Oramed Pharmaceuticals Inc.
Annual Report 2013

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-K xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended August 31, 2013oroTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934Commission file number 000-50298ORAMED PHARMACEUTICALS INC.(Exact Name of Registrant as Specified in its Charter)Delaware98-0376008(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification No.) Hi-Tech Park 2/4Givat-RamP.O. Box 39098Jerusalem, Israel(Address of Principal Executive Offices)91390(Zip Code) +972-2-566-0001(Registrant’s Telephone Number, Including Area Code)Securities registered pursuant to Section 12(b) of the Exchange Act: NoneSecurities registered pursuant to Section 12(g) of the Act: Common Stock, $.001 par value per share Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x  Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes x No o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorterperiod that the registrant was required to submit and post such files). Yes x No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendmentto this Form 10-K. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one): Large accelerated filer oAccelerated filer oNon-accelerated filer oSmaller reporting company x(Do not check if a smaller reporting company)Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x The aggregate market value of the voting and non-voting common equity held by non-affiliates as of the last business day of the registrant’s mostrecently completed second fiscal quarter was $52,694,028, based on a price of $9.00, being the last price at which the shares of the registrant’s common stockwere sold on The Nasdaq Capital Market prior to the end of the most recently completed second fiscal quarter. Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 7,947,872 shares ofcommon stock issued and outstanding as of November 25, 2013.  ORAMED PHARMACEUTICALS INC.FORM 10-K(FOR THE FISCAL YEAR ENDED AUGUST 31, 2013)TABLE OF CONTENTS CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS1PART I2 ITEM 1. BUSINESS.2 ITEM 1A. RISK FACTORS.15 ITEM 2. PROPERTIES.26 ITEM 3. LEGAL PROCEEDINGS.26 ITEM 4. MINE SAFETY DISCLOSURES.26PART II27 ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASESOF EQUITY SECURITIES.27 ITEM 6. SELECTED FINANCIAL DATA.29 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.29 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.39 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.39 ITEM 9A. CONTROLS AND PROCEDURES.39 ITEM 9B. OTHER INFORMATION.40PART III41 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.41 ITEM 11. EXECUTIVE COMPENSATION.46 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERS.51 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.54 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.55 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.56  As used in this Annual Report on Form 10-K, the terms “we,” “us,” “our,” the “Company,” and “Oramed” mean Oramed Pharmaceuticals Inc. and our wholly-owned Israeli subsidiary, Oramed Ltd., unless otherwise indicated. All dollar amounts refer to U.S. Dollars unless otherwise indicated. On August 31, 2013, the exchange rate between the NIS and the dollar, as quoted by the Bank of Israel, was NIS 3.614 to $1.00. Unless indicated otherwiseby the context, statements in this Annual Report on Form 10-K that provide the dollar equivalent of NIS amounts or provide the NIS equivalent of dollaramounts are based on such exchange rate. On January 10, 2013, we effected a reverse stock split of our shares of common stock at a ratio of one-for-twelve. All share and per share amounts included inthis Annual Report on Form 10-K have been adjusted retroactively to reflect the effects of the reverse stock split.  CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K (including the section regarding Management’s Discussion and Analysis of Financial Condition and Results ofOperations) contains forward-looking statements within the meaning of the federal securities laws regarding our business, clinical trials, financial condition,expenditures, results of operations and prospects. Words such as “expects,” “anticipates,” “intends,” “plans,” “planned expenditures,” “believes,” “seeks,”“estimates” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this Annual Report on Form 10-K. Additionally, statements concerning futurematters are forward-looking statements. Although forward-looking statements in this Annual Report on Form 10-K reflect the good faith judgment of our management, such statementscan only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertaintiesand actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements.Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under theheading “Item 1A. Risk Factors” below, as well as those discussed elsewhere in this Annual Report on Form 10-K. Readers are urged not to place unduereliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. Except as required by law, weundertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date ofthis Annual Report on Form 10-K. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of thisAnnual Report on Form 10-K which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, resultsof operations and prospects.  PART I ITEM 1. BUSINESS. DESCRIPTION OF BUSINESS Research and Development We are a pharmaceutical company currently engaged in the research and development of innovative pharmaceutical solutions, including an orallyingestible insulin capsule to be used for the treatment of individuals with diabetes, and the use of orally ingestible capsules or pills for delivery of otherpolypeptides. Oral insulin: We are seeking to revolutionize the treatment of diabetes through our proprietary flagship product, an orally ingestible insulin capsule(ORMD0801) currently in non-U.S. Food and Drug Administration, or FDA, approved Phase 2 clinical trials. Our technology allows insulin to travel from thegastrointestinal tract via the portal vein to the bloodstream, revolutionizing the manner in which insulin is delivered. It enables its passage in a morephysiological manner than current delivery methods of insulin. Our technology is a platform that has the potential to deliver medications and vaccinesorally that today can only be delivered via injection. Diabetes: Diabetes is a disease in which the body does not produce or properly use insulin. Insulin is a hormone that causes sugar to be absorbedinto cells, where the sugar is converted into energy needed for daily life. The cause of diabetes is attributed both to genetics (type 1 diabetes) and, most often,to environmental factors such as obesity and lack of exercise (type 2 diabetes). According to the World Health Organization, or WHO, an estimated 347million people worldwide suffered from diabetes in 2010. In 2004, an estimated 3.4 million people died from consequences of high blood sugar, and theWHO projects that diabetes deaths will increase by two thirds between 2008 and 2030. According to the American Diabetes Association, or ADA, in theUnited States there were approximately 25.8 million people with diabetes, or 8.3% of the United States population in 2010. Diabetes is a leading cause ofblindness, kidney failure, heart attack, stroke and amputation.Intellectual property: We own a portfolio of patents and patent applications covering our technologies and we are aggressively protecting thesetechnology developments on a worldwide basis. Management: We are led by a highly-experienced management team knowledgeable in the treatment of diabetes. Our Chief Medical andTechnology Officer, Miriam Kidron, PhD, is a world-recognized pharmacologist and a biochemist and the innovator primarily responsible for our oral insulintechnology development and know-how. Scientific Advisory Board: Our management team has access to our internationally recognized Scientific Advisory Board whose members arethought-leaders in their respective areas. The Scientific Advisory Board is comprised of Dr. Nir Barzilai, Professor Ele Ferrannini, Professor Avram Hershko,Dr. Derek LeRoith, Dr. John Amatruda and Dr. Michael Berelowitz acting as Chairman. 2 Strategy Short Term Business Strategy We plan to conduct further research and development on the technology covered by the patent application “Methods and Composition for OralAdministration of Proteins,” which we acquired from Hadasit Medical Research Services and Development Ltd., or Hadasit in 2006 and which is pending invarious foreign jurisdictions, as well as the other patents we have filed in various foreign jurisdictions since then, as discussed below under “Business—Description of Business—Patents and Licenses” and below under “Item 1A. Risk Factors.” Through our research and development efforts, we are seeking todevelop an oral dosage form that will withstand the harsh chemical environment of the stomach and intestines and will be effective in delivering activeinsulin or other proteins, such as exenatide, for the treatment of diabetes. The enzymes and vehicles that are added to the proteins in the formulation processmust not modify the proteins chemically or biologically, and the dosage form must be safe to ingest. We plan to continue to conduct clinical trials to showthe effectiveness of our technology. In December 2012, we filed an Investigational New Drug, or IND, application with the FDA to begin a Phase 2 clinicaltrial of our orally ingested insulin capsule, in order to evaluate the safety, tolerability and efficacy of our oral insulin capsule on type 2 diabeticvolunteers. We have been communicating with the FDA regarding such Phase 2b IND application, and, according to the FDA’s request, are conducting aPhase 2a sub study before we may proceed with the Phase 2b clinical trial. We expect to begin the Phase 2b clinical trial in the third quarter of calendar year2014. We also began conducting a clinical trial of our orally ingested exenatide in January 2013, and commenced a first human clinical trial on healthyvolunteers with our oral insulin capsule delivered in combination with our oral exenatide capsule. Clinical trials are planned in order to substantiate ourresults as well as for purposes of making future filings for drug approval. We also plan to conduct further research and development by deploying ourproprietary drug delivery technology for the delivery of other polypeptides in addition to insulin, and to develop other innovative pharmaceutical products. Long Term Business Strategy If our oral insulin capsule or other drug delivery solutions show significant promise in clinical trials, we plan to ultimately seek a strategiccommercial partner, or partners, with extensive experience in the development, commercialization, and marketing of insulin applications and/or other orallydigestible drugs. We anticipate such partner or partners would be responsible for, or substantially support, late stage clinical trials (Phase 3) to increase thelikelihood of obtaining regulatory approvals and registrations in the appropriate markets in a timely manner. We further anticipate that such partner, orpartners, would also be responsible for sales and marketing of our oral insulin capsule in these markets. Such planned strategic partnership, or partnerships,may provide a marketing and sales infrastructure for our products as well as financial and operational support for global clinical trials, post marketing studies,label expansions and other regulatory requirements concerning future clinical development in the United States and elsewhere. Any future strategic partner,or partners, may also provide capital and expertise that would enable the partnership to develop new oral dosage form for other polypeptides. While ourstrategy is to partner with an appropriate party, no assurance can be given that any third party would be interested in partnering with us. Under certaincircumstances, we may determine to develop one or more of our oral dosage form on our own, either world-wide or in select territories. Other Planned Strategic Activities In addition to developing our own oral dosage form drug portfolio, we are, on an on-going basis, considering in-licensing and other means ofobtaining additional technologies to complement and/or expand our current product portfolio. Our goal is to create a well-balanced product portfolio thatwill enhance and complement our existing drug portfolio. Product Development Research and Development Summary We devote the majority of our efforts to research and development, including clinical studies for our lead clinical product candidates, as describedbelow. 3 Orally Ingestible Insulin During fiscal year 2007 we conducted several clinical studies of our orally ingestible insulin. The studies were intended to assess both thesafety/tolerability and absorption properties of our proprietary oral insulin. Based on the pharmacokinetic and pharmacologic outcomes of these trials, wedecided to continue the development of our oral insulin product. In November 2007, we successfully completed animal studies in preparation for the Phase 1B clinical trial of our oral insulin capsule(ORMD0801). In January 2008, we commenced the non-FDA approved Phase 1B clinical trials with our oral insulin capsule, in healthy human volunteerswith the intent of dose optimization. In March 2008, we successfully completed our Phase 1B clinical trials. In April 2008, we commenced a non-FDA approved Phase 2A study to evaluate the safety and efficacy of our oral insulin capsule in type 2 diabeticvolunteers at Hadassah Medical Center in Jerusalem. In August 2008, we announced the successful results of this trial. In July 2008 we were granted approval by the Institutional Review Board Committee of Hadassah Medical Center in Jerusalem, or the IRB, toconduct a non-FDA approved Phase 2A study to evaluate the safety and efficacy of our oral insulin capsule on type 1 diabetic volunteers. In September 2008,we announced the beginning of this trial. In July 2009 we reported positive results from this trial. In April 2009, we entered into a consulting service agreement with ADRES Advanced Regulatory Services Ltd., or ADRES, (which was amended inFebruary 2012), pursuant to which ADRES will provide services for the purpose of filing an IND application with the FDA for a Phase 2 study according tothe FDA requirements. The FDA approval process and, if approved, registration for commercial use as an oral drug can take several years. In May 2009, we commenced a non-FDA approved Phase 2B study in South Africa to evaluate the safety, tolerability and efficacy of our oral insulincapsule on type 2 diabetic volunteers. In May 2010, we reported that the capsule was found to be well tolerated and exhibited a positive safety profile. Nocumulative adverse effects were reported throughout this first study of extended exposure to the capsule. In February 2010, we entered into agreements with Vetgenerics Research G. Ziv Ltd., a clinical research organization, to conduct a toxicology trialon our oral insulin capsules. In March 2011, we reported that we successfully completed the resulting comprehensive toxicity study for our oral insulincapsule. The study was completed under conditions prescribed by the FDA Good Laboratory Practices regulations. In September 2010, we reported the successful results of an exploratory clinical trial testing the effectiveness of our oral insulin capsule in type 1diabetes patients suffering from uncontrolled diabetes. Unstable or labile diabetes is characterized by recurrent, unpredictable and dramatic blood glucoseswings often linked with irregular hyperglycemia and sometimes serious hypoglycemia affecting type 1 diabetes patients. This completed exploratory studywas a proof of concept study for defining a novel indication for ORMD0801. We believe the encouraging results justify further clinical developmentof ORMD0801 capsule application toward management of uncontrolled diabetes. In September 2012, we entered into a Master Services Agreement with Medpace, Inc., or Medpace, to retain Medpace as a CRO for our upcomingPhase 2 clinical trial for an oral insulin capsule that was expected to start in the first calendar quarter of 2013 in the United States, and was expected to becompleted in December 2013. As consideration for its services, we paid Medpace a total amount of approximately $540,480 during the term of theengagement, based on the achievement of certain milestones. In March 2013, due to a request from the FDA, as described below, we instructed Medpace totemporarily cease all work. As a result, Medpace returned all funds in excess of the actual expenses paid for the clinical trial, or $219,867. 4 In December 2012, we filed an Investigational New Drug, or IND, application with the FDA to begin a Phase 2 clinical trial of our orally ingestedinsulin capsule, in order to evaluate the safety, tolerability and efficacy of our oral insulin capsule on type 2 diabetic volunteers. We have beencommunicating with the FDA regarding such Phase 2b IND application, and, according to the FDA’s request, are conducting a Phase 2a sub study before wemay proceed with the Phase 2b clinical trial. The Phase 2a sub study, which is an in-patient study with 30 individuals that began in July 2013, is expected tobe completed in the fourth quarter of calendar year 2013. We expect to begin the Phase 2b clinical trial in the third quarter of calendar year 2014. GLP-1 Analog In September 2008 we announced the launch of pre-clinical trials of ORMD0901, an analog for GLP-1, a gastrointestinal hormone. The pre-clinicaltrials include animal studies which suggest that the GLP-1 analog (exenatide-4) when combined with Oramed’s absorption promoters is absorbed through thegastrointestinal tract and retains its biological activity. Glucagon-like peptide-1 (GLP-1) is an incretin hormone - a type of gastrointestinal hormone that stimulates the secretion of insulin from thepancreas. The incretin concept was hypothesized when it was noted that glucose ingested by mouth (oral) stimulated two to three times more insulin releasethan the same amount of glucose administered intravenously. In addition to stimulating insulin release, GLP-1 was found to suppress glucagon release(hormone involved in regulation of glucose) from the pancreas, slow gastric emptying to reduce the rate of absorption of nutrients into the blood stream, andincrease satiety. Other important beneficial attributes of GLP-1 are its effects of increasing the number of beta cells (cells that manufacture and release insulin)in the pancreas and, possibly, protection of the heart. In September 2009, we received approval from the IRB to commence human clinical trials of an oral GLP-1 analog. The approval was granted aftersuccessful pre-clinical results were reported. The trials are being conducted on healthy volunteers at Hadassah University Medical Center in Jerusalem.Oramed’s first-in-humans clinical trial was testing the safety and efficacy of ORMD0901, an encapsulated oral GLP-1 analog formulation. The studymonitored the responses of healthy males to a single dose delivered 60 minutes before a glucose load and was completed in December 2009. ORMD0901was well tolerated by all subjects and demonstrated physiological activity, as extrapolated from ensuing subject insulin levels when compared to thoseobserved after treatment with placebo. In June 2012, we presented an abstract, which reported on the impact of our oral insulin capsule ORMD0801 delivered in combination with our oralexenatide capsule ORMD0901. The work that was presented assessed the safety and effectiveness of a combination of oral insulin and oral exenatidetreatments delivered to pigs prior to food intake. The drug combination resulted in significantly improved blood glucose regulation when compared toadministration of each drug separately. In January 2013, we began a clinical trial for our oral exenatide capsule on healthy volunteers and type 2 diabetic patients. Combination TherapyIn June 2012, we presented an abstract, which reported on the impact of our oral insulin capsule ORMD0801 delivered in combination with our oralexenatide capsule ORMD0901. The work that was presented assessed the safety and effectiveness of a combination of oral insulin and oral exenatidetreatments delivered to pigs prior to food intake. The drug combination resulted in significantly improved blood glucose regulation when compared toadministration of each drug separately. 5 In February 2013, we commenced a first human clinical trial on type 2 diabetic volunteers with our oral insulin capsule delivered in combinationwith our oral exenatide capsule. Raw Materials Our oral insulin capsule is currently manufactured by Encap Drug Delivery.In May 2010, Oramed Ltd. entered into an agreement with SAFC Pharma, or SAFC, to develop a process to produce one of our oral capsuleingredients and in June, 2011, Oramed Ltd. issued a purchase order to SAFC for producing the ingredient.In July 2010, Oramed Ltd. entered into the Manufacturing and Supply Agreement, or MSA, with Sanofi-Aventis Deutschland GMBH, or Sanofi-Aventis. According to the MSA, Sanofi-Aventis will supply Oramed Ltd. with specified quantities of recombinant human insulin to be used for clinical trialsin the United States.We purchase, pursuant to separate agreements with third parties, the raw materials required for the manufacturing of our oral capsule. We generallydepend upon a limited number of suppliers for the raw materials. Although alternative sources of supply for these materials are generally available, we couldincur significant costs and disruptions if we would need to change suppliers. The termination of our relationships with our suppliers or the failure of thesesuppliers to meet our requirements for raw materials on a timely and cost-effective basis could have a material adverse effect on our business, prospects,financial condition and results of operations.Patents and Licenses We maintain a proactive intellectual property strategy which includes patent filings in multiple jurisdictions, including the United States and othercommercially significant markets. We hold 30 patent applications currently pending, with respect to various compositions, methods of production and oraladministration of proteins and exenatide. Expiration dates for pending patents, if granted, will fall between 2026 and 2032. We hold eight patents, three of which were issued in fiscal year 2013, including patents issued by the Australian, Canadian, Chinese, Israeli,Japanese, New Zealand, South African and Russian Patent Offices that cover a part of our technology which allows for the oral delivery of proteins andpatents issued by the New Zealand and South African Patent Offices that cover part of our technology for the oral delivery of exenatide. Consistent with our strategy to seek protection in key markets worldwide, we have been and will continue to pursue the patent applications andcorresponding foreign counterparts of such applications. We believe that our success will depend on our ability to obtain patent protection for ourintellectual property.Our patent strategy is as follows:Aggressively protect all current and future technological developments to assure strong and broad protection by filing patents and/or continuationsin part as appropriate, 6 Protect technological developments at various levels, in a complementary manner, including the base technology, as well as specific applications ofthe technology, and Establish comprehensive coverage in the United States and in all relevant foreign markets in anticipation of future commercialization opportunities. We also rely on trade secrets and unpatentable know-how that we seek to protect, in part, by confidentiality agreements. Our policy is to require ouremployees, consultants, contractors, manufacturers, outside scientific collaborators and sponsored researchers, our board of directors, or our Board, technicalreview board and other advisors to execute confidentiality agreements upon the commencement of employment or consulting relationships with us. Theseagreements provide that all confidential information developed or made known to the individual during the course of the individual’s relationship with us isto be kept confidential and not disclosed to third parties except in specific limited circumstances. We also require signed confidentiality or material transferagreements from any company that is to receive our confidential information. In the case of employees, consultants and contractors, the agreements providethat all inventions conceived by the individual while rendering services to us shall be assigned to us as the exclusive property of our Company. There can beno assurance, however, that all persons who we desire to sign such agreements will sign, or if they do, that these agreements will not be breached, that wewould have adequate remedies for any breach, or that our trade secrets or unpatentable know-how will not otherwise become known or be independentlydeveloped by competitors. Partnerships and Collaborative Arrangements In July 2010, we entered into the MSA with Sanofi-Aventis. Pursuant to the MSA, Sanofi-Aventis will supply specified quantities of recombinanthuman insulin to be used for clinical trials in the United States. In September 2011, we entered into the fourth agreement with Hadasit, Dr. Miriam Kidron and Dr. Daniel Schurr, or the Fourth Agreement, tofacilitate clinical trials and provide other services. According to the Fourth Agreement, Hadasit will be entitled to total consideration of $200,000 to be paidin accordance with the actual progress of the study, $50,000 of which was recognized or paid through August 31, 2013. See “Item 13. Certain Relationshipsand Related Transactions, and Director Independence” below for a further description of the terms and conditions of the Fourth Agreement. In February 2012, we entered into an advisory agreement with a third party advisor for a period of one year, pursuant to which the advisor agreed toprovide investor relations services for share based compensation as follows: 25,000 shares of our common stock will be issued in six installments over theengagement period, commencing as of February 15, 2012, and a warrant to purchase 62,500 shares of our common stock. The warrant has a term of five yearsand an exercise price of $6.00 per share and vests in 12 monthly installments over the first year of the agreement. In July 2012, we and the advisor enteredinto an amendment to the agreement, according to which the original agreement was extended until July 3, 2013 (unless terminated earlier by one of theparties), and a new payment and vesting schedule was determined as of such date for the remaining share based compensation and unvested warrant shares,respectively, until the end of the new term of the agreement. As of August 31, 2013, all 25,000 shares of our common stock had been issued to the advisor,and all of the warrant shares had vested. In September 2012, we entered into a Master Services Agreement with Medpace to retain Medpace as a CRO for our upcoming Phase 2 clinical trialfor an oral insulin capsule that is expected to start in the first calendar quarter of 2013 in the United States, and is expected to be completed in December2013. As consideration for its services, we paid Medpace a total amount of approximately $540,480 during the term of the engagement, based on theachievement of certain milestones. In March 2013, due to a request from the FDA, as described below, we instructed Medpace to temporarily cease all work.As a result, Medpace returned all funds in excess of the actual expenses paid for the clinical trial, or $219,867. 7 Out-Licensed Technology In June 2010, Oramed Ltd. entered into a joint venture agreement with D.N.A Biomedical Solutions Ltd., or D.N.A, for the establishment of EnteraBio LTD, or Entera. Under the terms of a license agreement that was entered into between Oramed and Entera in August 2010, we out-licensed technology to Entera, onan exclusive basis, for the development of oral delivery drugs for certain indications to be agreed upon between the parties. The out-licensed technologydiffers from our main delivery technology that is used for oral insulin and GLP-1 analog and is subject to different patent applications. Entera’s initialdevelopment effort is for an oral formulation for the treatment of osteoporosis. The license was royalty-free unless our ownership interest in Entera decreasedto 30% or less of its outstanding share capital, in which case royalties would have been payable with respect to revenues derived from certain indications.Under certain circumstances, Entera may have received ownership of the licensed technology, in which case we would have received a license back on thesame terms. D.N.A initially invested $600,000 in Entera, and Entera was initially owned in equal parts by Oramed and D.N.A. Entera’s Chief Executive Officer,Dr. Phillip Schwartz, was granted options to purchase ordinary shares of Entera, reflecting 9.9% of Entera’s share capital, upon full exercise. In March 2011, we consummated a transaction with D.N.A, whereby we sold to D.N.A 47% of Entera’s outstanding share capital on an undilutedbasis. As consideration for the Entera shares, we received a promissory note issued by D.N.A in the principal amount of $450,000, with an annual interest rateof 0.45%, to be paid within four months after closing, and 8,404,667 ordinary shares of D.N.A, having an aggregate market value of approximately $581,977as of March 31, 2011 ($348,838 as of November 25, 2013). Of the ordinary shares of D.N.A we received, we sold 6,275,991 shares, for which we receivedaggregate sale proceeds of $213,608, and currently hold only 2,128,676 shares. The promissory note was secured by a personal guarantee of the D.N.Amajority shareholders and its term was extended in August 2011. D.N.A paid off the promissory note in November 2011. The ordinary shares of D.N.A wererestricted for six months from the closing. Pursuant to the Israel Securities Law, the ordinary shares of D.N.A that we own are subject to certain additionalrestrictions on sale, which expired on March 31, 2013. Following that date, the market price for D.N.A’s ordinary shares may decline, which could result in aloss to us if we sell such shares at a price below the value on the date we acquired such shares. The ordinary shares of D.N.A have historically experiencedlow trading volume; as a result there is no guarantee that we will be able to resell the ordinary shares of D.N.A at the prevailing market prices. In addition,D.N.A invested $250,000 in our private placement investment round, which closed in March 2011, for which it received 65,105 shares of our common stockand five-year warrants to purchase 22,787 shares of our common stock at an exercise price of $6.00 per share. As part of the transaction with D.N.A, we entered into a patent transfer agreement (to replace the original license agreement upon closing) pursuantto which Oramed assigned to Entera all of its right, title and interest in and to the patent application that it had licensed to Entera in August 2010. Under thisagreement, Oramed Ltd. is entitled to receive from Entera royalties of 3% of Entera’s net revenues (as defined in the agreement) and a license back of thatpatent application for use in respect of diabetes and influenza. In March 2011, Oramed Ltd., Entera and D.N.A terminated the joint venture agreement entered into in June 2010 in connection with the formation ofEntera. 