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Item 8. Financial Statements and Supplementary Data

2025-03-31 compared with 2024-03-20 · 344 added, 221 removed, 533 unchanged (51% of the section changed)

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Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Report of Marcum LLP, Independent Registered Public Accounting Firm (PCAOB ID:

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets

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Notes to the Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Report of Marcum LLP, Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of

Rani Therapeutics Holdings, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Rani Therapeutics Holdings, Inc.

(the “Company”) as of December 31, 2024, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As more fully described in Note 1, the Company has incurred recurring losses from operations, negative cash flows from operating activities, and needs to raise additional funds to meet its obligations and sustain its operations.

These conditions raise substantial doubt about the Company's ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 1.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Marcum LLP

We have served as the Company’s auditor since 2024.

San Francisco, California

March 31, 2025

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Rani Therapeutics Holdings, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Rani Therapeutics Holdings, Inc.

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with U.S.

We have audited the accompanying consolidated balance sheet of Rani Therapeutics Holdings, Inc.

(the Company) as of December 31, 2023, the related consolidated statement of operations, comprehensive loss, changes in stockholders’ equity and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023, and the results of its operations and its cash flows for the year then ended, in conformity with U.S.

generally accepted accounting principles.

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These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2019.

We served as the Company’s auditor from 2019 to 2024.

San Francisco, California

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Cash and cash equivalents

Contract asset

Marketable securities

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Total liabilities

Commitments and contingencies (Note 12)

Stockholders' equity:

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Class B common stock, $ 0.0001 par value - 40,000 shares authorized;

24,116 issued and outstanding as of December 31, 2023 and December 31, 2022

23,972 and 24,116 issued and outstanding as of December 31, 2024 and December 31, 2023, respectively

Class C common stock, $ 0.0001 par value - 20,000 shares authorized;

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Additional paid-in capital

Accumulated other comprehensive loss

Accumulated other comprehensive gain (loss)

Accumulated deficit

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Year Ended December 31,

Contract revenue

Operating expenses

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General and administrative

Impairment loss

Total operating expenses

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Interest expense and other, net

Loss before income taxes

Income tax expense

Net loss attributable to non-controlling interest

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Other comprehensive loss

Net unrealized gain (loss) on marketable securities

Net unrealized gain on marketable securities

Comprehensive loss

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Balance at December 31, 2022

Effect of exchanges of Paired Interests and non-corresponding Class A Units of Rani LLC

Non-controlling interest adjustment for changes in proportionate ownership in Rani LLC

Issuance of warrants

Issuance of common stock under employee equity plans, net of shares withheld for tax settlement

Issuance of common stock under employee stock purchase plan

Issuance of common stock

Effect of exchanges of Paired Interests and non-corresponding Class A Units of Rani LLC

Non-controlling interest adjustment for changes in proportionate ownership in Rani LLC

Forfeiture of restricted stock awards

Equity-based compensation

Other comprehensive loss

Stock-based compensation

Other comprehensive gain

Balance at December 31, 2023

Issuance of common stock in connection with the October Securities Purchase Agreement, net of issuance costs of $ 621

Exercise of pre-funded warrants issued in connection with the October Securities Purchase Agreement

Issuance of common stock in connection with the July Securities Purchase Agreement, net of issuance costs of $ 1,117

Exercise of pre-funded warrants issued in connection with the July Securities Purchase Agreement

Issuance of common stock under employee equity plans, net of shares withheld for tax settlement

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Non-controlling interest adjustment for changes in proportionate ownership in Rani LLC

Forfeiture of restricted stock awards

Equity-based compensation

Stock-based compensation

Other comprehensive gain

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Net accretion and amortization of investments in marketable securities

Loss on disposal of property and equipment

Impairment loss

Changes in operating assets and liabilities:

Contract asset

Prepaid expenses and other current assets

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Purchases of property and equipment

Net cash provided by (used in) investing activities

Net cash provided by investing activities

Cash flows from financing activities

Proceeds from issuance of common stock and pre-funded warrants in connection with the October Securities Purchase Agreement, net of issuance costs of $ 621

Proceeds from issuance of common stock and pre-funded warrants in connection with the July Securities Purchase Agreement, net of issuance costs of $ 1,117

Issuance of common stock under employee stock purchase plan

Proceeds from employee stock purchase plan

Exercise of stock options

Tax withholdings paid on behalf of employees for net share settlement

Proceeds from the issuance of long-term debt and warrants, net of issuance costs

Payment of deferred financing costs

Repayment of debt

Net cash provided by financing activities

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Exchanges of Paired Interests and non-corresponding Class A Units of Rani LLC

Interest income receivable included in prepaid expenses

Remeasurement of operating lease right-of-use assets

Interest income receivable included in prepaid expenses and other current assets

Property and equipment purchases included in accounts payable and accrued expenses and other current liabilities

Issuance of costs deducted from long-term debt proceeds

Deferred financing costs included in prepaid expenses

The accompanying notes are an integral part of these consolidated financial statements.

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Rani Therapeutics Holdings, Inc.

(“Rani Holdings”) was formed as a Delaware corporation in April 2021 for the purpose of facilitating an initial public offering (“IPO”) of its Class A common stock, and to facilitate certain organizational transactions and to operate the business of Rani Therapeutics, LLC (“Rani LLC”) and its consolidated subsidiary, Rani Management Services, Inc.

Rani Holdings and its consolidated subsidiaries, Rani LLC and RMS (prior to December 15, 2022), are collectively referred to herein as “Rani” or the “Company.” RMS was dissolved on December 15, 2022.

The Company is a clinical stage biotherapeutics company focusing on advancing technologies to enable the administration of biologics and drugs orally, to provide patients, physicians, and healthcare systems with a convenient alternative to painful injections.

The Company is advancing a portfolio of oral therapeutics using its proprietary delivery technology, the RaniPill capsule.

(“Rani Holdings”, and together with its consolidated subsidiary, the “Company”) is a clinical-stage biotherapeutics company focusing on advancing technologies to enable the administration of biologics and drugs orally, to provide patients, physicians, and healthcare systems with a convenient alternative to painful injections.

The Company’s technology comprises a drug-agnostic oral delivery platform, the RaniPill capsule, which is designed to deliver a wide variety of drug substances, including antibodies, proteins, peptides, and oligonucleotides.

The Company is advancing a portfolio of oral therapeutics using the RaniPill capsule.

The Company is headquartered in San Jose, California and operates in one segment.

Organizational Transactions

In connection with the IPO in August 2021, the Company was party to the following organizational transactions (the “Organizational Transactions”):

• Amended and restated Rani LLC’s operating agreement (the “Rani LLC Agreement”) to appoint the Company as the sole managing member of Rani LLC and effectuated an exchange of all outstanding (i) convertible preferred units, automatic or net exercised warrants to purchase preferred units and common units, and common units of Rani LLC, into economic nonvoting Class A units (“Class A Units”) and an equal number of voting noneconomic Class B units (“Class B Units”) and (ii) all non-vested incentive units (“Profits Interests”) into Class A Units.

In connection with the closing of the IPO, each LLC interest was exchanged 1 for 0.5282 as determined and predicated on the initial public offering price of the Company’s Class A common stock ;

• Amended and restated the Company’s certificate of incorporation in July 2021, to provide for the issuance of (i) Class A common stock, each share of which entitles its holders to one vote per share , (ii) Class B common stock, each share of which entitles its holders to 10 votes per share on all matters presented to the Company's stockholders , (iii) Class C common stock, which has no voting rights, except as otherwise required by law and (iv) preferred stock;

• Exchanged 12,047,925 shares of Class A common stock for existing Class A Units of Rani LLC held by certain individuals and entities (the “Former LLC Owners”) on a one-for-one basis;

• Issued 29,290,391 shares of Class B common stock to certain individuals and entities that continued to hold Class A Units in Rani LLC after the IPO (the “Continuing LLC Owners”) in return for an equal amount of Rani LLC Class B Units;

• Entered into a Registration Rights Agreement with certain of the Continuing LLC Owners.

