UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2025
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 000-53002
Raphael Pharmaceutical Inc.
(Exact name of registrant as specified in its charter)
| Nevada | 26-0204284 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
4 Lui Paster Street
Tel Aviv-Jaffa, Israel 6803605
(Address of principal executive offices)
(Zip Code)
(+972) 52-775-5072
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares of the registrant’s common stock, $0.01 par value, outstanding as of May 15 2025: 19,626,418.
TABLE OF CONTENTS
| Page | ||||
| PART I | ||||
| Item 1. | Financial Statements | 1 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 2 | ||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 10 | ||
| Item 4. | Controls and Procedures | 10 | ||
| PART II | ||||
| Item 1. | Legal Proceedings | 11 | ||
| Item 1A. | Risk Factors | 11 | ||
| Item 6. | Exhibits | 12 |
i
Item 1. Financial Statements
RAPHAEL PHARMACEUTICAL INC. AND ITS SUBSIDIARY
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
AS OF MARCH 31, 2025
UNAUDITED
U.S. DOLLARS IN THOUSANDS
INDEX
- - - - - - - - - - -
1
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS
U.S dollars in thousands (except for share and per share data)
| As of March 31, | As of December 31, | |||||||
| 2025 | 2024 | |||||||
| (Unaudited) | (Audited) | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $50 | $19 | ||||||
| Other current assets | 41 | 6 | ||||||
| Total current assets | 91 | 25 | ||||||
| Fixed assets, net | 2 | 2 | ||||||
| Total assets | $ | 93 | $ | 27 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Short-term credit from a related party | 41 | 41 | ||||||
| Other accounts payables and accrued expenses | 379 | 500 | ||||||
| Payable to related party | 407 | 228 | ||||||
| Total current liabilities | 827 | 769 | ||||||
| Stockholders’ equity (deficit): | ||||||||
| Common stock, $0.01 par value: | ||||||||
| Authorized: 21,020,560 shares at March 31, 2025 and December 31, 2024; | ||||||||
| Issued and outstanding: 19,626,418 and 18,701,418 at March 31, 2025 and December 31, 2024, respectively; | 196 | 187 | ||||||
| Additional paid-in capital | 8,388 | 7,960 | ||||||
| Accumulated deficit | (9,318 | ) | (8,889 | ) | ||||
| Total stockholders’ equity (deficit) | (734 | ) | (742 | ) | ||||
| Total liabilities and stockholders’ equity (deficit) | $ | 93 | $ | 27 | ||||
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
F-1
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS
U.S dollars in thousands (except for share and per share data)
Three months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Unaudited | ||||||||
| Research and development expenses | $ | 72 | $ | 379 | ||||
| General and administrative expenses | 353 | 168 | ||||||
| Operating loss | 425 | 547 | ||||||
| Total financial expense | 4 | 3 | ||||||
| Net loss | $ | 429 | $ | 550 | ||||
| Basic and diluted net loss per share | $ | 0.02 | $ | 0.03 | ||||
| Weighted average number of shares of common stock used in computing basic and diluted net loss per share | 19,626,418 | 18,616,551 | ||||||
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
F-2
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
U.S dollars in thousands (except for share and per share data)
| Common stock | Additional paid-in | Accumulated | ||||||||||||||||||
| Number | Amount | capital | deficit | Total equity | ||||||||||||||||
| Balance as of January 1, 2024 | 18,502,918 | $ | 185 | $ | 7,392 | $ | (7,310 | ) | $ | 267 | ||||||||||
| Issuance of common stock and warrants | 158,500 | 2 | 178 | 180 | ||||||||||||||||
| Net loss | - | (550 | ) | (550 | ) | |||||||||||||||
| Balance as of March 31, 2024 | 18,661,418 | $ | 187 | $ | 7,570 | $ | (7,860 | ) | $ | (103 | ) | |||||||||
| Common stock | Additional paid-in | Accumulated | ||||||||||||||||||
| Number | Amount | capital | deficit | Total equity | ||||||||||||||||
| Balance as of January 1, 2025 | 18,701,418 | $ | 187 | $ | 7,960 | $ | (8,889 | ) | $ | (742 | ) | |||||||||
| Issuance of common stock and warrants | 575,000 | 6 | 234 | 240 | ||||||||||||||||
| Share based compensation | 350,000 | $ | 3 | 194 | $ | 197 | ||||||||||||||
| Net loss | - | (429 | ) | (429 | ) | |||||||||||||||
| Balance as of March 31, 2025 | 19,626,418 | $ | 196 | $ | 8,388 | $ | (9,318 | ) | $ | (734 | ) | |||||||||
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
F-3
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
U.S dollars in thousands (except for share and per share data)
| Three months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (429 | ) | $ | (550 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ) | ) | ||||||
| Stock based compensation | 197 | |||||||
| Changes in: | ||||||||
| Other current assets | (35 | ) | (6 | ) | ||||
| Account payables and related party | 58 | 384 | ||||||
| Net cash used in operating activities | (209 | ) | (172 | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of fixed assets | (1 | ) | ||||||
| Net cash used in investing activities | (1 | ) | ||||||
| Cash flows from financing activities | ||||||||
| Issuance of common stock and warrants** | 240 | 180 | ||||||
| Receipt for warrants exercise | 50 | |||||||
| Net cash provided by financing activities | 240 | 230 | ||||||
| Change in cash and cash equivalents | 31 | 57 | ||||||
| Cash and cash equivalents at the beginning of the period | 19 | 230 | ||||||
| Cash and cash equivalents at the end of the period | $ | 50 | $ | 287 | ||||
| (*) | less than $1 thousand |
| ** | In March 2025,a company's director was granted 350,000 shares and 250,000 options in exchange for his services. |
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
F-4
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
U.S dollars in thousands (except for share and per share data)
| NOTE 1:- | GENERAL |
| a. | Raphael Pharmaceutical Inc (formerly Easy Energy, Inc.) (the “Company”) was incorporated under the laws of the State of Nevada on May 17, 2007. The Company is headquartered in Tel Aviv-Jaffa, Israel.
On October 8, 2020, the Company and its stockholders entered into a Share Exchange Agreement (the “Share Exchange”) with an Israeli pharmaceutical company (“Raphael”), according to which, among other matters, all shareholders of Raphael will sell and convey the entire holdings in Raphael to the Company such that following the Share Exchange, the shareholders of Raphael will hold 90% of the issued and outstanding common stock of the Company, and the existing shareholders of the Company will hold the remaining 10% of the issued and outstanding common stock.
On May 14, 2021, the Company’s board of directors and stockholders approved a 1-for-100 reverse split of the Company’s common stock, which was implemented and became effective as of May 14, 2021. The reverse split combined each one hundred (100) shares of the Company’s issued and outstanding Common stock into one share of common stock. No fractional shares were issued in connection with the reverse split, and any fractional shares resulting from the reverse split were rounded up to the nearest whole share.
On May 14, 2021, Raphael and the Company, completed the Share Exchange pursuant to which 9,459,253 common stock were issued to the shareholders of Raphael so that they became the holders of 90% of the issued and outstanding common stock of the Company immediately after the Share Exchange while the Company’s shareholders hold, following the Share Exchange, 1,051,028 common stock which represents 10% of the Company. On May 19, 2021, as agreed by the parties to the Share Exchange, the Company changed its name to Raphael Pharmaceutical Inc. Following such Share Exchange, Raphael’s activities are the sole activities of the Company.
The Share Exchange was accounted for as a reverse recapitalization which is outside the scope ASC 805, “Business Combinations” (“ASC 805”), as the Company, the legal acquirer, is considered a non-operating public shell, and is therefore not a business as defined in ASC 805. As the shareholders of Raphael received the largest ownership interest in the Company, Raphael was determined to be the “accounting acquirer” in the Share Exchange. As a result, the historical financial statements of the Company were replaced with the financial statement of Raphael for all periods presented.
Company’s common stock began public trading on the over-the-counter market in the U.S. in January 2023 under the symbol “RAPH”. | |
| b. | Going concern and management plans |
The accompanying financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Since its inception, the Company has devoted substantially all of its efforts to research and development, clinical trials, and raising capital. The Company is still in its development and clinical stage and has not yet generated revenues. The extent of the Company's future operating losses and the timing of becoming profitable are uncertain. As of March 31, 2025, the Company's accumulated deficit was $9,318. The Company has funded its operations to date primarily through equity financing and the issuance of a loan.
Additional funding will be required to complete the Company’s research and development and clinical trials, to attain regulatory approvals, to begin the commercialization efforts of the Company’s product and to achieve a level of sales adequate to support the Company’s cost structure.
F-5
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
U.S dollars in thousands (except for share and per share data)
| NOTE 1:- | GENERAL (Cont.) |
Management’s plans include, but are not limited to, raising capital in the United States. There can be no assurance that it will be able to successfully raise additional financing, including in a public offering, or obtain additional financing on a timely basis or on terms acceptable to the Company, or at all.
Management expects that the Company will continue to generate losses from the development, clinical development and regulatory activities of its product, which will result in negative cash flow from operating activity. This has led management to conclude that substantial doubt about the Company’s ability to continue as a going concern exists in the event that additional funding does not occur. If such sufficient financing is not received timely, the Company will not have sufficient cash flows and liquidity to finance its business operations as currently contemplated and would then need to pursue a plan to license its assets, seek to be acquired by another entity, cease operations and/or seek bankruptcy protection. The Company’s financial statements do not reflect any adjustments that might result from the outcome of this uncertainty.
| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES |
These unaudited interim financial statements should be read in conjunction with the audited financial statements and accompanying notes for the year ended December 31, 2024. The significant accounting policies applied in the annual financial statements of the Company as of December 31, 2024, are applied consistently in these interim financial statements.
| NOTE 3:- | UNAUDITED INTERIM FINANCIAL STATEMENTS |
The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included (consisting only of normal recurring adjustments except as otherwise discussed). For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.
