convertible Note III was issued with a maturity date of December 21, 2024, and was amended to a maturity date of March 31, 2025 as described below, and bears interest at a rate of 5% per annum, payable upon maturity. The principal amount of the Cyclo Convertible Note III is convertible into shares of Cyclo Common Stock at the option of Rafael (provided, however, that Rafael may not elect to convert the convertible note (or prior convertible notes issued by Cyclo to Rafael in connection with previous loans) if, following such conversion, Rafael will beneficially own more than 49.9% of Cyclo Common Stock); and automatically on certain other events.

On September 9, 2024, Rafael entered into a Third Amended and Restated Note Purchase Agreement with Cyclo, pursuant to which Cyclo issued and sold a convertible promissory note in the principal amount of $3 million (the “Cyclo Convertible Note IV”) to Rafael for $3 million in cash. The Cyclo Convertible Note IV was issued with a maturity date of December 21, 2024, and was amended to a maturity date of March 31, 2025 as described below, and bears interest at a rate of 5% per annum, payable upon maturity. The principal amount of the Cyclo Convertible Note IV is convertible into shares of Cyclo Common Stock at the option of Rafael (provided, however, that Rafael may not elect to convert the convertible note (or prior convertible notes issued by Cyclo to Rafael in connection with previous loans) if, following such conversion, Rafael will beneficially own more than 49.9% of Cyclo Common Stock); and automatically on certain other events.

On October 8, 2024, Rafael entered into a Fourth Amended and Restated Note Purchase Agreement with Cyclo, pursuant to which Cyclo issued and sold a convertible promissory note in the principal amount of $3 million (the “Cyclo Convertible Note V”) to Rafael for $3 million in cash. The Cyclo Convertible Note V was issued with a maturity date of December 21, 2024, and was amended to a maturity date of March 31, 2025 as described below, and bears interest at a rate of 5% per annum, payable upon maturity. The principal amount of the Cyclo Convertible Note V is convertible into shares of Cyclo Common Stock at the option of Rafael (provided, however, that Rafael may not elect to convert the convertible note (or prior convertible notes issued by Cyclo to Rafael in connection with previous loans) if, following such conversion, Rafael will beneficially own more than 49.9% of Cyclo Common Stock); and automatically on certain other events.

Also on October 8, 2024, the maturity dates of the Cyclo Convertible Note I and the Cyclo Convertible Note II were amended to be December 21, 2024, such that each of the Cyclo Convertible Notes (as defined below) that were outstanding as of October 8, 2024 had a maturity date of December 21, 2024 as of the date of this amendment. The maturity date of the Cyclo Convertible Notes was subsequently amended, as discussed below.

On November 7, 2024, Rafael entered into a Fifth Amended and Restated Note Purchase Agreement with Cyclo, pursuant to which Cyclo issued and sold a convertible promissory note in the principal amount of $2 million (the “Cyclo Convertible Note VI”) to Rafael for $2 million in cash. The Cyclo Convertible Note VI was issued with a maturity date of December 21, 2024, and was amended to a maturity date of March 31, 2025 as described below, and bears interest at a rate of 5% per annum, payable upon maturity. The principal amount of the Cyclo Convertible Note VI is convertible into shares of Cyclo Common Stock at the option of Rafael (provided, however, that Rafael may not elect to convert the convertible note (or prior convertible notes issued by Cyclo to Rafael in connection with previous loans) if, following such conversion, Rafael will beneficially own more than 49.9% of Cyclo Common Stock); and automatically on certain other events.

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NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL INFORMATION

On December 5, 2024, Rafael entered into a Sixth Amended and Restated Note Purchase Agreement with Cyclo, pursuant to which Cyclo issued and sold a convertible promissory note in the principal amount of $1 million (the “Cyclo Convertible Note VII”) to Rafael for $1 million in cash. The Cyclo Convertible Note VII was issued with a maturity date of December 21, 2024, and was amended to a maturity date of March 31, 2025 as described below, and bears interest at a rate of 5% per annum, payable upon maturity. The principal amount of the Cyclo Convertible Note VII is convertible into shares of Cyclo Common Stock at the option of Rafael (provided, however, that Rafael may not elect to convert the convertible note (or prior convertible notes issued by Cyclo to Rafael in connection with previous loans) if, following such conversion, Rafael will beneficially own more than 49.9% of Cyclo Common Stock); and automatically on certain other events.