The Continuing LLC Owners are entitled to exchange, subject to the terms of the Rani LLC Agreement, the Class A Units they hold in Rani LLC, together with the shares they hold of the Company Class B common stock (together referred to as a "Paired Interest"), in return for shares of the Company’s Class A common stock on a one-for-one basis provided that, at the Company’s election, the Company has the ability to effect a direct exchange of such Class A common stock or make a cash payment equal to a volume weighted average market price of one share of Class A common stock for each Paired Interest redeemed.

Rani Holdings was formed as a Delaware corporation in April 2021 for the purpose of facilitating an initial public offering (“IPO”) of its Class A common stock.

In connection with the IPO, the Company effected a series of organizational transactions (the “Organizational Transactions”), which, together with the IPO, were completed in August 2021, that resulted in the Company becoming the ultimate parent company of Rani Therapeutics, LLC (“Rani LLC”).

The Company operates its business through Rani LLC.

As part of the Organizational Transactions, the Company entered into a Registration Rights Agreement with certain individuals and entities that continued to hold economic nonvoting Class A units of Rani LLC (“Class A Units”), collectively referred to herein as the “Continuing LLC Owners”.

The Continuing LLC Owners are entitled to exchange, subject to the terms of the Fifth Amended and Restated Limited Liability Company Agreement of Rani LLC (the “Rani LLC Agreement”), the Class A Units they hold in Rani LLC, together with the shares they hold of the Company Class B common stock (together referred to as a "Paired Interest"), in return for shares of the Company’s Class A common stock on a one-for-one basis provided that, at the Company’s election, the Company has the ability to effect a direct exchange of such Class A common stock or make a cash payment equal to a volume weighted average market price of one share of Class A common stock for each Paired Interest redeemed.

Any shares of Class B common stock will be canceled on a one-for-one basis if, at the election of the Continuing LLC Owners, the Company redeems or exchanges such Paired Interest pursuant to the terms of the Rani LLC Agreement.

As of December 31, 2024 , certain individuals who continue to own interests in Rani LLC but do not hold shares of the Company’s Class B common stock (“non-corresponding Class A Units”) have the ability to exchange their non-corresponding Class A Units of Rani LLC for 1,229,630 shares of the Company’s Class A common stock.

Liquidity and Going Concern

The Company has incurred recurring losses since its inception, including net losses of $ 56.6 million for the year ended December 31, 2024.

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Based on its available cash resources and current operating plan, there is substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year after the date that its financial statements for the year ended December 31, 2024 are issued.

The Company’s existing capital resources, including the net proceeds from our IPO and Loans, will not be sufficient to enable it to initiate any pivotal clinical trials.

The Company’s existing capital resources, including the issuance and sale of Class A common stock and warrants pursuant to a securities purchase agreement with an institutional investor in October 2024 and July 2024, will not be sufficient to enable it to initiate any pivotal clinical trials.

The Company will need to raise substantial additional funds in the future in order to complete the development of the RaniPill platform, to complete the clinical development of its product candidates and seek regulatory approval thereof, to expand its manufacturing capabilities, to further develop the RaniPill HC device and to commercialize any of its product candidates.

In August 2022, the Company entered into a loan and security agreement and related supplement (the “Loan Agreement”) with Avenue Venture Opportunities Fund, L.P (the “Lender”).

The Loan Agreement provides for term loans (the “Loans”) in an aggregate principal amount up to $ 45.0 million.

A Loan of $ 30.0 million was committed at closing, with $ 15.0 million funded immediately and $ 15.0 million available to be drawn between October 1, 2022 and December 31, 2022, which was drawn in December 2022.

The remaining $ 15.0 million of Loans (“Tranche 2”) is uncommitted and is subject to certain conditions and approval by the Lender.

In August 2022, the Company entered into a Controlled Equity Sales Agreement (the "Sales Agreement") with Cantor Fitzgerald & Co.

Wainwright & Co., LLC (collectively the "Agents"), pursuant to which the Company may offer and sell from time to time through the Agents up to $ 150 million of shares of its Class A common stock, in such share amounts as the Company may specify by notice to the Agents, in accordance with the terms and conditions set forth in the Sales Agreement.

The potential proceeds from the Sales Agreement are expected to be used for general corporate purposes.

As of December 31, 2023, the Company has no sales under the Sales Agreement.

In November 2023, the Company underwent a reduction in workforce and paused or discontinued certain programs to reduce expenses and focus its financial resources on key priorities.

In October 2024, the Company entered into a securities purchase agreement (the “October Securities Purchase Agreement”) with an institutional investor (the “Equity Investor”) relating to the issuance and sale of:

(i) 3,000,000 shares of its Class A common stock, par value $ 0.0001 per share, (ii) pre-funded warrants to purchase 333,333 shares of Class A common stock, and (iii) Series C common warrants, which will accompany the Class A common stock and pre-funded warrants, to purchase an aggregate of 3,333,333 shares of Class A common stock (the “October Offering”).

Pursuant to the October Securities Purchase Agreement, Series A common warrants to purchase an aggregate of 3,246,753 shares of Class A common stock issued in the July Offering were cancelled.

The aggregate net proceeds from the October Offering totaled $ 9.4 million, after deducting placement agent fees and other offering expenses, and excluding potential proceeds, if any, from the exercise of the Series C common warrants issued in the October Offering.

In October 2024, the pre-funded warrants were fully exercised for de minimis proceeds (Note 9 & 10).

In July 2024, the Company entered into a securities purchase agreement (the “July Securities Purchase Agreement”) with an institutional investor relating to the issuance and sale of:

(i) 2,800,000 shares of Class A common stock, (ii) pre-funded warrants to purchase 446,753 shares of Class A common stock, (iii) Series A common warrants, which accompany the Class A common stock and pre-funded warrants, to purchase an aggregate of 3,246,753 shares of Class A common stock and (iv) Series B common warrants, which accompany the Class A common stock and pre-funded warrants, to purchase an aggregate of 3,246,753 shares of Class A common stock (the “July Offering”).

The aggregate net proceeds from the July Offering totaled $ 8.9 million, after deducting placement agent fees and other offering expenses, and excluding potential proceeds, if any, from the exercise of the Series A common warrants and Series B common warrants issued in the July Offering.

In August 2024, the pre-funded warrants were fully exercised for de minimis proceeds (Note 9 & 10).

The Company expects to continue to generate operating losses and negative operating cash flows for the foreseeable future as it continues to develop the RaniPill capsule.

The Company expects to finance its future operations with its existing cash and through strategic financing opportunities that could include, but are not limited to, future offerings of its equity, such as “at the market offerings” as defined in Rule 415(a)(4) under the Securities Act, collaboration or licensing agreements, or the incurrence of debt.

The Company expects to finance its future operations with its existing cash and through strategic financing opportunities that could include, but are not limited to, future offerings of its equity, such as “at the market offerings” pursuant to its Controlled Equity Sales Agreement (the "Sales Agreement") with Cantor Fitzgerald & Co.

Wainwright & Co., LLC, collaboration or licensing agreements, or the incurrence of debt.

However, there is no guarantee that any of these strategic or financing opportunities will be executed or realized on favorable terms, if at all.

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These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

Certain prior period amounts have been reclassified to be consistent with current period presentation.

The Company operates and controls all of the business and affairs of Rani LLC and, through Rani LLC conducts its business.

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however, actual results may differ materially and adversely from these estimates.

Revenue Recognition

The Company may generate revenue from evaluation arrangements with certain pharmaceutical partners, under which the Company performs evaluation services of the partner’s drug molecules using the RaniPill platform technology (Note 6).

Revenue is recognized when control of promised goods or services is transferred to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

To determine revenue recognition for its arrangements with customers, the Company performs the following five steps:

(i) identify the contract(s) with a customer;

(ii) identify the performance obligations in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

The majority of the Company’s contracts include only one performance obligation.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is defined as the unit of account for revenue recognition.

In determining whether performance obligations meet the criteria for being distinct, the Company considers a number of factors, such as the degree of interrelation and interdependence between obligations, and whether or not the good or service significantly modifies or transforms another good or service in the contract.

Revenue for an individual contract is recognized at the related transaction price, which is the amount the Company expects to be entitled to in exchange for transferring the products and/or services.

Revenue is recognized only to the extent that it is probable that a significant reversal of the cumulative amount recognized will not occur in future periods.

As a practical expedient, we do not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less.

Variable consideration has not been material to our consolidated financial statements.