F-6
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
U.S dollars in thousands (except for share and per share data)
| NOTE 4:- | SHAREHOLDERS’ EQUITY |
On January 16, 2025, the Company signed an agreement to raise $55 and to issue 115,000 shares of common stock and 55,000 warrants to purchase common stock at an exercise price of $1.00 per share to certain investor of the Company. The warrants will expire on July 15, 2026.
On January 30, 2025, the Company signed an agreement to raise $50 and to issue 200,000 shares of common stock.
On March 2, 2025, the Company signed an agreement to raise $100 and to issue 200,000 shares of common stock and 100,000 warrants to purchase common stock at an exercise price of $1.00 per share to Company's chief executive officer. The warrants will expire on July 15, 2026.
On March 21, 2025, the Company signed an agreement to raise $25 and to issue 50,000 shares of common stock and 10,000 warrants to purchase common stock at an exercise price of $1.00 per share to certain investor of the Company. The warrants will expire on March 15, 2026.
On March 5, 2025, the Company entered into a service agreement with Ajay Kumar Dhadha, pursuant to which Mr. Dhadha will serve as a member of our Board and as chairman of the Board. Pursuant to the service agreement, on March 5, 2025, the Company granted Mr. Dhadha 350,000 restricted shares of the Company’s Common Stock and warrants to purchase up to 250,000 shares of Common Stock at an exercise price of $1.00 per share. The warrants will expire on December 31, 2026.
On March 10, 2025, the Company updated a service agreement with one of Company's directors and extended the service term until December 31, 2025. As compensation for the services, the director will be granted with warrants to purchase up to 200,000 of the Company's common stock at an exercise price of $1.00 per share, with a total value of $22. The warrants will expire on December 31, 2025.
On March 21, 2025, the Company signed an agreement to raise $10 and to issue 10,000 shares of common stock and warrants to purchase up to 5,000 of the Company’s common stock at an exercise price of $2.50 per share to a certain investor of the Company. The warrants will expire on March 15, 2026.
F-7
RAPHAEL PHARMACEUTICAL INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
U.S dollars in thousands (except for share and per share data)
| NOTE 5: | RELATED PARTY BALANCES AND TRANSACTIONS |
On March 2, 2025, the Company signed an agreement to raise $100 and to issue 200,000 shares of common stock and 100,000 warrants to purchase common stock at an exercise price of $1.00 per share to Company's chief executive officer. The warrants will expire on July 15, 2026.
On March 5, 2025, the Company entered into a service agreement with Ajay Kumar Dhadha, pursuant to which Mr. Dhadha will serve as a member of our Board and as chairman of the Board. Pursuant to the service agreement, on March 5, 2025, the Company granted Mr. Dhadha 350,000 restricted shares of the Company’s Common Stock and warrants to purchase up to 250,000 shares of Common Stock at an exercise price of $1.00 per share. The warrants will expire on December 31, 2026.
On March 10, 2025, the Company updated a service agreement with one of Company's directors and extended the service term until December 31, 2025. As compensation for the services, the director will be granted with warrants to purchase up to 200,000 of the Company's common stock at an exercise price of $1.00 per share, with a total value of $22. The warrants will expire on December 31, 2025.
| A. | Balances |
The following related party payables are included in accounts payable and accrued expenses.
| As of March 31, | As of December 31, | |||||||
| 2025 | 2024 | |||||||
| (Unaudited) | (Audited) | |||||||
| Payables to related party - Officers (*) | 407 | 228 | ||||||
| Short-term credit from related party (**) | 41 | 41 | ||||||
| (*) | Relates to Chief Executive Officer’s and Chief Financial Officer’s services |
| (**) | Relates to a director. The director was appointed during the first quarter of 2025. |
The Company’s Chief Executive Officer and Chief Financial Officer are guarantees for the repayment of the loan.
| B. | Transactions |
| Three months ended March 31, |
||||||||
| 2025 | 2024 | |||||||
| Consulting services | 132 | 60 | ||||||
| Stock-based compensation | 197 | |||||||
| Chief Financial Officer fee | 36 | 36 | ||||||
| 365 | 96 | |||||||
| NOTE 6:- | SUBSEQUENT EVENTS |
| In April 2025, the Company reached an agreement with one of its suppliers to reduce an outstanding debt of $120 thousand to $40 thousand. Furthermore, the parties agreed to discuss, subject to the supplier's choice, about the potential issuance of Company’s shares of common stock to such supplier. |
F-8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, or the Quarterly Report.
On May 14, 2021, Raphael Pharmaceutical Ltd., an Israeli company, and Easy Energy, Inc., a Nevada corporation, completed a share exchange agreement, or the Share Exchange, pursuant to which the shareholders of Raphael Pharmaceutical Ltd. became the holders of 90% of the issued and outstanding share capital of Easy Energy, Inc., while Easy Energy, Inc.’s shareholders hold, following the share exchange, 10% of Easy Energy, Inc. On May 19, 2021, as agreed by the parties to the Share Exchange, Easy Energy, Inc. changed its name to Raphael Pharmaceutical Inc. Unless otherwise mentioned or unless the context requires otherwise, when used in this Quarterly Report, the terms “Raphael,” “Company,” “we,” “us,” and “our” refer to Raphael Pharmaceutical Inc. and its subsidiary, Raphael Pharmaceutical Ltd., or Raphael Israel. References to Easy Energy are to Easy Energy, Inc. Unless otherwise mentioned or unless the context requires otherwise, the information provided in this Quarterly Report relates to Raphael Israel.
Forward-Looking Statements
This Quarterly Report 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, financial projections, strategies, expectations, competitive environment and regulation. Words such as “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information we have when those statements are made or our management’s good faith belief as of that time with respect to future events and are subject to significant risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:
| ● | the regulatory pathways that we may elect to utilize in seeking U.S. Food and Drug Administration, or FDA, European Medicines Agency, or EMA, and other regulatory approvals, if any; | |
| ● | obtaining (and the cost thereof) FDA and EMA approval of, or other regulatory action in Europe or the United States and elsewhere with respect to our product candidates; | |
| ● | the commercial launch and future sales of our product candidates and our advancement of product candidates for other indications in our pipeline; | |
| ● | the potential cost of our rheumatoid arthritis product candidate, or RA and RA product candidate, respectively, for patients; | |
| ● | our expectations regarding the timing of commencing clinical trials; |
| ● | our expectations regarding the supply of the active pharmaceutical ingredient for our product candidates; | |
| ● | third-party payor reimbursement for our product candidates; | |
| ● | our estimates regarding anticipated expenses, capital requirements and our needs for additional financing; | |
| ● | completion and receiving favorable results of clinical trials for our product candidates; and | |
| ● | the filing by us, and the subsequent issuance of patents to us, by the U.S. Patent and Trademark Office and other governmental patent agencies. |
2
The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that may cause our actual results to differ from those anticipated in our forward-looking statements. Please see “Item 1A. Risk Factors” in Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as well as “Item 1A. Risk Factors” in Part II of this Quarterly Report for additional risks that could adversely impact our business and financial performance.
Moreover, new risks regularly emerge and it is not possible for our management to predict or articulate all the risks we face, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. All forward-looking statements included in this Quarterly Report are based on information available to us on the date of this Quarterly Report. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained above and throughout this Quarterly Report.
In this Quarterly Report, unless otherwise specified, all dollar amounts are expressed in United States dollars. Except as otherwise indicated by the context, references in this Quarterly Report to “Raphael,” “Company”, “we,” “us” and “our” are references to Raphael Pharmaceutical Inc., a Nevada corporation, together with its consolidated subsidiaries.
Overview
We are a pharmaceutical drug research and development company focused on the discovery and clinical development of life-improving drug therapies based on cannabinoids, including cannabidiol, or CBD, oil. Unless indicated otherwise, we plan on using oil derived from CBD strains with low levels of Tetrahydrocannabinol, or THC. All references to the use of CBD in our product candidates refer to CBD strains with less than 0.3% of THC.
We have recently completed a proof-of-concept clinical study, or Study, for our lead product candidate for the treatment of RA in the United States. Encouraged by the promising results of the Study, we will continue to investigate our product for the treatment of autoimmune diseases.
In addition, we are aiming to develop a novel treatment for asthma. At Rambam Health Care Campus, Rambam Med-Tech Ltd., or Rambam, we have successfully conducted studies using human-derived immune cells and mouse models to advance our understanding both COVID-19 and RA products. Due to the similarity of COVID-19 and asthma symptoms, such studies also advance our understanding of asthma and its treatment. Since the volume of COVID-19 testing has been decreasing, we decided to leverage our knowledge and understanding of COVID-19 to study asthma as well.
On February 9, 2022, we filed an application for a clinical trial with the Medical Cannabis Unit of the Ministry of Health of Israel, or MOH. On February 16, 2022 we submitted an application with the Helsinki Committee at Rambam for a clinical trial in COVID-19 patients.
In November 2022, we submitted a proposal to the MOH for a clinical trial of a cannabis-based drug intended to alleviate the deterioration of COVID-19 patients.
On March 27, 2023, the MOH accepted our proposal for a clinical trial of a cannabis-based drug intended to alleviate the deterioration of COVID-19 patients.