On December 21, 2024, Rafael entered into an Amendment to Convertible Promissory Notes whereby the maturity date of each of the Cyclo Convertible Notes, as defined below, was amended to be February 15, 2025.

On January 3, 2025, Rafael entered into a Seventh Amended and Restated Note Purchase Agreement with Cyclo, pursuant to which Cyclo issued and sold a convertible promissory note in the principal amount of $3 million (the “Cyclo Convertible Note VIII”) to Rafael for $3 million in cash. The Cyclo Convertible Note VIII was issued with a maturity date of February 15, 2025, and was amended to a maturity date of March 31, 2025 as described below, and bears interest at a rate of 5% per annum, payable upon maturity. The principal amount of the Cyclo Convertible Note VIII is convertible into shares of Cyclo Common Stock at the option of Rafael (provided, however, that Rafael may not elect to convert the convertible note (or prior convertible notes issued by Cyclo to Rafael in connection with previous loans) if, following such conversion, Rafael will beneficially own more than 49.9% of Cyclo Common Stock); and automatically on certain other events.

On February 4, 2025, Rafael entered into an Eighth Amended and Restated Note Purchase Agreement with Cyclo, pursuant to which Cyclo issued and sold a convertible promissory note in the principal amount of $2 million (the “Cyclo Convertible Note IX”) to Rafael for $2 million in cash. The Cyclo Convertible Note IX matures on March 31, 2025 and bears interest at a rate of 5% per annum, payable upon maturity. The principal amount of the Cyclo Convertible Note IX is convertible into shares of Cyclo Common Stock at the option of Rafael (provided, however, that Rafael may not elect to convert the convertible note (or prior convertible notes issued by Cyclo to Rafael in connection with previous loans) if, following such conversion, Rafael will beneficially own more than 49.9% of Cyclo Common Stock); and automatically on certain other events.

On February 4, 2025, Rafael entered into an Amendment to Convertible Promissory Notes whereby the maturity date of each of the Cyclo Convertible Notes, as defined below, was amended to be March 31, 2025.

On March 6, 2025, Rafael entered into a Ninth Amended and Restated Note Purchase Agreement with Cyclo, pursuant to which Cyclo issued and sold a convertible promissory note in the principal amount of $2.5 million (the “Cyclo Convertible Note X”) to Rafael for $2.5 million in cash. The Cyclo Convertible Note X matures on March 31, 2025 and bears interest at a rate of 5% per annum, payable upon maturity. The principal amount of the Cyclo Convertible Note X is convertible into shares of Cyclo Common Stock at the option of Rafael (provided, however, that Rafael may not elect to convert the convertible note (or prior convertible notes issued by Cyclo to Rafael in connection with previous loans) if, following such conversion, Rafael will beneficially own more than 49.9% of Cyclo Common Stock); and automatically on certain other events.

The Cyclo Convertible Note I, the Cyclo Convertible Note II, the Cyclo Convertible Note III, the Cyclo Convertible Note IV, the Cyclo Convertible Note V, the Cyclo Convertible Note VI, the Cyclo Convertible Note VII, the Cyclo Convertible Note VIII, the Cyclo Convertible Note IX and the Cyclo Convertible Note X are collectively referred to as the “Cyclo Convertible Notes” (the “Financing Transactions”).

As described above in Note 1 to the unaudited pro forma condensed combined financial information, on December 23, 2024 Rafael converted $2.5 million in outstanding principal amount of the Cyclo Convertible Note III into 3,968,254 shares of Cyclo Common Stock.

