Raphael Pharmaceutical Inc

Previous wording

On May 14, 2021, Raphael Pharmaceutical Ltd., an Israeli company, and Easy Energy, Inc., a Nevada corporation, completed a share exchange agreement, or the Share Exchange, pursuant to which the shareholders of Raphael Pharmaceutical Ltd. became the holders of 90% of the issued and outstanding share capital of Easy Energy, Inc., while Easy Energy, Inc.’s shareholders hold, following the share exchange, 10% of Easy Energy, Inc. On May 19, 2021, as agreed by the parties to the Share Exchange, Easy Energy, Inc. changed its name to Raphael Pharmaceutical Inc. Unless otherwise mentioned or unless the context requires otherwise, when used in this prospectus, the terms “Raphael,” “Company,” “we,” “us,” and “our” refer to Raphael Pharmaceutical Inc. and its subsidiary, Raphael Pharmaceutical Ltd., or Raphael Israel. References to Easy Energy are to Easy Energy, Inc. Unless otherwise mentioned or unless the context requires otherwise, the information provided in this Quarterly Report on Form 10-Q relates to Raphael Israel.

Current wording

On May 14, 2021, Raphael Pharmaceutical Ltd., an Israeli company, and Easy Energy, Inc., a Nevada corporation, completed a share exchange agreement, or the Share Exchange, pursuant to which the shareholders of Raphael Pharmaceutical Ltd. became the holders of 90% of the issued and outstanding share capital of Easy Energy, Inc., while Easy Energy, Inc.’s shareholders hold, following the share exchange, 10% of Easy Energy, Inc. On May 19, 2021, as agreed by the parties to the Share Exchange, Easy Energy, Inc. changed its name to Raphael Pharmaceutical Inc. Unless otherwise mentioned or unless the context requires otherwise, when used in this Quarterly Report, the terms “Raphael,” “Company,” “we,” “us,” and “our” refer to Raphael Pharmaceutical Inc. and its subsidiary, Raphael Pharmaceutical Ltd., or Raphael Israel. References to Easy Energy are to Easy Energy, Inc. Unless otherwise mentioned or unless the context requires otherwise, the information provided in this Quarterly Report on Form 10-Q relates to Raphael Israel.

Previous wording

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws, which includes information relating to future events, future financial performance, strategies, expectations, competitive environment and regulation. Words such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information we have when those statements are made or management’s good faith belief as of that time with respect to future events, and are subject to significant risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:

Current wording

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws, which include information relating to future events, future financial performance, strategies, expectations, competitive environment and regulation. Words such as “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information we have when those statements are made or our management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:

Previous wording

We are currently in the pre-clinical development stage for our lead product candidate, our RA product candidate for the treatment of RA. In addition, we are aiming to develop a pharmaceutical drug product for the treatment of hyperinflammatory syndrome inflammation related to COVID-19. At Rambam Health Care Campus, or Rambam Hospital, we have successfully completed preclinical studies on human-derived immune cells and mouse models for both the COVID-19 and RA products.

Current wording

We are currently in the pre-clinical development stage for our lead product candidate, our RA product candidate for the treatment of RA. In addition, we are aiming to develop a pharmaceutical drug product for the treatment of hyperinflammatory syndrome and lung inflammation related to COVID-19. At Rambam Health Care Campus, or Rambam Hospital, we have successfully completed preclinical studies on human-derived immune cells and mouse models for both the COVID-19 and RA products.

Previous wording

On March 27, 2023, the MOH accepted our proposal for a clinical trial of a cannabis-based drug intended to alleviate the deterioration of COVID-19 patients.

Current wording

On March 27, 2023, the Israel Ministry of Health, or MOH, accepted our proposal for a clinical trial aimed at preventing the deterioration of hospitalized COVID-19 patients.

Previous wording

Initially, we intend to obtain approvals for our product candidates from the FDA, and the Medical Cannabis Unit of the MOH. Upon obtaining FDA approvals, or in the event that we are not successful in obtaining such approvals, we intend to apply for EMA, and other countries’ governmental regulatory agencies approvals for our product candidates. If we are successful in obtaining FDA approvals for our product candidates, we intend to enter into royalty agreements with good manufacturing practice, or GMP, approved medical manufactures and distributors, having them using our medical formulas for the purpose of growing, cultivating, manufacturing, and distributing Raphael Pharmaceutical medical indications in their designated territories.

Current wording

Initially, we intend to obtain approvals for our product candidates from the FDA and the Medical Cannabis Unit of the Israeli Ministry of Health, or MOH. Upon obtaining FDA approvals, or in the event that we are not successful in obtaining such approvals, we intend to apply for EMA and other countries’ governmental regulatory agencies approvals for our product candidates. If we are successful in obtaining FDA approvals for our product candidates, we intend to enter into royalty agreements with good manufacturing practice, or GMP, approved medical manufactures and distributors, having them using our medical formulas for the purpose of growing, cultivating, manufacturing, and distributing Raphael Pharmaceutical medical indications in their designated territories.