8 In September 2011, Entera reported successful Phase 1 clinical trial results. We believe the Phase 1 data supports the continued development ofEntera’s oral osteoporosis drug. The Phase 1 clinical trial consisted of twelve healthy patients and was conducted at the Hadassah Medical Center inJerusalem. No adverse events were reported. Government Regulation The Drug Development Process Regulatory requirements for the approval of new drugs vary from one country to another. In order to obtain approval to market our drug portfolio, weneed to go through a different regulatory process in each country in which we apply for such approval. In some cases information gathered during theapproval process in one country can be used as supporting information for the approval process in another country. As a strategic decision, we decided to firstexplore the FDA regulatory pathway. The following is a summary of the FDA’s requirements. The FDA requires that pharmaceutical and certain other therapeutic products undergo significant clinical experimentation and clinical testing priorto their marketing or introduction to the general public. Clinical testing, known as clinical trials or clinical studies, is either conducted internally by lifescience, pharmaceutical, or biotechnology companies or is conducted on behalf of these companies by contract research organizations, or CROs. The process of conducting clinical studies is highly regulated by the FDA, as well as by other governmental and professional bodies. Below wedescribe the principal framework in which clinical studies are conducted, as well as describe a number of the parties involved in these studies. Protocols. Before commencing human clinical studies, the sponsor of a new drug or therapeutic product must submit an IND application to the FDA.The application contains, among other documents, what is known in the industry as a protocol. A protocol is the blueprint for each drug study. The protocolsets forth, among other things, the following: · Who must be recruited as qualified participants,· How often to administer the drug or product, · What tests to perform on the participants, and · What dosage of the drug or amount of the product to give to the participants. Institutional Review Board. An institutional review board is an independent committee of professionals and lay persons which reviews clinicalresearch studies involving human beings and is required to adhere to guidelines issued by the FDA. The institutional review board does not report to theFDA, but its records are audited by the FDA. Its members are not appointed by the FDA. All clinical studies must be approved by an institutional reviewboard. The institutional review board’s role is to protect the rights of the participants in the clinical studies. It approves the protocols to be used, theadvertisements which the company or CRO conducting the study proposes to use to recruit participants, and the form of consent which the participants willbe required to sign prior to their participation in the clinical studies. Clinical Trials. Human clinical studies or testing of a potential product are generally done in three stages known as Phase 1 through Phase 3testing. The names of the phases are derived from the regulations of the FDA. Generally, there are multiple studies conducted in each phase. 9 Phase 1. Phase 1 studies involve testing a drug or product on a limited number of healthy or patients participants, typically 24 to 100 people at atime. Phase 1 studies determine a product’s basic safety and how the product is absorbed by, and eliminated from, the body. This phase lasts an average of sixmonths to a year. Phase 2. Phase 2 trials involve testing of no more than 300 hundred participants at a time who may suffer from the targeted disease or condition.Phase 2 testing typically lasts an average of one to two years. In Phase 2, the drug is tested to determine its safety and effectiveness for treating a specificillness or condition. Phase 2 testing also involves determining acceptable dosage levels of the drug. Phase 2 studies may be split into Phase 2a and Phase 2bsub-studies. Phase 2a studies may be conducted with patient volunteers and are exploratory (non-pivotal) studies, typically designed to evaluate clinicalefficacy or biological activity. Phase 2b studies are conducted with patients defined to evaluate definite dose range and evaluate efficacy. If Phase 2 studiesshow that a new drug has an acceptable range of safety risks and probable effectiveness, a company will generally continue to review the substance in Phase 3studies. Phase 3. Phase 3 studies involve testing large numbers of participants, typically several hundred to several thousand persons. The purpose is toverify effectiveness and long-term safety on a large scale. These studies generally last two to three years. Phase 3 studies are conducted at multiple locationsor sites. Like the other phases, Phase 3 requires the site to keep detailed records of data collected and procedures performed. New Drug Approval. The results of the clinical trials are submitted to the FDA as part of a new drug application, or NDA. Following the completionof Phase 3 studies, assuming the sponsor of a potential product in the United States believes it has sufficient information to support the safety andeffectiveness of its product, the sponsor will generally submit an NDA to the FDA requesting that the product be approved for marketing. The application is acomprehensive, multi-volume filing that includes the results of all clinical studies, information about the drug’s composition, and the sponsor’s plans forproducing, packaging and labeling the product. The FDA’s review of an application can take a few months to many years, with the average review lasting 18months. Once approved, drugs and other products may be marketed in the United States, subject to any conditions imposed by the FDA. Phase 4. The FDA may require that the sponsor conduct additional clinical trials following new drug approval. The purpose of these trials, known asPhase 4 studies, is to monitor long-term risks and benefits, study different dosage levels or evaluate safety and effectiveness. In recent years, the FDA hasincreased its reliance on these trials. Phase 4 studies usually involve thousands of participants. Phase 4 studies also may be initiated by the companysponsoring the new drug to gain broader market value for an approved drug. The drug approval process is time-consuming, involves substantial expenditures of resources, and depends upon a number of factors, including theseverity of the illness in question, the availability of alternative treatments, and the risks and benefits demonstrated in the clinical trials. Other Regulations Various federal, state and local laws, regulations, and recommendations relating to safe working conditions, laboratory practices, the experimentaluse of animals, the environment and the purchase, storage, movement, import, export, use, and disposal of hazardous or potentially hazardous substances,including radioactive compounds and infectious disease agents, used in connection with our research are applicable to our activities. They include, amongothers, the U.S. Atomic Energy Act, the Clean Air Act, the Clean Water Act, the Occupational Safety and Health Act, the National Environmental Policy Act,the Toxic Substances Control Act, and Resources Conservation and Recovery Act, national restrictions on technology transfer, import, export, and customsregulations, and other present and possible future local, state, or federal regulation. The compliance with these and other laws, regulations andrecommendations can be time-consuming and involve substantial costs. In addition, the extent of governmental regulation which might result from futurelegislation or administrative action cannot be accurately predicted and may have a material adverse effect on our business, financial condition, results ofoperations and prospects. 10 Competition Competition in General Competition in the area of biomedical and pharmaceutical research and development is intense and significantly depends on scientific andtechnological factors. These factors include the availability of patent and other protection for technology and products, the ability to commercializetechnological developments and the ability to obtain governmental approval for testing, manufacturing and marketing. Our competitors include majorpharmaceutical, medical products, chemical and specialized biotechnology companies, many of which have financial, technical and marketing resourcessignificantly greater than ours. In addition, many biotechnology companies have formed collaborations with large, established companies to supportresearch, development and commercialization of products that may be competitive with ours. Academic institutions, governmental agencies and other publicand private research organizations are also conducting research activities and seeking patent protection and may commercialize products on their own orthrough joint ventures. We are aware of certain other products manufactured or under development by competitors that are used for the treatment of thediseases and health conditions that we have targeted for product development. We can provide no assurance that developments by others will not render ourtechnology obsolete or noncompetitive, that we will be able to keep pace with new technological developments or that our technology will be able tosupplant established products and methodologies in the therapeutic areas that are targeted by us. The foregoing factors could have a material adverse effecton our business, prospects, financial condition and results of operations. These companies, as well as academic institutions, governmental agencies andprivate research organizations, also compete with us in recruiting and retaining highly qualified scientific personnel and consultants. Competition within our sector is increasing, so we will encounter competition from existing firms that offer competitive solutions in diabetestreatment solutions. These competitive companies could develop products that are superior to, or have greater market acceptance, than the products beingdeveloped by us. We will have to compete against other biotechnology and pharmaceutical companies with greater market recognition and greater financial,marketing and other resources. Our competition will be determined in part by the potential indications for which our technology is developed and ultimately approved byregulatory authorities. In addition, the first product to reach the market in a therapeutic or preventive area is often at a significant competitive advantagerelative to later entrants to the market. Accordingly, the relative speed with which we, or our potential corporate partners, can develop products, complete theclinical trials and approval processes and supply commercial quantities of the products to the market are expected to be important competitive factors. Ourcompetitive position will also depend on our ability to attract and retain qualified scientific and other personnel, develop effective proprietary products,develop and implement production and marketing plans, obtain and maintain patent protection and secure adequate capital resources. We expect ourtechnology, if approved for sale, to compete primarily on the basis of product efficacy, safety, patient convenience, reliability, value and patent position. 11 Competition for Our Oral Insulin Capsule We anticipate the oral insulin capsule to be a competitive diabetes drug because of its anticipated efficacy and safety profile. The following aretreatment options for type 1 and type 2 diabetic patients: · Insulin injections, · Insulin pumps, · Insulin inhalers, or · A combination of diet, exercise and oral medication which improve the body’s response to insulin or cause the body to producemore insulin. Several entities who are developing oral insulin capsules and other alternative oral insulin as well as the development stage are thought to be: NovoNordisk (Denmark), Biocon Limited (India) and Apollo Life Sciences Pvt. Limited (India). Scientific Advisory Board We maintain a Scientific Advisory Board consisting of internationally recognized scientists who advise us on scientific and technical aspects of ourbusiness. The Scientific Advisory Board meets periodically to review specific projects and to assess the value of new technologies and developments tous. In addition, individual members of the Scientific Advisory Board meet with us periodically to provide advice in their particular areas of expertise. TheScientific Advisory Board consists of the following members, information with respect to whom is set forth below: Professor Avram Hershko, Professor NirBarzilai, Professor Ele Ferrannini, Professor Derek LeRoith, Dr. John Amatruda and one of our directors, Dr. Michael Berelowitz, acting as Chairman. We have entered into an agreement with Dr. Berelowitz pursuant to which we will pay him certain fees as compensation for serving asChairman. See “Item 10. Directors, Executive Officers and Corporate Governance” and “Item 11. Executive Compensation—Director Compensation” forcertain information about Dr. Berelowitz. Professor Avram Hershko, MD, PhD, joined the Oramed Scientific Advisory Board in July 2008. He earned his MD degree (1965) and PhD degree(1969) from the Hebrew University- Hadassah Medical School of Jerusalem. Professor Hershko served as a physician in the Israel Defense Forces from 1965to 1967. After a post-doctoral fellowship with Gordon Tomkins at the University of San Francisco (1969-72), he joined the faculty of the Haifa Technionbecoming a professor in 1980. He is now Distinguished Professor in the Unit of Biochemistry in the B. Rappaport Faculty of Medicine of the Technion.Professor Hershko’s main research interests concern the mechanisms by which cellular proteins are degraded, a formerly neglected field of study. ProfessorHershko and his colleagues showed that cellular proteins are degraded by a highly selective proteolytic system. This system tags proteins for destruction bylinkage to a protein called ubiquitin, which had previously been identified in many tissues, but whose function was previously unknown. Subsequent workby Professor Hershko and many other laboratories has shown that the ubiquitin system has a vital role in controlling a wide range of cellular processes, suchas the regulation of cell division, signal transduction and DNA repair. Professor Hershko was awarded the Nobel Prize in Chemistry (2004) jointly with hisformer PhD student Aaron Ciechanover and their colleague Irwin Rose. His many honors include the Israel Prize for Biochemistry (1994), the Gairdner Award(1999), the Lasker Prize for Basic Medical Research (2000), the Wolf Prize for Medicine (2001) and the Louisa Gross Horwitz Award (2001). ProfessorHershko is a member of the Israel Academy of Sciences (2000) and a Foreign Associate of the U.S. Academy of Sciences (2003). Professor Derek LeRoith, MD, PhD, joined the Oramed Scientific Advisory Board in January 2007. He is currently the Director of Research in theDivision of Endocrinology, Diabetes and Bone Diseases at Mt. Sinai School of Medicine in New York, and Director of the Diabetes and Metabolism ClinicalResearch Center of Excellence Clinical Research Institute at Rambam (LHCRIR) Rambam- Health Care Campus. ProfessorLeRoith has worked at theNational Institute of Health, or NIH, since 1979 in the field of Endocrinology and Diabetes and rose to be Chief of Diabetes Branch at the MDNIH inBethesda, Maryland, a position he held until 2005. His main interests have focused on the role of insulin and the insulin-like growth factors, or IGFs, innormal physiology and disease states. In these areas he has published over 600 peer-reviewed articles and reviews in high profile journals. He is also thesenior editor of a textbook on diabetes, now in its third edition, and has edited books on IGFs. Professor LeRoith has made major contributions in ourunderstanding of the basic pathophysiology of type 2 diabetes and also the role of the IGFs in various disorders, especially in cancer, and is considered aworldwide expert on these topics. In recognition of his contributions he has received many lecturing positions worldwide and has been the plenary speaker atnumerous national and international symposia. He is the editor of a number of diabetes- and growth factor-related journals, has been on the advisory boardsof a number of companies and co-chairs two national committees involved in the education of endocrinologist and primary care physicians. 12 Professor Ele Ferrannini, MD, PhD, joined the Oramed Scientific Advisory Board in February 2007. He is a past President to the, EuropeanAssociation for the Study of Diabetes, which supports scientists, physicians, laboratory workers, nurses and students from all over the world who areinterested in diabetes and related subjects in Europe, and performs functions similar to that of the ADA in the United States. Professor Ferrannini has workedwith various institutions including the Department of Internal Medicine, University of Pisa School of Medicine, and NRC (National Research Council)Institute of Clinical Physiology, Pisa, Italy; and the Diabetes Division, Department of Medicine, University of Texas Health Science Center at San Antonio,Texas. He has also had extensive training focused on microbiology, immunology, and endocrinology, and specializing in diabetes studies. ProfessorFerrannini has received a Certificate of the Educational Council for Foreign Medical Graduates from the University of Bologna, and with cum laude honorscompleted a subspecialty in Diabetes and Metabolic Diseases at the University of Torino. He has published over 350 original papers and 50 book chaptersand he is a “highly cited researcher,” according to the Institute for Scientific Information, or ISI. ISI provides bibliographic database services and publisheslist of highly cited researchers. Professor Nir Barzilai,MD, joined the Oramed Scientific Advisory Board in January 2007. He is the Director of the Institute for Aging Research atthe Albert Einstein College of Medicine, New York and the Director of the Nathan Shock Center of Excellence for the Biology of Aging and the GlennCenter for the Biology of Human Aging. He is currently an Associate Professor in the Department of Medicine, Molecular Genetics and the Diabetes ResearchCenter and is a member of the Divisions of Endocrinology and Geriatrics. He is also the Director of the Montefiore Hospital Diabetes Clinic, New York. Hisinterests focus on several basic mechanisms in the biology of aging, including the biological effects of nutrients on extending life and the geneticdeterminants of life span. He established several cohorts of families of centenarians and has identified several longevity genes. Professor Barzilai has been therecipient of numerous prestigious awards, including the Beeson Fellow for Aging Research, the Senior Ellison Foundation Award, the Paul Glenn FoundationAward, the NIA- Nathan Shock Award, the 2010 Irving S. Wright Award of Distinction in Aging Research Award and the Rifkin Lectureship for Diabetes. Hehas spent over 20 years assisting patients internationally and training in various fields including Medicine, Geriatrics, Endocrinology and MolecularGenetics. Professor Barzilai has had a strong career in diabetes studies in Israel, London and the United States. He has worked for such esteemed institutionsas Hadassah Research Hospital, NIH, and many esteemed U.S. based university hospitals, including Cornell and Yale. 13 Dr. John Amatruda, MD, joined the Oramed Scientific Advisory Board in February 2010. He graduated from Yale University, received his MDdegree from the Medical College of Wisconsin and did his internship and residency in Internal Medicine and Fellowship in Endocrinology and Metabolismat The Johns Hopkins Hospital. He is board certified in Internal Medicine and Endocrinology and Metabolism. From 1977 to 1992, Dr. Amatruda was at TheUniversity of Rochester School of Medicine, where he was a Professor of Medicine, head of the Clinical Research Center, fully funded as principleinvestigator on two NIH grants, and acting Head of the Endocrine Metabolism Unit. In 1992 Dr. Amatruda left the University of Rochester to start and run adrug discovery group at Bayer Corp. where he served as Vice President and Therapeutic Area Research Head, as well as a Professor of Medicine Adjunct atYale University School of Medicine. He assisted in the approval of Acarbose, an anti-diabetic drug distributed by Bayer AG used to treat type 2 diabetes, andhis group put several compounds into clinical development including the first glucagon receptor antagonist. From 2002 to 2009, Dr. Amatruda held variouspositions at Merck & Co. Inc., including Vice President and Therapeutic Area Head for Metabolism and Atherosclerosis and acting Therapeutic Area head forCardiovascular. These groups filed NDAs for the drugs Vytorin, Januvia and Janumet. Most recently Dr. Amatruda was Senior Vice President and FranchiseHead for Diabetes and Obesity and a member of the Research Management Committee at Merck. Dr. Amatruda is an author of over 150 papers, abstracts,reviews and book chapters, primarily in the areas of insulin action in vitro systems and in clinical diabetes and obesity. He is currently a consultant and anAdjunct Professor of Medicine at Columbia University. Employees We have been successful in retaining experienced personnel involved in our research and development program. In addition, we believe we havesuccessfully recruited the clinical/regulatory, quality assurance and other personnel needed to advance through clinical studies or have engaged the servicesof experts in the field for these requirements. As of August 31, 2013, we have contracted with ten individuals for employment or consulting arrangements. Ofour staff, four are senior management, three are engaged in research and development work, and the remaining three are involved in administration work. 14 ITEM 1A. RISK FACTORS. An investment in our securities involves a high degree of risk. You should consider carefully the following information about these risks,together with the other information contained in this Annual Report on Form 10-K before making an investment decision. Our business, prospects,financial condition, and results of operations may be materially and adversely affected as a result of any of the following risks. The value of oursecurities could decline as a result of any of these risks. You could lose all or part of your investment in our securities. Some of the statements in “Item1A. Risk Factors” are forward-looking statements. The following risk factors are not the only risk factors facing our Company. Additional risks anduncertainties not presently known to us or that we currently deem immaterial may also affect our business, prospects, financial condition and resultsof operations. Risks Related to Our Business We continue and expect to incur losses in the future. Successful completion of our development programs and our transition to normal operations are dependent upon obtaining necessary regulatoryapprovals from the FDA prior to selling our products within the United States, and foreign regulatory approvals must be obtained to sell our productsinternationally. There can be no assurance that we will receive regulatory approval of any of our product candidates, and a substantial amount of time maypass before we achieve a level of revenues adequate to support our operations, if at all. We also expect to incur substantial expenditures in connection withthe regulatory approval process for each of our product candidates during their respective developmental periods. Obtaining marketing approval will bedirectly dependent on our ability to implement the necessary regulatory steps required to obtain marketing approval in the United States and in othercountries. We cannot predict the outcome of these activities. Based on our current cash resources and commitments, we believe we will be able to maintain our current planned development activities and thecorresponding level of expenditures for at least the next 12 months and beyond, although no assurance can be given that we will not need additional fundsprior to such time. If there are unexpected increases in our operating expenses, we may need to seek additional financing during the next 12 months. See“Item 1A. Risk Factors—We will need substantial additional capital in order to satisfy our business objectives.” We will need substantial additional capital in order to satisfy our business objectives. To date, we have financed our operations principally through offerings of securities exempt from the registration requirements of the Securities Actof 1933, as amended, or the Securities Act. We believe that our available resources and cash flow will be sufficient to meet our anticipated working capitalneeds for at least the next 12 months from the date of this Annual Report on Form 10-K. We will require substantial additional financing at various intervalsin order to continue our research and development programs, including significant requirements for operating expenses including intellectual propertyprotection and enforcement, for pursuit of regulatory approvals, and for commercialization of our products. We can provide no assurance that additionalfunding will be available on a timely basis, on terms acceptable to us, or at all. In the event that we are unable to obtain such financing, we will not be able tofully develop and commercialize our technology. Our future capital requirements will depend upon many factors, including: · Continued scientific progress in our research and development programs,· Costs and timing of conducting clinical trials and seeking regulatory approvals and patent prosecutions, 15 · Competing technological and market developments,· Our ability to establish additional collaborative relationships, and· Effects of commercialization activities and facility expansions if and as required.If we cannot secure adequate financing when needed, we may be required to delay, scale back or eliminate one or more of our research and developmentprograms or to enter into license or other arrangements with third parties to commercialize products or technologies that we would otherwise seek to developourselves and commercialize ourselves. In such event, our business, prospects, financial condition, and results of operations may be adversely affected as wemay be required to scale-back, eliminate, or delay development efforts or product introductions or enter into royalty, sales or other agreements with thirdparties in order to commercialize our products.We are a development stage company with a history of losses and can provide no assurance as to our future operating results. We are a development stage company with no revenues from our research and development activities. Consequently, we have incurred netlosses and negative cash flows since inception. We currently have no product revenues, and may not succeed in developing or commercializing anyproducts which could generate product or licensing revenues. We do not expect to have any products on the market for several years. In addition,development of our product candidates requires a process of pre-clinical and clinical testing, during which our products could fail. We may not be ableto enter into agreements with one or more companies experienced in the manufacturing and marketing of therapeutic drugs and, to the extent that we areunable to do so, we will not be able to market our product candidates. Eventual profitability will depend on our success in developing, manufacturing,and marketing our product candidates. As of August 31, 2013 and August 31, 2012, we had working capital of $8,146,083 and $4,632,051, respectively,and stockholders’ equity of $8,130,775 and $3,778,013, respectively. We have generated no revenues to date. For the period from our inception on April12, 2002 through August 31, 2013, the year ended August 31, 2012 and the year ended August 31, 2013, we incurred net losses of $22,123,589,$3,344,478 and $4,231,812, respectively. We may never achieve profitability and expect to incur net losses in the foreseeable future. See “Item7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We rely upon patents to protect our technology. The patent position of biopharmaceutical and biotechnology firms is generally uncertain and involves complex legal and factual questions. We donot know whether any of our current or future patent applications will result in the issuance of any patents. Even issued patents may be challenged,invalidated or circumvented. Patents may not provide a competitive advantage or afford protection against competitors with similar technology. Competitorsor potential competitors may have filed applications for, or may have received patents and may obtain additional and proprietary rights to compounds orprocesses used by or competitive with ours. In addition, laws of certain foreign countries do not protect intellectual property rights to the same extent as dothe laws of the United States. Patent litigation is becoming widespread in the biopharmaceutical and biotechnology industry and we cannot predict how this will affect our effortsto form strategic alliances, conduct clinical testing or manufacture and market any products under development. If challenged, our patents may not be heldvalid. We could also become involved in interference proceedings in connection with one or more of our patents or patent applications to determine priorityof invention. If we become involved in any litigation, interference or other administrative proceedings, we will likely incur substantial expenses and theefforts of our technical and management personnel will be significantly diverted. In addition, an adverse determination could subject us to significantliabilities or require us to seek licenses that may not be available on favorable terms, if at all. We may be restricted or prevented from manufacturing andselling our products in the event of an adverse determination in a judicial or administrative proceeding or if we fail to obtain necessary licenses. 