In April 2024 we began the Study in the United States, leveraging insights from the pre-clinical experiments we have conducted at the Rambam. This Study aimed to evaluate the Company’s Cannabinoid based formula, or Raphael’s Formula, in patients with active RA. The single-group Study was managed by MindMate, Inc./ dba Citruslabs, or Citruslabs, and conducted in Santa Monica, California, United States, under Institutional Review Board, or IRB, approval, in compliance with applicable FDA regulations and in accordance with applicable industry standards and regulations. An IRB is an appropriately constituted group that has been formally designated to review and monitor biomedical research involving human subjects.
3
On December 23, 2024, upon a successful completion of the Study, we received the Study results with overall findings that emphasize the clinical potential of Raphael’s Formula and suggest that it may have beneficial effects on symptom management and overall well-being for individuals with RA. For more information about the Study results, see “Item 1. Business - Research and Clinical Development Strategy”.
As we move forward, our focus will be on further investigating mechanisms and refining Raphael’s Formula through continued pre-clinical research. Our goal is to ensure that the formula meets all the necessary standards and regulations set forth by the FDA, allowing us to progress towards clinical treatments.
Our vision is to emerge as a pioneering company at the forefront of formulating pharmaceutical drugs that harness the potential of purified cannabinoids and full-spectrum CBD oil. Our primary mission is to cater to the unmet medical requirements of patients grappling with various disorders, with a particular focus on conditions linked to inflammation, such as autoimmune diseases, asthma, RA and COVID-19.
By leveraging our expertise in this field, we are committed to providing innovative solutions to improve the lives of those afflicted with these challenging medical conditions. Through our dedication to research, development, and compassionate care, we aim to contribute significantly to the well-being of patients worldwide, offering them much-needed relief and hope for a better future.
In order to achieve our goal, we have and will continue to build an experienced team of senior executives and scientists, with experience in all facets of pharmaceutical research and development, drug formulation, clinical trial execution and regulatory submissions. We intend to leverage the knowledge of our team in order to complete the clinical trials needed to receive approvals of our product candidates from applicable regulatory authorities.
Initially, we intend to obtain approvals for our product candidates from the FDA, and the Medical Cannabis Unit of the MOH. Upon obtaining FDA approvals, or in the event that we are not successful in obtaining such approvals, we intend to apply for European Medicines Agency, or EMA, and other countries’ governmental regulatory agencies approvals for our product candidates. If we are successful in obtaining FDA approvals for our product candidates, we intend to enter into royalty agreements with good manufacturing practice, or GMP, approved medical manufactures and distributors, having them use our medical formulas for the purpose of growing, cultivating, manufacturing, and distributing Raphael Pharmaceutical medical indications in their designated territories.
For this purpose, in October 2022, we entered into an agreement with the Medical Cannabis Research Center at Rambam for the development of a new, patentable formulation that combines purified cannabinoids to treat rheumatoid diseases.
The overall objective of this study is to identify a novel cannabinoid based patentable formulation to treat Rheumatoid diseases. Specifically, to investigate combination of purified cannabinoids to downregulate inflammation related to Rheumatoid diseases. We propose to base our study on data derived from Dr. Igal Louria-Hayon’s studies (Helsinki # 0442-20-RMB) on the evaluation of the immune regulation properties of cannabinoids on the immune system and the data derived from the cannabinoids receptors study (Helsinki # 0331-20-RMB). We will analyze the activation of cannabinoid receptors on mouse models and will study the role of purified cannabinoid as a potential to develop a novel patentable formulation to treat RA.
Our discovery platform currently focuses the use of CBD oil, one of the cannabinoids in cannabis plants, as the active pharmaceutical ingredient, or API, for our RA product candidate and COVID-19 product candidate. Research results published in 2018 (“Translational Investigation of the Therapeutic Potential of Cannabidiol (CBD): Toward a New Age”) has shown that there may be benefits to treading medical conditions, or their effects, with cannabinoids, and more specifically, with CBD, which may help reduce chronic pain by impacting endocannabinoid receptor activity, reducing inflammation and interacting with neurotransmitters. This research has also shown that CBD may have neuroprotective properties, and could have the ability to (i) reduce anxiety and depression, (ii) alleviate cancer-related symptoms, (iii) reduce acne and (iv) benefit heart health.
4
Over the last few years, pharmaceutical drug products that include parts of the cannabis plant have begun to receive regulatory approvals for use in patients suffering from certain disorders, as highlighted below.
| ● | Nabiximols, better known under the tradename Sativex, is a botanical mouth spray consisting of natural THC and CBD extracts, that received approval in the United Kingdom in 2010 for the alleviation of multiple sclerosis, or MS, symptoms like spasticity, pain and overactive bladder. |
| ● | Dronabinol, better known under the name Marinol, contains mainly THC and is a partial agonist of the cannabinoid receptor type 1, or CB1, in the nervous system and a partial agonist of the cannabinoid receptor type 2, or CB2, in the periphery that activates appetite, mood, cognition, memory and perception. Dronabinol received FDA-approval for use in the United States in 1985 for treatment of anorexia in acquired immunodeficiency syndrome, or AIDS, patients and for the prevention of chemotherapy-induced nausea and vomiting, or CINV. A Lack of randomized controlled trials, or RCTs, makes a recommendation for usage of dronabinol as a third-line treatment for CINV difficult. Dronabinol in the form of an oral tablet is known under the trade name Namisol. It has high bioavailability and a long shelf life and is indicated for MS, chronic pain and behavioral disturbances in dementia patients. |
| ● | Nabilone, better known under the tradename Cesamet, contains primarily THC, is approved for use as an anti-emetic and adjunctive analgesic for neuropathic pain, CINV and treatment for anorexia in AIDS patients in Canada, Mexico, the UK and the United States. Its main usage today is as adjunct medicine for chronic pain management. |
In light of the past regulatory approvals for other pharmaceutical drug products and, more specifically, the potential beneficial effects of CBD and other parts of the cannabis plant, we believe that a drug discovery platform based on CBD may offer new and differentiated treatment options for patients. Prior regulatory approvals of other companies’ pharmaceutical drug products do not serve as an indication as to the ability or likelihood that we receive regulatory approval to commercialize any of our product candidates.
After four successful years of pre-clinical research at the laboratories of Rambam, which paved the way for the Study in RA patients, we are now advancing our efforts to further develop our product candidates.
Following the completion of the Study, we intend to submit an IND application to the FDA and MOH. See “Item 1. Business - Research and Clinical Development Strategy - Clinical Development Plan” for additional information on the ongoing pre-clinical trial and our planned clinical trial for our RA product candidate.
In addition, with respect to our COVID-19 product candidate, our clinical research partners have been focused on the effect of cannabinoids and cannabis extracts on immune cells which induce acute inflammation. This study will begin in the pre-clinical level in immune cell models and, subject to positive results that exhibit downregulation of pro-inflammatory cytokines by cannabis extract, the study was completed successfully. Following the completion of the pre-clinical study, a mice model was conducted to analyze for acute inflammation, which resembles the immunopathology of COVID-19. The mice model was successfully completed and we have registered for a clinical trial in patients with the MOH.
As a pharmaceutical research and clinical development company we do not own or operate, and currently do not intend on creating an in-house team to manufacture and commercialize our pharmaceutical drug products, if any, that receive regulatory approval allowing for commercialization. We currently rely, and expect to continue to rely, on third parties for the manufacturing of our product candidates for preclinical and clinical testing, as well as for commercial manufacturing of any pharmaceutical drug products for which we may receive regulatory approval. Subject to the receipt of such regulatory approvals, we intend on cooperating with manufacturers and other third parties to manufacture and commercialize approved pharmaceutical drug products.
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Critical Accounting Estimates
Our financial statements are prepared in accordance with U.S. GAAP. There are no critical accounting estimates for the years ended December 31, 2024, and 2023. Also, please see Note 2 of Part I, Item 1 of this Quarterly Report for the summary of significant accounting policies.
Results of Operations
Three months ended March 31, 2025, compared to the three months ended March 31, 2024
Revenues. We had no revenues during the three months ended March 31, 2025, and March 31, 2024.
Research and Development Expenses. Our research and development expenses totaled $72,000 for the three months ended March 31, 2025, representing a decrease of $307,000, or 81%, compared to $379,000 for the three months ended March 31, 2024. The decrease was primarily attributable to expenses related to the Company’s research and development activities with Rambam.
General and Administrative Expenses. Our general and administrative expenses totaled $353,000 for the three months ended March 31, 2025, representing an increase of $185,000, or 110%, compared to $168,000 for the three months ended March 31, 2024. The increase was primarily attributable to stock-based compensation to a director.
Operating Loss. Our operating loss totaled $425,000 for the three months ended March 31, 2025, representing a decrease of $122,000, or 22%, compared to $547,000 for the three months ended March 31, 2024. The decrease was primarily due to a decrease in our research and development expenses, offset by the increase in general and administrative costs.
Financial expense (income), net. We recognized financial expense, net, of $4,000 for the three months ended March 31, 2025, representing an increase of $1,000, or 33%, compared to financial expenses, net of $3,000 for the three months ended March 31, 2024. The Company considers the decrease to be immaterial.
Net Loss. Our net loss totaled $429,000 for the three months ended March 31, 2025, representing a decrease of $121,000, or 22%, compared to $550,000 for the three months ended March 31, 2024. The decrease was primarily due to a decrease in our research and development expenses, offset by the increase in general and administrative costs.
Liquidity and Capital Resources
Since inception, we have funded our operations primarily through our founder’s capital and capital received from Easy Energy, Inc. As of March 31, 2025, we had $50,000 in cash and cash equivalents and have invested most of our available cash funds in ongoing cash accounts.