Previous wording

Research and Development Expenses. Our research and development expenses totaled $379,000 for the three months ended March 31, 2024, representing an increase of $265,000, or 232.5%, compared to $114,000 for the three months ended March 31, 2023. The increase was primarily attributable to the progress of Company’s research and development activities with Rambam related to the Supplement Agreement.

Current wording

Research and Development Expenses. Our research and development expenses totaled $24,000 for the three months ended June 30, 2024, representing a decrease of $269,000, or 91.8%, compared to $293,000 for the three months ended June 30, 2023. The decrease was primarily attributable to value of shares issued to Wolc in June 2023 which did not recur in 2024.

Previous wording

General and Administrative Expenses. Our general and administrative expenses totaled $168,000 for the three months ended March 31, 2024, representing an increase of $24,000, or 16.6%, compared to $144,000 for the three months ended March 31, 2023. The increase was primarily due to an increase in Company’s professional services expenses.

Current wording

General and Administrative Expenses. Our general and administrative expenses totaled $225,000 for the three months ended June 30, 2024, representing an increase of $99,000, or 78.5%, compared to $126,000 for the three months ended June 30, 2023. The increase was primarily due to increase in professional services in the second quarter of 2024.

Previous wording

*Financial Expense, net.*We recognized financial expense, net, of $3,000 for the three months ended March 31, 2024, representing a decrease of $3,000, or 100%, compared to financial expense of $6,000 for the three months ended March 31, 2023. The Company considers the decrease to be immaterial.

Current wording

*Financial income, net.*We recognized financial income, net, of $1,000 for the three months ended June 30, 2024, representing a decrease of $1,000, or 50%, compared to financial income, net of $2,000 for the three months ended June 30, 2023. The decrease was immaterial.

Previous wording

Operating Loss. Our operating loss totaled $547,000 for the three months ended March 31, 2024, representing an increase of $289,000, or 112%, compared to $258,000 for the three months ended March 31, 2023. The increase was primarily due to increase in our research and development expenses.

Current wording

Operating Loss. Our operating loss totaled $796,000 for the six months ended June 30, 2024, representing an increase of $119,000, or 17.5%, compared to $677,000 for the six months ended June 30, 2023. The increase was primarily due to the increase in our general and administrative expenses.

Previous wording

Net Loss. As a result of the foregoing, our net loss totaled $550,000 for the three months ended March 31, 2024, representing an increase of $286,000, or 108.3%, compared to $264,000 for the three months ended March 31, 2023. The increase was primarily due to increase in our research and development expenses.

Current wording

Net Loss. As a result of the foregoing, our net loss totaled $798,000 for the six months ended June 30, 2024, representing an increase of $117,000, or 17.2%, compared to $681,000 for the six months ended June 30, 2023. The increase was primarily due to the increase in our general and administrative expenses.

Previous wording

Since inception, we have funded our operations primarily through our founder’s capital and capital received from Easy Energy. As of March 31, 2024, we had $287,000 in cash and cash equivalents, and have invested most of our available cash funds in ongoing cash accounts.

Current wording

Since inception, we have funded our operations primarily through our founder’s capital and capital received from Easy Energy, Inc. As of June 30, 2024, we had $120,000 in cash and cash equivalents, and have invested most of our available cash funds in ongoing cash accounts.

Previous wording

Net cash used in operating activities was $172,000 for the three months period ended March 31, 2024, compared with net cash used in operating activities of $399,000 for the corresponding period in 2023. The $227,000 decrease in the net cash used in operating activities during the three months period ended March 31, 2024, compared to the same period in 2023, was primarily due to an increase in Company’s net loss for the period in the amount of $286,000 which was offset by a change in account payables and related party and other current assets of $514,000.

Current wording

Net cash used in operating activities was $390,000 for the six months period ended June 30, 2024, compared with net cash used in operating activities of $614,000 for the corresponding period in 2023. The $224,000 decrease in the net cash used in operating activities during the six months period ended June 30, 2024, compared to the same period in 2023, was primarily due to an increase in Company’s net loss for the period in the amount of $117,000 which was offset by a change in account payables and related party and other current assets of $341,000.

Previous wording

Net cash used in investing activities for the three months period ended March 31, 2024 was $1,000, compared with zero net cash used in investing activities for the corresponding period in 2023. The Increase is considered immaterial.

Current wording

There was no net cash used in investing activities for the six months period ended June 30, 2024 and for the same period in 2023.