The Company recognizes contract revenue from its evaluation arrangements using a cost-based input method, which most faithfully depicts the transfer of the performance obligation to the customer.

Accordingly, the Company will recognize contract revenue based on actual costs incurred as a percentage of total estimated costs the Company expects to incur to deliver its performance obligation.

These actual costs consist of the internal labor efforts, in vivo testing services and material costs related to the agreement, as the costs incurred over time will reflect the transfer of its performance obligations to the customer.

The cumulative effect of revisions to estimated costs to complete the Company’s performance obligation will be recorded in the period in which changes are identified and amounts are reasonably estimable.

Customer options, such as options granted to allow a customer to acquire later stage evaluation services, are evaluated at contract inception in order to determine whether those options provide a material right (i.e., an optional good or service offered for free or at a discount) to the customer.

If the customer options represent a material right, the material right is treated as a separate performance obligation at the outset of the arrangement.

The Company allocates the transaction price to material rights based on the standalone selling price, and revenue is recognized when or as the future goods or services are transferred or when the option expires.

Customer options that are not material rights do not give rise to a separate performance obligation, and as such, the additional consideration that would result from a customer exercising an option in the future is not included in the transaction price for the current contract.

Instead, the option is deemed a marketing offer, and additional option fee payments are recognized or being recognized as revenue when the licensee exercises the option.

The exercise of an option that does not represent a material right is treated as a separate contract for accounting purposes.

Incremental costs of obtaining contracts are expensed when incurred, when the amortization period of the assets that otherwise would have been recognized is one year or less.

To date, none of these costs have been material.

The costs to fulfill the contracts are determined to be immaterial and are recognized as an expense when incurred.

Collaborative Arrangements

The Company assesses whether its collaboration agreements are subject to ASC Topic 808:

Collaborative Arrangements based on whether they involve joint operating activities and whether both parties have active participation in the arrangement and are exposed to significant risks and rewards.

To the extent that the arrangement falls within the scope of Topic 808 and the Company concludes that its collaboration partner is not a customer, the Company presents amounts due from its collaboration partner as a reduction of research and development expense based on the nature of such payments.

Research and Development Costs

Research and development expenses consist primarily of payroll and related benefits, stock-based compensation, third-party services, facilities, materials and supplies.

Research and development costs are expensed as incurred.

Payments made prior to the receipt of goods or services to be used in research and development activities are recorded as prepaid expenses and other current assets on the consolidated balance sheets until the related goods or services are rendered .

Preclinical and Clinical Trial Accruals

The Company's preclinical and clinical trials are being supported by Contract Research Organizations (“CROs”) and other vendors.

Preclinical and clinical trial costs are a component of research and development expense.

As part of the process of preparing the consolidated financial statements, the Company is required to estimate expenses resulting from obligations under contracts with CROs and other vendors.

The financial terms of these contracts vary and may result in payment flows that do not match the periods over which materials or services are provided under such contracts.

The Company accrues expenses for preclinical and clinical trial activities performed by CROs and other vendors based upon the amount of work completed on each trial.

The Company maintains regular communications with the CROs and other vendors to assess the reasonableness of the accrual.

To date, differences between actual preclinical and clinical trial expenses and accrued preclinical and clinical trial expenses recorded have not been material and are adjusted for in the period in which they become known.

Payments made under these arrangements in advance of the receipt of the related services are recorded as prepaid expenses and other current assets on the consolidated balance sheets until the services are rendered.

Stock-Based Compensation

In July 2021, the Company adopted and its stockholders approved, the Rani Therapeutics Holdings, Inc.

2021 Equity Incentive Plan (the “2021 Plan”).

The Company has subsequently granted stock options to purchase shares of its Class A common stock as well as restricted stock units (“RSUs”) and restricted stock awards ("RSAs") from the 2021 Plan to both employees and non-employees.

The Company measures stock-based compensation at fair value on the grant date of the award.

The fair value of employee and nonemployee RSUs is determined based on the number of shares granted and the closing market price of the Company’s Class A common stock on the date of grant.

The fair value of RSAs is determined based on the estimated fair value of the Company’s Class A common stock on the grant date and is subject to the Company's reacquisition right which is accounted for as a forfeiture provision (Note 11).

For awards that vest subject to the satisfaction of service requirements, compensation expense is measured based on the fair value of the award on the date of grant and expense is recognized on a straight-line basis over the requisite service period.

The Company accounts for forfeitures as they occur.

Stock-based compensation is classified in the accompanying consolidated statements of operations and comprehensive loss based on the function to which the related services are provided.

The Company determines the grant-date fair value of options to purchase common shares using the Black-Scholes option-pricing model which requires inputs based on certain subjective assumptions, including the expected stock price volatility, the expected term of the option, the risk-free interest rate for a period that approximates the expected term of the option, and the Company’s expected dividend yield.

Such assumptions represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.

If actual results are not consistent with the Company’s assumptions and judgments used in making these estimates, the Company may be required to increase or decrease compensation expense, which could be material to the Company’s consolidated results of operations.

Rani LLC is a pass-through entity for United States federal and most applicable state and local income tax purposes following the IPO and Organizational Transactions.

As an entity classified as a partnership for tax purposes, Rani LLC is not subject to United States federal and certain state and local income taxes.

Any taxable income or loss generated by Rani LLC is passed through to, and included in the taxable income or loss of, its members, including the Company.

The Company is taxed as a corporation and pays corporate federal, state and local taxes with respect to income allocated to it, based on its economic interest in Rani LLC.

The Company accounts for income taxes under the asset and liability method of accounting.

Current income tax expense or benefit represents the amount of income taxes expected to be payable or refundable for the current year.

The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as for operating loss and tax credit carryforwards.

The Company measures deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which the Company expects to recover or settle those temporary differences.

The Company recognizes the effect of a change in tax rates on deferred tax assets and liabilities in the results of operations in the period that includes the enactment date.

The Company reduces the measurement of a deferred tax asset, if necessary, by a valuation allowance if it is more likely than not that the Company will not realize some or all of the deferred tax asset.

The Company’s tax positions are subject to income tax audits.

The Company uses a recognition threshold and measurement attribute for the consolidated financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

A tax position is recognized when it is more likely than not that the tax position will be sustained upon examination, including the resolution of any related appeals or litigation.

A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than a 50% likelihood of being realized upon ultimate settlement with a taxing authority.

Interest and penalties related to unrecognized tax benefits are recognized in income tax expense in the accompanying consolidated statements of operations and comprehensive loss.

No such interest and penalties were recognized for any period presented.

Tax Receivable Agreement

In August 2021, in connection with the IPO and Organizational Transactions, the Company entered into a tax receivable agreement ("TRA") with certain of the Continuing LLC Owners.

The TRA provides that the Company pay to such Continuing LLC Owners, 85 % of the amount of tax benefits, if any, it is deemed to realize (calculated using certain assumptions) as a result of (i) increases in the tax basis of assets of Rani LLC resulting from (a) any future redemptions or exchanges of Paired Interests or non-corresponding Class A Units of Rani LLC and (b) payments under the TRA and (ii) certain other benefits arising from payments under the TRA (collectively the “Tax Attributes”).

A liability for the payable to parties subject to the TRA, and a reduction to stockholders’ equity, is accrued when (i) an exchange of a Paired Interest or non-corresponding Class A Units of Rani LLC has occurred and (ii) when it is deemed probable that the Tax Attributes associated with the exchange will be used to reduce the Company’s taxable income based on the contractual percentage of the benefit of Tax Attributes that the Company expects to receive over a period of time (Note 14).

Non-Controlling Interest

Non-controlling interest ("NCI") represents the portion of income or loss, net assets and comprehensive loss of the Company's consolidated subsidiary that is not allocable to Rani Holdings based on the Company's percentage of ownership of Rani LLC.

In August 2021, based on the Organizational Transactions, Rani Holdings became the sole managing member of Rani LLC.

As of December 31, 2024 , Rani Holdings held approximately 57 % of the Class A Units of Rani LLC, and approximately 43 % of the outstanding Class A Units of Rani LLC are held by the Continuing LLC Owners.

Therefore, the Company reports NCI based on the Class A Units of Rani LLC held by the Continuing LLC Owners on its consolidated balance sheet as of December 31, 2024.