16 We may be unable to protect our intellectual property rights and we may be liable for infringing the intellectual property rights of others. Our ability to compete effectively will depend on our ability to maintain the proprietary nature of our technologies. We currently hold severalpending patent applications in the United States for our technologies covering oral administration of insulin and other proteins and oral administrationof exenatides and proteins, corresponding patent applications filed in Canada, Europe, Japan, China, Russia, Israel, Brazil, Australia, South Africa, NewZealand, Hong Kong and India and eight patents issued by the Australian, Canadian, Chinese, Israeli, Japanese, New Zealand, South African and Russian(for our technologies covering oral administration of insulin and other proteins) and New Zealand and South African (for our technologies covering oraladministration of insulin and other proteins and oral administration of exenatides) patent offices. Further, we intend to rely on a combination of tradesecrets and non-disclosure and other contractual agreements and technical measures to protect our rights in our technology. We intend to depend uponconfidentiality agreements with our officers, directors, employees, consultants, and subcontractors, as well as collaborative partners, to maintain theproprietary nature of our technology. These measures may not afford us sufficient or complete protection, and others may independently developtechnology similar to ours, otherwise avoid our confidentiality agreements, or produce patents that would materially and adversely affect our business,prospects, financial condition, and results of operations. We believe that our technology is not subject to any infringement actions based upon thepatents of any third parties; however, our technology may in the future be found to infringe upon the rights of others. Others may assert infringementclaims against us, and if we should be found to infringe upon their patents, or otherwise impermissibly utilize their intellectual property, our ability tocontinue to use our technology could be materially restricted or prohibited. If this event occurs, we may be required to obtain licenses from the holdersof this intellectual property, enter into royalty agreements, or redesign our products so as not to utilize this intellectual property, each of which mayprove to be uneconomical or otherwise impossible. Licenses or royalty agreements required in order for us to use this technology may not be availableon terms acceptable to us, or at all. These claims could result in litigation, which could materially adversely affect our business, prospects, financialcondition, and results of operations. Our commercial success will also depend significantly on our ability to operate without infringing the patents and other proprietary rights of thirdparties. Patent applications are, in many cases, maintained in secrecy until patents are issued. The publication of discoveries in the scientific or patentliterature frequently occurs substantially later than the date on which the underlying discoveries were made and patent applications are filed. In the event ofinfringement or violation of another party’s patent, we may be prevented from pursuing product development or commercialization. See “Item 1. Business—Description of Business—Patents and Licenses.” At present, our success depends primarily on the successful commercialization of our oral insulin capsule. The successful commercialization of oral insulin capsule is crucial for our success. At present, our principal product is the oral insulin capsule. Ouroral insulin capsule is in a very early stage of clinical development and faces a variety of risks and uncertainties. Principally, these risks include thefollowing: · Future clinical trial results may show that the oral insulin capsule is not well tolerated by recipients at its effective doses or is notefficacious as compared to placebo, 17 · Future clinical trial results may be inconsistent with previous preliminary testing results and data from our earlier studies may beinconsistent with clinical data, · Even if our oral insulin capsule is shown to be safe and effective for its intended purposes, we may face significant or unforeseendifficulties in obtaining or manufacturing sufficient quantities or at reasonable prices, · Our ability to complete the development and commercialization of the oral insulin capsule for our intended use is significantlydependent upon our ability to obtain and maintain experienced and committed partners to assist us with obtaining clinical and regulatory approvals for, andthe manufacturing, marketing and distribution of, the oral insulin capsule on a worldwide basis, · Even if our oral insulin capsule is successfully developed, commercially produced and receives all necessary regulatory approvals,there is no guarantee that there will be market acceptance of our product, and · Our competitors may develop therapeutics or other treatments which are superior or less costly than our own with the result thatour products, even if they are successfully developed, manufactured and approved, may not generate significant revenues. If we are unsuccessful in dealing with any of these risks, or if we are unable to successfully commercialize our oral insulin capsule for some otherreason, it would likely seriously harm our business. We have limited experience in conducting clinical trials. Clinical trials must meet FDA and foreign regulatory requirements. We have limited experience in designing, conducting and managing the preclinicalstudies and clinical trials necessary to obtain regulatory approval for our product candidates in any country. We have entered into agreements withHadasit.- to assist us in designing, conducting and managing our various clinical trials in Israel, as more fully described in “Item 1. Business—Description ofBusiness—Partnerships and Collaborative Agreements,” and will similarly use consultants for our various clinical trials in the United States. Any failure ofHadasit or any other consultant to fulfill their obligations could result in significant additional costs as well as delays in designing, consulting andcompleting clinical trials on our products. Our clinical trials may encounter delays, suspensions or other problems. We may encounter problems in clinical trials that may cause us or the FDA or foreign regulatory agencies to delay, suspend or terminate our clinicaltrials at any phase. These problems could include the possibility that we may not be able to conduct clinical trials at our preferred sites, enroll a sufficientnumber of patients for our clinical trials at one or more sites or begin or successfully complete clinical trials in a timely fashion, if at all. Furthermore, we, theFDA or foreign regulatory agencies may suspend clinical trials at any time if we or they believe the subjects participating in the trials are being exposed tounacceptable health risks or if we or they find deficiencies in the clinical trial process or conduct of the investigation. If clinical trials of any of the productcandidates fail, we will not be able to market the product candidate which is the subject of the failed clinical trials. The FDA and foreign regulatory agenciescould also require additional clinical trials, which would result in increased costs and significant development delays. Our failure to adequately demonstratethe safety and effectiveness of a pharmaceutical product candidate under development could delay or prevent regulatory approval of the product candidateand could have a material adverse effect on our business, prospects, financial condition, and results of operations. 18 We can provide no assurance that our products will obtain regulatory approval or that the results of clinical studies will be favorable. The testing, marketing and manufacturing of any of our products will require the approval of the FDA or regulatory agencies of other countries. Wehave completed certain non-FDA clinical trials and pre-clinical trials for our products but have yet to conduct any FDA approved trials. We filed an INDapplication with the FDA in December 2012 to conduct an FDA approved Phase 2 study on our oral insulin capsule. We have been communicating with theFDA regarding such Phase 2b IND application, and, according to the FDA’s request, are conducting a Phase 2a sub study before we may proceed with thePhase 2b clinical trial. We cannot predict with any certainty the amount of time necessary to obtain regulatory approvals, including from the FDA or other foreignregulatory authorities, and whether any such approvals will ultimately be granted. In any event, review and approval by the regulatory bodies is anticipatedto take a number of years. Preclinical and clinical trials may reveal that one or more of our products are ineffective or unsafe, in which event furtherdevelopment of such products could be seriously delayed or terminated. Moreover, obtaining approval for certain products may require the testing on humansubjects of substances whose effects on humans are not fully understood or documented. Delays in obtaining necessary regulatory approvals of any proposedproduct and failure to receive such approvals would have an adverse effect on the product’s potential commercial success and on our business, prospects,financial condition, and results of operations. In addition, it is possible that a product may be found to be ineffective or unsafe due to conditions or factswhich arise after development has been completed and regulatory approvals have been obtained. In this event we may be required to withdraw such productfrom the market. See “Item 1. Business—Description of Business—Government Regulation.” We are dependent upon third party suppliers of our raw materials. We are dependent on outside vendors for our entire supply of the oral insulin capsule and do not currently have any long-term agreements in placefor the supply of oral insulin capsules. While we believe that there are numerous sources of supply available, if the third party suppliers were to ceaseproduction or otherwise fail to supply us with quality raw materials in sufficient quantities on a timely basis and we were unable to contract on acceptableterms for these services with alternative suppliers, our ability to produce our products and to conduct testing and clinical trials would be materially adverselyaffected. We are highly dependent upon our ability to enter into agreements with collaborative partners to develop, commercialize, and market ourproducts. Our long-term strategy is to ultimately seek a strategic commercial partner, or partners, such as large pharmaceutical companies, with extensiveexperience in the development, commercialization, and marketing of insulin applications and/or other orally digestible drugs. We anticipate such partner orpartners would be responsible for, or substantially support, late stage clinical trials (Phase 3) and sales and marketing of our oral insulin capsule and otherproducts. Such planned strategic partnership, or partnerships, may provide a marketing and sales infrastructure for our products as well as financial andoperational support for global clinical trials, post marketing studies, label expansions and other regulatory requirements concerning future clinicaldevelopment in the United States and elsewhere. While our strategy is to partner with an appropriate party, no assurance can be given that any third party would be interested in partnering withus. We currently lack the resources to manufacture any of our product candidates on a large scale and we have no sales, marketing or distributioncapabilities. In the event we are not able to enter into a collaborative agreement with a partner or partners, on commercially reasonable terms, or at all, wemay be unable to commercialize our products, which would have a material adverse effect upon our business, prospects, financial condition, and results ofoperations. 19 The biotechnology and biopharmaceutical industries are characterized by rapid technological developments and a high degree ofcompetition. We may be unable to compete with more substantial enterprises. The biotechnology and biopharmaceutical industries are characterized by rapid technological developments and a high degree of competition. As aresult, our products could become obsolete before we recoup any portion of our related research and development and commercialization expenses. Theseindustries are highly competitive, and this competition comes both from biotechnology firms and from major pharmaceutical and chemicalcompanies. Many of these companies have substantially greater financial, marketing, and human resources than we do (including, in some cases,substantially greater experience in clinical testing, manufacturing, and marketing of pharmaceutical products). We also experience competition in thedevelopment of our products from universities and other research institutions and compete with others in acquiring technology from such universities andinstitutions. In addition, certain of our products may be subject to competition from products developed using other technologies. See “Item 1. Business—Description of Business—Competition.” We have limited senior management resources and may be required to obtain more resources to manage our growth. We expect the expansion of our business to place a significant strain on our limited managerial, operational, and financial resources. We will berequired to expand our operational and financial systems significantly and to expand, train, and manage our work force in order to manage the expansion ofour operations. Our failure to fully integrate our new employees into our operations could have a material adverse effect on our business, prospects, financialcondition, and results of operations. Our ability to attract and retain highly skilled personnel is critical to our operations and expansion. We face competitionfor these types of personnel from other technology companies and more established organizations, many of which have significantly larger operations andgreater financial, technical, human, and other resources than we have. We may not be successful in attracting and retaining qualified personnel on a timelybasis, on competitive terms, or at all. If we are not successful in attracting and retaining these personnel, our business, prospects, financial condition, andresults of operations will be materially adversely affected. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results ofOperations,” “Item 1. Business—Description of Business—Strategy” and “—Employees.” We depend upon our senior management and skilled personnel and their loss or unavailability could put us at a competitive disadvantage. We currently depend upon the efforts and abilities of our senior executives, as well as the services of several key consultants and other keypersonnel, including Dr. Miriam Kidron, our Chief Medical and Technology Officer. The loss or unavailability of the services of any of these individuals forany significant period of time could have a material adverse effect on our business, prospects, financial condition, and results of operations. We do notmaintain “key man” life insurance policies for any of our senior executives. In addition, recruiting and retaining qualified scientific personnel to performfuture research and development work will be critical to our success. There is currently a shortage of employees with expertise in developing, manufacturingand commercialization of products and related clinical and regulatory affairs, and this shortage is likely to continue. Competition for skilled personnel isintense and turnover rates are high. Our ability to attract and retain qualified personnel may be limited. Our inability to attract and retain qualified skilledpersonnel would have a material adverse effect on our business, prospects, financial condition, and results of operations. 20 Fulfilling our obligations incident to being a public company will be expensive and time consuming. As a public company, the Sarbanes-Oxley Act of 2002, Dodd-Frank Act, and the related rules and regulations of the Securities and ExchangeCommission, or the SEC, require us to maintain certain corporate governance practices and adhere to a variety of reporting requirements and complexaccounting rules. Compliance with these public company obligations increases our legal and financial compliance costs and place significant additionaldemands on our finance and accounting staff and on our financial, accounting and information systems. Healthcare policy changes, including pending legislation recently adopted and further proposals still pending to reform the U.S. healthcaresystem, may harm our future business. Healthcare costs have risen significantly over the past decade. There have been and continue to be proposals by legislators, regulators and third-party payors to keep these costs down. Certain proposals, if passed, would impose limitations on the prices we will be able to charge for the products that weare developing, or the amounts of reimbursement available for these products from governmental agencies or third-party payors. These limitations could inturn reduce the amount of revenues that we will be able to generate in the future from sales of our products and licenses of our technology. In March 2010, the U.S. Congress enacted and President Obama signed into law healthcare reform legislation that may significantly impact thepharmaceutical industry. In addition to requiring most individuals to have health insurance and establishing new regulations on health plans, this legislationwill require discounts under the Medicare drug benefit program and increased rebates on drugs covered by Medicaid. In addition, the legislation imposes anannual fee, which will increase annually, on sales by branded pharmaceutical manufacturers starting in 2011. The financial impact of these discounts,increased rebates and fees and the other provisions of the legislation on our business is unclear and there can be no assurance that our business will not bematerially adversely affected. In addition, these and other ongoing initiatives in the United States have increased and will continue to increase pressure ondrug pricing. The announcement or adoption of any such initiative could have an adverse effect on potential revenues from any product that we maysuccessfully develop. Various healthcare reform proposals have also emerged at the state level. We cannot predict what healthcare initiatives, if any, will be implementedat the federal or state level, or the effect any future legislation or regulation will have on us. However, an expansion in government’s role in the U.S.healthcare industry may lower the future revenues for the products we are developing and adversely affect our future business, possibly materially. 21 Risks Related to our Common Stock As the market price of our common stock may fluctuate significantly, this may make it difficult for you to sell your shares of common stockwhen you want or at prices you find attractive. The price of our common stock is currently listed on The Nasdaq Capital Market, or Nasdaq, and constantly changes. In recent years, the stockmarket in general has experienced extreme price and volume fluctuations. We expect that the market price of our common stock will continue to fluctuate.These fluctuations may result from a variety of factors, many of which are beyond our control. These factors include: · Clinical trial results and the timing of the release of such results, · The amount of cash resources and our ability to obtain additional funding, · Announcements of research activities, business developments, technological innovations or new products by us or our competitors, · Entering into or terminating strategic relationships, · Changes in government regulation, · Departure of key personnel, · Disputes concerning patents or proprietary rights, · Changes in expense level, · Future sales of our equity or equity-related securities, · Public concern regarding the safety, efficacy or other aspects of the products or methodologies being developed, · Activities of various interest groups or organizations, · Media coverage, and · Status of the investment markets. Future sales of common stock or the issuance of securities senior to our common stock or convertible into, or exchangeable or exercisable for,our common stock could materially adversely affect the trading price of our common stock, and our ability to raise funds in new equity offerings. Future sales of substantial amounts of our common stock or other equity-related securities in the public market or privately, or the perception thatsuch sales could occur, could adversely affect prevailing trading prices of our common stock and could impair our ability to raise capital through futureofferings of equity or other equity-related securities. We anticipate that we will need to raise capital though offerings of equity and equity relatedsecurities. We can make no prediction as to the effect, if any, that future sales of shares of our common stock or equity-related securities, or the availability ofshares of common stock for future sale, will have on the trading price of our common stock. 22 Our stockholders may experience significant dilution as a result of any additional financing using our equity securities. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution. Sale of additionalequity securities at prices below certain levels may trigger anti-dilution provisions with respect to certain securities we have previously sold. Future sales of our common stock by our existing stockholders could adversely affect our stock price. The market price of our common stock could decline as a result of sales of a large number of shares of our common stock in the market, or theperception that these sales could occur. These sales also might make it more difficult for us to sell equity securities in the future at a time and at a price thatwe deem appropriate. As of November 25, 2013, we had outstanding 7,947,872 shares of common stock, a large majority of which are freelytradeable. Giving effect to the exercise in full of all of our outstanding warrants and options, including those currently unexercisable, we would haveoutstanding 10,291,844 shares of common stock. Our issuance of warrants and options to investors, employees and consultants may have a negative effect on the trading prices of our commonstock as well as a dilutive effect. We have issued and may continue to issue warrants, options and convertible notes at, above or below the current market price. As of August 31,2013, we had outstanding warrants and options exercisable for 2,343,972 shares of common stock (1,892,142 as of August 31, 2012). In addition to thedilutive effect of a large number of shares and a low exercise price for the warrants and options, there is a potential that a large number of underlying sharesmay be sold in the open market at any given time, which could place downward pressure on the trading of our common stock. Delaware law could discourage a change in control, or an acquisition of us by a third party, even if the acquisition would be favorable to you,and thereby adversely affect existing stockholders. The Delaware General Corporation Law contains provisions that may have the effect of making more difficult or delaying attempts by others toobtain control of our Company, even when these attempts may be in the best interests of stockholders. Delaware law imposes conditions on certain businesscombination transactions with “interested stockholders.” These provisions and others that could be adopted in the future could deter unsolicited takeoversor delay or prevent changes in our control or management, including transactions in which stockholders might otherwise receive a premium for their sharesover then current market prices. These provisions may also limit the ability of stockholders to approve transactions that they may deem to be in their bestinterests. Because we will not pay cash dividends, investors may have to sell shares in order to realize their investment. We have not paid any cash dividends on our common stock and do not intend to pay cash dividends in the foreseeable future. We intend to retainfuture earnings, if any, for reinvestment in the development and expansion of our business. Any credit agreements which we may enter into with institutionallenders or otherwise may restrict our ability to pay dividends. Whether we pay cash dividends in the future will be at the discretion of our Board and will bedependent upon our financial condition, results of operations, capital requirements, and any other factors that our Board decides is relevant. See “Item5. Market Price for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.” 23 Because certain of our stockholders control a significant number of shares of our common stock, they may have effective control over actionsrequiring stockholder approval. As of November 25, 2013, our directors, executive officers and principal affiliated stockholders beneficially own approximately 25.9% of ouroutstanding shares of common stock. As a result, these stockholders, should they act together, may have the ability to control the outcome of matterssubmitted to our stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets. Inaddition, these stockholders, should they act together, may have the ability to control the management and affairs of our Company. Accordingly, thisconcentration of ownership might harm the market price of our common stock by: · Delaying, deferring or preventing a change in corporate control, · Impeding a merger, consolidation, takeover or other business combination involving us, or · Discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us. Risks Related to Conducting Business in Israel We are affected by the political, economic, and military risks of locating our principal operations in Israel. Our operations are located in the State of Israel, and we are directly affected by political, economic, and security conditions in that country. Sincethe establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its Arab neighbors and a state of hostility,varying in degree and intensity, has led to security and economic problems for Israel. Since October 2000, there has been a high level of violence betweenIsrael and the Palestinians. In addition, acts of terrorism, armed conflicts or political instability in the region could negatively affect local business conditionsand harm our results of operations. We cannot predict the effect on the region of any diplomatic initiatives or political developments involving Israel or thePalestinians or other countries in the Middle East. Recent political events, including political uprisings, social unrest and regime change, in various countriesin the Middle East and North Africa have weakened the stability of those countries, which could result in extremists coming to power. In addition, Iran hasthreatened to attack Israel and is widely believed to be developing nuclear weapons. Iran is also believed to have a strong influence among extremist groupsin the region, such as Hamas in Gaza and Hezbollah in Lebanon. This situation may potentially escalate in the future to violent events which may affect Israeland us. Our business, prospects, financial condition, and results of operations could be materially adversely affected if major hostilities involving Israelshould occur or if trade between Israel and its current trading partners is interrupted or curtailed. All adult male permanent residents of Israel, unless exempt, may be required to perform military reserve duty annually. Additionally, all suchresidents are subject to being called to active duty at any time under emergency circumstances. Some of our officers, directors, and employees currently areobligated to perform annual military reserve duty. We can provide no assurance that such requirements will not have a material adverse effect on ourbusiness, prospects, financial condition, and results of operations in the future, particularly if emergency circumstances occur. It may be difficult to enforce a U.S. judgment against us or our officers and directors and to assert U.S. securities laws claims in Israel. Almost all of our directors and officers are nationals and/or residents of countries other than the United States. As a result, service of process upon us,our Israeli subsidiary and our directors and officers, may be difficult to obtain within the United States. Furthermore, because the majority of our assets andinvestments, and most of our directors and officers are located outside the United States, it may be difficult for investors to enforce within the United Statesany judgments obtained against us or any such officers or directors. Additionally, it may be difficult to assert U.S. securities law claims in original actionsinstituted in Israel. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws because Israel is not the most appropriate forum inwhich to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to suchclaim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costlyprocess. Certain matters of procedure will also be governed by Israeli law. 24 Subject to specified time limitations and legal procedures, under the rules of private international law currently prevailing in Israel, Israeli courtsmay enforce a U.S. judgment in a civil matter, including a judgment based upon the civil liability provisions of the U.S. securities laws, as well as a monetaryor compensatory judgment in a non-civil matter, provided that the following key conditions are met: ·subject to limited exceptions, the judgment is final and non-appealable; ·the judgment was given by a court competent under the laws of the state in which the court is located and is otherwise enforceable in such state; ·the judgment was rendered by a court competent under the rules of private international law applicable in Israel; ·the laws of the state in which the judgment was given provides for the enforcement of judgments of Israeli courts; ·adequate service of process has been effected and the defendant has had a reasonable opportunity to present his arguments and evidence; ·the judgment and its enforcement are not contrary to the law, public policy, security or sovereignty of the State of Israel; ·the judgment was not obtained by fraud and does not conflict with any other valid judgment in the same matter between the same parties; and ·an action between the same parties in the same matter was not pending in any Israeli court at the time the lawsuit was instituted in the U.S. court. If any of these conditions are not met, Israeli courts will likely not enforce the applicable U.S. judgment. 25 ITEM 1B. UNRESOLVED STAFF COMMENTS. Not applicable. ITEM 2. PROPERTIES. Our principal executive offices are comprised of approximately 168 square meters of leased office space in Givat-Ram, Jerusalem, Israel. Thecurrent lease term is from October 1, 2013 until September 30, 2016. The aggregate annual base rent for this space is currently $18,552 in fiscal year2013 and $24,641 from 2014 onwards, and will be linked to the increase in the Israeli consumer price index. We believe that our existing facilities aresuitable and adequate to meet our current business requirements. In the event that we should require additional or alternative facilities, we believe thatsuch facilities can be obtained on short notice at competitive rates. As security for our obligations under the lease agreement, we have provided a bank guarantee in an amount equal to three monthly leasepayments, valid until November 30, 2016. ITEM 3. LEGAL PROCEEDINGS. From time to time we may become subject to litigation incidental to our business. We are not currently a party to any material legalproceedings. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 26 PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIES. Market Price for our Common Stock On February 11, 2013, our common stock began trading on The Nasdaq Capital Market under the symbol “ORMP.” Until then it was quoted on theOTCQB under the same symbol. The quarterly high and low reported bid prices for our common stock as quoted on the OTCQB or the high and lowsales price on The Nasdaq Capital Market, as applicable, for the periods indicated are as follows: High Low Year Ended August 31, 2012 Three Months Ended November 30, 2011 $5.28 $3.00 Three Months Ended February 29, 2012 $4.56 $3.24 Three Months Ended May 31, 2012 $4.32 $3.24 Three Months Ended August 31, 2012 $4.32 $2.76 Year Ended August 31, 2013 Three Months Ended November 30, 2012 $3.96 $3.12 Three Months Ended February 28, 2013 $9.61 $3.60 Three Months Ended May 31, 2013 $10.68 $6.10 Three Months Ended August 31, 2013 $9.35 $5.00 The foregoing quotations for periods prior to February 11, 2013 were provided by Yahoo! Finance and the quotations reflect inter-dealer prices,without retail mark-up, mark-down or commission and may not represent actual transactions. The last reported sale price per share of common stock as quoted on Nasdaq was $8.31 on November 25, 2013. Holders As of November 25, 2013, there were 7,947,872 shares of our common stock issued and outstanding held of record by approximately 100registered stockholders. We believe that a significant number of stockholders hold their shares of our common stock in brokerage accounts andregistered in the name of stock depositories and are therefore not included in the number of stockholders of record. 27 Dividend Policy We have never paid any cash dividends on our capital stock and do not anticipate paying any cash dividends on our common stock in theforeseeable future. We intend to retain future earnings to fund ongoing operations and future capital requirements of our business. Any futuredetermination to pay cash dividends will be at the discretion of our Board and will be dependent upon our financial condition, results of operations,capital requirements and such other factors as our Board deems relevant. Unregistered Sales of Equity Securities and Use of Proceeds During the fiscal year 2013, we issued 33,709 shares of our common stock, valued at $244,457, in the aggregate, to certain service providers asremuneration for services provided. These issuances and sales were exempt under Section 4(a)(2) of the Securities Act. 28 ITEM 6. SELECTED FINANCIAL DATA. Not applicable. ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion and analysis of our financial conditions and results of operations should be read in conjunction with our accompanyingconsolidated financial statements and notes thereto for the years ended August 31, 2013 and 2012. In addition to our consolidated financial statements, thefollowing discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from thosediscussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in thisAnnual Report on Form 10-K, particularly in “Cautionary Statement Regarding Forward-Looking Statements” and “Item 1A. Risk Factors.” Overview of Operations We are a pharmaceutical company currently engaged in the research and development of innovative pharmaceutical solutions, including an orallyingestible insulin capsule to be used for the treatment of individuals with diabetes, and the use of orally ingestible capsules or pills for delivery of otherpolypeptides. Short Term Business Strategy We plan to conduct further research and development on the technology covered by the patent application “Methods and Composition for OralAdministration of Proteins,” which we acquired from Hadasit in 2006 and which is pending in various foreign jurisdictions, as well as the other patents wehave filed in various foreign jurisdictions since then, as discussed above under “Item 1. Business—Description of Business—Patents and Licenses” and“Item 1A. Risk Factors.” Through our research and development efforts, we are seeking to develop an oral dosage form that will withstand the harsh chemicalenvironment of the stomach and intestines and will be effective in delivering active insulin or other proteins, such as exenatide, for the treatment of diabetes.The enzymes and vehicles that are added to the proteins in the formulation process must not modify the proteins chemically or biologically, and the dosageform must be safe to ingest. We plan to continue to conduct clinical trials to show the effectiveness of our technology. In December 2012, we filed an INDapplication with the FDA to begin a Phase 2 clinical trial of our orally ingested insulin capsule, in order to evaluate the safety, tolerability and efficacy of ouroral insulin capsule on type 2 diabetic volunteers. We have been communicating with the FDA regarding such Phase 2b IND application, and, according tothe FDA’s request, are conducting a Phase 2a sub study before we may proceed with the Phase 2b clinical trial. We expect to begin the Phase 2b clinical trialin the second quarter of 2014. We also began conducting a clinical trial of our orally ingested exenatide in January 2013, and commenced a first humanclinical trial on healthy volunteers with our oral insulin capsule delivered in combination with our oral exenatide capsule. Clinical trials are planned in orderto substantiate our results as well as for purposes of making future filings for drug approval. We also plan to conduct further research and development bydeploying our proprietary drug delivery technology for the delivery of other polypeptides in addition to insulin, and to develop other innovativepharmaceutical products. Long Term Business Strategy If our oral insulin capsule or other drug delivery solutions show significant promise in clinical trials, we plan to ultimately seek a strategiccommercial partner, or partners, with extensive experience in the development, commercialization, and marketing of insulin applications and/or other orallydigestible drugs. We anticipate such partner or partners would be responsible for, or substantially support, late stage clinical trials (Phase 3) to increase thelikelihood of obtaining regulatory approvals and registrations in the appropriate markets in a timely manner. We further anticipate that such partner, orpartners, would also be responsible for sales and marketing of our oral insulin capsule in these markets. Such planned strategic partnership, or partnerships,may provide a marketing and sales infrastructure for our products as well as financial and operational support for global clinical trials, post marketing studies,label expansions and other regulatory requirements concerning future clinical development in the United States and elsewhere. Any future strategic partner,or partners, may also provide capital and expertise that would enable the partnership to develop new oral dosage form for other polypeptides. While ourstrategy is to partner with an appropriate party, no assurance can be given that any third party would be interested in partnering with us. Under certaincircumstances, we may determine to develop one or more of our oral dosage form on our own, either world-wide or in select territories. 29 Other Planned Strategic Activities In addition to developing our own oral dosage form drug portfolio, we are, on an on-going basis, considering in-licensing and other means ofobtaining additional technologies to complement and/or expand our current product portfolio. Our goal is to create a well-balanced product portfolio thatwill enhance and complement our existing drug portfolio. Results of Operations Critical accounting policies Our significant accounting policies are more fully described in the notes to our accompanying consolidated financial statements. We believethat the accounting policies below are critical for one to fully understand and evaluate our financial condition and results of operations. The discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which weprepared in accordance with U.S. generally accepted accounting principles. The preparation of our consolidated financial statements requires us to makeestimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of theconsolidated financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate suchestimates and judgments. We base our estimates on historical experience and on various other factors that we believe are reasonable under thecircumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparentfrom other sources. Actual results may differ from these estimates under different assumptions or conditions. Marketable securities: Consist mainly of equity securities classified as available-for-sale and are recorded at fair value. Until August 26, 2013, thefair value of the restricted securities was measured based on the quoted prices of the otherwise identical unrestricted securities, adjusted for the effect of therestriction by applying a proper discount. The discount was determined with reference to other similar restricted instruments. Similar securities, with norestriction on tradability, are quoted on an active market. As of August 31, 2013, the securities are not restricted and the fair value of the securities ismeasured based on the quoted prices of the securities on an active market. Changes in fair value, net of taxes, are reflected in other comprehensive income. Factors considered in determining whether a loss is temporary include the extent to which fair value has been less than the cost basis, and thefinancial condition and near-term prospects of the investee based on our intent and ability to hold the investment for a period of time sufficient to allow forany anticipated recovery in market value. The loss is recorded as a charge to comprehensive income. 30 Valuation of options and warrants: We grant options to purchase shares of our common stock to employees and consultants and issue warrants inconnection with some of our financings and to certain other consultants. We account for share-based payments in accordance with the guidance that requires awards classified as equity awards be accounted for using thegrant-date fair value method. The fair value of share-based payment transactions is recognized as an expense over the requisite service period, net ofestimated forfeitures. We estimate forfeitures based on historical experience and anticipated future conditions. We elected to recognize compensation cost for an award with only service conditions that has a graded vesting schedule using the acceleratedmethod based on the multiple-option award approach. When stock options are granted as consideration for services provided by consultants and other non-employees, the transaction is accounted forbased on the fair value of the consideration received or the fair value of the stock options issued, whichever is more reliably measurable, pursuant to theguidance. The fair value of the options granted is measured on each reporting date, and the gains (losses) are recorded to earnings over the related serviceperiod using the straight-line method. Valuation of warrants issued as part of capital raisings that are classified as a liability: Warrants that entitle the holder to down-round protection(through ratchet and anti-dilution provisions) are classified as liabilities in the statement of financial position. The liability is measured both initially and insubsequent periods in fair value, with changes in fair value are charged to finance expenses, net. The fair value of the warrants was determined by using Monte Carlo type model based on the risk neutral approach. The model takes as an input theestimated future dates when new capital will be raised, and builds a multi-step dynamic model. The first step is to model the risk neutral distribution of theshare value on the new issue dates, then for each path to use the Black-Scholes model to estimate the value of the warrants on the last issue date including allthe changes in exercise price and quantity along this path. The significant unobservable input used in the fair value measurement is the future expected issuedates. Significant delay in this input would result in a higher fair value measurement. Taxes on income: Deferred taxes are determined utilizing the asset and liability method based on the estimated future tax effects of differencesbetween the financial accounting and tax bases of assets and liabilities under the applicable tax laws. Deferred tax balances are computed using the tax ratesexpected to be in effect when those differences reverse. A valuation allowance in respect of deferred tax assets is provided if, based upon the weight ofavailable evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. We have provided a full valuation allowance withrespect to our deferred tax assets. Regarding our subsidiary, Oramed Ltd., relevant accounting guidance prohibits the recognition of deferred tax liabilities or assets that arisefrom differences between the financial reporting and tax bases of assets and liabilities that are measured from the local currency into dollars usinghistorical exchange rates, and that result from changes in exchange rates or indexing for tax purposes. Consequently, the above-mentioned differenceswere not reflected in the computation of deferred tax assets and liabilities. Uncertainty in income tax: We follow a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluatethe tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will besustained on audit. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimatesettlement. Such liabilities are classified as long-term, unless the liability is expected to be resolved within twelve months from the balance sheet date.Our policy is to include interest and penalties related to unrecognized tax benefits within income tax expenses. 31 Comparison of Fiscal Year 2013 to Fiscal Year 2012 The following table summarizes certain statements of operations data for us for the twelve month periods ended August 31, 2013 and 2012: Year ended Operating Data: August 31,2013 August 31,2012 Research and development expenses, net $2, 2,271,794 $1,680,845 General and administrative expenses 2,032,129 1,203,164 Impairment of available- for-sale securities - 184,254 Financial expenses, net 132,951 185,997 Loss before taxes on income (4,436,874) (3,254,260)Taxes on income (Tax benefit) (205,062) 90,218 Net loss for the period (4,231,812) (3,344,478) Loss per common share – basic and diluted $(0.59) $(0.57)Weighted average common shares outstanding 7,209,283 5,884,595 Research and development expenses Research and development expenses include costs directly attributable to the conduct of research and development programs, including thecost of salaries, payroll taxes, employee benefits, costs of registered patents materials, supplies, the cost of services provided by outside contractors,including services related to our clinical trials, clinical trial expenses, the full cost of manufacturing drug for use in research, preclinical development.All costs associated with research and development are expensed as incurred. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors.We outsource a substantial portion of our clinical trial activities, utilizing external entities such as CROs, independent clinical investigators, and otherthird-party service providers to assist us with the execution of our clinical studies. Clinical activities which relate principally to clinical sites and other administrative functions to manage our clinical trials are performedprimarily by CROs. CROs typically perform most of the start-up activities for our trials, including document preparation, site identification, screeningand preparation, pre-study visits, training, and program management. Clinical trial and pre-clinical trial expenses include regulatory and scientific consultants’ compensation and fees, research expenses, purchaseof materials, cost of manufacturing of the oral insulin capsules, payments for patient recruitment and treatment, costs related to the maintenance of ourregistered patents, costs related to the filings of patent applications, as well as salaries and related expenses of research and development staff. 32 In August 2009, Oramed Ltd. was awarded a government grant amounting to a total net amount of NIS 3.1 million (approximately $813,000),from the Office of the Chief Scientist of the Ministry of Industry, Trade and Labor of Israel, or OCS. This grant was used for research and developmentexpenses for the period of February 2009 to June 2010. The funds were used by us to support further research and development and clinical study of ouroral insulin capsule and oral GLP-1-analog. In December 2010, Oramed Ltd. was awarded a second grant, or the Second Grant, amounting to a total netamount of NIS 2.9 million (approximately $720,000) from the OCS, which was designated for research and development expenses for the period of July2010 to November 2011. As a result of a delay in the research and development plan, as of November 30, 2011, Oramed Ltd. had used only NIS1,473,000 (approximately $365,000) of the Second Grant. In May 2012, Oramed Ltd. was awarded an extension of nine months to use the funds of theSecond Grant until August 2012. In addition, in May 2012, Oramed Ltd. was granted a third grant amounting to a total net amount of NIS 595,000(approximately $148,000) from the OCS, which was designated for research and development expenses for the period of September 2012 to December2012. In May 2013, Oramed Ltd. was awarded a fourth grant, or the Fourth Grant, amounting to a total net amount of NIS 975,000 (approximately$265,000) from the OCS, which was designated for research and development expenses for the period of January 2013 to December 2013. We used thefunds to support further research and development and clinical studies of our oral insulin capsule and oral GLP-1 analog. The three grants are subject torepayment according to the terms determined by the OCS and applicable law. See “—Government grants” below. During the year ended August 31, 2013, research and development expenses totaled $2,271,794, compared to $1,680,845 for the year endedAugust 31, 2012. The increase is mainly attributed to expenses related to the FDA approved Phase 2a and Phase 2b clinical trials as well as to theincrease in stock based compensation costs. The research and development costs include stock based compensation costs, which during the year endedAugust 31, 2013 totaled $346,961, as compared to $98,688 during the year ended August 31, 2012. The increase is mainly attributable to the optionsgranted to employees and directors of the Company in August 2012. Government grants The Government of Israel encourages research and development projects through the OCS, pursuant to the Law for the Encouragement ofIndustrial Research and Development, 1984, as amended, or the R&D Law. Under the R&D Law, a research and development plan that meets specifiedcriteria is eligible for a grant of up to 50% of certain approved research and development expenditures. Each plan must be approved by the OCS. In the years ended August 31, 2013 and 2012, we recognized research and development grants in an amount of $309,155 and $372,959,respectively. As of August 31, 2013, we had no contingent liabilities to the OCS. Under the terms of the grants we received from the OCS, we are obligated to pay royalties of 3% to 3.5% on all revenues derived from the sale ofthe products developed pursuant to the funded plans, including revenues from licensed ancillary services. Pursuant to a proposed amendment to theR&D Law, our royalty rate may be 3% to 6% per annum. Royalties are payable up to 100% of the amount of such grants, or up to 300% as detailedbelow, linked to the U.S. Dollar, plus annual interest at LIBOR. The R&D Law generally requires that a product developed under a program be manufactured in Israel. However, upon notification to theOCS (and provided that the OCS does not object within 30 days), up to 10% of a company’s approved Israeli manufacturing volume, measured on anaggregate basis, may be transferred outside of Israel. In addition, upon the approval of the OCS, a greater portion of the manufacturing volume may beperformed outside of Israel, provided that the grant recipient pays royalties at an increased rate, which may be substantial, and the aggregate repaymentamount is increased up to 300% of the grant, depending on the portion of the total manufacturing volume that is performed outside of Israel. The R&DLaw further permits the OCS, among other things, to approve the transfer of manufacturing rights outside of Israel in exchange for an import of differentmanufacturing into Israel as a substitute, in lieu of the increased royalties. The R&D Law also allows for the approval of grants in cases in which theapplicant declares that part of the manufacturing will be performed outside of Israel or by non-Israeli residents and an OCS research committee isconvinced that doing so is essential for the execution of the program. This declaration will be a significant factor in the determination of the OCS as towhether to approve a program and the amount and other terms of benefits to be granted. For example, an increased royalty rate and repayment amountmight be required in such cases. 33 The R&D Law also provides that know-how developed under an approved research and development program may not be transferred to thirdparties in Israel without the approval of the research committee. Such approval is not required for the sale or export of any products resulting from suchresearch or development. The R&D Law further provides that the know-how developed under an approved research and development program may notbe transferred to any third parties outside Israel absent OCS approval which may be granted under special circumstances such as those noted in thefollowing cases: (a) the grant recipient pays to the OCS a portion of the sale price paid in consideration for such OCS-funded know-how or the price paidin consideration for the sale of the grant recipient itself, as the case may be (according to certain formulas; the portion to be paid in respect of a sale ofthe grant recipient itself changed under the applicable rules that came into effect in November 2012); (b) the grant recipient receives know-how from athird party in exchange for its OCS-funded know-how; or (c) such transfer of OCS-funded know-how arises in connection with certain types ofcooperation in research and development activities. The R&D Law imposes reporting requirements with respect to certain changes in the ownership of a grant recipient. The R&D Law requires thegrant recipient and its controlling shareholders and foreign interested parties to notify the OCS of any change in control of the recipient or a change inthe holdings of the means of control of the recipient that results in a non-Israeli becoming an interested party in the recipient, and requires the newinterested party to undertake to the OCS to comply with the R&D Law. In addition, the rules of the OCS may require additional information orrepresentations in respect of certain such events. For this purpose, “control” is defined as the ability to direct the activities of a company other than anyability arising solely from serving as an officer or director of the company. A person is presumed to have control if such person holds 50% or more of themeans of control of a company. “Means of control” refers to voting rights or the right to appoint directors or the chief executive officer. An “interestedparty” of a company includes a holder of 5% or more of its outstanding share capital or voting rights, its chief executive officer and directors, someonewho has the right to appoint its chief executive officer or at least one director, and a company with respect to which any of the foregoing interestedparties owns 25% or more of the outstanding share capital or voting rights or has the right to appoint 25% or more of the directors. Accordingly, anynon-Israeli who acquires 5% or more of our common stock will be required to notify the OCS that it has become an interested party and to sign anundertaking to comply with the R&D Law. Failure to meet the R&D Law’s requirements may subject us to mandatory repayment of grants received by us (together with interest andpenalties), as well as expose us to criminal proceedings. In addition, the Israeli government may from time to time audit sales of products which it claimsincorporate technology funded through OCS programs which may lead to additional royalties being payable on additional products. 34 Grants from Bio-Jerusalem The Bio-Jerusalem fund was founded by the Jerusalem Development Authority in order to support the biomed industry in Jerusalem. We arecommitted to pay royalties to the Bio-Jerusalem fund on proceeds from future sales at a rate of 4% and up to 100% of the amount of the grants received by theCompany (Israeli CPI linked) in the total aggregate amount of $65,053 as of August 31, 2013. For the year ended August 31, 2013, we received $12,319from the Bio-Jerusalem fund and for the year ended August 31, 2012 there were no grants received from the Bio-Jerusalem fund. As we have not yet realizedany revenues since inception, we have not incurred any royalty liability to the Bio-Jerusalem fund. General and administrative expenses General and administrative expenses include the salaries and related expenses of our management, consulting costs, legal and professional fees,traveling, business development costs, insurance expenses and other general costs. For the year ended August 31, 2013, general and administrative expenses totaled $2,032,129 compared to $1,203,164 for the year endedAugust 31, 2012. The increase in costs incurred related to general and administrative activities during the year ended August 31, 2013, reflects anincrease in stock based compensation costs, arising from options granted to employees and consultants, of $199,788, as well as an increase in legal feesand consulting expenses mainly in connection with our listing on Nasdaq in February 2013. During the year ended August 31, 2013, as part of ourgeneral and administrative expenses, we incurred $372,258 related to stock options granted to employees and consultants, as compared to $172,470during the year ended August 31, 2012. Financial income/expense, net Net financial expense decreased from $185,997 for the year ended August 31, 2012 to $132,951 for the year ended August 31, 2013. The decrease ismainly due to changes in the fair value of warrant liabilities offset by the exchange of the warrant liabilities attributable to warrants held by Regals Fund LP,or Regals, into stockholders' equity on November 29, 2013, as a result of the deletion of the anti-dilution provisions of the warrants (as described below),which resulted in a cost of $296,982 and by a gain on sale of marketable securities of $90,370 in fiscal year 2013. Taxes on Income / Tax benefit Taxes on income for the years ended August 31, 2013 and August 31, 2012, a benefit of $205,062 and tax of $90,218, respectively, are a result ofrecognizing and measuring uncertain tax positions. The decrease in uncertain tax positions as of August 31, 2013, is a result of the expiration of the statute oflimitations with respect to the 2008 tax year of Oramed Ltd. Other comprehensive income A subsequent increase in the fair value of available for sale securities previously written down as impaired for the year ended August 31, 2013 of$130,845 resulted from the increase in fair value of our D.N.A ordinary shares. Reclassification adjustment for gains included in net loss for the year endedAugust 31, 2013 of $90,370, resulted from the sale of 7,000,000 of our D.N.A ordinary shares in February and March 2013. Unrealized gain on available forsale securities for the year ended August 31, 2013 of $262,928, resulted from the increase in fair value of our D.N.A ordinary shares. Impairment of available for sale securities for the year ended August 31, 2012 of $184,254 resulted from the decrease in fair value of our D.N.Aordinary shares. 35 Liquidity and Capital Resources From inception through August 31, 2013, we incurred losses in an aggregate amount of $22,123,589. We have financed our operations throughseveral private placements of our common stock, as well as and a public offering of our common stock in July 2013, raising a total of $20,859,553, net oftransaction costs. We will seek to obtain additional financing through similar sources in the future as needed. As of August 31, 2013, we had $2,272,228of available cash, $5,246,627 of short term bank deposits and $956,376 of marketable securities. Marketable securities are presented at fair value andtheir realization is subject to certain limitations if sold through the market, and we are therefore exposed to market risk. There is no assurance that at thetime of sale of the marketable securities the price per share will be the same or higher, nor that we will be able to sell all of the securities at once giventhe volume of securities we hold. We anticipate that we will require approximately $5.7 million to finance our activities during the 12 months followingAugust 31, 2013. Management is in the process of evaluating various financing alternatives as we will need to finance future research and development activitiesand general and administrative expenses through fund raising in the public or private equity markets. Although there is no assurance that we will besuccessful with those initiatives, management believes that it will be able to secure the necessary financing as a result of ongoing financing discussionswith third party investors and existing stockholders, future public offerings, and additional funding from the OCS. During the year ended August 31, 2013, cash and cash equivalents decreased by $2,158,512 from the $4,430,740 reported as of August 31,2012, which is primarily due to proceeds from the issuance of common stock and the purchase of short term deposits. Operating activities used cash of $3,395,341 in the year ended August 31, 2013 and $2,301,608 in the year ended August 31, 2012. Cash usedfor operating activities in the year ended August 31, 2013 primarily consisted of net loss resulting from research and development and general andadministrative expenses, partially offset by stock based compensation adjustments and exchange of warrants, while cash used by operating activities inthe year ended August 31, 2012 primarily consisted of net loss resulting from research and development and general and administrative expenses. Investing activities used cash of $4,569,521 in the year ended August 31, 2013, as compared to $1,768,898 provided by investing activities inthe year ended August 31, 2012. Cash used for investing activities in the year ended August 31, 2013 consisted primarily of the purchase of short-termbank deposits. In the year ended August 31, 2012, cash provided by investing activities consisted primarily of proceeds from the sale of short termdeposits and proceeds from the sale of our investment in Entera. Financing activities provided cash of $5,824,493 in the year ended August 31, 2013 and $3,488,942 in the year ended August 31, 2012. Cashprovided by financing activities during both periods consisted of proceeds from our issuance of common stock, warrants and options. During fiscal year2013, a total of 10,180 warrants were exercised via a "cashless" manner, resulting in the issuance of 3,787 shares of common stock to our investors. Inaddition 11,262 warrants were exercised for cash and resulted in the issuance of 11,262 shares of common stock to our investors and 8,334 options wereexercised for cash and resulted in the issuance of 8,334 shares of common stock. The cash consideration received for exercise of warrants was $67,572and the cash consideration received for exercise of options was $42,003. During the year ended August 31, 2013, of the $296,836 OCS grants we recognized during such period, we received approximately $326,964from the OCS towards our research and development expenses, as compared to $305,984 received in the year ended August 31, 2012. The amounts thatwere received but not recognized during the year ended August 31, 2013 were recognized in the year ended August 31, 2012. The OCS has supportedour activity in the past three years. 