The Cyclo Convertible Notes are required to be measured at fair value pursuant to ASC 825 Financial Instruments (“ASC 825”) at their respective dates of issuance and in subsequent reporting periods, due to Rafael’s Prior Investment in Cyclo which Rafael elected to account for under the fair value method, pursuant to ASC 825-10-25-7(b). Subsequent changes in fair value are recorded as unrealized gain or loss as a component of earnings in the consolidated statements of operations and comprehensive loss. In the Transaction Accounting Adjustments columns on the unaudited pro forma condensed combined balance sheet presentation above, the outstanding Cyclo Convertible Notes are presented at their principal amounts plus accrued interest as these outstanding Cyclo Convertible Notes were included in the purchase consideration of the Merger as they were forgiven at the closing of the Merger, and the fair value of the Cyclo Convertible Notes equals the outstanding principal plus accrued interest at the closing of the Merger. The Convertible notes payable, due to Rafael, representing the Cyclo Convertible Note I, Cyclo Convertible Note II, Cyclo Convertible Note III, Cyclo Convertible Note IV, Convertible Note V, Convertible Note VI and Convertible Note VII is recorded at fair value in Cyclo’s historical financial statements as of December 31, 2024. The Convertible notes receivable, due from Cyclo, representing Cyclo Convertible Note I, Cyclo Convertible Note II, Cyclo Convertible Note III, Cyclo Convertible Note IV, Cyclo Convertible Note V, Cyclo Convertible Note VI, Cyclo Convertible Note VII, and Cyclo Convertible Note VIII are recorded at fair value in Rafael’s historical financial statements as of January 31, 2025. Refer to pro forma adjustments A, B, E, E1, F, G, H and EE in Note 8 to this unaudited pro forma condensed combined financial information for discussion of the adjustments related to the Cyclo Convertible Notes.

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NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL INFORMATION

Note 7. Accounting Treatment for the Merger

Upon consummation of, and as a result of the Merger, Rafael became the primary beneficiary of Cyclo, a VIE that constitutes a business. In accordance with ASC 810, the initial consolidation of a VIE that is a business is a business combination and shall be accounted for in accordance with the provisions in Topic 805.

The guidance in ASC 805 for a step acquisition states that the acquirer shall recognize goodwill on the initial consolidation of Cyclo as of the Closing Date of the Merger, measured as the excess of (a) the sum of (i) the fair value of consideration transferred, (ii) the fair value of any noncontrolling interests in the acquiree, and (iii) the fair value of previously held equity interests, over (b) the net amount of the identifiable assets acquired and liabilities assumed measured in accordance with ASC 805.

The net amount of Cyclo’s identifiable assets and liabilities recognized with respect to the Merger is based upon management’s preliminary estimates of, and assumptions related to, the fair values of assets acquired and liabilities assumed, using currently available information. For this purpose, fair value shall be determined in accordance with the fair value concepts defined in ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). Fair value is defined in ASC 820 as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Fair value measurements can be highly subjective and can involve a high degree of estimation.

The following table presents, in accordance with ASC 805, the sum of (i) the fair value of consideration transferred, (ii) the fair value of any noncontrolling interests in the acquiree, and (iii) the fair value of previously held equity interests (amounts in $000s):