Income or loss attributed to the NCI in Rani LLC is based on the Class A Units outstanding during the period for which the income or loss is generated and is presented on the consolidated statements of operations and comprehensive loss.

Future exchanges of Paired Interests and non-corresponding Class A Units of Rani LLC will result in a change in ownership and reduce or increase the amount recorded as NCI and increase or decrease additional paid-in-capital when Rani LLC has positive or negative net assets, respectively.

From the date of the Organizational Transactions to December 31, 2024 , there were 5,318,539 exchanges of Paired Interests and 315,892 exchanges of non-corresponding Class A Units of Rani LLC for an equal number of shares of the Company's Class A common stock.

Comprehensive Loss

Comprehensive loss is defined as a change in equity of a business enterprise during a period, resulting from transactions and other events and/or circumstances from non-owner sources.

Other comprehensive loss represents changes in fair value of the Company's available-for-sale marketable securities.

Concentrations of Credit Risk and Other Risks and Uncertainties

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The Company also holds money market funds that are not federally insured.

However, management believes the Company is not exposed to significant credit risk due to the financial strength of the depository institutions in which these deposits are held and of the money market funds and other entities in which these investments are made.

Cash, Cash Equivalents and Restricted Cash Equivalents

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Year Ended December 31,

End of Period:

Cash and cash equivalents

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Total cash, cash equivalents and restricted cash equivalents

Contract Balances

A contract asset is created when the Company satisfies a performance obligation by transferring a promised good or service to the customer.

Contract assets may represent conditional or unconditional rights to consideration.

The right is conditional and recorded as a contract asset if the Company must first satisfy another performance obligation in the contract before it is entitled to payment from the customer.

Contract assets are transferred to accounts receivable once the right becomes unconditional.

If the Company has the unconditional right to receive consideration from the customer, the contract asset is accounted for as accounts receivable and presented separately from contract assets.

A right is unconditional if nothing other than the passage of time is required before payment of that consideration is due.

As of December 31, 2024 , contract asset balances totaled $ 0.4 million.

Contract liabilities are recorded as deferred revenue when cash payments are received or due in advance of performance or where the Company has unsatisfied performance obligations.

As of December 31, 2024 , no deferred revenue was recognized for unsatisfied evaluation services.

Marketable Securities

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The Company has made an accounting policy election to not measure an allowance for credit loss for accrued interest receivables and will recognize a credit loss for accrued interest receivables when the loss becomes probable and estimable.

As of December 31, 2023 and 2022 , interest income receivable recorded as a component of prepaid expenses and other current assets on the consolidated balance sheet was $ 0.2 million and de minimis, respectively.

Fair Value of Financial Instruments

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A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value of the instrument.

Property and Equipment, Net

Property and equipment, net are stated at cost, less accumulated depreciation and amortization calculated using the straight-line method over the estimated useful lives of the assets, generally between three and five years.

Leasehold improvements are amortized over the shorter of the related lease term or useful life.

Maintenance and repairs are charged to operations when incurred, while betterments or renewals are capitalized.

When property and equipment are sold or otherwise disposed of, the asset account and related accumulated depreciation and amortization accounts are relieved, and any gain or loss is included in the results of operations.

Construction-in-progress consists of production equipment that will be used to scale-up the manufacturing of the RaniPill capsule for clinical trials and that has been determined to have an alternative future use.

Construction-in-progress is stated at cost and does not begin to depreciate until it is put into production.

Impairment of Long-Lived Assets

The Company reviews the carrying amounts of its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable.

If indicators of impairment exist, an impairment loss would be recognized when the estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount.

The impairment charge is determined based upon the excess of the carrying value of the asset over its estimated fair value, with estimated fair value determined based upon an estimate of discounted future cash flows or other appropriate measures of estimated fair value.

As of December 31, 2024 , the Company assessed the recoverability of the long-lived assets relating to construction-in-progress property and equipment.

The Company considered many factors in evaluating whether the value of its construction-in-progress property and equipment may not be recoverable, including, but not limited to, alternative use, cost-savings and strategic considerations.

As a result, the Company determined the carrying amount of the construction-in-progress property and equipment exceeded its fair value, and was written down to its salvage value.

Therefore, an impairment loss of $ 3.7 million was recognized as of December 31, 2024 , related to construction-in-progress property and equipment.

The Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present at the inception of the arrangement and if such a lease is classified as a financing lease or operating lease.

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The lease components resulting in a ROU asset have been recorded on the consolidated balance sheet and amortized as lease expense on a straight-line basis over the lease term.

Long-Term Debt with Detachable Warrants

Detachable warrants are evaluated for the classification of warrants as either equity instruments, derivative liabilities, or liabilities depending on the specific terms of the warrant agreement.

In circumstances in which debt is issued with equity-classified warrants, the proceeds from the issuance of debt are first allocated to the debt and the warrants at their relative estimated fair values.

The portion of the proceeds allocated to the warrants are accounted for as paid in capital and a debt discount.

The remaining proceeds, as further reduced by discounts created by the bifurcation of embedded derivatives and beneficial conversion features, are allocated to the debt.

The Company accounts for debt as liabilities measured at amortized cost and amortizes the resulting debt discount from the allocation of proceeds, to interest expense using the effective interest method over the expected term of the debt instrument.

The Company considers whether there are any embedded features in debt instruments that require bifurcation and separate accounting as derivative financial instruments.

Research and Development Costs

Research and development costs are expensed as incurred.

Research and development expenses consist primarily of contract research fees and process development, outsourced labor and related expenses for personnel, facilities cost, fees paid to consultants and advisors, depreciation and supplies used in research and development and costs incurred under the Company's evaluation agreements.

Payments made prior to the receipt of goods or services to be used in research and development activities are recorded as prepaid expenses until the related goods or services are received.

Until future commercialization is considered probable and the future economic benefit is expected to be realized, the Company does not capitalize pre-launch inventory costs.

Costs of property and equipment related to scaling-up of the manufacturing capacity for clinical trials and to support commercialization are capitalized as property and equipment unless the related asset does not have an alternative future use.

Clinical and preclinical costs are a component of research and development expense.

The Company accrues and expenses clinical and pre-clinical trial activities performed by third parties based upon actual work completed in accordance with agreements established with its service providers.

The Company determines the actual costs through discussions with internal personnel and external service providers as to the progress or stage of completion of services and the agreed-upon fee to be paid for such services.

Stock-Based Compensation

In July 2021, the Company adopted and its stockholders approved, the Rani Therapeutics Holdings, Inc.

2021 Equity Incentive Plan (the “2021 Plan”).

The Company measures stock-based compensation at fair value on the grant date of the award.

The fair value of employee and nonemployee RSUs is determined based on the number of shares granted and the closing market price of the Company’s Class A common stock on the date of grant.

The fair value of employee RSAs is determined based on the estimated fair value of the Company’s Class A common stock on the grant date and is subject to the Company's reacquisition right which is accounted for as a forfeiture provision (Note 10).

The Company accounts for forfeitures as they occur.

Stock-based compensation is classified in the accompanying consolidated statements of operations and comprehensive loss based on the function to which the related services are provided.

Such assumptions represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.

The Company is the managing member of Rani LLC and, as a result, consolidates the financial results of Rani LLC and, prior to December 15, 2022, its taxable subsidiary RMS in the consolidated financial statements.

RMS was dissolved on December 15, 2022.

Rani LLC is a pass-through entity for United States federal and most applicable state and local income tax purposes following the IPO and Organizational Transactions.

As an entity classified as a partnership for tax purposes, Rani LLC is not subject to United States federal and certain state and local income taxes.

Any taxable income or loss generated by Rani LLC is passed through to, and included in the taxable income or loss of, its members, including the Company.

The Company is taxed as a corporation and pays corporate federal, state and local taxes with respect to income allocated to it, based on its economic interest in Rani LLC.

The Company's tax provision also includes the activity of RMS prior to its dissolution, which is taxed as a corporation for United States federal and state income tax purposes.

The Company accounts for income taxes under the asset and liability method of accounting.

Current income tax expense or benefit represents the amount of income taxes expected to be payable or refundable for the current year.

The Company recognizes the effect of a change in tax rates on deferred tax assets and liabilities in the results of operations in the period that includes the enactment date.

The Company’s tax positions are subject to income tax audits.