36 During fiscal years 2013 and 2012 we issued a total of 62,793 shares of common stock to various third party vendors for services rendered. Theaggregate value of those shares was approximately $352,317. We also consummated a private placement, in which we sold 1,137,336 “units” at apurchase price of $4.44 per unit, for total consideration of $5,049,710. Each unit consisted of one share of common stock and a five-year warrant topurchase 0.50 of a share of common stock at an exercise price of $6.00 per share. In July 2013, we sold 658,144 shares of common stock, at a price of$7.00 per share, to various investors in a registered direct offering, for aggregate net proceeds of approximately $4,238,889. The placement agents inthis offering received aggregate cash compensation in the amount of approximately $235,000, and approximately $30,000 as reimbursement forunaccountable expenses. Our recent financing activities include the following: · Between August and November 2012, we completed a private placement pursuant to which we sold to the investors an aggregate of1,137,336 “units” at a purchase price of $4.44 per unit for total consideration of $5,049,710. Each unit consisted of one share of our common stock and afive-year warrant to purchase 0.50 of a share of our common stock at an exercise price of $6.00 per share. We paid cash compensation of $84,135. We alsoissued 1,127 shares of our common stock and warrants to purchase 564 shares of our common stock as a finder’s fee to a third party in connection with theprivate placements and issued 12,745 shares of our common stock and warrants to purchase 6,373 shares of our common stock as a finder’s fee to Mr. LeonardSank, one of our directors. Most of the investors in such private placements were granted customary registration rights with respect to resales of shares,including the shares underlying the warrants. Regals Fund participated in such private placements and received certain special rights, including preemptiverights as long as they hold at least 5% of our outstanding common stock. With respect to Regals’ participation in the August 2012 private placement, weundertook to file a registration statement to register their shares and the shares underlying their warrants, by December 27, 2012. Since such registrationstatement was not timely filed, we may be required to pay liquidated damages of $10,000 or, at Regals’ discretion, 27,027 shares of common stock. Theliquidated damages may not exceed, in the aggregate, $100,000. Regals has not notified us that they plan to request such payment, and such damages may bewaived by Regals. ● In October 2012, we entered into a Securities Purchase Agreement with D.N.A, according to which we issued to D.N.A 199,172 sharesof our common stock in consideration for an option to purchase up to 21,637,611 ordinary shares of D.N.A, or the D.N.A Option. We had previously acquired8,404,667 ordinary shares of D.N.A issued in March 2011, as further discussed in “Our Business—Out-Licensed Technology.” In February 2013, we exercisedthe D.N.A Option. In addition, in February and March 2013 we sold a total amount of 7,000,000 of our D.N.A ordinary shares, of which 5,250,000 ordinaryshares were issued to us in March 2011 and 1,750,000 ordinary shares were issued to us in February 2013 upon our exercise of the D.N.A Option. Theordinary shares were sold in private transactions for a total of NIS 840,000 (or approximately $226,670, based on the exchange rate between the NIS and theU.S. dollar, as quoted by the Bank of Israel on the dates of sale), before brokerage fees. In October and November 2013 we also sold in the market total of1,025,991 of our D.N.A ordinary shares, all of which were issued to us in March 2011, for total consideration of NIS 152,453 (or approximately $43,208). Asof November 25, 2013, we own approximately 10.6% of D.N.A’s outstanding ordinary shares. The market price for D.N.A’s ordinary shares may decline,which could result in a loss to us if we sell such shares at a price below the value on the date we acquired such shares. The ordinary shares of D.N.A havehistorically experienced low trading volume; as a result there is no guarantee that we will be able to resell the ordinary shares of D.N.A at the prevailingmarket prices. 37 · In November 2012, we entered into the Agreement with Regals in connection with the Warrants. Pursuant to the Agreement, we andRegals agreed to amend the Warrants to provide that the anti-dilution protection of the Warrants shall be deleted in its entirety. In addition, as to the warrantsissued in August and November 2012, the parties agreed to reduce the exercise price to $3.7656 per share, the current exercise price per share of the warrantsoriginally issued in January 2011. At such time, we also issued to Regals the New Warrant. · In connection with the New Warrant, Nadav Kidron, our President, Chief Executive Officer and a director, in his personal capacity asone of our stockholders, agreed that following the execution and delivery of the Agreement, in the event that an adjustment pursuant to the anti-dilutionprotection of the Warrants (had they not been amended by the Agreement) would have been triggered and the number of shares of our common stock thatRegals would have been able to purchase under the Warrants would have increased by an aggregate number in excess of 137,311 common shares, thenRegals shall have the right to purchase from Mr. Kidron such number of shares of our common stock owned by Mr. Kidron, up to a maximum of 112,690shares of our common stock. This right shall survive until the termination of the Warrants. · In May 2013, a total of 10,180 warrants were exercised via a "cashless" manner, resulting in the issuance of 3,787 shares of commonstock to our investors. · In July 2013, 11,262 warrants and 8,334 options were exercised for cash consideration of $67,572 and $42,003, respectively. · In July 2013, we sold 658,144 shares of common stock, at a price of $7.00 per share, to various investors in a registered direct offering,for aggregate net proceeds of approximately $4,238,889. · In July and August 2013, we issued a total of 33,709 shares of our common stock, valued at $244,457, in the aggregate, to certainservice providers as remuneration for services rendered. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements. Planned Expenditures The estimated expenses referenced herein are in accordance with our business plan. Since our technology is still in the development stage, itcan be expected that there will be changes in some budgetary items. Our planned expenditures for the twelve months beginning September 1, 2013 are asfollows: Category Amount Research and development, net of OCS funds $4,203,000 General and administrative expenses 1,524,000 Financial expenses, net 10,000 Total $5,737,000 As indicated above, in December 2012 and April 2013, we filed IND applications with the FDA for our orally ingested insulin and we areconducting, or planning to conduct, further clinical studies with our exenatide capsule and the combination therapy, respectively, and others. Our ability tocomplete these expected activities is dependent on several major factors including the ability to attract sufficient financing on terms acceptable to us andreceiving additional grants from the OCS. 38 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not applicable. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. See Item 15 of this Annual Report on Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. ITEM 9A. CONTROLS AND PROCEDURES. Disclosure Controls and Procedures Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls andprocedures as of August 31, 2013. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosurecontrols and procedures are effective. Management’s Annual Report on Internal Control over Financial Reporting Our management, under the supervision of our Chief Executive Officer and Chief Financial Officer, is responsible for establishing andmaintaining adequate internal control over our financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the ExchangeAct. The Company’s internal control over financial reporting is defined as a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.Internal control over financial reporting includes policies and procedures that: ·pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and asset dispositions; ·provide reasonable assurance that transactions are recorded as necessary to permit the preparation of our financial statements in accordance withU.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations ofour management and directors; and ·provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of assets that couldhave a material effect on our financial statements. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, weevaluated the effectiveness of our internal control over financial reporting as of August 31, 2013 based on the framework for Internal Control-IntegratedFramework set forth by The Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that the Company’s internal control over financial reporting was effective as of August31, 2013 at a reasonable assurance level. 39 Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the quarter ended August 31, 2013 that havematerially affected, or are reasonable likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION. Not applicable. 40 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. Set forth below is certain information with respect to the individuals who are our directors and executive officers. Name Age Position Nadav Kidron 39 President, Chief Executive Officer and Director Miriam Kidron 73 Chief Medical and Technology Officer and Director Leonard Sank 48 Director Harold Jacob 60 DirectorMichael Berelowitz 69 Director and Chairman of the Scientific Advisory BoardGerald Ostrov 63 DirectorYifat Zommer 39 Chief Financial Officer, Treasurer and Secretary Joshua Hexter 43 Chief Operating Officer and VP Business Development Dr. Miriam Kidron is Mr. Nadav Kidron’s mother. There are no other directors or officers of our Company who are related by blood or marriage. Business Experience The following is a brief account of the education and business experience during at least the past five years of each director and our onlyexecutive officer who is not a director, indicating the principal occupation during that period, and the name and principal business of the organization inwhich such occupation and employment were carried out. Mr. Nadav Kidron was appointed President, Chief Executive Officer and director in March 2006. He is also a director of Entera (of which theCompany owns 3% of the outstanding shares). In 2009, he was a fellow at the Merage Foundation for U.S.-Israel Trade Programs for executives in the lifesciences field. From 2003 to 2006, he was the managing director of the Institute of Advanced Jewish Studies at Bar Ilan University. From 2001 to 2003, hewas a legal intern at Wine, Mishaiker & Ernstoff Law Offices in Jerusalem, Israel. Mr. Kidron holds an LL.B. and an International MBA from Bar IlanUniversity, Israel, and is a member of the Israel Bar Association.We believe that Mr. Kidron’s qualifications to serve on our Board include his familiarity with the Company as its founder, his experience in capitalmarkets, as well as his knowledge and familiarity with corporate management.Dr. Miriam Kidron was appointed Chief Medical and Technology Officer and director in March 2006. Dr. Kidron is a pharmacologist and abiochemist with a Ph.D. in biochemistry. From 1990 to 2007, Dr. Kidron was a senior researcher in the Diabetes Unit at Hadassah University Hospital inJerusalem, Israel. During 2003 and 2004, Dr. Kidron served as a consultant to Emisphere Technologies Inc., a company that specializes in developingbroad-based proprietary drug delivery platforms. Dr. Kidron was formerly a visiting professor at the Medical School at the University of Toronto(Canada), and is a member of the American, European and Israeli Diabetes Associations. Dr. Kidron is a recipient of the Bern Schlanger Award. 41 We believe that Dr. Kidron’s qualifications to serve on our Board include her expertise in the Company’s technology, as it is based on herresearch, as well as her experience and relevant education in the fields of pharmacology and diabetes. Mr. Leonard Sank was appointed a director in October 2007. Mr. Sank is a South African entrepreneur and businessman, who is devoted toentrepreneurial endeavors and initiatives. He has over 20 years of experience playing important leadership roles in developing businesses. SinceDecember 2011, Mr. Sank has served as a director in Eastvaal Motors Pty Ltd., a diversified retail motor business, and served as a director there in thepast. Since 2010, Mr. Sank has served as a director in Bradbury Finance Pty Ltd. From 2000 to 2007, Mr. Sank served as a director in Vecto Finance PtyLtd., a credit lending business. For the past fifteen years Mr. Sank has served as a director of Macsteel Service Centres SA Pty Ltd., South Africa’s largestprivate company. He also serves on the boards of small businesses and local non-profit charity organizations in Cape Town, where he resides. We believe that Mr. Sank’s qualifications to serve on our Board include his years of experience in development stage businesses, as well as hisexperience serving as a director of many entities. Dr. Harold Jacob was appointed a director in July 2008. Since 1998, Dr. Jacob has served as the president of Medical Instrument DevelopmentInc., a company which provides a range of support and consulting services to start-up and early stage companies as well as patenting its own proprietarymedical devices. Since 2011, Dr. Jacob has also served as an attending physician at Hadassah University Medical Center, where he has served as thedirector of the gastrointestinal endoscopy unit since September 2013. Dr. Jacob has advised a spectrum of companies in the past and he served as aconsultant and then as the Director of Medical Affairs at Given Imaging Ltd., from 1997 to 2003, a company that developed the first swallowablewireless pill camera for inspection of the intestine. He has licensed patents to a number of companies including Kimberly-Clark Corporation. Since2004, Dr. Jacob has served as the Chief Executive Officer of NanoVibronix, Inc., a medical device company using surface acoustics to prevent catheteracquired infection as well as other applications. He practiced clinical gastroenterology in New York and served as Chief of Gastroenterology at St.John’s Episcopal Hospital and South Nassau Communities Hospital from 1986 to 1995, and was a Clinical Assistant Professor of Medicine at SUNYfrom 1983 to 1990. Dr. Jacob founded and served as Editor in Chief of Endoscopy Review and has authored numerous publications in the field ofgastroenterology. We believe that Dr. Jacob’s qualifications to serve on our Board include his years of experience in the biomed industry, his experience servingin management roles of various companies, as well as his knowledge and familiarity with gastroenterology. Dr. Michael Berelowitz was appointed a director in June 2010 and Chairman of our Scientific Advisory Board in June 2011. Since 2011, Dr.Berelowtiz has been self-employed as a biopharmaceutical consultant. From 2009 to 2011, Dr. Berelowitz served as Senior Vice President and Head ofClinical Development and Medical Affairs in the Specialty Care Business Unit at Pfizer, Inc. From 1996 to 2009, he served in various other roles atPfizer, Inc., beginning as a Medical Director in the Diabetes Clinical Research team and then assuming positions of increasing responsibility until beingappointed to his present role. Prior to that, Dr. Berelowitz spent a number of years in academia. Among his public activities, Dr. Berelowitz has served onthe board of directors of the ADA, the Clinical Initiatives Committee of the Endocrine Society, and has chaired the Task Force on Research of the NewYork State Council on Diabetes. He has also served on several editorial boards, including the Journal of Clinical Endocrinology and Metabolism andEndocrinology, Reviews in Endocrine and Metabolic Disorders and Clinical Diabetes. Dr. Berelowitz has authored and co-authored more than 100 peer-reviewed journal articles and book chapters in the areas of pituitary growth hormone regulation, diabetes and metabolic disorders. Dr. Berelowitz holdsadjunct appointments as Professor of Medicine in the Divisions of Endocrinology and Metabolism at SUNY – StonyBrook and Mt. Sinai School ofMedicine in New York. 42 We believe that Dr. Berelowitz’s qualifications to serve on our Board include his years of experience in management roles in thepharmaceuticals industry, as well as his vast skill and expertise in the fields of endocrinology and diabetes. Mr. Gerald Ostrov was appointed a director in September 2012. Mr. Ostrov currently serves on the board of directors of Orasure Technologies Inc., aNasdaq listed company which develops, manufactures, markets and sells oral fluid diagnostic products and specimen collection devices, is a founder and aboard of directors member of Adlens Beacon, a privately held company developing self-adjustable reading glasses, serves as a board of directors member ofthe Robert Wood Johnson University Hospital Foundation and serves on the Johnson & Johnson Corporate Contributions Committee. From 2008 to 2010,Mr. Ostrov served as Chairman and Chief Executive Officer of Bausch & Lomb Incorporated, where he helped to stabilize and restructure the businessfollowing its privatization. From 1998 to 2006, Mr. Ostrov acted as Company Group Chairman for Johnson & Johnson’s Worldwide Vision Carebusinesses. Mr. Ostrov began his career with Johnson & Johnson’s Health Care Division in 1976. In 1982, he left Johnson & Johnson to become VicePresident of Marketing for Ciba-Geigy’s Consumer Pharmaceuticals Company, where he was named President of Ciba Consumer Pharmaceuticals in 1985and served in that capacity until rejoining Johnson & Johnson in 1991 as President of the corporation’s Personal Products Company. Mr. Ostrov holds aBachelor of Science degree with distinction in Industrial Engineering and Operations Research from Cornell University and holds an M.B.A. from HarvardUniversity.We believe that Mr. Ostrov’s qualifications to serve on our Board include his years of experience in management roles in the pharmaceuticalsindustry, as well as his experience serving as a director of many entities. Ms. Yifat Zommer was appointed as Chief Financial Officer, Treasurer and Secretary in April 2009. From 2007 to 2008, Ms. Zommer served asChief Financial Officer of Witech Communications Ltd., a subsidiary of IIS Intelligence Information Systems Ltd., a company operating in the field ofvideo transmission using wireless communications. From April 2006 to April 2007, Ms. Zommer acted as Chief Financial Officer for CTWARE Ltd., atelecommunication company. Prior to that she was an audit manager in Kesselman & Kesselman, a member of PricewaterhouseCoopers InternationalLimited, where she served for five years. Ms. Zommer holds a Bachelor of Accounting and Economics degree from the Hebrew University, a BusinessAdministration degree (MBA) from Tel-Aviv University and a Masters degree in Law (LL.M.) from Bar-Ilan University, Israel. Ms. Zommer is a certifiedpublic accountant in Israel. Mr. Joshua Hexter was appointed as Chief Operating Officer and VP Business Development in April 2013. From 2007 to 2013, Mr. Hexterwas a Director or Executive Director in BioLineRx Ltd. (TASE: BLRX) (“BioLine”), a biopharmaceutical development company dedicated toidentifying, in-licensing and developing innovative therapeutic candidates. Prior to his employment with BioLine, Mr. Hexter was a member of theboard of directors and CEO of Biosensor Systems Design, Inc., a company developing market-driven biosensors. Mr. Hexter holds a bachelor’s degreefrom the University of Wisconsin and a master’s degree in management from Boston University. 43 Board of Directors There are no agreements with respect to the election of directors. Each director is elected for a period of one year at our annual meeting ofstockholders and serves until the next such meeting and until his or her successor is duly elected. The Board may also appoint additional directors up toa maximum of fifteen directors. A director so chosen or appointed will hold office until the next annual meeting of stockholders. The Board hasdetermined that Leonard Sank, Harold Jacob, Michael Berelowitz and Gerald Ostrov are independent as defined under the rules promulgated by Nasdaq.Except as described in “Item 13. Certain Relationships and Related Transactions, and Director Independence,” none of the independent directors hasany relationship with us besides serving on our Board of Directors. We have determined that each of the directors is qualified to serve as a director of the Company based on a review of the experience,qualifications, attributes and skills of each director. In reaching this determination, we have considered a variety of criteria, including, among otherthings: character and integrity; ability to review critically, evaluate, question and discuss information provided, to exercise effective business judgmentand to interact effectively with the other directors; and willingness and ability to commit the time necessary to perform the duties of a director. Board Meeting Attendance During the year ended August 31, 2013, our Board held four meetings and took actions by written consent on eight occasions. No incumbentdirector of the meeting attended fewer than 75% of the aggregate of: (i) the total number of meetings of the Board (during the period for which suchdirector served as a director); and (ii) the total number of meetings held by all committees of the Board on which such director served (during the periodfor which such director served on such committees). Board members are encouraged to attend our annual meetings of stockholders. Committees Audit Committee and Audit Committee Financial Expert The members of our Audit Committee are Leonard Sank, Michael Berelowitz and Gerald Ostrov. Our Board has determined that Gerald Ostrov is an“audit committee financial expert” as set forth in Item 407(d)(5) of Regulation S-K and that all members of the Audit Committee are “independent” asdefined by the rules of the SEC and the Nasdaq rules and regulations. The Audit Committee operates under a charter that was approved by our Board onSeptember 28, 2012. The primary responsibilities of our Audit Committee include: · Appointing, compensating and retaining our registered independent public accounting firm; · Overseeing the work performed by any outside accounting firm; · Assisting the Board in fulfilling its responsibilities by reviewing: (i) the financial reports provided by us to the SEC, our stockholders or tothe general public, and (ii) our internal financial and accounting controls; and 44 · Recommending, establishing and monitoring procedures designed to improve the quality and reliability of the disclosure of our financialcondition and results of operations.Compensation Committee The members of our Compensation Committee are Leonard Sank, Michael Berelowitz and Gerald Ostrov. The Board has determined that all of themembers of the Compensation Committee are “independent” as defined by the rules of the SEC and Nasdaq rules and regulations. The CompensationCommittee operates under a written charter that was approved by our Board on September 28, 2012, as amended in June 2013. The primary responsibilitiesof our Compensation Committee include: · Reviewing, negotiating and approving, or recommending for approval by our Board of the salaries and incentive compensation of ourexecutive officers; · Administering our equity based plans and making recommendations to our Board with respect to our incentive–compensation plansand equity–based plans; and · Periodically reviewing and making recommendations to our Board with respect to director compensation. Section 16(a) Beneficial Ownership Reporting Compliance Based solely upon a review of Forms 3, 4 and 5, and amendments thereto, furnished to us during fiscal year 2013, we believe that during fiscalyear 2013, our executive officers, directors and all persons who own more than ten percent of a registered class of our equity securities complied with allSection 16(a) filing requirements, except as follows: · Regals, an owner of more than ten percent of our common stock, failed to timely file a Form 4 reporting the amendment to the terms ofcertain warrants to purchase common stock in November 2012. Regals filed a Form 4 reporting these transactions on December 13, 2012. · Regals also failed to timely file a Form 4 reporting purchases of an aggregate of 550 shares of our common stock in June2013. Regals filed a Form 4 reporting these transactions on July 12, 2013. Code of Ethics We have adopted a Code of Ethics and Business Conduct for our senior officers, directors and employees. A copy of the Code of Ethics and BusinessConduct is located at our website at www.oramed.com. 45 ITEM 11. EXECUTIVE COMPENSATION. Summary Compensation Table The following table sets forth the compensation earned during the fiscal years ended August 31, 2013 and 2012 by our President and Chief ExecutiveOfficer, our Chief Medical and Technology Officer, our Chief Financial Officer, and our Chief Operating Officer and VP Business Development, or theNamed Executive Officers: Name and PrincipalPosition Year(1) Salary($)(2) Bonus($)(2)(3) OptionAwards($)(4) All OtherCompensation($)(2) (5) Total($) Nadav KidronPresident and CEO and director(6)2013 199,670 60,000 104,253 11,992 375,915 2012 159,136 - 88,927 17,989 266,052 Miriam KidronChief Medical and TechnologyOfficer and director (7)2013 168,410 20,000 104,253 12,076 304,739 2012 159,136 - 88,927 13,200 261,263 Yifat ZommerCFO, Treasurer and Secretary2013 83,387 15,000 93,355 29,086 220,828 2012 58,686 - 32,915 29,719 121,320 Joshua HexterCOO and VP BusinessDevelopment2013 48,426 - 109,061 10,019 167,506 _______________(1)The information is provided for each fiscal year, which begins on September 1 and ends on August 31.(2)Amounts paid for Salary and All Other Compensation were originally denominated in NIS and were translated into U.S. Dollars at the then currentexchange rate for each payment.(3)Bonuses were granted at the discretion of the Compensation Committee.(4)The amounts reflect the grant date fair value, as calculated pursuant to FASB ASC Topic 718, of these option awards. The assumptions used todetermine the fair value of the option awards for fiscal years ended August 31, 2013 and 2012 are set forth in Note 10 to our audited consolidatedfinancial statements included in this Annual Report on Form 10-K. Our Named Executive Officers will not realize the value of these awards in cashunless and until these awards are exercised and the underlying shares subsequently sold.(5)See “All Other Compensation Table” below.(6)Mr. Kidron receives compensation from Oramed Ltd. through KNRY, Ltd., an Israeli entity owned by Mr. Kidron, or KNRY. See “—Employment andConsulting Agreements” below.(7)Dr. Kidron receives compensation from Oramed Ltd. through KNRY. See “—Employment and Consulting Agreements” below. See “Item 13. CertainRelationships and Related Transactions, and Director Independence” for a description of management fees received by Dr. Kidron from Hadasit. 46 All Other Compensation Table The “All Other Compensation” amounts set forth in the Summary Compensation Table above consist of the following: Name Year Automobile-RelatedExpenses($) Manager’sInsurance*($) EducationFund*($) Total($) Nadav Kidron 2013 11,992 -- -- 11,992 2012 17,989 -- -- 17,989 Miriam Kidron 2013 12,076 -- -- 12,076 2012 13,200 -- -- 13,200 Yifat Zommer 2013 10,507 12,416 6,163 29,086 2012 12,976 11,024 5,719 29,719 Joshua Hexter 2013 3,536 3,998 2,485 10,019 ______________*Manager’s insurance and education funds are customary benefits provided to employees based in Israel. Manager’s insurance is a combination ofseverance savings (in accordance with Israeli law), defined contribution tax-qualified pension savings and disability insurance premiums. Aneducation fund is a savings fund of pre-tax contributions to be used after a specified period of time for educational or other permitted purposes. Outstanding Equity Awards at Fiscal Year-End The following table sets forth information concerning stock options and stock awards held by the Named Executive Officers as of August 31, 2013. Option AwardsName Number ofSecuritiesUnderlyingUnexercisedOptions (#)Exercisable Number ofSecuritiesUnderlyingUnexercisedOptions (#)Unexercisable OptionExercisePrice($) OptionExpirationDateNadav Kidron 72,000(1) - 6.48 05/07/18 72,000(3) - 5.88 04/20/20 60,000(4) 12,000(4) 4.08 08/08/22Miriam Kidron 72,000(1) - 6.48 05/07/18 72,000(3) - 5.88 04/20/20 60,000(4) 12,000(4) 4.08 08/08/22Yifat Zommer 33,334(2) -- 5.64 10/19/19 22,750(5) 28,000(5) 4.08 08/08/22Joshua Hexter 12,600(6) 88,200(6) 7.88 03/14/23_____________ (1)On May 7, 2008, 72,000 options were granted to each of Nadav Kidron and Miriam Kidron under the 2008 Plan at an exercise price of $6.48 pershare; 12,000 of such options vested immediately on the date of grant and the remainder vested in twenty equal monthly installments, commencingon June 30, 2008. The options have an expiration date of May 7, 2018.(2)On June 3, 2009, 33,334 options were granted to Yifat Zommer under the 2008 Plan at an exercise price of $5.64 per share; the options vest in threeequal annual installments, commencing October 19, 2010, and expire on October 19, 2019.(3)On April 21, 2010, 72,000 options were granted to each of Nadav Kidron and Miriam Kidron under the 2008 Plan at an exercise price of $5.88 pershare; 9,000 of such options vested immediately on the date of grant and the remainder vested in twenty-one equal monthly installments,commencing on May 31, 2010. The options have an expiration date of April 20, 2020.(4)On August 8, 2012, 72,000 options were granted to each of Nadav Kidron and Miriam Kidron under the 2008 Plan at an exercise price of $4.08 pershare; 21,000 of such options vested immediately on the date of grant and the remainder vests in seventeen equal monthly installments, commencingon August 31, 2012. The options have an expiration date of August 8, 2022.(5)On August 8, 2012, 50,750 options were granted to Yifat Zommer under the 2008 Plan at an exercise price of $4.08 per share; the options vest intwenty-nine equal monthly installments, commencing on August 31, 2012, and expire on August 8, 2022.(6)On April 14, 2013, 100,800 options were granted to Joshua Hexter under the 2008 Plan at an exercise price of $7.88 per share; the options vest in 35consecutive equal installments during a 3-year period commencing on May 31, 2013, and two installments of 1,400 each, that will vest on April 30,2013 and April 14, 2016, and expire on April 14, 2023. 47 Employment and Consulting Agreements On July 1, 2008, Oramed Ltd. entered into a consulting agreement with KNRY, whereby Mr. Nadav Kidron, through KNRY, provides services asPresident and Chief Executive Officer of both the Company and Oramed Ltd., or the Nadav Kidron Consulting Agreement. Additionally, on July 1, 2008,Oramed Ltd. entered into a consulting agreement with KNRY whereby Dr. Miriam Kidron, through KNRY, provides services as Chief Medical andTechnology Officer of both the Company and Oramed Ltd., or the Miriam Kidron Consulting Agreement, and together with the Nadav Kidron ConsultingAgreement, the Consulting Agreements. The Consulting Agreements are both terminable by either party upon 60 days prior written notice. The Consulting Agreements provide that KNRY(i) will be paid, under each of the Consulting Agreements, in a gross amount of NIS 50,400 per month and (ii) will be reimbursed for reasonable expensesincurred in connection with performance of the Consulting Agreements. Pursuant to the Consulting Agreements, KNRY, Nadav Kidron and Miriam Kidroneach agree that during the term of the Consulting Agreements and for a 12 month period thereafter, none of them will compete with Oramed Ltd. nor solicitemployees of Oramed Ltd. On July 17, 2013 the Consulting Agreements were amended, in such way that the monthly consulting will be increased to NIS 75,000 and NIS60,000 for the services of Nadav Kidron and Miriam Kidron, respectively, effective July 1, 2013. We, through Oramed Ltd., have entered into an employment agreement with Yifat Zommer as of April 19, 2009, pursuant to which Ms. Zommer wasappointed as Chief Financial Officer, Treasurer and Secretary of the Company and Oramed Ltd. In accordance with the employment agreement, as amended,Ms. Zommer’s current gross monthly salary is NIS 31,460. We, through Oramed Ltd., have entered into an employment agreement with Joshia Hexter as of April 14, 2013, pursuant to which Mr. Hexter wasappointed as Chief Operating Officer and VP Business Development of the Company and Oramed Ltd. In accordance with the employment agreement, Mr.Hexter's current gross monthly salary is NIS 38,500. We have entered into indemnification agreements with our directors and officers pursuant to which we agreed to indemnify each director and officerfor any liability he or she may incur by reason of the fact that he or she serves as our director or officer, to the maximum extent permitted by law. 48 Director Compensation Our directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance atmeetings of our Board. Each independent director is entitled to receive as remuneration for his or her service as a member of the Board a sum equal to$10,000 per annum, to be paid quarterly and shortly after the close of each quarter. Our executive officers did not receive additional compensation forservice as directors. The Board may award special remuneration to any director undertaking any special services on behalf of us other than services ordinarilyrequired of a director. Michael Berelowitz serves as the Chairman of our Scientific Advisory Board. In this role, Dr. Berelowitz is actively involved in our scientificdecisions, clinical strategy, and partnership negotiations. Dr. Berelowitz is paid a fee of $300 per hour, up to $1,500 per day, as compensation for serving inthis position. Other than as indicated in this Annual Report on Form 10-K, no director received and/or accrued any compensation for his or her services as adirector, including committee participation and/or special assignments, during the year ended August 31, 2013. 