Net cash used in operating activities was $209,000 for the three months period ended March 31, 2025, compared with net cash used in operating activities of $172,000 for the corresponding period in 2024. The $37,000 increase in the net cash used in operating activities during the three months period ended March 31, 2025, compared to the same period in 2024, was primarily due to a decrease in changes in other payables.
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There was no net cash used in investing activities for the three months period ended March 31, 2025, compared to $1,000 net cash used in investing activities for the corresponding period in 2024. The Company considers the change to be immaterial.
Net cash provided by financing activities for the three months period ended March 31, 2025 was $240,000 compared to $230,000 for the same period in 2024. The increase in net cash provided by financing activities during the three months period ended March 31, 2025 compared to the corresponding period in 2024 was mainly due to issuance of shares during the period ended March 31, 2025.
Off-Balance Sheet Arrangements
Rambam Research Agreement
On July 17, 2019, we entered into a sponsored Research Agreement with Rambam, pursuant to which the Company agreed to fund a research project, to be performed by Rambam, with a research plan aimed at identifying the effects of different cannabis strains on the function of immune cells. On October 28, 2020, the Company and Rambam agreed to expand the research plan to study the anti-inflammatory activities of cannabis extracts in an RA mouse model. On February 15, 2021, the Company and Rambam agreed to further expand the research plan to study the effect of cannabis extracts on the immunopathology of the COVID-19 disease. The sponsored Researched Agreement is for an initial term of 48 months. On October 23, 2022, the Company and Rambam entered into a supplement to the Research Agreement, or the Supplement Agreement, pursuant to which the Company exercised an option to extend the Research Agreement by additional two years until December 31, 2024, which we plan to extend in 2025.
Pursuant to the Research Agreement, we agreed to pay Rambam $1.4 million in four equal payments, due on the first day of August on each successive year from 2019 through 2022. Pursuant to the Supplement Agreement, we agreed to pay Rambam $960,000 plus VAT in four biannual payments from May 2023 through December 2024. Such amount was later amended to $470,000 plus VAT. Furthermore, in accordance with the terms of the Research Agreement, we and Rambam will have joint ownership of any IP created as a result of research programs covered by such agreement. In connection with the Research Agreement, Rambam agreed not to work, study or develop any technologies with other entities that compete with our work with Rambam for our COVID-19 product candidate or RA product candidate for a term of three and seven years, respectively, from the end of the parties’ collaboration with respect to the COVID-19 product candidate and seven years from the end of the term of the Research Agreement with respect to the RA product candidate.
Subject to commercial sales of any product candidate using the IP created as a part of the research covered by such agreement, Raphael Israel is required to pay Rambam a royalty in an amount equal to 6% of all net sales, subject to certain deductions, such as taxes paid by any purchaser, transportation and shipping costs, and other customary deductions.
On December 25, 2023, the Company received an extension to pay the remaining $350,000 pursuant to the Research Agreement until the end of June 2024. As of the date of this Quarterly Report, the Company has made all four of the four equal payments due pursuant to the Research Agreement, for a total amount of $1.4 million and $295,000 for the Supplement Agreement (out of the remaining $470,000).
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Way of Life Cannabis Agreement
In October 2020, Raphael Israel entered into an engagement agreement with Wolc, pursuant to which, subject to its completing the Share Exchange with Easy Energy, Raphael Israel will be provided with up to 15 liters of CBD oil, from a strain of cannabis during a term of 18 months, to be provided in two to three deliveries of between one to seven 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 in Israel.
On July 27, 2022, the Company 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, the Company 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.
Service Agreement with our Chief Technology Officer
Our Chief Technology Officer, Dr. Igal Louria Hayon, provides services to our Company pursuant to a service agreement, by and between the Company and Dr. Igal Louria Hayon. Pursuant to the terms thereof Dr. Hayon provides consulting services the Company to engage with an array of science consultants and to coordinate collaborations with hospitals on medical cannabis research. Pursuant to such agreement, we agreed to pay our Chief Technology Officer 15% of the Company’s net royalty’s income from worldwide sales of any of the Company’s cannabis-based medical indications treating COVID-19. Pursuant to Dr. Hayon’s service agreement, in the event we will apply for any clinical trial of cannabis-based treatment or will begin any other new cannabis related research, the Corporation will grant Dr. Hayon warrants to purchase up to 350,000 shares of Common Stock at an exercise price of $0.01. On May 1, 2024, the milestone was met and the Company granted to Dr. Igal Louria Hayon warrants to purchase up to 350,000 shares of Common Stock of the Company at an exercise price of $0.01. The warrants expire on April 30, 2026. On March 3, 2025, we entered into a new service agreement with our Chief Technology Officer, substantially on the same terms as the agreement described above, effective as of January 1, 2025 Pursuant to such service agreement, we agreed to pay our Chief Technology Officer a monthly fee of $24,000 and to reimburse him with certain expenses related to his scientific work.
The Company may terminate the service agreement prior to the expiration of its term upon 120 days advance notice and the payment to Dr. Hayon of a termination fee equal to the monthly fees payable through the expiration of its term.
Except for the above, we have not engaged in any off-balance sheet arrangements, such as the use of unconsolidated subsidiaries, structured finance, special purpose entities or variable interest entities.
We do not believe that our off-balance sheet arrangements and commitments have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
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Current Outlook
We have financed our operations to date primarily through proceeds from founder’s capital and issuance of shares and warrants. We have incurred losses and generated negative cash flows from operations since inception. To date we have not generated revenue, and we do not expect to generate significant revenues from the sale of our products in the near future. We do not believe that our current cash on hand will be sufficient to fund our projected operating requirements. This raises substantial doubt about our ability to continue as a going concern. At this time, there is no guarantee that we will be able to obtain an adequate level of financial resources required for the short and long-term support of our operations or that we will be able to obtain additional financing as needed, or meet the conditions of such financing, or that the costs of such financing may not be prohibitive. These conditions raise substantial doubt about our ability to continue as a going concern for a period within one year from the date of the financial statements included elsewhere in this Quarterly Report.
As of March 31, 2025, our cash and cash equivalents were $50,000. We believe that our existing cash and cash equivalents will not be sufficient to fund our projected cash requirements through the third quarter of 2025. Therefore, we will require significant additional financing in the near future to fund our operations. We currently anticipate that we will require approximately $500 thousand for research and development activities over the course of the next 12 months. We also anticipate that we will require approximately $700 thousand for capital expenditures over such 12-month period, which consists primarily of expenditures for clinical trials and general Company operating costs.
In addition, our operating plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than planned. Our future capital requirements will depend on many factors, including:
| ● | our research and development efforts, including our ability to finish research and development projects or product development within the allotted or expected timeline; |
| ● | the cost, timing and outcomes of seeking to commercialize our products in a timely manner; | |
| ● | our ability to generate cash flows; | |
| ● | economic weakness, including inflation, or political instability in particular foreign economies and markets; | |
| ● | government regulation in our industry, and more specifically, the costs and timing of obtaining regulatory approval or permits to launch our technology in various geographical markets; and | |
| ● | the costs of, and timing for, strengthening our manufacturing agreements for production of our wave energy systems. |
Until we can generate significant revenues, if ever, we expect to satisfy our future cash needs through our existing cash, cash equivalents and short-term deposits, loans, or debt or equity financings. We cannot be certain that additional funding will be available to us on acceptable terms, if at all. If funds are not available, we may be required to delay, reduce the scope of, or eliminate research or development plans for, or commercialization efforts with respect to, one or more applications of our products. This may raise substantial doubts about our ability to continue as a going concern.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 4. Controls and Procedures
Management’s Conclusions Regarding Effectiveness of Disclosure Controls and Procedures
As of March 31, 2025, we conducted an evaluation, under the supervision and participation of management including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended). There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.
Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level as of March 31, 2025.
Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the fiscal quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even internal controls determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. The effectiveness of our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the possibility of human error, and the risk of fraud. The projection of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies may deteriorate. Because of these limitations, there can be no assurance that any system of internal control over financial reporting will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.
This Quarterly Report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to rules of the Commission that exempt from this requirement issuers that are neither accelerated filers nor large accelerated filers.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There have been no material changes to our legal proceedings as described in “Item 3. Legal Proceedings” in our Annual Report on Form 10-K, as filed with the SEC on March 31, 2025.
Item 1A. Risk Factors
There have been no material changes to our risk factors from those disclosed in “Item 1A. Risk Factors” in our Annual Report on Form 10-K, as filed with the SEC on March 31, 2025.
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
On January 16, 2025, the Company signed an agreement to raise $55 and to issue 115,000 shares of common stock and 55,000 warrants to purchase common stock at an exercise price of $1.00 per share to a certain investor of the Company. The warrants will expire on July 15, 2026.
On January 30, 2025, the Company signed an agreement to raise $50 and to issue 200,000 shares of common stock to a certain investor of the Company.
On March 2, 2025, the Company signed an agreement to raise $100 and to issue 200,000 shares of common stock and 100,000 warrants to purchase common stock at an exercise price of $1.00 per share to Company's Chief Executive Officer. The warrants will expire on July 15, 2026.
On March 10, 2025, the Company updated a service agreement with one of Company's directors and extended the service term until December 31, 2025. As compensation for the services, the director will be granted with warrants to purchase up to 200,000 of the Company's common stock at an exercise price of $1.00 per share. The warrants will expire on December 31, 2025.
On March 21, 2025, the Company signed an agreement to raise $25 and to issue 50,000 shares of common stock and 10,000 warrants to purchase common stock at an exercise price of $1.00 per share to a certain investor of the Company. The warrants will expire on March 15, 2026.
