UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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| Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review. |
(a) On February 28, 2022, the management and Audit Committee of the Board of Directors of Rafael Holdings, Inc. (the “Company”) concluded that the Company’s previously issued unaudited consolidated interim financial statements as of, and for the quarter ended, October 31, 2021 (the “Prior Period”), should no longer be relied upon because the Company did not correctly allocate non-cash losses to its noncontrolling interests and incorrectly calculated the weighted average shares outstanding by including in the figure nonvested restricted stock in the Prior Period resulting in material misstatements of certain balance sheet, statement of operations and comprehensive loss and statements of equity items for, and as of the end of, the Prior Period. Additionally, the Company’s earnings release and any similar communications should no longer be relied upon to the extent that they relate to its unaudited consolidated interim financial statements for the Prior Period. The items described above will result in the restatement of the Company’s unaudited consolidated interim financial statements for the Prior Period.
Management has concluded that, as of the end of the Prior Period, there existed material weaknesses in internal control over financial reporting, as the Company did not maintain effective controls over the Company’s consolidation process as related to the allocation of non-cash losses between the Company and noncontrolling interests, and did not design effective controls over the application of accounting principles generally accepted in the United States (“GAAP”) related to the calculation of weighted average shares outstanding used in earnings per share. Management of the Company has re-evaluated its assessment of the Company’s disclosure controls and procedures and internal control over financial reporting as of October 31, 2021 and concluded that it was ineffective as of such date.
As soon as practicable, the Company intends to amend its Quarterly Report on Form 10-Q for the quarter ended October 31, 2021 (the “Original Filing”) to reflect the restatement of its unaudited consolidated interim financial statements for the Prior Period and the change in management’s conclusion regarding the effectiveness of the Company’s disclosure controls and procedures and internal control over financial reporting as of October 31, 2021 (the “Amended Form 10-Q”).
The Company expects its restated unaudited consolidated interim financial statements for the Prior Period to be included in the Amended Form 10-Q to differ from the amounts reported in the Original Filing. The restated amounts for the Prior Period are expected to be approximately as follows:
| As Previously Reported | Adjustment | As Restated | ||||||||||
| Consolidated Balance Sheet as of October 31, 2021 | ||||||||||||
| Accumulated deficit at October 31, 2021 | $ | (170,118 | ) | $ | 17,295 | $ | (152,823 | ) | ||||
| Total equity attributable to Rafael Holdings, Inc. | $ | 98,736 | $ | 17,295 | $ | 116,031 | ||||||
| Noncontrolling interests at October 31, 2021 | $ | 14,326 | $ | (17,295 | ) | $ | (2,969 | ) | ||||
| Total stockholders’ equity at October 31, 2021 | $ | 113,062 | $ | — | $ | 113,062 | ||||||
| Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended October 31, 2021 | ||||||||||||
| Consolidated net loss | $ | (129,411 | ) | $ | — | $ | (129,411 | ) | ||||
| Net loss attributable to noncontrolling interests | $ | (92 | ) | $ | (17,295 | ) | $ | (17,387 | ) | |||
| Net loss attributable to Rafael Holdings, Inc. | $ | (129,319 | ) | $ | 17,295 | $ | (112,024 | ) | ||||
| Basic and diluted loss per share | $ | (6.49 | ) | $ | 0.58 | $ | (5.91 | ) | ||||
| Weighted average shares outstanding | 19,925,140 | (977,056 | ) | 18,948,084 | ||||||||
| Consolidated Statements of Equity, Three Months Ended October 31, 2021 | ||||||||||||
| Net loss attributable to noncontrolling interests | $ | (92 | ) | $ | (17,295 | ) | $ | (17,387 | ) | |||
| Net loss attributable to Rafael Holdings, Inc. | $ | (129,319 | ) | $ | 17,295 | $ | (112,024 | ) | ||||
| Accumulated deficit at October 31, 2021 | $ | (170,118 | ) | $ | 17,295 | $ | (152,823 | ) | ||||
| Noncontrolling interests at October 31, 2021 | $ | 14,326 | $ | (17,295 | ) | $ | (2,969 | ) | ||||
The Audit Committee of the Board of Directors
of the Company has discussed the matters disclosed herein with CohnReznick LLP, the Company’s independent registered public accounting
firm.
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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 hereunto duly authorized.
| RAFAEL HOLDINGS, INC. | ||
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By: |
/s/ William Conkling | |
| William Conkling | ||
| Chief Executive Officer | ||
Dated: February 28, 2022
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