49 The following table sets forth director compensation for the year ended August 31, 2013. Name of Director Fees Earnedor Paid inCash($) OptionAwards (2)(3)($) All OtherCompensation($) Total($) Nadav Kidron (1) - - - - Miriam Kidron (1) - - - - Leonard Sank (2) 10,000 41,203 - 51,203 Harold Jacob (2) 10,000 41,203 - 51,203 Michael Berelowitz (3) 10,000 16,484 1,375 27,859 Gerald Ostrov (6) 9,361 34,649 - 44,010 _______________ (1)Please refer to the summary compensation table for executive compensationwith respect to the named individual. (2)The amounts reflect the grant date fair value, as calculated pursuant to FASBASC Topic 718, of these option awards. The assumptions used to determine thefair value of the option awards for the fiscal year ended August 31, 2013 are setforth in Note 10 to our audited consolidated financial statements included inthis Annual Report on Form 10-K. Our directors will not realize the value ofthese awards in cash unless and until these awards are exercised and theunderlying shares subsequently sold. (3)At August 31, 2013, our non-employee directors held options to purchaseshares of our common stock as follows: Name of Director AggregateNumberof SharesUnderlyingStockOptions Leonard Sank 45,000 Harold Jacob 45,000 Michael Berelowitz 28,334 Gerald Ostrov 20,000 50 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. Stock Option Plans 2008 Stock Incentive Plan On May 5, 2008, our Board adopted the 2008 Plan in order to attract and retain quality personnel. The 2008 Plan provides for the grant of stockoptions, restricted stock, restricted stock units and stock appreciation rights, collectively referred to as “awards.” Stock options granted under the 2008Plan may be either incentive stock options under the provisions of Section 422 of the Internal Revenue Code, or non-qualified stock options. Incentivestock options may be granted only to our employees or to employees of our parent or subsidiary. Awards other than incentive stock options may begranted to employees, directors and consultants. Under the 2008 Plan, as amended, 1,000,000 shares were reserved for the grant of awards, which may beissued at the discretion of our Board from time to time. As of August 31, 2013, options with respect to 1,234,999 shares have been granted, of which 86,167 have been forfeited, 8,334 have beenexercised and 291,674 have expired. Other On August 14, 2007, we granted Dr. Miriam Kidron a warrant to purchase up to 180,114 shares at an exercise price of $0.012 per share; the warrantvested immediately and had an expiration date of August 14, 2012. On August 8, 2012, our Board resolved to extend the term of Dr. Kidron’s warrant untilAugust 6, 2014. The warrant is not governed by either of the plans detailed above. The following table sets forth additional information with respect to our equity compensation plans as of August 31, 2013: Plan category Number ofsecurities to beissued uponexercise ofoutstandingoptions,warrants andrights(a) Weight-averageexercise priceof outstandingoptions,warrants andrights (b) Number ofsecuritiesremainingavailable forfuture issuanceunder equitycompensationplans(excludingsecuritiesreflected incolumn (a))(c) Equity compensation plans approved by security holders -- -- -- Equity compensation plans not approved by security holders 1,580,280 $4.43 151,176 Total 1,580,280 $4.43 151,176 51 Security Ownership of Certain Beneficial Owners and ManagementThe following table sets forth certain information regarding the beneficial ownership of our common stock as of November 25, 2013 by: (i) eachperson who is known by us to own beneficially more than 5% of our common stock; (ii) each director; (iii) each of our Named Executive Officers listedabove under “Summary Compensation Table”; and (iv) all of our directors and executive officers as a group. On such date, we had 7,947,872 shares ofcommon stock outstanding. As used in the table below and elsewhere in this Annual Report on Form 10-K, the term “beneficial ownership” with respect to a security consistsof sole or shared voting power, including the power to vote or direct the vote and/or sole or shared investment power, including the power to dispose or directthe disposition, with respect to the security through any contract, arrangement, understanding, relationship, or otherwise, including a right to acquire suchpower(s) during the next 60 days following November 25, 2013. Inclusion of shares in the table does not, however, constitute an admission that the namedstockholder is a direct or indirect beneficial owner of those shares. Unless otherwise indicated, each person or entity named in the table has sole voting powerand investment power (or shares that power with that person’s spouse) with respect to all shares of common stock listed as owned by that person or entity. Name and Address ofBeneficial Owner Number ofShares Percentage ofSharesBeneficiallyOwned Nadav Kidron #+12 Eliezer Hagadol St.Jerusalem, Israel 1,080,312(1) 13.2% Miriam Kidron #+2 Elza St.Jerusalem, Israel 496,114(2) 5.9% Leonard Sank #3 Blair Rd Camps BayCape Town, South Africa 555,623(3) 6.9% Harold Jacob # 45,834(4) * Michael Berelowitz # 28,334(5) * Yifat Zommer + 63,084(6) * Regals Fund LP767 Fifth Ave. New York, NY, USA 1,325,094(7) 15.6% Gerald Ostrov # 20,000(8) * Joshua Hexter + 23,800(9) * All current executive officers and directors, as a group (eight persons) 2,313,101(10) 25.9% 52 _______________*Less than 1%#Indicates Director+Indicates Executive Officer(1)Includes 216,000 shares of common stock issuable upon the exercise of outstanding stock options.(2)Includes 280,114 shares of common stock issuable upon the exercise of an outstanding warrant and 216,000 shares of common stock issuable uponthe exercise of outstanding stock options.(3)Includes: (i) 243,000 shares of common stock and warrants to purchase 23,265 shares of common stock held by Mr. Sank, (ii) 78,125 shares ofcommon stock and a warrant to purchase 27,344 shares of common stock held by Mr. Sank’s wife, (iii) 45,000 shares of common stock issuable toMr. Sank upon the exercise of outstanding stock options, and (iv) 138,889 shares of common stock owned by a company wholly owned by a trust ofwhich Mr. Sank is a trustee. Mr. Sank disclaims beneficial ownership of the securities referenced in (ii) and (iv) above.(4)Includes 834 shares of common stock indirectly acquired through a corporation wholly-owned by Mr. Jacob, and 45,000 shares of common stockissuable upon the exercise of outstanding stock options.(5)Includes 28,334 shares of common stock issuable upon the exercise of outstanding stock options.(6)Includes 63,084 shares of common stock issuable upon the exercise of outstanding stock options.(7)Include warrants to purchase 557,274 shares of common stock. Regals Capital Management LP is the investment manager of Regals Fund LP(“Regals”), the owner of record of these shares of common stock. Mr. David M. Slager is the managing member of the general partner of RegalsCapital Management LP. All investment decisions are made by Mr. Slager, and thus the power to vote or direct the votes of these shares of commonstock, as well as the power to dispose or direct the disposition of such shares of common stock is held by Mr. Slager through Regals CapitalManagement LP. The forgoing is based in part on a Schedule 13G/A filed February 12, 2013 and a Form 4 filed June 18, 2013 jointly by Regals,Regals Capital Management LP and Mr. Slager.(8)Includes 20,000 shares of common stock issuable upon the exercise of outstanding stock options.(9)Includes 23,800 shares of common stock issuable upon the exercise of outstanding stock options.(10)Includes 987,941 shares of common stock issuable upon the exercise of warrants beneficially owned by the referenced persons and the exercise ofoutstanding stock options. 53 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. Except as otherwise indicated below, during fiscal years 2013 and 2012, we did not participate in any transaction, and we are not currentlyparticipating in any proposed transaction, or series of transactions, in which the amount involved exceeds the lesser of $120,000 or one percent of theaverage of our total assets at year-end for the last two completed fiscal years, and in which, to our knowledge, any of our directors, officers, five percentbeneficial security holders, or any member of the immediate family of the foregoing persons had, or will have, a direct or indirect material interest. Our policy is to enter into transactions with related persons on terms that, on the whole, are no less favorable than those available fromunaffiliated third parties. Based on our experience in the business sectors in which we operate and the terms of our transactions with unaffiliated thirdparties, we believe that all of the transactions described below met this policy standard at the time they occurred. All related person transactions areapproved by our Board. On February 17, 2006, we entered into an agreement with Hadasit, or the First Agreement, to retain Hadasit to provide consulting and clinicaltrial services for a total consideration of $200,000, and to acquire the provisional patent related to our research and development of an orally ingestibleinsulin pill to be used for the treatment of individuals with diabetes. On January 7, 2009, we entered into a second agreement with Hadasit whichreplaced in its entirety the First Agreement and confirms that Hadasit has conveyed, transferred and assigned all of its ownership rights in the patentsacquired under the First Agreement and certain other patents filed by us after the First Agreement as a result of the collaboration between us and Hadasit,and that Hadasit acknowledges and agrees that the 345,128 shares of our common stock that were issued to Hadasit on February 17, 2006 constitute thesole and complete compensation for said sale. On July 8, 2009, we entered into a third agreement with Hadasit to retain consulting and clinical trialservices from Hadasit for a total consideration of $400,000, with $200,000 of this amount having first been agreed to in the terms of the First Agreement.The clinical trials conducted by Hadasit are managed by Dr. Miriam Kidron, our Chief Medical and Technology Officer and one of our directors, througha research fund account at Hadasit in Dr. Kidron’s name. The fees paid by us to Hadasit are deposited into such Hadasit research account. Pursuant to thegeneral policy of Hadasit with respect to its research funds, Dr. Kidron is entitled to receive a management fee in the amount of 10% of all the fundsdeposited into this research fund account, including the funds paid by us under the aforementioned agreements. Since March 2006, only the funds paidby us have been deposited in this account, of which, $10,214 has been paid to Dr. Kidron. On September 11, 2011, we entered into theFourth Agreement to facilitate clinical trials and provide other services. According to this agreement, Hadasit will be entitled to total consideration of$200,000 to be paid in accordance with the actual progress of the study, $50,000 of which was recognized or paid through August 31, 2013 Hadasit willdeduct 16.7% of the payments that will be received from us as overhead. All other terms and conditions of this agreement are substantially similar tothose of the previous Hadasit agreements. On October 30, 2012, we entered into a Securities Purchase Agreement with D.N.A, according to which, we issued to D.N.A 199,172 shares ofour common stock, valued at such time at approximately $628,630, in consideration for a warrant to purchase up to 21,637,611 ordinary shares of D.N.Aat no additional cost. In February 2013, we exercised the D.N.A Option. . We hold approximately 10.6% of D.N.A’s outstanding ordinary shares,including the D.N.A ordinary shares we received in March 2011 as further discussed in “Item 1. Business—Description of Business—Out-LicensedTechnology.” On November 29, 2012, we entered into the Agreement with Regals in connection with the Warrants. Pursuant to the Agreement, we and Regalsagreed to amend the Warrants (and to prepare and execute amendments to the Warrants setting forth such terms as soon as reasonably practicable) to providethat the anti-dilution protection of the Warrants shall be deleted in its entirety. In addition, as to the warrants issued in August and November 2012, theparties agreed that the exercise price shall be reduced to $3.7656 per share, the current exercise price per share of the warrants originally issued to Regals inJanuary 2011. On that day, we also issued to Regals the New Warrant pursuant to which Regals shall have the right to purchase up to 137,311 shares of ourcommon stock over a period of four years at an exercise price of $7.20 per share. 54 In connection with the New Warrant, Nadav Kidron, our President, Chief Executive Officer and a director, in his personal capacity as one ofour shareholders, undertook and agreed that following the execution and delivery of the Agreement, in the event that an adjustment pursuant to theanti-dilution protection of the Warrants (had they not been amended by the Agreement) would have been triggered and the number of shares of ourcommon stock that Regals would have been able to purchase under the Warrants would have increased by an aggregate number in excess of 137,311common shares, then Regals shall have the right to purchase from Mr. Kidron such number of shares of our common stock owned by Mr. Kidron equal tosuch excess, up to a maximum of 112,690 shares of our common stock at an exercise price of $3.7656 per share. The foregoing right shall survive untilthe termination of the Warrants. See “Item 11. Executive Compensation—Director Compensation” above for information as to one of our directors and the Chairman of ourScientific Advisory Board, Michael Berelowitz. The Board has determined that Leonard Sank, Harold Jacob, Michael Berelowitz and Gerald Ostrov are independent as defined under the rulespromulgated by Nasdaq. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. The aggregate fees billed by Kesselman & Kesselman, independent registered public accounting firm, and member firm of PricewaterhouseCoopersInternational Limited, for services rendered to us during the fiscal years ended August 31, 2013 and 2012: Summary: 2013 2012 Audit Fees(1) $100,000 $102,240 Audit-Related Fees - - Tax Fees(2) 10,000 10,000 All Other Fees - - Total Fees $110,000 $112,240 ___________(1)Amount represents fees paid for professional services for the audit of our consolidated annual financial statements and review of our interim condensedconsolidated financial statements included in quarterly reports and services that are normally provided by our independent registered public accountingfirm in connection with statutory and regulatory filings or engagements.(2)Amount represents fees paid for consulting services to assist us with our implementation of FASB ASC Topic 740-10 (formerly FIN 48), “Income Taxes,”relating to uncertain tax positions.The Board established our Audit Committee on September 28, 2012. The Audit Committee pre-approves all services provided by ourindependent auditors. All of the above services and fees were reviewed and approved by the Audit Committee before the services were rendered. 55 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Index to Financial Statements The following financial statements are filed as part of this Annual Report on Form 10-K: Page REPORT OF INDEPENDENT REGISTERED PUBLIC F - 1ACCOUNTING FIRM - Report of Kesselman & Kesselman REPORT OF INDEPENDENT REGISTERED PUBLIC F - 2ACCOUNTING FIRM - Report of Malone & Bailey, PC CONSOLIDATED FINANCIAL STATEMENTS: Balance sheets F - 3Statements of comprehensive income (loss) F - 4Statements of changes in stockholders’ equity F - 5 - F - 7Statements of cash flows F - 8Notes to financial statements F - 9 - F - 38  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders ofOramed Pharmaceuticals Inc.(A Development Stage Company)We have audited the accompanying consolidated balance sheets of Oramed Pharmaceuticals Inc. (A Development Stage Company) and its subsidiary (the“Company”) as of August 31, 2013 and 2012, and the related consolidated statements of comprehensive income (loss), changes in stockholders’ equity andcash flows for the years then ended and cumulatively, for the period from September 1, 2007 to August 31, 2013 (not separately presented herein). Thesefinancial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based onour audits. We did not audit the cumulative totals of the Company for the period from April 12, 2002 (date of incorporation) to August 31, 2007, which totalsreflect a deficit of $4,478,933 accumulated during the development stage. Those cumulative totals were audited by other independent auditors, whose report,dated December 10, 2007, expressed an unqualified opinion on the cumulative amounts but included an emphasis of a matter. Our opinion, insofar as itrelates to amounts included for that period is based on the report of the other independent auditors. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion. In our opinion, based upon our audits and the report of the other independent auditors, the consolidated financial statements referred to above present fairly,in all material respects, the consolidated financial position of the Company as of August 31, 2013 and 2012, and the consolidated results of their operationsand their cash flows for the years then ended and cumulatively, for the period from September 1, 2007 to August 31, 2013 (not separately presented herein),in conformity with accounting principles generally accepted in the United States of America. Tel Aviv, Israel/s/ Kesselman & KesselmanNovember 26, 2013Kesselman & Kesselman Certified Public Accountants (Isr.) A member firm of PricewaterhouseCoopers International Limited F - 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of DirectorsOramed Pharmaceuticals, Inc. (a development stage company)Jerusalem, Israel We have audited the consolidated statements of expenses, changes in stockholders’ deficit, and cash flows for the period from April 12, 2002 (Inception)through August 31, 2007. These financial statements are the responsibility of Oramed’s management. Our responsibility is to express an opinion on thesefinancial statements based on our audit. We conducted our audit in accordance with the standards of the Public Accounting Oversight Board (United States). Those standards require that we plan andperform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required tohave, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control overfinancial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonablebasis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of its consolidated operations and itscash flows for the periods described in conformity with accounting principles generally accepted in the United States of America. /s/ MALONE & BAILEY, PCwww.malone-bailey.comHouston, Texas December 10, 2007 F - 2 ORAMED PHARMACEUTICALS INC.(A Development Stage Company)CONSOLIDATED BALANC SHEETSU.S. dollars August 31 2013 2012 Assets CURRENT ASSETS: Cash and cash equivalents $2,272,228 $4,430,740 Short term deposits (note 2) 5,246,627 454,381 Marketable securities (note 3) 956,376 200,311 Restricted cash (note 1n) 16,000 16,000 Prepaid expenses and other current assets (note 4) 90,103 89,998 Related parties (note 16) 4,530 404 Grants receivable from the chief scientist 58,412 84,642 T o t a l current assets 8,644,276 5,276,476 LONG TERM DEPOSITS AND INVESTMENT (note 8b) 4,593 8,867 AMOUNTS FUNDED IN RESPECT OF EMPLOYEE RIGHTS UPON RETIREMENT (note 7) 5,545 4,740 PROPERTY AND EQUIPMENT, NET (note 5) 5,768 4,768 T o t a l assets $8,660,182 $5,294,851 Liabilities and stockholders' equity CURRENT LIABILITIES: Accounts payable and accrued expenses (note 11) $450,941 $597,173 Account payable with former shareholder 47,252 47,252 T o t a l current liabilities 498,193 644,425 LONG TERM LIABILITIES: Warrants (note 6) - 637,182 Employee rights upon retirement (note 7) 8,004 6,959 Provision for uncertain tax position (note 15e) 23,210 228,272 31,214 872,413 COMMITMENTS (note 8) STOCKHOLDERS’ EQUITY: Common stock, $ 0.012 par value (16,666,667 authorized shares; 7,937,872 and 6,674,068* shares issued andoutstanding as of August 31, 2013 and 2012, respectively) 95,238 80,075 Accumulated other comprehensive income 303,403 - Additional paid-in capital 29,855,723 21,589,715 Deficit accumulated during the development stage (22,123,589) (17,891,777)T o t a l stockholders' equity 8,130,775 3,778,013 T o t a l liabilities and stockholders’ equity $8,660,182 $5,294,851 * See note 1a(3).The accompanying notes are an integral part of the financial statements. F - 3 ORAMED PHARMACEUTICALS INC.(A Development Stage Company)CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)U.S. dollars Period from April 12, 2002 (inception) Year ended through August 31 August 31, 2013 2012 2013 RESEARCH AND DEVELOPMENT EXPENSES, NET (note 12) $2,271,794 $1,680,845 $11,804,488 IMPAIRMENT OF INVESTMENT - - 434,876 GENERAL AND ADMINISTRATIVE EXPENSES (note 13) 2,032,129 1,203,164 10,193,676 OPERATING LOSS 4,303,923 2,884,009 22,433,040 FINANCIAL INCOME (note 14a) (180,495) (13,126) (387,653)GAIN ON SALE OF INVESTMENT - - (1,033,004)IMPAIRMENT OF AVAILABLE- FOR-SALE SECURITIES - 184,254 381,666 FINANCIAL EXPENSES (note 14b) 313,446 199,123 693,826 LOSS BEFORE TAXES ON INCOME 4,436,874 3,254,260 22,087,875 INCOME TAX EXPENSES (BENEFIT) (note 15) (205,062) 90,218 35,714 NET LOSS FOR THE PERIOD $4,231,812 $3,344,478 $22,123,589 SUBSEQUENT INCREASE IN THE FAIR VALUE OF AVAILABLE FOR SALE SECURITIESPREVIOUSLY WRITTEN DOWN AS IMPAIRED (130,845) - (130,845)RECLASSIFICATION ADJUSTMENT FOR GAINS INCLUDED IN NET LOSS 90,370 - 90,370 UNREALIZED GAIN ON AVAILABLE FOR SALE SECURITIES (262,928) - (262,928)TOTAL OTHER COMPREHENSIVE INCOME (303,403) - (303,403)TOTAL COMPREHENSIVE LOSS FOR THE PERIOD $3,928,409 $3,344,478 $21,820,186 BASIC AND DILUTED LOSS PER COMMON SHARE $0.59 $0.57 WEIGHTED AVERAGE NUMBER OF COMMON SHARES USED IN COMPUTING BASIC AND DILUTED LOSS PER COMMON STOCK* 7,209,283 5,884,595 * See note 1a(3). The accompanying notes are an integral part of the financial statements. F - 4 ORAMED PHARMACEUTICALS INC.(A development stage company)CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITYU.S. dollars Additionalpaid-incapital AccumulatedOtherComprehensiveIncome Deficitaccumulatedduring thedevelopmentstage Totalstockholders'equity Common Stock Shares* $ BALANCE AS OF APRIL 12, 2002(inception) 2,902,589 $34,828 $18,872 - - $53,700 CHANGES DURING THE PERIODFROM APRIL 12, 2002 THROUGHAUGUST 31, 2007: SHARES CANCELLED (1,650,000) (19,800) 19,800 - - - SHARES ISSUED FORINVESTMENT IN ISTI-NJ 95,368 1,144 433,732 - - 434,876 SHARES ISSUED FOR OFFERINGCOSTS 146,079 1,753 (1,753) - - - SHARES AND WARRANTS ISSUEDFOR CASH– NET OF ISSUANCEEXPENSES 2,265,514 27,181 2,095,800 - - 2,122,981 SHARES ISSUED FOR SERVICES 10,417 125 98,625 - - 98,750 CONTRIBUTIONS TO PAID INCAPITAL - - 18,991 - - 18,991 STOCK BASED COMPENSATIONRELATED TO OPTIONSGRANTED TO EMPLOYEES ANDDIRECTORS - - 1,968,547 - - 1,968,547 STOCK BASED COMPENSATIONRELATED TO OPTIONSGRANTED TO CONSULTANTS - - 177,782 - - 177,782 DISCOUNT ON CONVERTIBLENOTE RELATED TOBENEFICIAL CONVERSIONFEATURE - - 108,000 - - 108,000 OTHER COMPREHENSIVE LOSS - - - (16) (16)IMPUTED INTEREST - - 8,437 - - 8,437 NET LOSS - - - - (4,478,917) (4,478,917)BALANCE AS OF AUGUST 31, 2007 3,769,967 45,231 4,946,833 - (4,478,933) 513,131 RECEIPTS ON ACCOUNT OFSHARES AND WARRANTS - - 6,061 - - 6,061 SHARES ISSUED FORCONVERSION OFCONVERTIBLE NOTE 45,844 550 274,450 - - 275,000 SHARES AND WARRANTS ISSUEDFOR CASH - NET OF ISSUANCEEXPENSES 848,288 10,178 5,774,622 - - 5,784,800 SHARES ISSUED FOR SERVICES 24,419 293 115,817 - - 116,110 STOCK BASED COMPENSATIONRELATED TO OPTIONSGRANTED TO EMPLOYEES ANDDIRECTORS - - 459,467 - - 459,467 STOCK BASED COMPENSATIONRELATED TO OPTIONSGRANTED TO CONSULTANTS - - 203,982 - - 203,982 IMPUTED INTEREST - - 3,780 - - 3,780 NET LOSS - - - - (2,769,271) (2,769,271)BALANCE AS OF AUGUST 31, 2008 4,688,518 $56,252 $11,785,012 - $(7,248,204) $4,593,060 * See note 1a(3). The accompanying notes are an integral part of the condensed consolidated financial statements. F - 5 ORAMED PHARMACEUTICALS INC.(A development stage company)CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITYU.S. dollars Deficit Accumulated accumulated Additional Other during the Total Common Stock paid-in Comprehensive development stockholders' Shares* $ capital Income stage equity BALANCE AS OF AUGUST 31, 2008 4,688,518 $56,252 $11,785,012 $- $(7,248,204) $4,593,060 SHARES ISSUED FOR SERVICES 17,012 204 152,724 - - 152,928 SHARES TO BE ISSUED FORSERVICES - - 203,699 - - 203,699 STOCK BASED COMPENSATIONRELATED TO OPTIONSGRANTED TO EMPLOYEESAND DIRECTORS - - 436,025 - - 436,025 STOCK BASED COMPENSATIONRELATED TO OPTIONSGRANTED TO CONSULTANTS - - 117,174 - - 117,174 IMPUTED INTEREST - - 3,780 - - 3,780 NET LOSS - - - - (2,760,474) (2,760,474)BALANCE AS OF AUGUST 31, 2009 4,705,530 $56,456 $12,698,414 - $(10,008,678) $2,746,192 SHARES ISSUED FOR SERVICES 92,416 1,109 248,741 - - 249,850 STOCK BASED COMPENSATIONRELATED TO OPTIONSGRANTED TO EMPLOYEESAND DIRECTORS - - 690,882 - - 690,882 STOCK BASED COMPENSATIONRELATED TO OPTIONSGRANTED TO CONSULTANTS - - 116,944 - - 116,944 IMPUTED INTEREST - - 3,780 - - 3,780 NET LOSS - - - - (2, 977, 376) (2,977,376)BALANCE AS OF AUGUST 31, 2010 4,797,946 $57,565 $13,758,761 - $(12,986,054) $830,272 SHARES ISSUED FOR SERVICES 60,887 731 226,838 - - 227,569 SHARES AND WARRANTS ISSUEDFOR CASH** 984,209 11,808 3,682,404 - - 3,694,212 STOCK BASED COMPENSATIONRELATED TO OPTIONSGRANTED TO EMPLOYEESAND DIRECTORS - - 502,593 - - 502,593 STOCK BASED COMPENSATIONRELATED TO OPTIONSGRANTED TO CONSULTANTS - - 26,733 - - 26,733 IMPUTED INTEREST - - 3,782 - - 3,782 NET LOSS - - - - (1,561,245) (1,561,245)BALANCE AS OF AUGUST 31, 2011 5,843,042 70,104 18,201,111 - (14,547,299) 3,723,916 SHARES ISSUED FOR SERVICES 29,084 349 107,511 - - 107,860 SHARES AND WARRANTS ISSUEDFOR CASH, INCLUDINGRECLASSIFICATION OFWARRANTS 801,942 9,622 2,984,842 - - 2,944,464 SHARES AND WARRANTS TO BEISSUED FOR CASH - - 25,093 - - 25,093 STOCK BASED COMPENSATIONRELATED TO OPTIONSGRANTED TO EMPLOYEESAND DIRECTORS - - 200,866 - - 200,866 STOCK BASED COMPENSATIONRELATED TO OPTIONSGRANTED TO CONSULTANTS - - 70,292 - - 70,292 NET LOSS - - - - (3,344,478) (3,344,478)BALANCE AS OF AUGUST 31, 2012 6,674,068 $80,075 $21,589,715 - $(17,891,777) $3,778,013 * See note 1a(3). ** Including 16,397 shares issued as finders' fee.The accompanying notes are an integral part of the financial statements. F - 6 ORAMED PHARMACEUTICALS INC.(A development stage company)CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITYU.S. dollars Deficit Accumulated accumulated Additional other during the Total Common Stock paid-in Comprehensive development stockholders' Shares* $ capital Income stage equity BALANCE AS OF AUGUST 31, 2012 6,674,068 $80,075 $21,589,715 - $(17,891,777) $3,778,013 SHARES AND WARRANTS ISSUEDFOR CASH, NET** 349,396 4,192 1,418,400 - - 1,422,592 SHARES ISSUED FOR CASH, NET*** 658,144 7,897 4,230,992 - - 4,238,889 SHARES ISSUED FOR MARKETABLESECURITIES 199,172 2,390 626,240 - - 628,630 SHARES ISSUEDFOR SERVICES**** 33,709 404 244,053 - - 244,457 EXCHANGE OF WARRANTS (see note6) - - 917,809 - - 917,809 EXERCISE OF WARRANTS ANDOPTIONS 23,383 280 109,295 - - 109,575 STOCK BASED COMPENSATIONRELATED TO OPTIONS GRANTEDTO EMPLOYEES AND DIRECTORS - - 562,966 - - 562,966 STOCK BASED COMPENSATIONRELATED TO OPTIONS GRANTEDTO CONSULTANTS - - 156,253 - - 156,253 NET LOSS - - - - (4, 231,812) (4,231,812)OTHER COMPREHENSIVE INCOME - - - 303,403 - 303,403 BALANCE AS OF AUGUST 31, 2013 7,937,872 $95,238 $29,855,723 $303,403 $(22,123,589) $8,130,775 * See note 1a(3).** Including 13,872 shares issued as finders' fee. See note 9d.*** See note 9g.**** See notes 8h, 9b and 9h. The accompanying notes are an integral part of the financial statements F - 7 ORAMED PHARMACEUTICALS INC.(A Development Stage Company)CONSOLIDATED STATEMENTS OF CASH FLOWSU.S. dollars Period fromApril 12, 2002(inceptiondate) through Year ended August 31 August 31, 2013 2012 2013 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $(4,231,812) $(3,344,478) $(22,123,589)Adjustments required to reconcile net loss to net cash used in operating activities: Depreciation and amortization 5,379 14,737 126,223 Amortization of debt discount - - 108,000 Exchange differences 19,179 62,494 50,216 Stock based compensation 719,219 271,158 5,690,506 Common stock issued for services 244,457 107,860 1,400,413 Gain on sale of investment (50,703) - (1,083,707)Impairment of investments - - 434,876 Impairment of available for sale securities - 184,254 381,666 Imputed interest - - 23,559 Exchange of warrants 296,982 - 296,982 Changes in fair value of warrant liabilities (44,699) 142,704 98,005 Changes in operating assets and liabilities: Prepaid expenses and other current assets (3,094) (31,199) (163,253)Restricted cash - - (16,000)Accounts payable and accrued expenses (146,232) 203,133 450,941 Liability for employee rights upon retirement 1,045 (2,489) 21,231 Provision for uncertain tax position (205,062) 90,218 23,210 Total net cash used in operating activities (3,395,341) (2,301,608) (14,280,721)CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (6,379) (2,129) (131,991)Purchase of short term deposits (5,846,628) (475,353) (11,750,363)Proceeds from sale of short term deposits 1,054,011 1,800,000 6,482,011 Proceeds from sale of investment and marketable securities 226,671 450,000 676,671 Funds in respect of employee rights upon retirement (2,090) (3,620) (8,985)Other 4,894 - (2,615)Total net cash provided by (used in) investing activities (4,569,521) 1,768,898 (4,735,272)CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from sales of common stocks and warrants - net of issuance expenses 5,714,918 3,488,942 20,859,553 Proceeds from exercise of warrants and options 109,575 - 109,575 Receipts on account of shares issuances - - 6,061 Proceeds from convertible notes - - 275,000 Proceeds from short term note payable - - 120,000 Payments of short term note payable - - (120,000)Stockholder advances - - 66,243 Total net cash provided by financing activities 5,824,493 3,488,942 21,316,432 EFFECT OF EXCHANGE RATE CHANGES ON CASH (18,143) (38,857) (28,211)INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,158,512) 2,917,375 2,272,228 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,430,740 1,513,365 - CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,272,228 $4,430,740 $2,272,228 Material non cash investing and financing activities: Discount on convertible note related to beneficial conversion feature - - $108,000 Shares and warrants issued as offering costs - - $77,779 Contribution to paid in capital - - $18,991 Exchange of warrants $917,809 - $917,809 Shares issued for marketable securities $628,630 - $628,630 Shares and warrants to be issued for cash - $25,093 - The accompanying notes are an integral part of the financial statements. F - 8 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES: a.General 1)Incorporation and operations Oramed Pharmaceuticals Inc. (the “Company”) was incorporated on April 12, 2002, under the laws of the State of Nevada.From incorporation until March 3, 2006, the Company was an exploration stage company engaged in the acquisition andexploration of mineral properties. On February 17, 2006, the Company entered into an agreement with Hadasit MedicalServices and Development Ltd (“Hadasit”) to acquire the provisional patent related to orally ingestible insulin pill to be usedfor the treatment of individuals with diabetes. In subsequent periods, the Company entered into additional developmentagreements with Hadasit, the most recent of which was signed on September 11, 2011, see also note 8a. On March 11, 2011, the Company was reincorporated from the State of Nevada to the State of Delaware. On May 14, 2007, the Company incorporated a wholly-owned subsidiary in Israel, Oramed Ltd., which is engaged in researchand development. Unless the context indicates otherwise, the term “Group” refers to Oramed Pharmaceuticals Inc. and itsIsraeli subsidiary, Oramed Ltd. (the “Subsidiary”), (together with the Company, "the Group"). In March 2011, the Subsidiary sold shares of its investee company, Entera Bio Ltd ("Entera") to D.N.A Biomedical SolutionsLtd ("D.N.A"), remaining a 3% interest, which is accounted for as a cost method investment (amounting $1,027). Inconsideration for the shares sold to D.N.A, the Company received a promissory note issued by D.N.A in the principal amountof $450,000, with an annual interest rate of 0.45%, that was paid in full in November 2011, and 8,404,667 ordinary shares ofD.N.A, see also note 3. As part of this agreement, the Subsidiary entered into a patent transfer agreement according to which, the Subsidiary assignedto Entera all of its right, title and interest in and to the patent application that it has licensed to Entera since August2010. Under this agreement, the Subsidiary is entitled to receive from Entera royalties of 3% of Entera's net revenues (asdefined in the agreement) and a license back of that patent application for use in respect of diabetes and influenza. As ofAugust 31, 2013, Entera had not yet realized any revenues and had not paid any royalties to the Subsidiary. 