A tax position is recognized when it is more likely than not that the tax position will be sustained upon examination, including the resolution of any related appeals or litigation.

Interest and penalties related to unrecognized tax benefits are recognized in income tax expense in the accompanying consolidated statements of operations and comprehensive loss.

No such interest and penalties were recognized for any period presented.

Tax Receivable Agreement

In August 2021, in connection with the IPO and Organizational Transactions, the Company entered into a tax receivable agreement ("TRA") with certain of the Continuing LLC Owners.

Comprehensive Loss

Comprehensive loss is defined as a change in equity of a business enterprise during a period, resulting from transactions and other events and/or circumstances from non-owner sources.

Other comprehensive loss represents changes in fair value of the Company's available-for-sale marketable securities.

Non-Controlling Interest

In August 2021, based on the Organizational Transactions, Rani Holdings became the sole managing member of Rani LLC.

As of December 31, 2023 , Rani Holdings held approximately 51 % of the Class A Units of Rani LLC, and approximately 49 % of the outstanding Class A Units of Rani LLC are held by the Continuing LLC Owners.

Therefore, the Company reports NCI based on the Class A Units of Rani LLC held by the Continuing LLC Owners on its consolidated balance sheet as of December 31, 2023.

From the date of the Organizational Transactions to December 31, 2023 , there were 5,173,947 exchanges of Paired Interests and 200,455 exchanges of non-corresponding Class A Units of Rani LLC for an equal number of shares of the Company's Class A common stock.

Property and Equipment, Net

Leasehold improvements are amortized over the shorter of the related lease term or useful life.

Maintenance and repairs are charged to operations when incurred, while betterments or renewals are capitalized.

Construction-in-progress is stated at cost and does not begin to depreciate until it is put into production.

Impairment of Long-Lived Assets

Management believes that no revision to the remaining useful lives or write-down of long-lived assets is required as of and for the year ended December 31, 2023 .

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC“) 480, “Distinguishing Liabilities from Equity”, and ASC 815, “Derivatives and Hedging”.

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own shares, among other conditions for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.

For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value of the date of issuance, and each balance sheet date thereafter.

Changes in the estimated fair value of liability classified warrants are recognized as a non-cash gain or loss on the consolidated statements of operations.

Costs associated with issuing the warrants classified as derivative liabilities are charged to operations when the warrants are issued.

Net Loss Per Class A Common Share Attributable to Rani Holdings

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As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates .

Recently adopted accounting pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, requiring public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis.

Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis.

The Company adopted ASU 2023-07 effective December 31, 2024, on a retrospective basis.

The adoption of 2023-07 did not change the way that the Company identifies its reportable segment.

However, it has resulted in incremental disclosures within the notes of the Company’s consolidated financial statements (Note 16).

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”).

ASU 2023-09 requires enhanced annual disclosures regarding the rate reconciliation and income taxes paid information.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024 and may be adopted on a prospective or retrospective basis.

Early adoption is permitted.

The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03 “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)” to provide disaggregated information about certain income statement costs and expenses.

ASU 2024-03 is effective for the Company’s annual periods beginning January 1, 2027, with early adoption permitted.

The Company is evaluating the impact of this guidance on its consolidated financial statements and related disclosures.

Cash Equivalents, Restricted Cash Equivalents and Marketable Securities

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Treasuries and agencies

Corporate debt securities

Commercial paper

Total marketable securities

Total cash equivalents, restricted cash equivalents and marketable securities

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Money market funds

Total cash equivalents

Total cash and cash equivalents

Restricted cash equivalents:

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Treasuries and agencies

Commercial paper

Corporate debt securities

International government

Commercial paper

Total marketable securities

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Since any provision for expected credit losses for a security held is limited to the amount the fair value is less than its amortized cost, no allowance for expected credit loss was deemed necessary at December 31, 2024.

As of December 31, 2024 and 2023 , interest income receivable recorded as a component of prepaid expenses and other current assets on the consolidated balance sheet was de minimis and $ 0.2 million, respectively.

Fair Value Measurements

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Treasuries and agencies

Corporate debt securities

Commercial paper

As of December 31, 2023

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Treasuries and agencies

Commercial paper

Corporate debt securities

International government

Commercial paper

Level 1 and Level 2 financial instruments are comprised of investments in money market funds and fixed-income securities.

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There were no transfers between Level 1, Level 2 and Level 3 of the fair value hierarchy for any of the periods presented.

In 2022, as further discussed in Note 8, the Company issued Level 3 equity classified warrants totaling $ 0.5 million in connection with the loan and security agreement that were estimated on the date of issuance using the Black-Scholes valuation model which requires inputs based on certain subjective assumptions, including the expected stock price volatility, the expected term of the option, the risk-free interest rate for a period that approximates the expected term of the option, and the Company’s expected dividend yield.

Such assumptions represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.

Balance Sheet Components

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Total property and equipment, net

As of December 31, 2024 , the Company recognized an impairment loss of $ 3.7 million related to construction-in-progress property and equipment (Note 2).

Depreciation and amortization expense totaled $ 1.0 million and $ 0.8 million for the years ended December 31, 2024 and 2023, respectively.

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Accrued interest

Accrued preclinical and clinical trial costs

Payroll and related

Payroll and related costs

Accrued professional fees

Related party payable

Accrued preclinical and clinical trial costs

Total accrued expenses and other current liabilities

Evaluation and Collaborative Arrangements

Evaluation Arrangement

In August 2024, the Company entered into a contract to conduct evaluation services of certain customer compounds for oral delivery using the RaniPill HC, which was concluded to be a single performance obligation with an enforceable right to payment.

This customer paid the Company an up-front payment of $ 0.6 million upon execution of the contract.

Upon completion of the evaluation services, the Company is entitled to a final $ 0.6 million payment for an aggregate total of $ 1.2 million due under the contract.

In addition, if agreed upon, the agreement allows for joint filing of certain intellectual property protection in which all associated expenses will be shared equally.

The customer has the ability to terminate the agreement at any time by providing 10 days’ written notice after the effective date of the contract.

The contract can be terminated for cause by either party based on uncured material breach by the other party.

Upon early termination, all ongoing activities under the agreement and all mutual collaboration, development and commercialization licenses and sublicenses will terminate.

For the year ended December 31, 2024 , $ 1.0 million in contract revenue was recognized for evaluation services performed.

ProGen Co., Ltd.

In June 2024, the Company and ProGen Co., Ltd.

(“ProGen”) entered into a Collaboration Agreement (the “Collaboration Agreement”).

Under the Collaboration Agreement, the Company and ProGen will collaborate to manufacture, develop, seek regulatory approvals for and, if approved, commercialize a product (the “Product”) combining ProGen’s GLP-1/GLP-2 dual agonist compound, PG-102, and the RaniPill HC oral delivery device (the “Device”) in the field of weight management (including without limitation obesity, weight reduction and weight maintenance) in humans (the “Collaboration”).

Under the Collaboration Agreement, development costs, as well as operating profits and losses from the commercialization of the Product, will be equally shared by the Company and ProGen.

The Company and ProGen each granted to the other party an exclusive right and license (except with respect to the other party’s affiliates and sublicensees) to certain intellectual property to develop the Product for weight management and an exclusive right and license to seek regulatory approval for, and to use, sell, offer to sell, import and commercialize the Product in their assigned territories.

The parties share responsibility for the development of RT-114 worldwide, with the Company leading such development for preclinical activities through Phase 1 clinical trials.

After initiation of the first Phase 2 clinical trial, the Company will lead development and commercialization of the Product in the United States, Canada, Europe (including the United Kingdom) and Australia, and ProGen will lead development and commercialization in all other countries.

Each party has the right to opt-out of the Collaboration (“Opt-Out”) at any time upon prior written notice to the other party.

Following an Opt-Out, the continuing party shall have sole right to develop, conduct regulatory activities for and commercialize the Product on a worldwide basis.

The Opt-Out party shall share all development costs and operating profit (or loss) through the effective date of the Opt-Out, and all costs to complete the conduct of any clinical trials of Product that have been initiated prior to delivery of the Opt-Out notice, even if the costs are incurred or the trials are completed after the effective date of the Opt-Out.

The continuing party shall pay to the Opt-Out party low single to mid-single digit royalties on net sales of the Product made after the Opt-Out date depending on when the Opt-Out occurs.