On March 21, 2025, the Company signed an agreement to raise $10 and to issue 10,000 shares of common stock and warrants to purchase up to 5,000 of the Company’s common stock at an exercise price of $2.50 per share to a certain investor of the Company. The warrants will expire on March 15, 2026.
We claimed exemption from registration under the Securities Act, for the foregoing transactions under Section 4(a)(2) of the Securities Act.
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Item 6. Exhibits
EXHIBIT INDEX
| * | Filed herewith. |
| ** | Furnished herewith |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| RAPHAEL PHARMACEUTICAL INC. | ||
| Date: May 15, 2025 | By: | /s/ Shlomo Pilo |
| Name: | Shlomo Pilo | |
| Title: | Chief Executive Officer (Principal Executive Officer) | |
| Date: May 15, 2025 | By: | /s/ Guy Ofir |
| Name: | Guy Ofir | |
| Title: | Chief Financial Officer (Principal Financial Officer) | |
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Exhibit 10.1
FORM OF SUBSCRIPTION AGREEMENT
| To: | Raphael Pharmaceutical Inc. (the “Corporation” or the “Issuer”) Address: Las Vegas, Nevada, USA |
The undersigned (the “Subscriber”) hereby acknowledges that the Corporation is proceeding with a private placement of units (each, a “Unit”), with each Unit consisting of one common stock share par value $0.01of the Corporation (a “Share”). The Subscriber hereby tenders to the Corporation this subscription offer which, upon acceptance by the Corporation, will constitute an agreement of the Subscriber to subscribe for, take up, purchase and pay for and, on the part of the Corporation, to issue and sell to the Subscriber the number of Units set out below on the terms and subject to the conditions set out in this Agreement.
| Number of Units: | ______________ |
| Total Purchase Price ___$ per Unit: Number of Warrants: Price per Warrant: $ |
$ _____________ |
| Last Execution Date: |
DATED this day______ of ________, 2025.
U.S. Domestic Purchaser: ______
Non-U.S. Purchaser: ______
| (Name of Subscriber - please print) | (Subscriber’s Address) | |
| By: | ||
| (Official Capacity or Title - please print) | ||
| (Telephone Number) | ||
| Authorized Signature | (Facsimile Number) | |
| (Please print name of individual whose signature | (E-mail Address) | |
| Appears above if different than the name of the | ||
| Subscriber printed above). |
If Registration or delivery instructions are different from the address listed above, please advise the Issuer at the time of subscription.
This subscription is accepted by the Corporation this ____ day of, 2025.
Raphael Pharmaceutical Inc
| Per: | |
| Shlomo Pilo, CEO |
| 1. | Interpretation |
1.1. In this Agreement, unless the context otherwise requires:
“1933 Act” means the United States Securities Act of 1933, as amended;
“Accredited Investor” has the meaning set forth in Appendix I hereto;
“Closing” means the day on which the transaction hereof is consummated pursuant to the terms of Section 5 below;
“Commission” means the United States Securities and Exchange Commission;
“Exemption” means the exemptions from the prospectus requirements of the 1933 Act;
“Parties” or “Party” means the Subscriber, the Corporation or both, as the context requires;
“Private Placement” means the offering of the Units by the Issuer;
“Price Per Share” means the price per Share paid by the Subscriber at the time of the Closing;
“Purchased Shares” means the total number of Share purchased by the Subscriber under this Agreement.
“Regulation S” means Regulation S promulgated under the 1933 Act;
“Regulatory Authorities” means the Commission and the securities regulatory authorities in an international jurisdiction;
“Shares” means shares of common stock par value $0.00001 each of the Corporation;
“Subscriber” has the meaning ascribed to it on the cover page;
“Subscriber’s Units” means those Units which the Subscriber has agreed to purchase under this Agreement;
“Subscription Proceeds” means the total gross proceeds from the sale of Units under the Private Placement;
“United States” means the United States of America, its territories and possessions, any state of the United States and the District of Columbia;
“U.S. Person” has the meaning ascribed to it in Regulation S. Without limiting the foregoing, but for greater clarity in this Agreement, a U.S. Person includes, subject to the exclusions set forth in Regulation S, (i) any natural person resident in the United States, (ii) any partnership or corporation organized or incorporated under the laws of the United States, (iii) any estate or trust of which any executor, administrator or trustee is a U.S. Person, (iv) any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident in the United States, and (v) any partnership or corporation organized or incorporated under the laws of any non-U.S. jurisdiction which is formed by a U.S. Person principally for the purpose of investing in securities not registered under the 1933 Act, unless it is organized or incorporated, and owned, by Accredited Investors who are not natural persons, estates or trusts.
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1.2 This Agreement is to be read with all changes in gender or number as required by the context.
1.3 The headings in this Agreement are for convenience of reference only and do not affect the interpretation of this Agreement.
1.4 Unless otherwise indicated, all dollar amounts referred to in this Agreement are in lawful currency of the United States of America.
1.5 This Agreement is governed by, subject to and interpreted in accordance with the laws prevailing in New York. The competent courts in New York, New York shall have sole and exclusive jurisdiction on and dispute arising out or in connection with this Agreement.
| 2. | representations, WARRANTIES, covenants and acknowledgements of the subscriber |
2.1 The Subscriber acknowledges, represents, warrants and covenants to and with the Corporation that, as at the date given above and at the Closing:
| (a) | no prospectus has been filed by the Corporation with any of the Commissions in connection with the issuance of the Units, such issuance is exempted from the prospectus requirements of the 1933 Act and that: |
| (i) | the Subscriber is restricted from using most of the civil remedies available under the 1933 Act; |
| (ii) | the Subscriber may not receive information that would otherwise be required to be provided to it under the 1933 Act; and |
| (iii) | the Corporation is relieved from certain obligations that would otherwise apply under the 1933 Act; |
| (b) | the Subscriber certifies that it is resident in the jurisdiction(s) set out on the first page of this Agreement; |
| (c) | the Subscriber is purchasing the Subscriber’s Units as principal for its own account and not for the benefit of any other person, and is purchasing the Subscriber’s Units for investment only and not with a view to the resale or distribution of all or any of the Subscriber’s Units; |
| (d) | the Subscriber acknowledges that: |
| (i) | no securities commission or similar regulatory authority has reviewed or passed on the merits of the Units; |
| (ii) | there is no government or other insurance covering the Units; |
| (iii) | there are risks associated with the purchase of the Units; |
| (iv) | without derogating from the Corporation’s obligations herein, there are restrictions on the Subscriber’s ability to resell the Units and it is the responsibility of the Subscriber to find out what those restrictions are and to comply with them before selling the Units; and |
| (v) | the Corporation has advised the Subscriber that the Corporation is relying on an exemption from the rules and regulations requiring it to provide the Subscriber with a prospectus and to sell securities through a person registered to sell securities under the 1933 Act and, as a consequence of acquiring Units pursuant to an Exemption, certain protections, rights and remedies provided by the 1933 Act, including statutory rights of rescission or damages, will not be available to the Subscriber; |
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| (e) | at the time the Subscriber was offered the Units, it was, and as of the date hereof it is, a “non-US person” as defined in Regulation S (“Regulation S”) as promulgated under the 1933 Act and/or an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the 1933 Act. If the Subscriber is an Accredited Investor, by virtue of the fact that the Subscriber falls within one or more of the sub-paragraphs of the definition of Accredited Investor set out in Appendix I, and the Subscriber has checked the sub-paragraph(s) applicable to the Subscriber; |
| (f) | each Subscriber indicating that such Subscriber is an Accredited Investor on its signature page to this Agreement, severally and not jointly, shall complete the Accredited Investor Questionnaire set forth on Appendix I; |
| (g) | each Subscriber indicating that it is not a U.S. Person on its signature page to this Agreement, severally and not jointly, further makes the representations and warranties to the Corporation set forth on Appendix II; |
| (h) | no person has made to the Subscriber any written or oral representations: |
| (i) | that any person will resell or repurchase any of the Units; |
| (ii) | that any person will refund the purchase price of any of the Units; or |
| (iii) | as to the future price or value of any of the Units; |
| (i) | the Subscriber will not become a “control person” by virtue of the purchase of the Subscriber’s Shares, and does not intend to act in concert with any other person to form a control group of the Issuer; |
| (j) | the Subscriber has no knowledge of a “material fact” or “material change” in the affairs of the Corporation that has not been generally disclosed to the public, save knowledge disclosed to it in connection with this particular transaction; |
| (k) | the offer made by this subscription is irrevocable by the Subscriber and requires acceptance by the Corporation; |
| (l) | the acceptance of this subscription offer will be conditional upon the sale of the Subscriber’s Units to the Subscriber being exempt from the prospectus and registration requirements under applicable relevant securities legislation; |
| (m) | the Subscriber has the legal capacity and competence to enter into and execute this Agreement and to take all actions required pursuant hereto and, if an individual is of full age of majority, and if the Subscriber is a corporation it is duly incorporated and validly subsisting under the laws of its jurisdiction of incorporation, and all necessary approvals by its directors, shareholders and others have been given to authorize the execution of this Agreement on behalf of the Subscriber; |
| (n) | the entering into of this Agreement and the transactions contemplated hereby will not result in the violation of any of the terms and provisions of any law applicable to, or the incorporation documents of, the Subscriber or of any agreement, written or oral, to which the Subscriber may be a party or by which it is or may be bound; |
| (o) | this Agreement has been duly executed and delivered by the Subscriber and constitutes a legal, valid and binding obligation of the Subscriber enforceable against the Subscriber; |
| (p) | the Subscriber has been advised to consult its own legal advisors with respect to the applicable hold periods imposed in respect of the Shares by applicable securities legislation and regulatory policies and confirms that no representations by the Corporation have been made respecting the hold periods applicable to the Units; |
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| (q) | without derogating from the Corporation’s obligations herein, the Subscriber is aware of the risks and other characteristics of the Units and of the fact that the Subscriber may not be able to resell the Units purchased by it except in accordance with the applicable securities legislation and regulatory policies and that the Units may be subject to resale restrictions and may bear a legend to this effect; |
| (r) | if required by applicable securities legislation, policy or order or by any securities commission, stock exchange or other regulatory authority, the Subscriber will execute, deliver, file and otherwise assist the Corporation in filing, such reports, undertakings and other documents with respect to the issue of the Corporation as may be required; |
| (s) | the Subscriber has not purchased the Units as a result of any form of general solicitation or general advertising, including advertisements, articles, notices or other communication published in any newspaper, magazine or similar media or broadcast over radio, television or internet or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; |
| (t) | the Subscriber has such knowledge in financial and business affairs as to be capable of evaluating the merits and risks of its investment and is able to bear the economic risk of loss of its investment; |
| (u) | the Subscriber agrees that the Corporation may be required by law or otherwise to disclose to regulatory authorities the identity of the Subscriber and, if applicable, the beneficial purchaser for whom the Subscriber may be acting; |
| (v) | the Subscriber agrees that the above representations, warranties, covenants and acknowledgements in this subsection will be true and correct both as of the execution of this subscription and as of the day of Closing; and |
| (w) | the Subscriber has: (i) reviewed all of the Corporation's filings under the 1934 Act; and (ii) been given the chance to ask questions of the Corporation's officers and directors; and (iii) received answers to all questions asked. |
2.2 The foregoing representations, warranties, covenants and acknowledgements are made by the Subscriber with the intent that they be relied upon by the Corporation in determining its suitability as a purchaser of Shares, and the Subscriber hereby agrees to indemnify the Corporation against all losses, claims, costs, expenses and damages or liabilities which any of them may suffer or incur as a result of reliance thereon. The Subscriber undertakes to notify the Corporation immediately of any change in any representation, warranty or other information relating to the Subscriber set forth herein which takes place prior to the Closing.