2)Development and liquidity risks The Company has been in the development stage since its formation and has not yet generated any revenues from itsoperations. The Group is engaged in research and development in the biotechnology field and is considered a development stagecompany in accordance with the ASC Topic 915 "Development Stage Entities" due to the fact that it has not generated anyrevenues from its operations. F - 9 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued): Successful completion of the Company’s development programs and its transition to normal operations is dependent uponobtaining necessary regulatory approvals from the FDA prior to selling its products within the United States, and foreignregulatory approvals must be obtained to sell its products internationally. There can be no assurance that the Company willreceive regulatory approval of any of its product candidates, and a substantial amount of time may pass before the Companyachieves a level of revenues adequate to support its operations, if at all. The Company also expects to incur substantialexpenditures in connection with the regulatory approval process for each of its product candidates during their respectivedevelopmental periods. Obtaining marketing approval will be directly dependent on the Company’s ability to implement thenecessary regulatory steps required to obtain marketing approval in the United States and in other countries. The Companycannot predict the outcome of these activities.Based on its current cash resources and commitments, and cash received in private and public offerings in the year endedAugust 31, 2013, the Company believes it will be able to maintain its current planned development activities and thecorresponding level of expenditures for at least the next 12 months and beyond, although no assurance can be given that itwill not need additional funds prior to such time. If there are unexpected increases in general and administrative expenses orresearch and development expenses, the Company may need to seek additional financing during the next 12 months. 3)Reverse stock split On January 10, 2013, the Company's Board of Directors approved a reverse stock split at a ratio of one-for-twelve, effectiveJanuary 22, 2013, which decreased the number of common shares issued and outstanding as of January 23, 2013, fromapproximately 86.5 million shares to approximately 7.2 million shares and the number of authorized common shares from 200million shares to approximately 16.7 million shares. All share and per share amounts included in the consolidated financialstatements have been adjusted retroactively to reflect the effects of the reverse stock split. b.Accounting principles The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United Statesof America (“U.S. GAAP”). c.Use of estimates in the preparation of financial statements The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the financialstatements date and the reported expenses during the reporting periods. Actual results could differ from those estimates.As applicable to these consolidated financial statements, the most significant estimates and assumptions relate to stock basedcompensation, valuation and impairment of marketable securities and valuation of tax exposures. F - 10 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued): d.Functional currency The currency of the primary economic environment in which the operations of the Group are conducted is the U.S. dollar (“$” or “dollar”).Therefore, the functional currency of the Group is the dollar. Transactions and balances originally denominated in dollars are presented at their original amounts. Balances in foreign currencies aretranslated into dollars using historical and current exchange rates for non-monetary and monetary balances, respectively. For foreigntransactions and other items reflected in the statements of operations, the following exchange rates are used: (1) for transactions - exchangerates at transaction dates or average rates and (2) for other items (derived from non-monetary balance sheet items such as depreciation) -historical exchange rates. The resulting transaction gains or losses are carried to financial income or expenses, as appropriate. e.Principles of consolidation The consolidated financial statements include the accounts of the Company and its Subsidiary. All inter-company transactions and balances havebeen eliminated in consolidation. f.Property and equipment Property and equipment are recorded at cost and depreciated by the straight-line method over the estimated useful lives of the assets. Annual rates of depreciation are as follows: % Computers and peripheral equipment 33 Office furniture and equipment 15-33 Leasehold improvements are amortized over the term of the lease which is shorter than the estimated useful life of the improvements. g.Income taxes1. Deferred taxesDeferred taxes are determined utilizing the asset and liability method based on the estimated future tax effects of differences between thefinancial accounting and tax bases of assets and liabilities under the applicable tax laws. Deferred tax balances are computed using the taxrates expected to be in effect when those differences reverse. A valuation allowance in respect of deferred tax assets is provided if, basedupon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. TheCompany has provided a full valuation allowance with respect to its deferred tax assets. Regarding the Subsidiary, the recognition is prohibited for deferred tax liabilities or assets that arise from differences between the financialreporting and tax bases of assets and liabilities that are measured from the local currency into dollars using historical exchange rates, andthat result from changes in exchange rates or indexing for tax purposes. Consequently, the abovementioned differences were not reflectedin the computation of deferred tax assets and liabilities. F - 11 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued): Taxes that would apply in the event of disposal of investments in the subsidiary have not been taken into account in computing deferredtaxes, as it is the Company’s intention to hold this investment, not to realize it. 2. Uncertainty in income tax The Company follows a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the taxposition for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will besustained on audit. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized uponultimate settlement. Such liabilities are classified as long-term, unless the liability is expected to be resolved within twelve months from thebalance sheet date. The Company's policy is to include interest and penalties related to unrecognized tax benefits within income taxexpenses. h.Research and development, netResearch and development expenses include costs directly attributable to the conduct of research and development programs, including thecost of salaries, employee benefits, costs of registered patents materials, the cost of supplies, the cost of services provided by outsidecontractors, including services related to the Company’s clinical trials, clinical trial expenses and the full cost of manufacturing drug foruse in research and preclinical development. All costs associated with research and development are expensed as incurred. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-partycontractors. The Company out sources a substantial portion of its clinical trial activities, utilizing external entities such as ContractResearch Organizations, independent clinical investigators, and other third-party service providers to assist the Company with theexecution of its clinical studies. For each clinical trial that the Company conducts, clinical trial costs are expensed immediately. Grants received from the OCS and Bio-Jerusalem are recognized as grant income when the grants become receivable, provided there isreasonable assurance that the Company will comply with the conditions attached to the grant and there is reasonable assurance the grantwill be received. The grants are deducted from the related research and development expenses as the costs are incurred and are presented inR&D expenses, net. See also notes 8(k) and 8(l). i.Cash equivalentsThe Company considers all short term, highly liquid investments, which include short-term deposits with original maturities of threemonths or less from the date of purchase that are not restricted as to withdrawal or use and are readily convertible to known amounts of cash,to be cash equivalents. F - 12 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued): j.Loss per common share Basic and diluted net loss per common share are computed by dividing the net loss for the period by the weighted average number of sharesof common stock outstanding and shares relating to receipts on account of shares in equity during the period. Outstanding stock optionsand warrants have been excluded from the calculation of the diluted loss per share because all such securities are anti-dilutive for allperiods presented. The total number of common stock options and warrants excluded from the calculation of diluted net loss was 2,343,972for the year ended August 31, 2013 (1,892,180 for the year ended August 31, 2012). The computation of basic and diluted net loss percommon share was adjusted retroactively for all periods presented to reflect the Company’s reverse stock split. See also note 1a(3). k.Impairment in value of long-lived assets The Company reviews long-lived assets, to be held and used, for impairment whenever events or changes in circumstances indicate that thecarrying amount of the assets may not be recoverable. In the event the sum of the expected future cash flows (undiscounted and withoutinterest charges) of the long-lived assets is less than the carrying amount of such assets, an impairment loss would be recognized, and theassets are written down to their estimated fair values l.Stock based compensation Equity awards granted to employees are accounted for using the grant-date fair value method. The fair value of share-based paymenttransactions is recognized as an expense over the requisite service period, net of estimated forfeitures. The Company estimated forfeituresbased on historical experience and anticipated future conditions. The Company elected to recognize compensation cost for an award with only service conditions that has a graded vesting schedule usingthe accelerated method based on the multiple-option award approach. When stock options are granted as consideration for servicesprovided by consultants and other non-employees, the transaction is accounted for based on the fair value of the consideration received orthe fair value of the stock options issued, whichever is more reliably measurable. The fair value of the options granted is measured on a finalbasis at the end of the related service period and is recognized over the related service period using the straight-line method. m.Warrants issued as part of capital raisings that are classified as a liability Warrants that entitle the holder to down-round protection (through ratchet and anti-dilution provisions) are classified as liabilities in thestatement of financial position. The liability is measured both initially and in subsequent periods at fair value, with changes in fair value charged to finance expenses, net.See note 6. F - 13 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued): n.Fair value measurement: Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between marketparticipants at the measurement date. In order to increase consistency and comparability in fair value measurements, the guidanceestablishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels,which are described as follows: Level 1:Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fairvalue hierarchy gives the highest priority to Level 1 inputs. Level 2:Observable prices that are based on inputs other than quoted prices included within Level 1 that are observable for theasset or liability, either directly or indirectly. Level 3:Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority toLevel 3 inputs. As of August 31, 2013 the assets or liabilities measured at fair value comprise of available for sale securities (level 1). In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use ofunobservable inputs to the extent. In order to secure the fulfillment of the Company’s obligations under the derivatives agreements, the Company has placed a restricteddeposit with the bank in an amount of $16,000. Available-for-sale securities are reported at fair value, with unrealized gains and losses, net of related tax recorded as a separate componentof other comprehensive income in equity until realized. Unrealized losses that are considered to be other-than-temporary are charged tostatement of operations as an impairment charge and are included in the consolidated statement of operations under impairment ofavailable-for-sale securities. The Company considers available evidence in evaluating potential impairments of its investments, including the duration and extent towhich fair value is less than cost, and the Company’s ability and intent to hold the investment. Realized gains and losses on sales of thesecurities are included in the consolidated statement of operations as financial income or expenses. o.Concentration of credit risks Financial instruments that subject the Company to credit risk consist primarily of cash and cash equivalents, deposit and short terminvestments which are deposited in major financial institutions. The Company is of the opinion that the credit risk in respect of thesebalances is remote. F - 14 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued): p.Newly issued and recently adopted accounting pronouncements: 1.In June 2011, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (ASU) 2011-05, anupdate to ASC No. 220, “Presentation of Comprehensive Income,” which eliminates the option to present other comprehensiveincome and its components in the statement of shareholders’ equity. The Company can elect to present the items of net income andother comprehensive income in a single continuous statement of comprehensive income or in two separate, but consecutive,statements. Under either method the statement would need to be presented with equal prominence as the other primary financialstatements. The amended guidance, which must be applied retroactively, is effective for fiscal years, and interim periods within thoseyears, beginning after December 15, 2011, with earlier adoption permitted. In December 2011, the FASB issued another update on thetopic, which deferred the effective date pertaining only to the presentation of reclassification adjustments on the face of the financialstatements. The Company adopted the pronouncement in the first quarter of fiscal year 2013. 2.In February 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out ofAccumulated Other Comprehensive Income (“ASU 2013-02”). This update requires an entity to provide information about theamounts reclassified out of accumulated other comprehensive income by component. In addition, ASU 2013-02 requires presentation,either on the face of the income statement or in the notes, of significant amounts reclassified out of accumulated other comprehensiveincome by respective line items of net income, but only if the amounts reclassified are required to be reclassified in their entirety inthe same reporting period. For amounts that are not required to be reclassified in their entirety to net income, an entity is required tocross-reference to other disclosures that provide additional details about these amounts. The amendments in ASU 2013-02 will beeffective prospectively for annual reporting periods beginning after December 15, 2012, and interim periods within those annualperiods. The accounting update will be applicable to the Company beginning in the first quarter of fiscal year 2014. The Companydoes not expect the adoption of ASU 2013-02 to have a material effect on the consolidated financial statement presentation. F - 15 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued): 3.In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a NetOperating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (ASU 2013-11). This update requires an entityto present in the financial statements an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to adeferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extenta net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax lawof the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the taxlaw of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset forsuch purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combinedwith deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit anddeferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date.The amendments in ASU 2013-11 will be effective prospectively for annual reporting periods beginning after December 15, 2013,and interim periods within those annual periods. The accounting update will be applicable to the Company beginning in the firstquarter of fiscal year 2015. The Company does not expect the adoption of ASU 2013-11 to have a material effect on the consolidatedfinancial statement presentation. NOTE 2 - SHORT TERM DEPOSITS:Amounts that represent bank deposits that do not meet the cash equivalent criteria are the following: August 31 2013 2012 Annualinterest rate Amount Annualinterest rate Amount Dollar deposits 0.6-1.06% $5,111,914 0.85% $260,371 NIS deposits 1.93% 134,713 1.93-1.97% 194,010 $5,246,627 $454,381 F - 16 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 3 - MARKETABLE SECURITIES: During the reporting period, marketable securities consist wholly of equity securities of D.N.A, which were received in March 2011 as part of theconsideration for selling the shares of Entera, see also note 1a(1), and in October 2012, as an option to purchase ordinary shares of D.N.A with noadditional costs in exchange for the Company's common stock (the "D.N.A Option"), see also note 9e. The D.N.A Option was exercised by theCompany in February 2013 for 21,637,611 shares of D.N.A. Pursuant to Tel Aviv Stock Exchange ("TASE") policy regarding private placements,trading of such shares was restricted until August 2013. Until August 26, 2013, the fair value of the restricted securities was measured based on thequoted prices of the otherwise identical unrestricted securities, adjusted for the effect of the restriction by applying a proper discount. Thediscount was determined with reference to other similar restricted instruments. Similar securities, with no restriction on tradability, are quoted onan active market. As of August 31, 2013 the securities were reclassified to level 1, since the restriction period was over. Those securities are classified as available-for-sale and are recorded at fair value.On February 14, 2013 the Subsidiary sold 3,500,000 of the D.N.A shares in a private transaction for a total of NIS 420,000 (or approximately$114,130). On March 5, 2013 each of the Subsidiary and the Company sold additional 1,750,000 of their D.N.A shares in a private transaction fora total of NIS 420,000 (or approximately $112,540).The cost of the securities sold and the amount reclassified out of accumulated other comprehensive income into net loss, were determined byspecific identification. The shares are traded on the TASE and have a quoted price. The fair value of those securities is measured at the quoted prices of the securities onthe measurement date. Financial assets carried at fair value as of August 31, 2013 and 2012 are classified as level 1 as described in the table below: Level 1 Marketable securities: August 31, 2013 $956,376 August 31, 2012 $200,311 As of August 31, 2013 the Group owns approximately 11.1% of D.N.A’s outstanding ordinary shares. For information regarding sales of D.N.Ashares by the Group after balance sheet date, see note 17a. Transfers in and/or out of level 3 are recognized in the beginning of the reporting period. The following table summarizes the activity for those financial assets where fair value measurements are estimated utilizing Level 3 inputs: August 31 2013 2012 Carrying value at the beginning of the period $- $384,565 Additions 628,630 - Reclassification to level 1 (628,630) (384,565)Carrying value at the end of the period $- $- F - 17 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 3 - MARKETABLE SECURITIES (continued):As of August 31, 2013, the carrying amount of cash and cash equivalents, short term deposits, accounts receivable, other current assets andaccounts payables and accrued expenses approximates their fair values due to the short-term maturities of these instruments. The fair value of long-term deposits also approximates their carrying value, since they bear interest at rates close to the prevailing market rates.The amounts funded in respect of employee rights are stated at cash surrender value which approximates its fair value. NOTE 4 - PREPAID EXPENSES AND OTHER CURRENT ASSETS:Composition of prepaid expenses and other current assets, grouped by major classifications, is as follows: August 31 2013 2012 Tax Authorities $59,898 $53,341 Prepaid expenses and other receivables 30,205 36,657 $90,103 $89,998 NOTE 5 - PROPERTY AND EQUIPMENT, NET: a.Composition of property and equipment, grouped by major classifications, is as follows: August 31 2013 2012 Cost: Leasehold improvements $76,029 $76,029 Office furniture and equipment 19,941 19,941 Computers and peripheral equipment 34,301 29,642 130,271 125,612 Less - accumulated depreciation and amortization 124,503 120,844 $5,768 $4,768 b.Depreciation expenses totaled $5,379 and $14,737 in the years ended August 31, 2013 and 2012, respectively. F - 18 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 6 - WARRANTS As part of the Company's private placements, warrants were granted to the Leading Investor, as defined in note 9c. Warrants to purchase 182,292shares were granted in January 2011 (the "2011 Warrants"), warrants to purchase 112,613 shares were granted in August 2012 (the "August 2012Warrants") and warrants to purchase 16,892 shares were granted in November 2012 (together, with the 2011 Warrants and the August 2012Warrants, the "Three Warrants"). Each warrant was granted for five years at an initial exercise price of $6.00 per share. The warrants included afull ratchet anti-dilution protection from the second year anniversary date after issuing the warrant, subject to certain limitations and while thewarrant was outstanding. In the event the Company was to issue or sell any common stock for a consideration per share lower than the exerciseprice then in effect, or was to issue or sell any options, warrants or other rights for the purchase or acquisition of such shares at a considerationper share of less than the exercise price then in effect, the warrants were to be amended to (a) reduce the exercise price to an amount equal to theper share consideration payable to the company in such sale or issuance, and (b) the quantity of warrants were to be updated, based on certainrules as determined in the Warrants Agreements with the Leading Investor. As a result of a private placement in August 2012, and pursuant to adjustment of the terms of the 2011 Warrants, such warrants were amended to:(i) reduce the exercise price from $6.00 to $4.44, (ii) increase the number of shares issuable upon the exercise of the warrant from 182,292 to246,341. In addition, as a result of the agreement with D.N.A from October 2012, as described in note 9e, and pursuant to adjustment terms of the 2011Warrants, the Company further amended the 2011 Warrants by: (i) reducing the exercise price from $4.44 to $3.7656 and (ii) increasing thenumber of shares issuable upon the exercise of the 2011 Warrants from 246,341 to 290,459. On November 29, 2012, the Company and the Leading Investor entered into a letter agreement (the "Agreement") in connection with the ThreeWarrants. Pursuant to the Agreement, the Company and the Leading Investor agreed to amend the Three Warrants to provide that the anti-dilution protection of each of the Three Warrants shall be removed in its entirety. In addition, as to the Warrants issued in August and November2012, the parties agreed that the exercise price shall be reduced to $3.7656. On that day, the Company also issued to the Leading Investor aCommon Stock Purchase Warrant (the "New Warrant") pursuant to which, the Leading Investor shall have the right to purchase up to 137,311shares of the Company over a period of four years at an exercise price of $7.20 per share. The fair value of the New Warrant at the date of grantwas $145,173, using the following assumptions: dividend yield of 0% , expected term of 4 years, expected volatility of 62.29% and risk-freeinterest rate of 0.57%. F - 19 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 6 - WARRANTS (continued): The fair value of the warrants was determined by using a Monte Carlo type model based on the risk neutral approach. The significantunobservable input used in the fair value measurement is the future expected issue dates. Significant delay in this input would result a higherfair value measurement.In addition to the New Warrant, Nadav Kidron, the Company’s President, Chief Executive Officer and director, in his personal capacity as ashareholder of the Company, undertook and agreed that following the execution and delivery of the Agreement, in the event that an adjustmentpursuant to the anti-dilution protection of any of the Three Warrants (had it not been amended by the Agreement thereof) would have beentriggered and the number of shares of common stock of the Company that the Leading Investor would have been able to purchase under theThree Warrants would have increased by an aggregate number in excess of 137,311 shares, then the Leading Investor shall have the right topurchase from Mr. Kidron such number of shares of common stock of the Company owned by Mr. Kidron equal to such excess, up to a maximumof 112,690 shares of common stock of the Company (the "Kidron Option"). The foregoing right shall survive until the expiration date of suchThree Warrants. The fair value of the Kidron Option on the date of grant was $168,220, based on the Monte Carlo type model and wasrecognized as an expense against the stockholders equity. Following the removal of the anti-dilution protection, the Three Warrants were no longer classified as liabilities. The Company recognized afinancial expense in the amount of $296,982 during the three months ended November 30, 2012. Financial liabilities carried at fair value as of August 31, 2013 and 2012, are classified in the table below in one of the three fair value categories: Fair value measurementsat reportingdate using Level 3 Total Warrants - August 31, 2013 $- $- August 31, 2012 $637,182 $637,182 The following table summarizes the activity for those financial liabilities where fair value measurements are estimated utilizing Level 3 inputs: Year endedAugust 31, Year endedAugust 31, 2013 2012 Carrying value at the beginning of the period $637,182 $- Additional warrant liabilities granted 28,344 494,478 Changes in fair value (44,699) 142,704 Exchange of warrants (620,827) - Carrying value at the end of the period $- $637,182 F - 20 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 7 - EMPLOYEES RIGHTS UPON RETIREMENT: The Subsidiary is required to make a severance payment upon dismissal of an employee, or upon termination of employment in certaincircumstances. The severance pay liability to the employees (based upon length of service and the latest monthly salary - one month’s salary foreach year employed) is recorded on the Subsidiary’s balance sheets under “Liability for employee rights upon retirement.” The liability isrecorded as if it were payable at each balance sheet date on an undiscounted basis. The liability is funded in part by the purchase of insurance policies or by the establishment of pension funds with dedicated deposits in thefunds. The amounts used to fund these liabilities are included in the Subsidiary’s balance sheets under “Funds in respect of employee rights uponretirement.” These policies are the Subsidiary’s assets. However, under labor agreements and subject to certain limitations, any policy may betransferred to the ownership of the individual employee for whose benefit the funds were deposited. In the years ended August 31, 2013 and 2012,the Subsidiary deposited $2,090 and $3,620, respectively, with insurance companies in connection with its severance payment obligations.In accordance with the current employment agreements with certain employees, the Subsidiary makes regular deposits with certain insurancecompanies for accounts controlled by each applicable employee in order to secure the employee’s rights upon retirement. The Subsidiary is fullyrelieved from any severance pay liability with respect to each such employee after it makes the payments on behalf of the employee. The liabilityaccrued in respect of these employees and the amounts funded, as of the respective agreement dates, are not reflected in the Subsidiary's balancesheets, as the amounts funded are not under the control and management of the Subsidiary and the pension or severance pay risks have beenirrevocably transferred to the applicable insurance companies (the “Contribution Plans”). The amounts of severance pay expenses were $23,331 and $5,615 for the years ended August 31, 2013 and 2012, respectively. $12,592 and$7,089 in the years ended August 31, 2013 and 2012, respectively, were in respect of a Contribution Plan. The Subsidiary expects to contribute approximately $25,480 in the year ending August 31, 2014 to insurance companies in connection with itsseverance liabilities for