The Company determined that the Collaboration Agreement is not a contract with a customer and is therefore accounted for under ASC Topic 808.

The Company evaluates the presentation of amounts due from ProGen based on the nature of each separate activity.

Reimbursements from ProGen are recognized as contra-research and development expense on the Consolidated Statement of Operations once earned and collectability is assured.

As of December 31, 2024 , reimbursement received from ProGen recorded as contra-research and development expense was de minims.

Related Party Transactions

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In June 2021, Rani LLC entered into a service agreement with ICL effective retrospectively to January 1, 2021, and subsequently amended such agreement in March 2022 (as amended, the "Rani LLC-ICL Service Agreement"), pursuant to which Rani LLC and ICL agreed to provide personnel services to the other upon requests.

Under the amendment in March 2022, Rani LLC has a right to occupy certain facilities leased by ICL in Milpitas, California and San Antonio, Texas (“Occupancy Services”) for general office, research and development, and light manufacturing.

Under the amendment in March 2022, Rani LLC had a right to occupy certain facilities leased by ICL in Milpitas, California and San Antonio, Texas (“Occupancy Services”) for general office, research and development, and light manufacturing.

The Rani LLC-ICL Service Agreement has a twelve-month term and will automatically renew for successive twelve-month periods unless terminated;

except that the Occupancy Services in Milpitas, California have a term until February 2024, following an extension granted in July 2022, and the Occupancy Services in San Antonio, Texas continue until either party gives six months’ notice of termination.

except that the Occupancy Services in Milpitas, California had a term until February 2024, following an extension granted in July 2022, and the Occupancy Services in San Antonio, Texas continue until either party gives six months’ notice of termination.

Except for the Occupancy Services, Rani LLC or ICL may terminate services under the Rani LLC-ICL Service Agreement upon 60 days' notice to the other party.

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Costs are billed or charged on a monthly basis by ICL or Rani LLC, respectively.

Rani LLC provided to ICL notice of termination of the Occupancy Services in San Antonio in December 2023, which termination will take effect in June 2024.

In June 2021, RMS entered into a service agreement with ICL (the “RMS-ICL Service Agreement”) effective retrospectively to January 1, 2021, pursuant to which ICL agreed to rent a specified portion of its facility in San Jose, California to RMS.

Additionally, RMS and ICL agreed to provide personnel services to the other upon requests based on rates specified in the RMS-ICL Service Agreement.

In April 2022, RMS assigned the RMS-ICL Service Agreement to Rani LLC.

In December 2023, Rani LLC provided to ICL notice of termination of the Occupancy Services in San Antonio, which took effect in June 2024.

In March 2024, the Company extended the Occupancy Services for the facility in Milpitas, California for an additional six-month term through August 2024 and increased the payment for such Occupancy Services during the extension period.

The Occupancy Services for the facility in Milpitas, California expired in August 2024.

In June 2021, Rani Management Services, Inc.

(“RMS”) entered into a service agreement with ICL effective retrospectively to January 1, 2021, pursuant to which ICL agreed to rent a specified portion of its facility in San Jose, California to RMS.

Additionally, RMS and ICL agreed to provide personnel services to the other upon requests based on rates specified in the agreement.

In April 2022, RMS assigned the agreement to Rani LLC.

In December 2022, RMS was dissolved.

In March 2024, the Company entered into an amendment to increase the Occupancy Services from 23,000 square feet to 24,000 square feet (such agreement, as assigned and amended, the “RMS-ICL Service Agreement”).

The RMS-ICL Service Agreement has a twelve-month term and will automatically renew for successive twelve-month periods unless terminated.

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General and administrative

Prior to April 2022, the Company’s eligible employees were permitted to participate in ICL’s 401(k) Plan (“401(k) Plan”).

Participation in the 401(k) Plan was offered for the benefit of the employees, including the Company’s named executive officers, who satisfied certain eligibility requirements.

In April 2022, the Company established its own 401(k) Plan, with participation offered for the benefit of the employees, including the Company’s named executive officers, who satisfy certain eligibility requirements.

As of December 31, 2023, all of the Company's facilities are owned or leased by an entity affiliated with the Company’s Chairman (Note 7).

The Company pays for the use of these facilities through its services agreements with ICL.

Exclusive License, Intellectual Property and Common Unit Purchase Agreement

The Company, through Rani LLC, and ICL entered into an exclusive license and an intellectual property agreement and common unit purchase agreement in 2012.

Pursuant to the common unit purchase agreement, the Company issued 46.0 million common units to ICL in return for rights to exclusive commercialization, development, use and sale of certain products and services related to the RaniPill capsule technology.

ICL also granted the Company a fully-paid, royalty-free, sublicensable, exclusive license under the intellectual property made by ICL during the course of providing services to the Company related to the RaniPill capsule technology.

Such rights were not recorded on the Company’s consolidated balance sheet as the transaction was considered a common control transaction.

As of December 31, 2024, one of the Company's facilities was owned by an entity affiliated with the Company’s Chairman (Note 8).

The Company pays for the use of this facility through the RMS-ICL Service Agreement.

Exclusive License Agreement

In June 2021, ICL and the Company, through Rani LLC, entered into an Amended and Restated Exclusive License Agreement which replaced the 2012 Exclusive License Agreement between ICL and Rani LLC, as amended in 2013, and terminated the 2012 Intellectual Property Agreement between ICL and Rani LLC, as amended in June 2013.

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The Non-Exclusive License Agreement will continue in perpetuity unless earlier terminated.

Intellectual Property Agreement with Mir Imran (the “Mir Agreement”)

In June 2021, the Company, through Rani LLC, entered into the Mir Agreement, pursuant to which the Company and Mir Imran agreed that the Company would own all intellectual property conceived (i) using any of the Company’s people, equipment, or facilities or (ii) that is within the field of oral delivery of sensors, small molecule drugs or biologic drugs including, any peptide, antibody, protein, cell therapy, gene therapy or vaccine.

Neither the Company nor Mir Imran may assign the Mir Agreement to any third party without the prior written consent of the other party.

The initial term of the Mir Agreement is three years, which can be extended upon mutual consent of the parties.

The Mir Agreement may be terminated by either party for any reason within the initial three-year term upon providing three months’ notice to the other party.

Tax Receivable Agreement

Certain parties to the TRA, entered into in August 2021 pursuant to the IPO and Organizational Transactions are related parties of the Company.

The TRA provides that the Company pay to ICL and the other Continuing LLC Owners 85% of the amount of tax benefits, if any, it is deemed to realize from exchanges of Paired Interests (Note 2).

During the years ended December 31, 2023 and 2022 , these parties to the TRA exchanged zero and 2,317,184 Paired Interests, respectively, that resulted in tax benefits subject to the TRA (Note 13).

Registration Rights Agreement

In connection with the IPO, the Company entered into a Registration Rights Agreement.

ICL and its affiliates are parties to this agreement.

The Registration Rights Agreement provides certain registration rights whereby, at any time following the IPO and the expiration of any related lock-up period, ICL and its affiliates can require the Company to register under the Securities Act of 1933, as amended (the “Securities Act”) shares of Class A common stock issuable to ICL and its affiliates upon, at the Company’s election, redemption or exchange of their Paired Interests.

The Registration Rights Agreement also provides for piggyback registration rights.

In March 2022, certain holders of the Company's Class A common stock considered to be related parties were made parties to the Registration Rights Agreement.

As a result of certain stockholders exercising their registration rights under the Registration Rights Agreement, in December 2022, the Company filed a registration statement on Form S-3 to register 6,009,542 shares of Class A common stock of the Company held by certain of its stockholders.

The TRA provides that the Company pay to ICL and the other Continuing LLC Owners 85% of the amount of tax benefits, if any, it is deemed to realize from exchanges of Paired Interests.

For each of the years ended December 31, 2024 and 2023 , these parties to the TRA exchanged zero Paired Interests, respectively, that resulted in tax benefits subject to the TRA (Note 14).

Rani LLC Agreement

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provided that, at the Company’s election, the Company may effect a direct exchange of such Class A common stock or make a cash payment equal to a volume weighted average market price of one share of Class A common stock for each Paired Interest redeemed.