Fair value of consideration Amounts
Fair value of Rafael Class B Common Stock issued^(1)^ $ 14,692
Fair value of Rollover Options^(2)^ 360
Fair value of Replacement Warrants^(3)^ 472
Cash paid to extinguish warrants^(4)^ 3,586
Fair value of the Cyclo Convertible Notes which were forgiven^(5)^ 21,472
Fair value of previously held equity interests^(6)^ 9,366
Total consideration $ 49,948
^(1)^ The fair value of the 7,132,228 shares of Rafael Class B Common<br>Stock issued, in exchange for 20,234,468 shares of Cyclo Common Stock based on the Exchange Ratio of 0.3525, is included as part of the<br>consideration transferred. The fair value was measured utilizing the share price of Rafael’s Class B Common Stock of $2.06, which<br>was the closing share price on March 25, 2025.
--- ---
^(2)^ Represents the fair value-based measure of the Rollover Options<br>issued by Rafael that is attributable to pre-Merger vesting based on the fair-value-based measure of the pre-Merger vesting of the Cyclo<br>Options over the requisite service period. The fair value of the Rollover Options was measured utilizing a share price of Rafael Class<br>B Common Stock of $2.06 and the pre-Merger fair value of the Cyclo Options was measured utilizing a share price of Cyclo Common Stock<br>of approximately $0.72, which were their respective closing share prices on March 25, 2025.
--- ---
^(3)^ Represents the fair value of the Replacement Warrants issued<br>by Rafael that were measured utilizing a share price of Rafael’s Class B Common Stock of $2.06, which was the closing share price<br>on March 25, 2025.
--- ---
^(4)^ Represents the cash-settlement amount due to the holders of<br>5,473,914 Cyclo warrants that exercised their rights under provisions within their warrant agreements that grant the holders an option<br>to elect cash-settlement upon certain events. The Merger with Cyclo has triggered the option to elect cash-settlement and the holders<br>have elected to receive cash payment in lieu of receiving warrants to purchase Rafael Class B Common Stock (as permitted under the terms<br>of the specified Cyclo warrants). The cash-settlement amount was determined by applying the Black-Scholes option pricing model, utilizing<br>a volume weighted average price (“VWAP”) of Cyclo Common Stock of $1.21, which was the greater of the closing price per share<br>on March 25, 2025 and the highest VWAP during the period from the trading day immediately prior to the announcement of the Merger<br>Agreement on August 22, 2024.
--- ---
^(5)^ Represents the outstanding principal and accrued interest on<br>the Cyclo Convertible Notes due to Rafael from Cyclo which were forgiven as part of the Merger. As of the Closing Date of the Merger,<br>the fair value of the Cyclo Convertible Notes equaled the outstanding principal and accrued interest through that date. The outstanding<br>principal and accrued interest on the Cyclo Convertible Notes, as if the Financing Transactions and Merger had collectively occurred<br>on January 31, 2025, is $21.5 million and is included in the consideration of the Merger.
--- --- 
14

NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL INFORMATION

^(6)^ Rafael’s Prior Investment in Cyclo represents previously<br>held equity interests in Cyclo as of January 31, 2025 that were included in the purchase price at their fair values as of the closing<br>of the Merger. The 12,998,194 shares of Cyclo Common Stock previously held by Rafael were valued at $9.4 million based on a share price<br>of Cyclo Common Stock of approximately $0.72, which was the closing share price on March 25, 2025. The Rafael-Owned Cyclo Warrants<br>are ascribed a fair value of $0 in the measurement of previously held equity interests above as their exercise prices were greater than<br>the share price of Cyclo Common Stock of approximately $0.72, which was the closing share price on March 25, 2025. The Rafael-Owned<br>Cyclo Warrants were cancelled at the consummation of the Merger. The fair value of Rafael’s Prior Investment in Cyclo was $10.8<br>million at January 31, 2025. The remeasurement of Rafael’s Prior Investment in Cyclo for purposes of the unaudited pro forma condensed<br>combined financial information is based upon the fair value as of March 25, 2025 described above, which results in a pro forma adjustment<br>of $1.4 million when compared to the fair value of Rafael’s Prior Investment in Cyclo at January 31, 2025. Refer to adjustment<br>C in Note 8 to this unaudited pro forma condensed combined financial information.

The following table presents the net amount of the identifiable assets acquired and liabilities assumed and goodwill recognized, measured in accordance with ASC 805 as of the assumed acquisition date of January 31, 2025 for purposes of preparing this unaudited pro forma condensed combined financial information (amounts in $000s):

Assets acquired and liabilities assumed
Cash $ 8,039
Accounts Receivable 245
Inventory 229
Prepaid expenses and other current assets 1,687
Property and equipment 18
Prepaid expenses, noncurrent 1,951
Other assets 22
Intangible assets - customer relationships 1,170
Acquired In Process Research & Development (IPR&D) 38,200
Accounts payable (5,262 )
Accrued expenses (1,058 )
Other current liabilities (21 )
Other liabilities (2 )
Deferred tax liabilities (11,417 )
Total identifiable net assets acquired $ 33,801
Goodwill recognized $ 16,147

^^

To value the IPR&D and Customer Relationships, Rafael utilized the Multi-Period Excess Earnings Method (“MPEEM”), under the Income Approach. The method considers the present value of excess earnings generated by Cyclo’s IPR&D and customers after taking into account the cost to realize the revenue, charges for contributory assets and an appropriate discount rate to reflect the time value and risk associated with the invested capital. IPR&D acquired represents Cyclo’s research and development activities related to its lead drug candidate Trappsol® Cyclo™ (hydroxypropyl beta cyclodextrin) as a treatment for Niemann-Pick Type C disease (“NPC”). The acquired Customer Relationships are related to Cyclo’s Specialty Chemicals business. The identifiable intangible assets associated with Customer Relationships are being amortized on a straight-line basis over their preliminary estimated useful lives of 8 years. IPR&D and goodwill are considered indefinite lived assets.