Previous wording

Net cash provided by financing activities for the three months period ended March 31, 2024 was $230,000 compared to $149,000 for the same period in 2023. The increase in net cash provided by financing activities during the three months period ended March 31, 2024 compared to the corresponding period in 2023 was mainly due to an increase in funds received from issuance of shares and warrants and proceeds received from exercise of warrants.

Current wording

Net cash provided by financing activities for the six months period ended June 30, 2024 was $280,000 compared to $437,000 for the same period in 2023. The decrease in net cash provided by financing activities during the six months period ended June 30, 2024 compared to the corresponding period in 2023 was mainly due to a decrease in funds received from issuance of shares and warrants and proceeds received from exercise of warrants.

Previous wording

Pursuant to the Research Agreement, we agreed to pay Rambam $1.4 million in four equal payments, due on the first day of August on each successive year from 2019 through 2022. Pursuant to the Supplement Agreement, we agreed to pay Rambam MT $960,000 plus VAT in four biannual payments from May 2023 through December 2024. Furthermore, in accordance with the terms of the Research Agreement, we and Rambam MT will have joint ownership of any IP created as a result of research programs covered by such agreement. In connection with the Research Agreement, Rambam MT agreed not to work, study or develop any technologies with other entities that compete with our work with Rambam MT for our COVID-19 product candidate or RA product candidate for a term of three and seven years, respectively, from the end of the parties’ collaboration with respect to the COVID-19 product candidate and seven years from the end of the term of the Research Agreement with respect to the RA product candidate.

Current wording

Pursuant to the Research Agreement, we agreed to pay Rambam MT $1.4 million in four equal payments, due on the first day of August on each successive year from 2019 through 2022. Pursuant to the Supplement Agreement, we agreed to pay Rambam MT $960,000 plus VAT in four biannual payments from May 2023 through December 2024. Furthermore, in accordance with the terms of the Research Agreement, we and Rambam MT will have joint ownership of any intellectual property (IP) created as a result of research programs covered by such agreement. In connection with the Research Agreement, Rambam MT agreed not to work, study or develop any technologies with other entities that compete with our work with Rambam MT for our COVID-19 product candidate or RA product candidate for a term of three and seven years, respectively, from the end of the parties’ collaboration with respect to the COVID-19 product candidate and seven years from the end of the term of the Research Agreement with respect to the RA product candidate.

Previous wording

Subject to commercial sales of any product candidate using the intellectual property created as a part of the research covered by such agreement, Raphael Israel is required to pay Rambam MT a royalty in an amount equal to 6% of all net sales, subject to certain deductions, such as taxes paid by any purchaser, transportation and shipping costs, and other customary deductions.

Current wording

Subject to commercial sales of any product candidate using the IP created as a part of the research covered by such agreement, Raphael Israel is required to pay Rambam MT a royalty in an amount equal to 6% of all net sales, subject to certain deductions, such as taxes paid by any purchaser, transportation and shipping costs, and other customary deductions.

Previous wording

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

Current wording

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

Previous wording

On July 27, 2022, we issued 100,500 shares of common stock to Wolc in connection with the engagement agreement. The value of such issued shares was based on the value of the service provided, which amounted to $100,000. In June 2023, we issued 201,000 shares of common stock to Wolc, in connection with the services agreement dated October 2020. The value of the shares issued was based on the value of the service provided, which amounted to $200,000.

Current wording

On July 27, 2022, we issued 100,500 shares of common stock to Wolc in connection with the engagement agreement. The value of such issued shares was based on the value of the service provided, which amounted to $100,000. In June 2023, we issued the remaining 201,000 shares of common stock to Wolc in connection with the services agreement dated October 2020.The value of the shares issued was based on the value of the service provided, which amounted to $200,000.

Previous wording

As of March 31, 2024, our cash and cash equivalents were $287 thousand. We believe that our existing cash and cash equivalents will not be sufficient to fund our projected cash requirements through the third quarter of 2024. Therefore, we will require significant additional financing in the near future to fund our operations. We currently anticipate that we will require approximately $800 thousand for research and development activities over the course of the next 12 months. We also anticipate that we will require approximately $850 thousand for capital expenditures over such 12-month period, which consists primarily of expenditures for clinical trials and general Company operating costs.

Current wording

As of June 30, 2024, our cash and cash equivalents were $120,000. We believe that our existing cash and cash equivalents will not be sufficient to fund our projected cash requirements through the end of the year. Therefore, we will require significant additional financing in the near future to fund our operations. We currently anticipate that we will require approximately $700,000 for research and development activities over the course of the next 12 months. We also anticipate that we will require approximately $500,000 for capital expenditures over such 12-month period, which consists primarily of expenditures for clinical trials and general Company operating costs.