During the years ended December 31, 2023 and 2022 , certain related parties that are party to the Rani LLC Agreement exchanged zero and 2,317,184 Paired Interests, respectively, for an equal number of shares of the Company's Class A common stock.

For each the years ended December 31, 2024 and 2023 , certain related parties that are party to the Rani LLC Agreement exchanged zero Paired Interests, respectively, for an equal number of shares of the Company's Class A common stock.

In November 2023, Rani LLC and BKM South Bay 240, LLC (“Landlord”) entered into the Standard Industrial/Commercial Multi-Tenant Lease - Net (the “Lease”).

Pursuant to the terms of the Lease, Rani LLC is leasing approximately 33,000 square feet of space in Fremont, California, which is part of a two-building project (the “Project”).

The initial term of the Lease commenced in February 2024, and the duration of the initial term is 63 months.

Subject to certain conditions, Rani LLC has an option to renew the Lease for one additional 5-year term at the then-prevailing market rate.

The monthly base rent for the initial term of the Lease is approximately $ 95,000 per month, subject to a 4 % increase each year.

Rani LLC is also responsible for the payment of additional rent to cover its share of common area operating expenses, including taxes, insurance, utilities, and repair and maintenance of the premises and common areas of the Project.

The Company pays for the use of its office, laboratory and manufacturing facility in San Jose, California as part of the RMS-ICL Service Agreement.

In April 2022, RMS assigned the RMS-ICL Service Agreement to Rani LLC.

In December 2022, RMS was dissolved.

In March 2024, the Company entered into an amendment to increase the Occupancy Services from 23,000 square feet to 24,000 square feet.

The RMS-ICL Service Agreement has a twelve-month term and will automatically renew for successive twelve-month periods unless Rani LLC or ICL terminate occupancy under the RMS-ICL Service Agreement upon six months’ notice.

The Company determined it to be reasonably certain that it would exercise its renewal option for a successive twelve-month period and has considered it in the determination of the right-of-use assets and lease liabilities associated with the RMS-ICL Service Agreement as of December 31, 2023.

Under the Rani LLC-ICL Service Agreement amended in March 2022, Rani LLC has a right to occupy certain facilities leased by ICL in Milpitas, California and San Antonio, Texas for general office, research and development, and light manufacturing.

In January 2024, the Company determined it to be reasonably certain that it would exercise its renewal option for a successive twelve-month period through 2025.

The Company accounted for the renewal option as a lease modification that did not result in a separate contract and recognized the additional right-of-use asset and corresponding lease liabilities associated with the Rani LLC-ICL Service Agreement in its consolidated balance sheet.

Under the Rani LLC-ICL Service Agreement amended in March 2022, Rani LLC had a right to occupy certain facilities leased by ICL in Milpitas, California and San Antonio, Texas for general office, research and development, and light manufacturing.

The Rani LLC-ICL Service Agreement has a twelve-month term and will automatically renew for a successive twelve-month periods unless terminated;

except that the Occupancy Services in Milpitas, California have a term until February 2024, following an extension granted in July 2022, with the potential for one additional annual renewal, subject to approval by the landlord upon a nine months’ notice of renewal prior to the end of the lease term, and the Occupancy Services in San Antonio, Texas continue until either party gives six months’ notice of termination.

The Company accounted for the lease extension as a lease modification that did not result in a separate contract and recognized the right-of-use asset and lease liabilities associated with the Rani LLC-ICL Service Agreement in the consolidated balance sheet as of December 31, 2023.

As of December 31, 2023, the second renewal option for the facility in Milpitas, California was not deemed reasonably certain to be exercised.

The Company provided to ICL notice of termination of the Occupancy Services in San Antonio in December 2023, which termination will take effect in June 2024.

except that the Occupancy Services in Milpitas, California had a term until February 2024, following an extension granted in July 2022.

The Company accounted for its Occupancy Services in San Antonio, Texas as a short-term lease.

In December 2023, the Company provided to ICL notice of termination of the Occupancy Services in San Antonio, which took effect in June 2024.

The Company accounted for the March 2024 extension for its Occupancy Services in Milpitas, California as a short-term lease.

The Occupancy Services for the facility in Milpitas, California expired in August 2024.

The Company's leases are accounted for as operating leases and require certain fixed payments of real estate taxes and insurance in addition to future minimum lease payments, and certain variable payments of common area maintenance costs and building utilities.

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Variable lease payments are excluded in the total operating lease expense and immaterial for the periods presented.

Supplemental information on the Company’s consolidated balance sheet and statements of cash flows as of December 31, 2023 related to leases was as follows (in thousands):

Supplemental information on the Company’s consolidated balance sheet and statements of cash flows as of December 31, 2024 and 2023, respectively, related to leases was as follows (in thousands):

Weighted-average remaining lease term (in years)

Weighted-average discount rate

As of December 31, 2023, minimum annual rental payments under the Company’s operating lease agreements are as follows (in thousands):

Year Ended December 31,

Cash paid for amounts included in lease liabilities:

Operating cash flows used for operating leases

As of December 31, 2024, minimum annual rental payments under the Company’s operating lease agreements are as follows (in thousands), excluding short-term leases:

Year ending December 31,

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Operating lease liability, net current portion

In November 2023, Rani LLC and BKM South Bay 240, LLC (“Landlord”) entered into the Standard Industrial/Commercial Multi-Tenant Lease - Net (the “Lease”).

Pursuant to the terms of the Lease, Rani LLC is leasing approximately 33,000 square feet of space in Fremont, California, which is part of a two-building project (the “Project”).

The initial term of the Lease commenced in February 2024, and the duration of the initial term is 63 months.

Subject to certain conditions, Rani LLC has an option to renew the Lease for one additional 5-year term at the then-prevailing market rate.

The monthly base rent for the initial term of the Lease is approximately $ 95,000 per month, subject to a 4 % increase each year.

The Company will further evaluate the Lease and record its impact on the Company's consolidated financial statements on the commencement date of the Lease in February 2024.

Future minimum lease payments for the Lease total $ 6.5 million through 2029 and are excluded from the table above.

In October 2024, as part of the October Offering, the Company issued (i) pre-funded warrants to purchase 333,333 shares of Class A common stock, and (ii) Series C common warrants, which will accompany the Class A common stock and pre-funded warrants, to purchase an aggregate of 3,333,333 shares of Class A common stock.

The pre-funded warrants are exercisable immediately and have an unlimited term and an exercise price of $ 0.0001 per share.

The Series C common warrants are exercisable immediately following the closing date of the October Offering, will expire five years from the date of issuance and will have an exercise price of $ 3.00 per share.

The Series C warrants include certain rights upon “fundamental transactions,” as described in the Series C warrants, including the right of the holders thereof to receive from the Company or a successor entity the same type or form of consideration (and in the same proportion) that is being offered and paid to the holders of Class A common stock in such fundamental transaction in the amount of the Black Scholes value of the unexercised portion of the applicable Series C warrants on the date of the consummation of the fundamental transactions.

In October 2024, the pre-funded warrants were fully exercised for de minimis proceeds.

As of December 31, 2024 , there were 3,333,333 Series C warrants outstanding.

In July 2024, as part of the July Offering, the Company issued (i) pre-funded warrants to purchase 446,753 shares of Class A common stock, (ii) Series A common warrants to purchase an aggregate of 3,246,753 shares of Class A common stock and (iii) Series B common warrants to purchase an aggregate of 3,246,753 shares of Class A common stock.

The pre-funded warrants are exercisable immediately and have an unlimited term and an exercise price of $ 0.0001 per share.

Pursuant to the October Offering, Series A common warrants to purchase an aggregate of 3,246,753 shares of Class A common stock issued in the July Offering were cancelled.

The Series B warrants will be exercisable following the six-month anniversary of the closing date of the July Offering, will expire five and a half years from the date of issuance and will have an exercise price of $ 3.08 per share.

The Series B warrants include certain rights upon “fundamental transactions,” as described in the Series B warrants, including the right of the holders thereof to receive from the Company or a successor entity the same type or form of consideration (and in the same proportion) that is being offered and paid to the holders of Class A common stock in such fundamental transaction in the amount of the Black Scholes value of the unexercised portion of the applicable Series B warrants on the date of the consummation of the fundamental transactions.

In August 2024, the pre-funded warrants were fully exercised for de minimis proceeds.