^^

The Merger has been treated as a tax-free reorganization and therefore Cyclo’s tax basis in the assets acquired and liabilities assumed will carryover. Accordingly, Rafael recognized net deferred tax liabilities associated with the Merger with a preliminary carrying value of approximately $11.4 million. The deferred tax liability to be established upon application of purchase accounting under the acquisition method utilized Rafael’s estimated blended federal and statutory tax rate of 29.0%. The net deferred tax liabilities are not expected to result in a reduction of Rafael’s existing valuation allowance.

^^

15

NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL INFORMATION

Note 8. Pro Forma Adjustments

The unaudited pro forma condensed combined balance sheet has been prepared to illustrate the effects of the Financing Transactions and the Merger and the unaudited pro forma condensed combined statements of operations has been prepared to illustrate the effects of the Transactions and have been prepared for informational purposes only. The unaudited pro forma condensed combined financial information, including the notes thereto, should be read in conjunction with (1) the separate historical audited financial statements of Rafael as of and for the fiscal year ended July 31, 2024, of Cornerstone as of and for the fiscal year ended July 31, 2023, and of Cyclo as of and for the fiscal year ended December 31, 2023, which are incorporated by reference into this Form 8-K amendment, and of Cyclo as of and for the fiscal year ended December 31, 2024, which are included in Exhibit No. 99.1 to this Form 8-K amendment, and (2) the unaudited interim financial statements of Rafael as of and for the six months ended January 31, 2025, of Cornerstone as of and for the six month period ended January 31, 2024 included in Exhibit No. 99.5 to the Registration Statement, and of Cyclo as of and for the six months ended June 30, 2024 and 2023, which are incorporated by reference into this Form 8-K amendment.

The following is a description of the unaudited pro forma adjustments reflected in the unaudited pro forma condensed combined financial statements:

Adjustments to the Unaudited Pro Forma Condensed Combined BalanceSheet:

Adjustments related to the Financing Transactions

A. Reflects Rafael’s purchase of Cyclo Convertible Note<br>IX and Cyclo Convertible Note X for $2.0 million, and $2.5 million, respectively, in cash which are reflected under Convertible Note<br>Receivable, due from Cyclo at their respective principal amounts. Rafael’s purchase of Cyclo Convertible Note I, Cyclo Convertible<br>Note II, Cyclo Convertible Note III, Cyclo Convertible Note IV, Cyclo Convertible Note V, Cyclo Convertible Note VI, Cyclo Convertible<br>Note VII and Cyclo Convertible Note VIII in the principal amounts of $2.0 million, $2.0 million, $3.0 million, $3.0 million, $3.0 million,<br>$2.0 million, $1.0 million, and $3.0 million, respectively, are reflected in Rafael’s historical balance sheet at their fair values<br>as of January 31, 2025 (refer to adjustment E1 below).
B. Reflects Cyclo’s issuance of Cyclo Convertible Note<br>VIII, Cyclo Convertible Note IX and Cyclo Convertible Note X in the principal amounts of $3.0 million, $2.0 million, and $2.5 million,<br>respectively. Cyclo’s issuance of the Cyclo Convertible Note I, Cyclo Convertible Note II, Cyclo Convertible Note III, Cyclo Convertible<br>Note IV, Cyclo Convertible Note V, Cyclo Convertible Note VI and Cyclo Convertible Note VII in the principal amounts of $2.0 million,<br>$2.0 million, $3.0 million, $3.0 million, $3.0 million, $2.0 million, and $1.0 million, respectively, are reflected in Cyclo’s<br>historical balance sheet at their fair values as of December 31, 2024 (refer to adjustment E below).
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Adjustmentsrelated to the Merger