| 3. | representations, warranties AND COVENANTS of the CORPORATION |
3.1 The Corporation represents, warrants and covenants that, as of the date given above and at the Closing:
| (a) | the Corporation is a valid and subsisting corporation incorporated under the laws of the State of Nevada; |
| (b) | the Corporation is, where required, duly registered and licensed to carry on business in the jurisdictions in which it carries on business or owns property where required under the laws of that jurisdiction, except where in failure to so register will not have a material adverse effect on the Corporation; |
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| (c) | the Corporation has sufficient non-issued shares in its authorized share capital to issue the Units, and upon their issuance the Shares comprising the Units will be duly and validly issued as fully paid and non-assessable; |
| (d) | The Ordinary Shares are owned and held beneficially are as set forth in Exhibit 3.1(d) hereto. The shareholders detailed in Exhibit 3.1(d) (the “Existing Shareholders”) are the registered and beneficial owners of all of the issued and outstanding share capital of the Corporation on a fully diluted basis and none of the Existing Shareholders owns any other shares, options or other rights to subscribe for, purchase or acquire any share capital of the Corporation or holds any rights of rescission with the shares issued to them by the Corporation which are not specified in Exhibit 3.1(d). The Corporation represents that all his shares are free and clear of all liens, claims, charges, encumbrances, restrictions, rights, options to purchase, proxies, voting trust and other voting agreements, calls or commitments of any kind. The Purchased Shares, when issued and allotted will be duly authorized, validly issued, fully paid, non-assessable, and free of any pre-emptive rights or any other third party right, and will have the rights, preferences, privileges, and restrictions set forth in the Company’s Bylaws, as in effect at the issuance date, and will be free and clear of any lien, pledge or any other security interest. |
| (e) | Financial Statements. |
Attached as Schedule 3.1(e)1 is a copy of the Corporation audited financial statements as of and for the period ended December 31, 2021, and a copy of the Corporation unaudited financial statements for the period ended March 31, 2022 (together referred to as the “Financial Statements”). The Financial Statements are true and correct in all material respects, are in accordance with the books and records of the Corporation and have been prepared in accordance with generally accepted accounting principles (“GAAP”) consistently applied, and fairly and accurately present in all material respects the financial position of the Corporation as of such dates and the results of its operations for the periods then ended.
except as set forth in Schedule 3.1(e)2, the Corporation is not a guarantor of any debt or obligation of another, nor has the Corporation given any indemnification, loan, security or otherwise agreed to become directly or contingently liable for any obligation of any person, and no person has given any guarantee of, or security for, any obligation of the Corporation.
Since December 31, 2021, except as set forth in Schedule 3.1(e)3 and as contemplated by this Agreement and its Exhibits, there has not been:
1) any change or event that has had or may be reasonably expected to have a material adverse effect on the assets, liabilities, financial condition, operating results or business of the Corporation from that reflected in the Financial Statements;
2) any damage, destruction or loss, whether or not covered by insurance, adversely affecting the Condition of the Corporation;
3) any waiver by the Corporation of a valuable right or of a material debt owed to it;
4) any satisfaction or discharge of any lien or payment of any obligation by the Corporation, except in the ordinary course of business and that is not, individually or in the aggregate, materially adverse to the assets, liabilities, financial condition, operating results or business of the Corporation as currently conducted and as currently proposed to be conducted (collectively, the “Condition of the Corporation”);
5) any material change or amendment to a material contract or arrangement by which the Corporation or any of its assets or properties is bound or subject;
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6) any material change in any compensation arrangement or agreement with any employee of the Corporation or any change in any arrangement or agreement with the Founder;
7) any loans made by the Corporation to its employees, officers, or directors other than travel advances made in the ordinary course of business;
8) any sale, transfer or lease of (except in the ordinary course of business) or mortgage or pledge or imposition of lien on, any of the Corporation assets;
9) any change in the accounting methods or accounting principles or practices employed by the Corporation; or
10) any other event or condition of any character that by itself or in conjunction with other events or conditions would materially and adversely affect the Condition of the Corporation.
| (f) | key persons. Schedule 3.1(f) list of the key persons of the Corporation as of the date hereof. |
| (g) | Litigation. Except as detailed in Schedule 3.1(g), there is no action, suit, proceeding, governmental inquiry or investigation pending or, to the Corporation’s knowledge, currently threatened against the Corporation or any director, officer, shareholder or employee that questions the validity of this Agreement, or the right of the Corporation to enter into such agreements, or to consummate the transactions contemplated hereby or thereby, or that might result, either individually or in the aggregate, in any material adverse changes to the assets, condition (financial or otherwise) or operations of the Corporation, or any change in the current equity ownership of the Corporation, nor is the Corporation or the Founder aware that there is any basis for the foregoing. |
The foregoing includes, without limitation, actions, suits, proceedings or investigations pending or threatened involving the prior employment of any of the Corporation’s employees, their use in connection with the Corporation’s business of any information or techniques allegedly proprietary to any of their former employers or any academic institute, or any third party or their obligations under any agreements with prior employers or any third party.
The Corporation or, to the Corporation’s knowledge, any officer, shareholder or key persons is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality.
There is no action, suit, proceeding or investigation initiated by the Corporation or, to the Corporation’s knowledge, any officer, shareholder or key persons (in their capacity as such) currently pending or that the Corporation (or, to the Corporation’s knowledge, any officer, shareholder or key persons) intends to initiate.
| (h) | Intellectual Property; Conduct of Business. |
“Intellectual Property” means any and all worldwide industrial and intellectual property rights and all rights associated therewith, including, without limitation, patent rights and applications therefor, trademark rights, service mark rights, trade name rights, copyright rights, trade secrets, proprietary rights and processes, all inventions (whether patentable or not), invention disclosures, improvements, proprietary information, know how, technology, technical data, proprietary processes and formulae, works of authorship, algorithms, specifications, engineering, market analysis, all industrial designs and any registrations and applications therefor, Internet domain names, Internet and World Wide Web URLs or addresses, all computer software, including all source code, object code, firmware, development tools, files, records and data, all schematics, netlists, test methodologies, test vectors, emulation and simulation tools and reports, hardware development tools, and all rights in prototypes and other devices, all databases and data collections and all rights therein, all moral and economic rights of authors and inventors, however denominated, research records and any similar or equivalent rights to any of the foregoing, and all tangible embodiments of the foregoing.
1) The Corporation has sufficient title and ownership or sufficient rights to the use of all Intellectual Property and processes necessary for its business as currently conducted and as currently proposed to be conducted; the Corporation is not aware that any Intellectual Property owned by the Corporation, conflicts with, or infringes upon, the rights of others.
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2) The Corporation has not granted any options or licenses, or entered any agreements of any kind relating to the Corporation’s Intellectual Property, nor is the Corporation bound by or a party to any options, licenses or agreements of any kind with respect to the Intellectual Property of any other person or entity.
3) The Corporation has not received any communications alleging that the Corporation have violated or, by conducting its business as proposed, would violate any of the Intellectual Property (including, without limitation, patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights) of any other person or entity and the Corporation is not aware that a reasonable basis exists for any such allegations or threats by any person.