As of December 31, 2024 , there were 3,246,753 Series B warrants outstanding.

In August 2022, in conjunction with a loan and security agreement (Note 13), the Company issued warrants to purchase 76,336 shares of the Company's Class A common stock.

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Stockholders’ Equity

For the years ended December 31, 2023 and 2022 , certain of the Continuing LLC Owners executed an exchange of zero and 5,173,947 Paired Interests, respectively, and 42,404 and 158,051 non-corresponding Class A Units of Rani LLC, respectively, in return for an equal number of shares of the Company’s Class A common stock.

From the date of the Organizational Transactions to December 31, 2024 , 5,318,539 Paired Interests and 315,892 non-corresponding Class A Units of Rani LLC were exchanged for an equal number of shares of the Company's Class A common stock.

For the years ended December 31, 2024 and 2023 , certain of the Continuing LLC Owners executed an exchange of 144,592 and zero Paired Interests and 115,437 and 42,404 non-corresponding Class A Units of Rani LLC, respectively, in return for an equal number of shares of the Company’s Class A common stock.

The corresponding shares of the Company’s Class B common stock included in the exchange of Paired Interests were subsequently canceled and retired pursuant to the terms of the Rani LLC Agreement.

In August 2022, the Company entered into a Controlled Equity Sales Agreement (the "Sales Agreement") with Cantor Fitzgerald & Co.

Wainwright & Co., LLC (collectively the "Agents"), pursuant to which the Company may offer and sell from time to time through the Agents up to $ 150.0 million of shares of its Class A common stock, in such share amounts as the Company may specify by notice to the Agents, in accordance with the terms and conditions set forth in the Sales Agreement.

The potential proceeds from the Sales Agreement are expected to be used for general corporate purposes.

As of December 31, 2023 , the Company has no sales under the Sales Agreement.

In connection with the Sales Agreement, the Company recognized deferred offering costs totaling $ 0.3 million as a component of prepaid expenses and other current assets in the consolidated balance sheet as of December 31, 2023 which will be offset against proceeds upon a sale under the Sales Agreement within the consolidated statement of changes in stockholders’ equity.

In accordance with the Rani LLC Agreement, Rani LLC also issues a corresponding Class A Unit to Rani Holdings for each share of common stock issued by Rani Holdings.

This increases Rani Holdings’ ownership in Rani LLC.

In October 2024, the Company closed the October Offering, pursuant to which it issued and sold:

Pursuant to the October Securities Purchase Agreement, Series A common warrants to purchase an aggregate of 3,246,753 shares of Class A common stock issued in the July Offering were cancelled.

In October 2024, the pre-funded warrants were fully exercised for de minimis proceeds.

In July 2024, the Company closed the July Offering, pursuant to which it issued and sold:

In August 2024, the pre-funded warrants were fully exercised for de minimis proceeds.

As of December 31, 2024 , the Company reserved 0.5 million shares of Class A Common Stock for issuance under the Rani Therapeutics Holdings, Inc.

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Stock-Based Compensation

Stock Option Repricing

On December 16, 2023 (the “Repricing Date”), the Company's Board of Directors approved a stock option award repricing whereby certain previously granted and still outstanding unvested stock option awards issued under the 2021 Plan and the 2016 Equity Incentive Plan, were reduced to $ 2.84 per share, which represented the most recent closing market price of the Company’s Class A common stock to the Repricing Date (the “Option Repricing”).

These stock option awards are held by employees, including the Company’s named executive officers, certain consultants, and non-employee members of the Board of Directors.

No other terms of the options were modified, and the stock option awards will continue to vest according to their original vesting schedules, remain subject to the same service requirements and will retain their original expiration dates.

The Option Repricing was fair valued using the Black-Scholes option pricing model, which approximated the Lattice model, resulting in $ 1.8 million of incremental stock-based compensation expense and is expected to be recognized over a weighted-average period of approximately 2.3 years.

Stock Options

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During the years ended December 31, 2024 and 2023 , the Company recognized $ 0.2 million and $ 0.3 million, respectively, of stock-based compensation expense related to the ESPP.

As of December 31, 2023, contributions withheld from employees were de minimis and recorded as a component of accrued expenses and other current liabilities in the consolidated balance sheet.

As of December 31, 2023 , there was $ 0.1 million of unrecognized stock-based compensation expense related to the ESPP which is expected to be recognized over a weighted-average period of approximately 0.4 years.

As of December 31, 2024 , unrecognized stock-based compensation expense related to the ESPP was de minimis which is expected to be recognized over a weighted-average period of approximately 0.1 years.

As of December 31, 2024, contributions withheld from employees was de minimis and are recorded as a component of accrued expenses and other current liabilities in the consolidated balance sheet.

Stock-Based Compensation Expense

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Legal costs associated with these matters are expensed when incurred.

The Company is currently involved in several opposition proceedings at the European Patent Office, all of which were asserted against us by Novo Nordisk A/S.

The ultimate outcome of this matter as a loss is not probable nor is there any amount that is reasonably estimable.

However, the outcome of the opposition proceedings could impact the Company’s ability to prevent third parties from commercializing in Europe products with characteristics similar to those of the Company’s RaniPill technology.

Tax Receivable Agreement

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The remaining $ 15.0 million of Loans (“Tranche 2”) is uncommitted and is subject to certain conditions and approval by the Lender.

The remaining $ 15.0 million of Loans was uncommitted and subject to certain conditions and is no longer available under the Loan Agreement.

The purpose of the Loans is for general corporate purposes.

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Pursuant to the Loan Agreement, the maturity date for the Loans is August 1, 2026 (the “Maturity Date”).

The Loan principal is repayable in equal monthly installments beginning September 2024 extendable to March 2025 under certain conditions.

The Loan principal is repayable in equal monthly installments beginning September 2024.

The Loans bear interest at a variable rate per annum equal to the greater of (A) the prime rate, as published by the Wall Street Journal from time to time plus 5.60 % or (B) 10.35 %.

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There have been no material adverse events in connection with the Loan Agreement and the substantial doubt regarding our ability to continue as a going concern does not currently constitute a material adverse event under the terms of the Loan Agreement.

As of December 31, 2023, the Company was in compliance with all applicable covenants under the Loan Agreement.

As of December 31, 2024, the Company was in compliance with all applicable financial covenants under the Loan Agreement.

As of December 31, 2024, future principal payments for the Company’s debt are as follows (in thousands):

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Total long-term debt, less current portion

There was no income tax expense for the year ended December 31, 2023 .

Income tax expense totaled $ 0.1 million for the year ended December 31, 2022.

There was no income tax expense for the years ended December 31, 2024 and 2023, respectively.

The effective tax rate for the years ended December 31, 2024 and 2023 is different from the federal statutory rate primarily due to the valuation allowance against deferred tax assets as a result of insufficient sources of income and pass-through loss not subject to income tax.

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Uncertain tax position

Liquidating distribution

Change in valuation allowance

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Therefore, they are not included in the computation of net loss per Class A common share attributable to Rani Therapeutics Holdings, Inc.

Subsequent Events

Amended Service Agreements

In March 2024, the Company entered into an amendment to the RMS-ICL Service Agreement to increase the Occupancy Services from 23,000 square feet to 24,000 square feet.

In March 2024, the Company also entered into an amendment to the Rani LLC-ICL Service Agreement to extend the term of the Occupancy Services in Milpitas, California from February 2024 to August 2024 and to increase the payment for such Occupancy Services during the extension period.

Segment Information

The Company operates as one operating segment.

The Company's chief operating decision maker (“CODM”) is its Chief Executive Officer, who reviews financial information presented on a consolidated basis.

The CODM assesses operating performance and makes resource allocation decisions primarily based on net loss, cash on-hand and cash flows utilizing the Company’s long-range plan, which includes product development roadmaps and long-range financial models.

Significant expenses include research and development and general and administrative expenses, which are each separately presented on the Company’s Consolidated Statements of Operations.

Other segment items within net loss include interest income and other, net and interest expense and other, net.

See the consolidated financial statements for other financial information regarding the Company’s operating segment.

The Company’s long-lived assets recognized on the Consolidated Balance Sheets primarily consisted of property and equipment, net and operating lease right-of-use assets, which are located within the US.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data