C. Reflects the elimination of Rafael’s Prior Investment<br>in Cyclo, which is carried at its January 31, 2025 fair value of approximately $10.8 million in Rafael’s historical balance sheet.<br>Rafael’s Prior Investment in Cyclo represents previously held equity interests in Cyclo that are included in the purchase price<br>at their fair values as of the Closing Date of the Merger. The 12,998,194 shares of Cyclo Common Stock previously held by Rafael as of<br>January 31, 2025 were valued at $9.4 million based on a share price of Cyclo Common Stock of approximately $0.72, which was the closing<br>share price on March 25, 2025. The Rafael-Owned Cyclo Warrants are ascribed a fair value of $0 in the measurement of previously<br>held equity interests as their exercise prices are greater than the share price of Cyclo Common Stock of approximately $0.72, which was<br>the closing share price on March 25, 2025. The Rafael-Owned Cyclo Warrants were cancelled at the consummation of the Merger. The<br>remeasurement of Rafael’s Prior Investment in Cyclo at the closing of the Merger is based upon the fair value as of March 25,<br>2025 described above, which results in a pro forma adjustment of approximately $1.4 million to the accumulated deficit when compared<br>to the sum of the fair value of Rafael’s Prior Investment in Cyclo at January 31, 2025.
C1. Reflects the goodwill of approximately $16.1 million, recognized<br>upon consummation of the Merger, measured as the difference between the fair value of consideration Rafael paid to acquire Cyclo over<br>the fair value of the identifiable net assets of Cyclo acquired, as illustrated in Note 7 above.
C2. Reflects the estimated fair value on the Closing Date of<br>the Merger of intangible assets (excluding IPR&D) acquired of approximately $1.2 million.
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C3. Reflects the estimated fair value on the Closing Date of<br>the Merger of IPR&D of approximately $38.2 million.
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16

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINEDFINANCIAL INFORMATION

C4. Reflects recognition of deferred income tax liabilities of<br>approximately $11.4 million upon application of purchase accounting under the acquisition method utilizing Rafael’s blended federal<br>and statutory tax rate of 29.0%.
C5. Reflects issuance of 7,132,228 shares of Rafael Class B Common<br>Stock, at par value of $0.01, with fair value of approximately $14.7 million, as consideration transferred for 20,234,468 shares of Cyclo<br>Common Stock upon consummation of the Merger.
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C6. Reflects elimination of Cyclo historical equity carrying<br>values upon consummation of the Merger (exclusive of the elimination of pro forma adjustment E described below).
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C7. Reflects approximately $0.4 million recorded to additional<br>paid-in capital for the portion of the fair value-based measure of the Rollover Options that is attributable to pre-Merger vesting based<br>on the fair-value-based measure of the pre-Merger vesting of the Cyclo Options over the requisite service period, which is included in<br>the fair value of the consideration transferred in the purchase price of the Merger.
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C8. Reflects approximately $0.5 million recorded to additional<br>paid-in capital for the fair value of the Replacement Warrants, which is included in the fair value of the consideration transferred<br>in the purchase price to the Merger.
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C9. Reflects approximately $3.6 million for the cash-settlement<br>amount due at the closing of the Merger to holders of certain Cyclo warrants that have elected to receive cash payment in lieu of receiving<br>Replacement Warrants, which is included in the fair value of the consideration transferred in the purchase price to the Merger.
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D. Represents Rafael’s and Cyclo’s preliminary estimated<br>transaction costs of approximately $198 thousand and $298 thousand, respectively, for consulting, legal, accounting, and other professional<br>fees that have been expensed as part of the Merger, and have not already been recognized in Rafael’s historical consolidated statement<br>of operations for the six months ended January 31, 2025 nor for the fiscal year ended July 31, 2024 and have not already been recognized<br>in Cyclo’s historical condensed statement of operations for the six months ended December 31, 2024 nor twelve months ended June<br>30, 2024. The unaudited pro forma condensed combined balance sheet reflects these costs as an increase to “Accrued expenses.”<br>These costs are reflected as an increase to “Accumulated deficit” and are included as an expense in the unaudited pro forma<br>condensed combined statement of operations for the fiscal year ended July 31, 2024 (see entry CC). These costs are non-recurring.
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E. Reflects an adjustment of approximately $0.8 million to the<br>fair value of Cyclo’s liability with respect to the Cyclo Convertible Notes that were outstanding at the Closing Date (which have<br>been forgiven as part of the Merger), to bring the fair value of the Cyclo Convertible Notes to their outstanding principal amounts and<br>accrued interest of approximately $21.5 million, as if the Financing Transactions and Merger collectively occurred on January 31, 2025.<br>The fair value of the Cyclo Convertible Notes equals the outstanding principal and accrued interest on the Closing Date. Refer to adjustment<br>EE below for related adjustments to the unaudited pro forma condensed combined statements of operations for the six months ended January<br>31, 2025 and for the fiscal year ended July 31, 2024. The Cyclo Convertible Notes outstanding at the Closing Date were forgiven as part<br>of the Merger (refer to adjustment F below).
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E1. Reflects an adjustment of approximately $0.4 million to the<br>fair value of Rafael’s receivable balance with respect to the Cyclo Convertible Notes outstanding at the Closing Date, which have<br>been forgiven as part of the Merger, to bring the fair value of the Cyclo Convertible Notes to their outstanding principal amounts and<br>accrued interest of approximately $21.5 million, as if the Financing Transactions and Merger collectively occurred on January 31, 2025.<br>The fair value of the Cyclo Convertible Notes equaled the outstanding principal and accrued interest on the Closing Date. Refer to adjustment<br>EE below for related adjustment to the unaudited pro forma condensed combined statements of operations. The Cyclo Convertible Notes outstanding<br>at the Closing Date were forgiven as part of the Merger (refer to adjustment F below).
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F. Reflects the elimination of Rafael’s receivable balance<br>pursuant to the Cyclo Convertible Notes of $21.5 million, which is included as purchase consideration in the Merger as Rafael forgave<br>all amounts outstanding on the Cyclo Convertible Notes at the Closing Date, classified as “Convertible notes receivable, due from<br>Cyclo,” and as such, Cyclo’s respective payable balance of $21.5 million, classified as “Convertible notes payable,<br>due to Rafael” is eliminated.
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17