4) The Corporation has not received any communications alleging that the Corporation have violated or, by conducting its business as proposed, would violate any of the Intellectual Property (including, without limitation, patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights) of any other person or entity and the Corporation is not aware that a reasonable basis exists for any such allegations or threats by any person.
| (i) | Business Plan; Budget. The Corporation's business plan that includes the budget attached hereto as Schedule 3.1(i) (the “Plan”) has been prepared in good faith by the Corporation; and the Corporation is not aware of any untrue statement of a material fact therein, nor does it omit to state a material fact necessary to make the statements made therein not misleading, except that with respect to assumptions, projections and expressions of opinion or predictions contained in the Plan, the Corporation represents only that such assumptions, projections and expressions were made in good faith and that the Corporation believes there is a reasonable basis therefore, provided however that no assurance can be given that the assumptions are correct and/or that any of the forecast projections, expectations or transactions contemplated therein will be attained. |
| (j) | Research status. The Research status is as described at Schedule 3.1(j). |
| (k) | Agreements; No Defaults. Exhibit 3.1(k) contains a list of all material agreements, contracts, leases, licenses, instruments and commitments, both written and oral, to which the Corporation is a party or by which it is bound (in this Section, the "Agreements"). Each Agreement is in full force and effect, and is valid and enforceable against the Corporation and against the other parties thereto, in accordance with its terms; the Corporation, and to the Corporation’s best knowledge, each of the other parties to each of the Agreements is, and at all times has been, in material compliance with the terms and requirements of such Agreements; to the Corporation's best knowledge no event has occurred or circumstance exists that (with or without notice or lapse of time) contravenes, conflicts with, or results in a violation or breach of, or give the Corporation or any other person or entity the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Agreement; and the Corporation has not given to or received from any other person or entity, any notice or other communication regarding any actual, or alleged violation or breach of, or default under, any Agreement. |
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| (l) | the Corporation has complied and will comply fully with the requirements of all applicable corporate and securities laws and administrative policies and directions in relation to the issue of its securities and in all matters relating to the Private Placement; |
| (m) | the issue and sale of the Units by the Corporation does not and will not conflict with, and does not and will not result in a breach of, any of the terms of the Corporation’s incorporating documents or any agreement or instrument to which the Corporation is a party or by which it is bound; |
| (n) | this Agreement has been or will be by the Closing, duly authorized by all necessary corporate action on the part of the Corporation, and the Issuer has or will have by the Closing full corporate power and authority to undertake the Private Placement; and |
| (o) | Disclosure. Neither this Agreement nor any agreement or document made or delivered by the Corporation in connection with this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements herein or therein not misleading as at the date hereof and at the Closing Date. There is no material fact or information directly relating to the business, prospects, condition (financial or otherwise), affairs, operations, or assets of the Corporation that has not been disclosed to the Subscriber by the Corporation. |
| (p) | The Corporation shall, immediately following the execution of this Agreement by the Subscriber, will take all required measures in order to guarantee that the Shares issued to the Subscriber hereunder shall be free from any limitation on resale and shall be listed for trade. |
3.2 The representations and warranties contained in this section will survive the Closing for a period of one year.
4. WITHDRAWL OF SUBSCRIPTION
4.1 The Subscriber waives the right to withdraw this subscription and to terminate its obligations hereunder at any time before the Closing.
5. CLOSING
5.1 The Closing will be contingent upon, and only take place immediately following the occurrence of the Condition Precedent (as defined below) (the “Closing Date”). In the event that the Closing shall not take place by or at the Closing Date, the subscription proceeds will be returned to the Subscriber without interest or deduction.
5.2 Upon execution of this Agreement, the Subscriber will deliver to the Corporation:
| (a) | this subscription Agreement, duly executed; |
| (b) | at the Closing, Subscriber will deliver to the Corporation a certified check, wire transfer or bank draft for the total price of the Subscriber’s Units made payable to the Corporation; and |
| (c) | the completed Accredited Investor Questionnaire annexed hereto as Appendix A. |
5.3 At Closing, the Corporation will deliver (a) a copy of the Corporation’s board of directors resolution certified by an authorized officer of the Corporation, approving the issuance of the securities in accordance with the sale of the Units hereunder; and (b) irrevocable instructions to its transfer agent to issue as soon as is reasonably practicable to the subscribers share certificates for the Subscriber’s Shares.
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5.4 “Condition Precedent” means the closing of that certain contemplated merger by form of share swap transaction, by and among the Corporation and an Israeli company by the name of Raphael Pharmaceutical Ltd. (the “Target Company”); according to which, inter-alia, all issued and outstanding share capital of Target Company shall be transferred, conveyed and sold to Corporation in consideration for the issuance of the Corporation’s Shares, in such amount reflecting, following their issuance, approximately 90% of the issued and outstanding share capital of the Corporation; such that at the closing of such transaction, the shareholders of the Target Company immediately prior to said transaction shall hold, by such virtue, 90% of the Corporation’s issued and outstanding share capital, and Corporation shall hold 100% of the issued and outstanding share capital of the Target Company.
6. Resale restrictions
Without derogating from the Corporation’s obligations herein, including inter alia under Article 3 (p) above, the Subscriber understands and acknowledges that the Units will be subject to resale restrictions under United States securities laws, the terms of which may be endorsed on the certificates representing the Units, and the Subscriber agrees to comply with such resale restrictions. The Subscriber also acknowledges that it has been advised to consult with its own independent legal advisor with respect to the applicable resale restrictions and the Subscriber is solely responsible for complying with such restrictions and the Corporation is not responsible for ensuring compliance by the Subscriber with the applicable resale restrictions.
7. USE OF PERSONAL INFORMATION
7.1 The Subscriber hereby acknowledges and consents to: (i) the disclosure by the Subscriber and the Corporation of Personal Information concerning the Subscriber to a securities commission or other regulatory authority (a “Securities Commission”), or to a stock exchange and any of its affiliates, authorized agents, subsidiaries and divisions, (collectively referred to as “an Exchange”); and (ii) the collection, use and disclosure of Personal Information by an Exchange for the following purposes (or as otherwise identified by such Exchange, from time to time):
| (a) | to conduct background checks; |
| (b) | to verify the Personal Information that has been provided about the Subscriber; |
| (c) | to consider the suitability of the Subscriber as a holder of securities of the Corporation; |
| (d) | to consider the eligibility of the Corporation to list on the Exchange; |
| (e) | to provide disclosure to market participants as the security holdings of the Corporation’s shareholders, and their involvement with any other reporting issuers, issuers subject to a cease trade order or bankruptcy, and information respecting penalties, sanctions or personal bankruptcies, and possible conflicts of interest with the Issuer; |
| (f) | to detect and prevent fraud; |
| (g) | to conduct enforcement proceedings; and |
| (h) | to perform other investigations as required by and to ensure compliance with all applicable rules, policies, rulings and regulations of an Exchange, securities legislation and other legal and regulatory requirements governing the conduct and protection of the public markets. |
7.2 Herein, “Personal Information” includes any information about the Subscriber required to be disclosed to a Securities Commission or an Exchange, whether pursuant to a Securities Commission or Exchange form or a request made by a Securities Commission or an Exchange.
7.3 The Subscriber acknowledges and consents to: (i) the fact that the Corporation is collecting his Personal Information for the purpose of completing this Agreement; (ii) the Issuer retaining such Personal Information for as long as permitted or required by law or business practices; (iii) the fact that the Corporation may be required by securities laws, the rules and policies of any stock exchange to provide regulatory authorities with any Personal Information provided by the Subscriber in this Agreement.
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8. MISCELLANEOUS
8.1 Subject to Section 8.4 hereof, the Subscriber hereby authorizes the Corporation to correct any formal errors in, or complete any minor information missing from this Agreement and any Appendix that has been executed by the Subscriber and delivered to the Corporation, but the Corporation may not correct any errors in substance without the consent of the subscriber. The Subscriber consents to the filing of such documents and any other documents as may be required to be filed with any Securities Commission in connection with the Private Placement.
8.2 This Agreement, which includes any interest granted or right arising under this Agreement, may not be assigned or transferred.
8.3 Except as expressly provided in this Agreement and in the agreements, instruments and other documents contemplated or provided for herein, this Agreement contains the entire agreement between the Parties with respect to the Units and there are no other terms, conditions, representations or warranties whether expressed, implied, oral or written, by statute, by common law, by the Corporation, or by anyone else.
8.4 The Parties may amend this Agreement only in writing.
8.5 This Agreement enures to the benefit of and is binding upon the Parties and, as the case may be, their respective heirs, executors, administrators and, successors.
8.6 A Party will give all notices or other written communications to the other Party concerning this Agreement by hand or by registered mail addressed to such other Party’s respective address which is noted on the cover page of this Agreement.
8.7 This Agreement may be executed in counterparts, each of which when delivered will be deemed to be an original and all of which together will constitute one and the same document and the Corporation will be entitled to rely on delivery by facsimile machine of an executed copy of this subscription, and acceptance by the Corporation of such facsimile copy will be equally effective to create a valid and binding agreement between the Subscriber and the Issuer as if the Corporation had accepted the subscription originally executed by the Subscriber.
8.8. Without limiting the generality of the parties’ confidentiality obligations and subject to any duty imposed by any applicable law, it is agreed immediately subsequent to the Closing the Corporation will announce the transaction hereof by issuing a press releases and making such other filings as required by applicable law.
8.9 If applicable, this Agreement replaces any previous subscription agreement entered by undersigned and Corporation during 2020.
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Appendix I
Accredited Investor Questionnaire
The information contained herein is being furnished to the Company in order for the Company to determine whether the undersigned’s subscription for Units may be accepted pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Regulation D promulgated thereunder (“Regulation D”). The undersigned understands that (i) the Company will rely upon the following information for purposes of complying with Federal and applicable state securities laws, (ii) the Units will not be registered under the Securities Act in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act and Regulation D, and (iii) this questionnaire is not an offer to sell nor the solicitation of an offer to buy any Units, or any other securities, to the undersigned.