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Adjustments to the Unaudited Pro Forma CondensedCombined Statements of Operations

The pro forma adjustments included in the unaudited pro forma condensed combined statements of operations for the six months ended January 31, 2025 and the fiscal year ended July 31, 2024 are as follows:

Adjustments relatedto the Merger

AA. Reflects the elimination in consolidation of historical unrealized<br>loss on Rafael’s Prior Investment in Cyclo of approximately $3.8 million for the six months ended January 31, 2025 and the elimination<br>in consolidation of historical unrealized gain on Rafael’s Prior Investment in Cyclo of approximately $37 thousand for the fiscal<br>year ended July 31, 2024.
AA1. Reflects amortization expense of $73 thousand for the six<br>months ended January 31, 2025 and $146 thousand for the fiscal year ended July 31, 2024, related to the Customer Relationships finite-lived<br>intangible assets acquired by Rafael in the Merger. As described in Note 7 to the unaudited pro forma condensed combined financial<br>information above, the identifiable intangible asset associated with Customer Relationships are being amortized on a straight-line basis<br>over its preliminary estimated useful lives of 8 years.
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BB. Reflects additional compensation expense of approximately<br>$0.1 million for the fiscal year ended July 31, 2024 for the portion of the fair-value-based measure of the Rollover Options that are<br>attributable to post-Merger vesting, measured as the difference between the fair-value-based measure of the Rollover Options and the<br>portion attributable to the pre-Merger vesting of the Rollover Options, as described in adjustment C7 above.
CC. Reflects estimated transaction costs of approximately $974<br>thousand and $1.4 million that have not already been recognized in Rafael’s historical consolidated statement of operations for<br>the fiscal year ended July 31, 2024 and Cyclo’s historical condensed statement of operations for the twelve months ended June 30,<br>2024, respectively, of which $776 thousand had been included in Rafael’s historical consolidated statement of operations for the<br>six months ended January 31, 2025 and $1.1 million had been included in Cyclo’s historical consolidated statement of operations<br>for the six months ended December 31, 2024, as if incurred on August 1, 2023, the date the Merger occurred for the purposes of the unaudited<br>pro forma condensed combined statement of operations. Cyclo incurred $8 thousand in transaction costs that were expensed in its historical<br>condensed statement of operations for the twelve months ended June 30, 2024 and Rafael incurred $62 thousand in transaction costs that<br>were expensed in its historical consolidated statement of operations for the fiscal year ended July 31, 2024. This cost item is not expected<br>to recur beyond twelve months of the Merger. Refer to adjustment D above to the unaudited pro forma condensed combined balance sheet<br>for the composition of the amounts shown in this entry.
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DD. Reflects the elimination of approximately $0.4 million of<br>realized gains recognized by Rafael in its historical consolidated statement of operations for the fiscal year ended July 31, 2024<br>from its exercise, in October 2023, of Cyclo warrants purchased in May 2023.
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EE. Reflects the elimination of approximately $1.0 million for<br>Cyclo’s change in fair value of the Cyclo Convertible Notes recorded by Cyclo on its historical condensed statement of operations<br>for the six months ended December 31, 2024, the elimination of approximately $0.7 million of loss for Cyclo’s change in fair value<br>of the Cyclo Convertible Notes recorded by Cyclo on its historical condensed statement of operations for the twelve months ended June<br>30, 2024, the elimination of approximately $1.1 million of loss for Rafael’s change in fair value of the Cyclo Convertible Notes<br>recorded by Rafael on its historical condensed statement of operations for the six months ended January 31, 2025 and the elimination<br>of approximately $1.2 million of gain for Rafael’s change in fair value of the Cyclo Convertible Notes recorded by Rafael on its<br>historical condensed statement of operations for the fiscal year ended July 31, 2024.
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18

NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL INFORMATION

FF. Reflects the impact on the unaudited pro forma condensed<br>combined statement of operations of the issuance of 7,132,228 shares of Rafael Class B Common Stock as consideration transferred for<br>20,234,468 shares of Cyclo Common Stock upon consummation of the Merger.

Adjustments relatedto the Cornerstone Restructuring

GG. Represents the elimination of interest expense related to<br>Cornerstone’s RFL Line of Credit that has been converted into Cornerstone’s common stock in the Cornerstone Restructuring<br>of $1.4 million for the fiscal year ended July 31, 2024.
HH. Represents the elimination of interest expense related to<br>Cornerstone’s 2023 Promissory Note that has been converted into Cornerstone’s common stock in the Cornerstone Restructuring<br>of $0.1 million for the fiscal year ended July 31, 2024.
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HH1. Represents the elimination of Rafael’s interest income<br>related to the 2023 Promissory Note that has been converted into Cornerstone’s common stock in the Cornerstone Restructuring of<br>$0.1 million for the fiscal year ended July 31, 2024.
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II. Represents the elimination of interest expense related to<br>Cornerstone’s Series C Convertible Notes that have been converted into Cornerstone’s common stock in the Cornerstone Restructuring<br>of $0.2 million for the fiscal year ended July 31, 2024.
II1. Represents the recognition of implied interest on Cornerstone’s Series C Convertible Notes that<br> have been modified in the Restructuring of $2 thousand for the fiscal year ended July 31, 2024, as these notes are recorded at their<br> fair values as of the date of the Cornerstone Acquisition.
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JJ. Represents the elimination of Cornerstone’s amortization<br>of deferred debt issuance costs related to the RPF Line of Credit that has been modified in the Cornerstone Restructuring of $4.8 million<br>and the elimination of the change in fair value of derivative liabilities related to the anti-dilution provision of the RPF Line of Credit<br>that was terminated in the Cornerstone Restructuring of $2.1 million for the fiscal year ended July 31, 2024.
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Adjustments related to the CornerstoneAcquisition

KK. Represents the recognition of the implied interest on a creditor<br>payable, recognized by Rafael at its fair value in the Cornerstone Acquisition, of $0.4 million for the fiscal year ended July 31, 2024.
LL. Represents the adjustment to the net loss attributable to<br>noncontrolling interests of Cornerstone of $0.9 million for the fiscal year ended July 31, 2024, as if the Cornerstone Acquisition had<br>taken place on August 1, 2023.
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19

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