The following representations and information are furnished herewith:
1. Qualification as an Accredited Investor. Please check the categories applicable to you indicating the basis upon which you qualify as an Accredited Investor for purposes of the Securities Act and Regulation D thereunder.
| ☐ | Individual with Net Worth In Excess of $1.0 Million. A natural person (not an entity) whose net worth, or joint net worth with his or her spouse, at the time of purchase exceeds $1,000,000. (Explanation: In calculating your net worth, you must exclude the value of your primary residence. This means you must exclude both the equity in your primary residence and any mortgage or other debt secured by your primary residence up to the fair market value of your primary residence; provided, however, that any indebtedness secured by your primary residence that (i) you have incurred in the 60 day period prior to the date of your subscription to the Company or (ii) is in excess of the fair market value of your primary residence should be considered a liability and deducted from your aggregate net worth. In calculating your net worth, you may include your equity in personal property and real estate (excluding your primary residence), cash, short-term investments, stock and securities. Your inclusion of equity in personal property and real estate (excluding your primary residence) should be based on the fair market value of such property less debt secured by such property.) |
| ☐ | Individual with a $200,000 Individual Annual Income. A natural person (not an entity) who had an individual income of more than $200,000 in each of the preceding two calendar years, and has a reasonable expectation of reaching the same income level in the current year. |
| ☐ | Individual with a $300,000 Joint Annual Income. A natural person (not an entity) who had joint income with his or her spouse in excess of $300,000 in each of the preceding two calendar years, and has a reasonable expectation of reaching the same income level in the current year. |
| ☐ | Corporations or Partnerships. A corporation, partnership, or similar entity that has in excess of $5 million of assets and was not formed for the specific purpose of acquiring Units in the Company. |
| ☐ | Revocable Trust. A trust that is revocable by its grantors and each of whose grantors is an accredited investor. (If this category is checked, please also check the additional category or categories under which the grantor qualifies as an accredited investor.) |
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| ☐ | Irrevocable Trust. A trust (other than an ERISA plan) that (i) is not revocable by its grantors, (ii) has in excess of $5 million of assets, (iii) was not formed for the specific purpose of acquiring Units, and (iv) is directed by a person who has such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of an investment in the Company. |
| ☐ | Government Benefit Plan. A plan established and maintained by a state, municipality, or any agency of a state or municipality, for the benefit of its employees, with total assets in excess of $5 million. |
| ☐ | Non-Profit Entity. An organization described in Section 501(c)(3) of the Internal Revenue Code, as amended, with total assets in excess of $5 million (including endowment, annuity and life income funds), as shown by the organization’s most recent audited financial statements. |
| ☐ | Other Institutional Investor (check one). | |
| ☐ | A bank, as defined in Section 3(a)(2) of the Securities Act (whether acting for its own account or in a fiduciary capacity); | |
| ☐ | A savings and loan association or similar institution, as defined in Section 3(a)(5)(A) of the Securities Act (whether acting for its own account or in a fiduciary capacity); | |
| ☐ | A broker-dealer registered under the Securities Exchange Act of 1934, as amended; | |
| ☐ | An insurance company, as defined in section 2(a)(13) of the Securities Act; | |
| ☐ | An investment company registered under the Investment Company Act of 1940, as amended; | |
| ☐ | A “business development company,” as defined in Section 2(a)(48) of the Investment Company Act; | |
| ☐ | A small business investment company licensed under Section 301(c) or (d) of the Small Business Investment Act of 1958, as amended; or | |
| ☐ | A “private business development company” as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended. | |
| ☐ | Executive Officer or Director. A natural person who is an executive officer, director or managing member of the Company. | |
| ☐ | Entity Owned Entirely By Accredited Investors. A corporation, partnership, private investment company or similar entity each of whose equity owners is an accredited investor.
(If this category is checked, please also check the additional category or categories under which each equity owner qualifies as an accredited investor.) | |
| ■ | I do not qualify for any of the above. |
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| 2. | Representations and Warranties By Limited Liability Companies, Corporations, Partnerships, Trusts and Estates |
If the Subscriber is a corporation, partnership, limited liability company or trust, the Subscriber and each person signing on behalf of Subscriber certifies that the following responses are accurate and complete:
Was the undersigned organized or reorganized for the purpose of acquiring interests in the Company?
Yes ¨ No ■
Is the signatory duly authorized to execute the Subscription Documents?
Yes ¨ No ■
To the best of my information and belief, the above information supplied by me is true and correct in all respects.
[Signature page follows]
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| Date: ___ of _______ 2025, | ||
| SIGNATURE FOR INDIVIDUAL: | SIGNATURE FOR PARTNERSHIP, CORPORATION, TRUST OR OTHER ENTITY: | |
| (Signature) | (Print Name) | |
| (Print Name) | (Signature of Authorized Signatory) | |
| (Signature of any joint tenant or co-holder of any security issued by the Company) | (Name of Authorized Signatory) | |
| (Print Name) | (Title) |
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APPENDIX II
NON U.S. PERSON REPRESENTATIONS
Each Subscriber indicating that it is not a U.S. Person, severally and not jointly, further represents and warrants to the Company as follows:
| 1. | At the time of (a) the offer by the Company and (b) the acceptance of the offer by such person or entity, of the Units, such person or entity was outside the United States. |
| 2. | Such person or entity is acquiring the Units for such Subscriber’s own account, for investment and not for distribution or resale to others and is not purchasing the Units for the account or benefit of any U.S. Person, or with a view towards distribution to any U.S. Person, in violation of the registration requirements of the 1933 Act. |
| 3. | Such person or entity will make all subsequent offers and sales of the Securities either (x) outside of the United States in compliance with Regulation S; (y) pursuant to a registration under the Securities Act of 1933 (the “Securities Act”); or (z) pursuant to an available exemption from registration under the Securities Act. Specifically, such person or entity will not resell the Units to any U.S. Person or within the United States prior to the expiration of a period commencing on the Closing Date and ending on the date that is one year thereafter (the “Distribution Compliance Period”), except pursuant to registration under the Securities Act or an exemption from registration under the Securities Act. |
| 4. | Such person or entity has no present plan or intention to sell the Units in the United States or to a U.S. Person at any predetermined time, has made no predetermined arrangements to sell the Units and is not acting as a distributor of such securities. |
| 5. | Neither such person or entity, its affiliates nor any person acting on behalf of such person or entity, has entered into, has the intention of entering into, or will enter into any put option, short position or other similar instrument or position in the U.S. with respect to the Units at any time after the Closing Date through the Distribution Compliance Period except in compliance with the Securities Act. |
| 6. | Such person or entity consents to the placement of a legend on any certificate or other document evidencing the Units substantially in the form set forth in Section 4.1. |
| 7. | Such person or entity is not acquiring the Units in a transaction (or an element of a series of transactions) that is part of any plan or scheme to evade the registration provisions of the Securities Act. |
| 8. | Such person or entity has sufficient knowledge and experience in finance, securities, investments and other business matters to be able to protect such person’s or entity’s interests in connection with the transactions contemplated by this Agreement. |
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| 9. | Such person or entity has consulted, to the extent that it has deemed necessary, with its tax, legal, accounting and financial advisors concerning its investment in the Units. |
| 10. | Such person or entity understands the various risks of an investment in the Units and can afford to bear such risks for an indefinite period of time, including, without limitation, the risk of losing its entire investment in the Units. |
| 11. | Such person or entity has had access to the Company’s publicly filed reports with the Commission and has been furnished during the course of the transactions contemplated by this Agreement with all other public information regarding the Company that such person or entity has requested and all such public information is sufficient for such person or entity to evaluate the risks of investing in the Units. |
| 12. | Such person or entity has been afforded the opportunity to ask questions of and receive answers concerning the Company and the terms and conditions of the issuance of the Units. |
| 13. | Such person or entity is not relying on any representations and warranties concerning the Company made by the Company or any officer, employee or agent of the Company, other than those contained in this Agreement. |
| 14. | Such person or entity will not sell or otherwise transfer the Units unless either (A) the transfer of such securities is registered under the Securities Act or (B) an exemption from registration of such securities is available. |
| 15. | Such person or entity represents that the address furnished on its signature page to this Agreement is the principal residence if he is an individual or its principal business address if it is a corporation or other entity. |
| 16. | Such person or entity understands and acknowledges that the Units have not been recommended by any federal or state securities commission or regulatory authority, that the foregoing authorities have not confirmed the accuracy or determined the adequacy of any information concerning the Company that has been supplied to such person or entity and that any representation to the contrary is a criminal offense. |
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Exhibit 31.1
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Shlomo Pilo, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Raphael Pharmaceutical Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant ‘s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: May 15, 2025 | By: | /s/ Shlomo Pilo |
| Shlomo Pilo | ||
| Chief Executive Officer |
Exhibit 31.2
CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a)
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Guy Ofir, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Raphael Pharmaceutical Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant ‘s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: May 15, 2025 | By: | /s/ Guy Ofir |
| Guy Ofir | ||
| Chief Financial Officer |
Exhibit 32.1
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the quarterly report of Raphael Pharmaceutical Inc., or the Company, on Form 10-Q for the period ended March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof, or the Report, I, Shlomo Pilo, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, that to my knowledge:
| 1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: May 15, 2025 | /s/ Shlomo Pilo |
| Shlomo Pilo | |
| Chief Executive Officer |
Exhibit 32.2
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the quarterly report of Raphael Pharmaceutical Inc., or the Company, on Form 10-Q for the period ended March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof, or the Report, I, Guy Ofir, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, that to my knowledge:
| 1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Dated: May 15, 2025 | /s/ Guy Ofir |
| Guy Ofir | |
| Chief Financial Officer |