its operations for that year, $22,835 of which will be contributed to one or more Contribution Plans. NOTE 8 - COMMITMENTS: a.On September 11, 2011, the Subsidiary entered into an agreement with Hadasit, Dr. Miriam Kidron and Dr. Daniel Schurr (the “Agreement”),to retain consulting and clinical trial services. According to the Agreement, Hadasit will be entitled to a consideration of $200,000 to be paidby the Company in accordance with the actual progress of the study, $50,000 of which were paid and recognized through August 31, 2013.See also note 1a(1). F - 21 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 8 - COMMITMENTS (continued): b.The Subsidiary has entered into operating lease agreements for vehicles used by its employees for a period of 3 years. The lease expenses for the years ended August 31, 2013 and 2012 were $29,603 and $29,543, respectively. The future lease payments under the lease agreement are $24,603, $17,615 and $7,340 for the years ending August 31, 2014, 2015 and 2016,respectively. As security for its obligation under the lease agreements the Subsidiary deposited $1,959, which are classified as long term deposits. c.On July 5, 2010, the Subsidiary of the Company entered into a Manufacturing Supply Agreement (“MSA”) with Sanofi-Aventis DeutschlandGMBH (“Sanofi”). According to the MSA, Sanofi will supply the subsidiary with specified quantities of recombinant human insulin to beused for clinical trials in the United States. d.On February 15, 2011, the Subsidiary entered into a consulting agreement with a third party (the "Consultant”) for a period of five years,pursuant to which the Consultant will provide consultation on scientific and clinical matters. The Consultant is entitled to a fixed monthlyfee of $8,000, royalties of 8% of the net royalties actually received by the Subsidiary in respect of the patent that was sold to Entera on March31, 2011 (see note 1a(1)) and an option to purchase up to 20,834 shares of the Company at an exercise price of $6.00 per share. The optionvests in five annual installments commencing February 16, 2012 and expires on February 16, 2021. The initial fair value of the option on thedate of grant was $62,185, using the Black Scholes option-pricing model and was based on the following assumptions: dividend yield of 0%for all years; expected volatility of 78.65%; risk-free interest rates of 3.62%; and the remaining expected term of 10 years. The fair value ofthe option as of August 31, 2013 was $108,675, using the following assumptions: dividend yield of 0% and expected term of 7.46 years;expected volatility of 76.87%; and risk-free interest rate of 2.33%. The fair value of the option granted is remeasured at each balance sheetreporting date and is recognized over the related service period using the straight-line method. e.On July 25, 2011, the Company issued warrants to purchase 32,000 shares of the Company at an exercise price of $6.00 per share to a thirdparty as remuneration for services to be rendered during the 12 month period commencing May 13, 2011. The warrants vest in twelve equalinstallments over the five years period form October 13, 2011 to May 13, 2016, and will expire on July 25, 2016. The fair value of thesewarrants on the date of grant was $5,057, using the Black Scholes option-pricing model and was based on the following assumptions:dividend yield of 0% for all years; expected volatility of 77.39%; risk-free interest rate of 1.55%; and the remaining expected term of 5 years.The fair value of the option as of August 31, 2013, was $9,169, using the following assumptions: dividend yield of 0% and expected term of2.9 years; expected volatility of 76.41%; and risk-free interest rate of 0.79%. The fair value of the option granted is remeasured at eachbalance sheet reporting date and is recognized over the related service period using the straight-line method. F - 22 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 8 - COMMITMENTS (continued): f.On February 15, 2012, the Company entered into an advisory agreement with a third party for a period of one year, pursuant to which suchthird party will provide investors relations services and will be entitled to a share based compensation as follows: 25,000 shares of theCompany will be issued in six installments over the engagement period, commencing February 15, 2012, and a warrant to purchase 62,500shares of the Company at an exercise price of $6.00 per share. The warrant vested in 12 monthly installments commencing February 15, 2012and expires on February 15, 2017. The initial fair value of the warrant on the date of grant was $121,304, using the Black Scholes option-pricing model and was based on the following assumptions: dividend yield of 0% for all years; expected volatility of 76.82%; risk-freeinterest rates of 0.81%; and the remaining expected term of 5 years. On July 3, 2012, the Company and the third party entered into an amendment to the agreement, according to which the original agreementwas extended until July 3, 2013, and a new vesting schedule was determined for the remainder of the share based compensation until July 3,2013. The change in the vesting schedule did not have any material effect on the expenses related to this advisory agreement. The Companyrecords expenses in respect of this warrant during the term of the services.The fair value of the warrant as of June 15, 2013, the date of the last vesting installment, was $164,752, using the following assumptions:dividend yield of 0% and expected term of 4.0 years; expected volatility of 76.16%; and risk-free interest rate of 0.77%. The fair value of thewarrant granted is recognized over the related service period using the straight-line method. g.On March 18, 2012, the Subsidiary entered into a lease agreement for its facilities in Israel. The lease agreement is for a period of 57 monthscommencing January 1, 2012. The annual lease expenses for the years ended August 31, 2013 and 2012 were approximately $13,116 and $9,132, respectively.On April 28, 2013, the Subsidiary entered into a new lease agreement for its office facilities in Israel. The new lease agreement is for a periodof 36 months commencing October 1, 2013. The annual lease payment will be NIS 89,052 from 2014-2016, and will be linked to the increasein the Israeli consumer price index (as of August 31, 2013, the future annual lease payments under the new agreement will be $24,641, basedon the exchange rate as of August 31,2013).As security for its obligation under this lease agreement the Company provided a bank guarantee in an amount equal to three monthly leasepayments. h.On April 15, 2013, the Company entered into a consulting agreement with a third party advisor for a period of twelve months, pursuant towhich such advisor provided investor relations services and received a monthly cash fee and 15,000 shares of the Company to be issued inthree equal installments, on each of May 1, 2013, August 1, 2013 and November 15, 2013. On July 11, 2013 the Company issued to suchadvisor 5,000 shares. The fair value of the shares at this date was $34,900. The Company issued the remaining 10,000 shares on November 4,2013, see also note 9f. F - 23 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)NOTE 8 - COMMITMENTS (continued): i.On April 29, 2013, the Subsidiary entered into a Clinical Research Organization Service Agreement with a third party, to retain it as a CRO,for its Phase 2a clinical trial for an oral insulin capsule. As consideration for its services, the subsidiary will pay the CRO a total amount ofapproximately $332,702 that will be paid during the term of the engagement and based on achievement of certain milestones, $89,830 ofwhich were paid and recognized through August 31, 2013. j.On July 23, 2013, the Subsidiary entered into a Master Service Agreement with a vendor for the process development and production of oneof its oral capsule ingredients in the amount of $102,280, of which $30,684 were paid and recognized through August 31, 2013. k.Grants from Bio-Jerusalem The Subsidiary is committed to pay royalties to the Bio-Jerusalem fund on proceeds from future sales at a rate of 4% and up to 100% of theamount of the grant received by the Company (Israeli CPI linked) at the total amount of $65,053. As of August 31, 2013, the Subsidiary hadnot yet realized any revenues and did not incur any royalty liability.During the year ended August 31, 2013, the Company received $12,319 from the Bio-Jerusalem fund. For the period from inception on April12, 2002 through August 31, 2013, the research and development expenses are presented net of Bio-Jerusalem grants, in the total amount of$65,053. l.Grants from the Chief Scientist Office ("OCS") Under the terms of the Company’s funding from the Israeli Government, royalties of 3%-3.5% are payable on sales of products developedfrom a project so funded, up to 100% of the amount of the grant received by the Company (dollar linked) with the addition of annual interestat a rate based on LIBOR. At the time the grants were received, successful development of the related projects was not assured. In case of failure of a project that waspartly financed as above, the Company is not obligated to pay any such royalties.On August 31, 2013, the Subsidiary had not yet realized any revenues from the said project and did not incur any royalty liability. The totalamount that was actually received through August 31, 2013 was $1,659,338.For the years ended August 31, 2013, and 2012, and for the period from inception on April 12, 2002 through August 31, 2013, the researchand development expenses are presented net of OCS Grants, in the total amount of $296,836, $372,959 and $1,717,392, respectively. F - 24 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)NOTE 9 - STOCKHOLDERS' EQUITY: In February 2013 the Company's common stock began trading on the Nasdaq Capital Market under the symbol ORMP. Before then it was tradedon the Over-The-Counter Bulletin Board. The following are capital stock transactions that took place during the years ended August 31, 2013 and 2012: a.On August 15, 2011, the Company entered into a consulting agreement with a third party advisor for a period of nine months, pursuant towhich such advisor provided investor relations services and received a monthly cash fee and shares of the Company's that were issued in threeequal installments as follows: on each of December 12, 2011, March 14, 2012 and May 15, 2012, the Company issued 6,917 shares at a fairvalue of $24,900, $26,560 and $24,900, respectively. b.Under the terms of the advisory agreement, as described in note 8f, on each of March 14, 2012 and July 5, 2012, the Company issued 4,167shares to such advisor as remuneration for services provided. The fair value of the shares at the dates of grant was $15,500 and $16,000,respectively. The Company issued the remaining 16,667 shares on July 30, 2013 at a fair value of $123,336. c.In August 2012, the Company entered into Securities Purchase Agreements with a number of investors for the sale of 801,942 units at apurchase price of $4.44 per unit for total consideration of $3,560,192. Each unit consisted of one share of the Company and one common stockpurchase warrant. Each warrant entitles the holder to purchase half a share exercisable for five years at an exercise price of $6.00 per share. Theinvestors were granted customary registration rights with respect to resales of shares, including the shares underlying the warrants. In addition,one of the investors who was previously defined as a leading investor (the "Leading Investor"), who purchased 225,226 of the units, wasgranted the right to maintain its percentage of the shares of the Company’s common stock outstanding by purchasing more shares wheneverthe Company proposes to issue certain additional shares to other investors. Such right only exists so long as such investor holds at least 5% ofthe Company's outstanding common stock. In addition, such investor’s warrants contained anti-dilution protection (the "full ratchet anti-dilution protection") and cashless exercise provisions not contained in the other investors’ warrants. The other terms of the Leading Investor'sSecurities Purchase Agreement were substantially the same as those granted to him in 2011 for his first investment. As to the amendment to the2011 Warrants, see note 6. In addition, in August 2012, the Company entered into a Securities Purchase Agreement with an investor for the sale of 5,652 units at sameterms as describe above. As the payment from said investor was received during September 2012, following which, the Company issued him5,652 shares of its common stock and a warrant to purchase 2,826 shares of its common stock, the proceeds from that investment, of $25,093were presented as shares and warrants to be issued for cash. The Company paid cash consideration of $71,250 as finders' fees in connection with the Securities Purchase Agreements. F - 25 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 9 - STOCKHOLDERS' EQUITY (continued): d.Between September and November 2012, the Company entered into Securities Purchase Agreements with a number of investors for the sale of329,872 units at a purchase price of $4.44 per unit for total consideration of $1,464,425. Each unit consisted of one share of the Company'scommon stock and one common stock purchase warrant. Each warrant entitles the holder to purchase 0.50 a share of common stockexercisable for five years at an exercise price of $6.00 per share. The investors were granted customary registration rights with respect toresales of shares, including the shares underlying the warrants. The Leading Investor purchased 33,784 of the units and was granted the samerights as described in note 9c above. See also note 6 regarding the removal of the full ratchet anti-dilution protection. As a finder's fee, in connection with the securities purchase agreements, the Company paid cash consideration of $12,885, as well as issued1,127 shares of the Company and 564 common stock purchase warrant to another individual. The Company also issued 12,745 shares of theCompany and 6,373 common stock purchase warrants to a director as a finder's fee with respect to the Securities Purchase Agreementsdescribed above and to the Securities Purchase Agreements to which the Company had entered into in August 2012. e.On October 30, 2012, the Company entered into a Securities Purchase Agreement with D.N.A, according to which, the Company issued on thatday to D.N.A 199,172 shares of its common stock, in consideration for the option to purchase up to 21,637,611 ordinary shares of D.N.A,valued at approximately $628,630 at the day of the transaction. The Company exercised the option in February 2013. See also note 3. f.As described in note 8h, on July 11, 2013, the Company issued 5,000 shares of its common stock to an advisor as remuneration for servicesrendered. g.On July 10, 2013, the Company entered into a Placement Agency Agreement with Aegis Capital Corp. as representative of the severalplacement agents (the "Placement Agents"), pursuant to which the Placement Agents agreed to use their reasonable best efforts to arrange forthe sale of up to 658,144 shares of the Company’s common stock. In connection therewith, on July 10, 2013, the Company also entered into aSecurities Purchase Agreement, pursuant to which the Company agreed to sell an aggregate of 658,144 shares at a price of $7.00 per share, tovarious investors in a registered direct offering (the "Offering"). The Company had received all funds and issued all shares in connection withthe Offering as of July 17, 2013. The net proceeds to the Company from the offering are approximately $4,238,889, after deducting PlacementAgents' commissions of $255,246 and other offering expenses of the Company. h.On July 8,2013, the Company issued 12,042 shares to four service providers as remuneration for investors relations services provided duringthe year ended August 31, 2013. The total fair value of the shares at the date of grant was $86,221. i.As to shares issued as part of stock based compensation plan see note 10. F - 26 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 10 - STOCK BASED COMPENSATION: As of August 31, 2013, the Company has one stock option plan (the “2008 Stock Option Plan”), under which, the Company had reserved a pool of1,000,000 shares of the Company’s common stock which may be issued at the discretion of the Company’s Board of Directors from time to time.Under this Plan, each option is exercisable into one share of common stock of the Company. The options may be exercised after vesting and in accordance with vesting schedules which will be determined by the Board of Directors for eachgrant. The maximum term of the options is 10 years. The fair value of each stock option grant is estimated at the date of grant using a Black Scholes option pricing model. The volatility is based on ahistorical volatility, by statistical analysis of the weekly share price for past periods. The expected term is the length of time until the expecteddates of exercising the options, based on estimated data regarding employees’ exercise behavior.The following are stock options transactions made during the years ended August 31, 2013 and 2012: a.On August 8, 2012, options to purchase an aggregate of 144,000 shares of the Company were granted to Nadav Kidron, the Company’sPresident, Chief Executive Officer and director, and Miriam Kidron, the Company’s Chief Medical and Technology Officer and director, bothrelated parties, at an exercise price of $4.08 per share (equivalent to the traded market price on the date of grant), the options vested withrespect to 42,000 shares of common stock immediately on the date of grant and the remaining shares of common stock will vest in seventeenequal monthly installments of 6,000 each. These options expire on August 7, 2022. The fair value of these options on the date of grant was$373,565, using the Black Scholes option-pricing model and was based on the following assumptions: dividend yield of 0% for all years;expected volatility of 76.03%; risk-free interest rates of 0.83%; and expected term of 5.5 years. b.On August 8, 2012, options to purchase an aggregate of 43,334 shares of the Company were granted to three Board of Directors members at anexercise price of $4.08 per share (equivalent to the traded market price on the date of grant). The options vest in two equal annualinstallments, commencing January 1, 2013, and expire on August 7, 2022. The fair value of these options on the date of grant was $114,694,using the Black Scholes option-pricing model and was based on the following assumptions: dividend yield of 0% for all years; expectedvolatility of 76.03%; risk-free interest rates of 1.0375%; and expected term of 5.75 years. c.On August 8, 2012, options to purchase 50,750 shares of the Company were granted to an employee of the Subsidiary, at an exercise price of$4.08 per share (equivalent to the traded market price on the date of grant). The options vest in 29 equal monthly installments, commencingAugust 31, 2012, and expire on August 8, 2022. The fair value of these options on the date of grant was $134,324, using the Black Scholesoption-pricing model and was based on the following assumptions: dividend yield of 0% for all years; expected volatility of 76.03%; risk-freeinterest rates of 1.0375%; and expected term of 5.75 years. F - 27 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)NOTE 10 - STOCK BASED COMPENSATION (continued): d.On August 8, 2012, options to purchase 6,250 shares of the Company c granted to an employee of the Subsidiary, at an exercise price of $4.08per share (equivalent to the traded market price on the date of grant). The options vest in three equal annual installments, commencingJanuary 1, 2013, and expire on August 7, 2022. The fair value of these options on the date of grant was $16,780, using the Black Scholesoption-pricing model and was based on the following assumptions: dividend yield of 0% for all years; expected volatility of 76.03%; risk-freeinterest rates of 0.935%; and expected term of 6 years. e.August 8, 2012, the Company's Board of Directors approved an extension of the term of the warrants to purchase 280,114 shares of theCompany held by Dr. Miriam Kidron by approximately two years from such approval, expiring on August 6, 2014. The incremental fair valueof the warrant extension was negligible. f.On December 20, 2012, options to purchase 20,000 shares of the Company were granted to a director at an exercise price of $6.00 per share(higher than the traded market price on the date of grant). The options vest in two equal annual installments, commencing January 1, 2013,and expire on December 19, 2022. The fair value of these options on the date of grant was $41,402, using the Black Scholes option-pricingmodel and was based on the following assumptions: dividend yield of 0% for all years; expected volatility of 64.35%; risk-free interest ratesof 1.01%; and expected term of 5.75 years. g.On December 20, 2012, options to purchase 4,667 shares of the Companywere granted to an employee of the Subsidiary at an exercise price of$6.00 per share (higher than the traded market price on the date of grant). The options vest in two equal annual installments, commencingJune 1, 2013, and expire on December 19, 2022. The fair value of these options on the date of grant was $9,660, using the Black Scholesoption-pricing model and was based on the following assumptions: dividend yield of 0% for all years; expected volatility of 64.35%; risk-freeinterest rates of 1.01%; and expected term of 5.75 years. h.On April 14, 2013, options to purchase 100,800 shares of the Company’s common stock were granted to an employee of the Subsidiary at anexercise price of $7.88 per share (equal to the traded market price on the date of grant). The options vest in 35 consecutive equal installmentsduring a 3-year period commencing on May 31, 2013, and two installments of 1,400 shares of common stock each, that will vest on April 30,2013 and April 14, 2016, and expire on April 14, 2023. The fair value of these options on the date of grant was $519,785, using the BlackScholes option-pricing model and was based on the following assumptions: dividend yield of 0% for all years; expected volatility of 75.46%;risk-free interest rates of 0.92%; and expected term of 6 years . i.As to options granted to third parties, see notes 8d, 8e and 8f. F - 28 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 10 - STOCK BASED COMPENSATION (continued):The fair value of each option grant is estimated on the date of grant using the Black Scholes option-pricing model with the followingassumptions: For options granted in the year ended August 31 2013 2012 Expected option life (years) 5.75-6 5.5-5.75 Expected stock price volatility (%) 64.35-75.46 76.03 Risk free interest rate (%) 0.92-1.01 0.83-1.0375 Expected dividend yield (%) 0.0 0.0 A summary of the status of the stock options granted to employees and directors as of August 31, 2013 and 2012, and changes during the yearsended on those dates, is presented below: Year ended August 31, 2013 2012 Weighted Weighted Number average Number average of exercise of exercise options price options price $ $ Options outstanding at beginning of year 932,116 3.72 834,117 3.84 Changes during the year: Granted - at market price 100,800 7.88 244,334 4.08 Granted - above market price 24,667 6.00 - Expired - (141,667) 5.40 Forfeited - (4,667) 5.64 Exercised 8,334 5.04 - Options outstanding at end of year 1,049,249 4.13 932,116 3.72 Options exercisable at end of year 870,883 717,088 Weighted average fair value of options granted during the year $4.55 $2.65 Costs incurred in respect of stock based compensation for employees and directors, for the years ended August 31, 2013 and 2012 were $562,966and $200,866, respectively. The total intrinsic value of employees options exercised during the year ended August 31, 2013, was $17,584. No options were exercised duringthe year ended August 31, 2012. F - 29 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 10 - STOCK BASED COMPENSATION (continued):The following table presents summary information concerning the options granted to employees and directors outstanding as of August 31, 2013: Weighted Average Weighted Range of Remaining average exercise Number Contractual exercise Aggregate prices outstanding Life price intrinsic value $ Years $ $ 0.012 280,114 0.93 0.012 2,038,670 4.08 to 6.48 668,335 7.05 5.28 1,340,874 7.88 100,800 9.62 7.88 - 1,049,249 5.66 4.13 3,379,544 The following table presents summary information concerning the options granted to employees and directors exercisable as of August 31, 2013: Weighted Average Weighted Range of Remaining average exercise Number Contractual exercise Aggregate prices exercisable Life price intrinsic value $ Years $ $ 0.012 280,114 0.93 0.012 2,038,670 4.08 to 6.48 578,169 6.74 5.43 1,075,120 7.88 12,600 9.62 7.88 - 870,883 4.92 3.72 3,113,790 As of August 31, 2013, there were $475,485 of unrecognized compensation costs related to non-vested employees and directors, to be recordedover the next 32 months. F - 30 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 10 - STOCK BASED COMPENSATION (continued):A summary of the status of the stock options granted to non-employees outstanding as of August 31, 2013, and changes during the years ended onthis date, is presented below: Year ended August 31 2013 2012 Weighted Weighted Number average Number average of exercise of exercise options price options price $ $ Options outstanding at beginning of year 144,856 6.66 82,356 7.20 Changes during the year: Granted above market price - 62,500 6.00 Options outstanding at end of year 144,856 6.66 144,856 6.66 Options exercisable at end of year 109,969 88,689 The Company recorded stock compensation of $156,253 and $117,098 during the years ended August 31, 2013 and 2012, respectively, related toconsulting services.The following table presents summary information concerning the options granted to non-employees outstanding as of August 31, 2013: Weighted Average Weighted Range of Remaining Average exercise Number Contractual Exercise Aggregate prices outstanding Life Price intrinsic value $ Years $ $ 4.08 to 6.00 111,520 3.79 5.93 151,785 9.12 33,336 4.33 9.12 - 144,856 3.92 6.66 151,785 F - 31 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 10 - STOCK BASED COMPENSATION (continued):The following table presents summary information concerning the options granted to non-employee exercisable as of August 31, 2013: Weighted Average Weighted Range of Remaining average exercise Number Contractual exercise Aggregate prices exercisable Life price intrinsic value $ Years $ $ 4.08 to 6.00 93,301 3.42 5.92 128,283 9.12 16,668 4.33 9.12 - 109,969 3.55 6.40 128,283 As of August 31, 2013 there were $52,949 of unrecognized compensation costs related to non-vested non-employee options, to be recorded overthe next 33 months.NOTE 11 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES: Year ended August 31, 2013 2012 Service providers $392,289 $580,714 Payroll and related expenses 58,652 16,459 $450,941 $597,173 NOTE 12 - RESEARCH AND DEVELOPMENT EXPENSES, NET: Period fromApril 12, 2002 (inception) Year ended through August 31, August 31, 2013 2012 2013 Clinical trials $1,341,471 $1,298,310 $6,504,824 Payroll and consulting fees 447,195 385,646 2,368,728 Costs for registration of patents 106,687 110,811 558,297 Compensation costs in respect of options granted to employees, directors andconsultants 346,961 98,688 3,268,842 Other 338,635 160,350 886,242 Less - grants from the OCS and Bio Jerusalem Fund (309,155) (372,959) (1,782,445) $2,271,794 $1,680,845 $11,804,488 F - 32 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 13 - GENERAL AND ADMINISTRATIVE EXPENSES Period fromApril 12, 2002 (inception) Year ended through August 31 August 31, 2013 2012 2013 Compensation costs in respect of options granted to employees, directors andconsultants $372,258 $172,470 $2,421,664 Professional services 439,175 221,218 2,338,919 Consulting fees 259,670 159,136 1,230,570 Travel costs 127,196 71,529 673,126 Write off of debt - - 275,000 Business development 308,183 284,899 1,124,128 Payroll and related expenses 230,191 144,101 983,399 Insurance 43,399 22,375 162,320 Other 252,057 127,436 984,550 $2,032,129 $1,203,164 $10,193,676 NOTE 14 - FINANCIAL INCOME AND EXPENSES a.Financial income Year ended August 31 2013 2012 Gain on sale of marketable securities (note 3) $90,370 $- Changes in fair value of warrants 44,699 - Income from interest 18,728 13,126 Other 26,698 - $180,495 $13,126 b.Financial expenses Year ended August 31 2013 2012 Exchange of warrants $296,982 $- Changes in fair value of warrants - 142,704 Exchange rate differences 2,804 35,067 Bank commissions 13,660 14,952 Other - 6,400 $313,446 $199,123 F - 33 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)NOTE 15 - TAXES ON INCOME:Taxes on income included in the consolidated statements of operations represent current taxes due to taxable income of the Company and itsSubsidiary. a.Corporate taxation in the U.S.The applicable corporate tax rate for the Company is 35%.As of August 31, 2013, the Company has an accumulated tax loss carryforward of approximately $5,605,237 (as of August 31, 2012,approximately $4,896,605). Under U.S. tax laws, carryforward tax losses expire 20 years after the year in which incurred. In the case of theCompany, the net loss carryforward will expire in the years 2025 through 2032. b.Corporate taxation in Israel:The Subsidiary is taxed in accordance with Israeli tax laws. The corporate tax rate applicable to 2012 and 2013 is 25%. On August 5, 2013, the Law for Change of National Priorities (Legislative Amendments for Achieving the Budgetary Goals for 2013-2014),2013 was published in Reshumot (the Israeli government official gazette), enacting, among other things, the following raising the corporatetax rate beginning in 2014 and thereafter to 26.5% (instead of 25%).As of August 31, 2013, the Subsidiary has an accumulated tax loss carryforward of approximately $7,663,790 (as of August 31, 2012,approximately $5,905,361). Deferred income taxes: August 31 2013 2012 In respect of: Net operating loss carryforward 3,992,737 3,190,152 Research and development expenses 338,908 18,008 Less - Valuation allowance (4,331,645) (3,208,160)Net deferred tax assets -,- -,- Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporarydifferences and carryforwards are expected to be available to reduce taxable income. As the achievement of required future taxable incomeis uncertain, the Company recorded a full valuation allowance. F - 34 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 15 - TAXES ON INCOME (continued): c.Loss before taxes on income and income taxes included in the income statements of operations: Period fromApril 12, 2002 (inception) Year ended through August 31 August 31, 2013 2012 2013 Loss before taxes on income: U.S. 1,185,831 599,067 9,626,374 Outside U.S. 3,251,044 2,655,193 12,461,502 $4,436,874 $3,254,260 $22,087,875 Income tax expenses (benefit): Current: U.S. (12,960) (7,569) 67,392 Outside U.S. (192,102) 97,787 108,440 $(205,062) $90,218 $175,832 d.Reconciliation of the statutory tax benefit to effective tax expenseFollowing is a reconciliation of the theoretical tax expense, assuming all income is taxed at the regular tax rates applicable to companies inthe United States, and the actual tax expense: Period fromApril 12, 2002 (inception) Year ended through August 31 August 31, 2013 2012 2013 Loss before income taxes as reported in the consolidated statement of operations $(4,436,874) $(3,254,260) $(22,087,875)Statutory tax benefit (1,522,906) (1,138,991) (7,700,757)Increase (decrease) in income taxes resulting from: Change in the balance of the valuation allowance for deferred tax 902,509 516,749 3,573,334 Disallowable deductions 374,059 120,156 2,617,605 Increase in taxes resulting from different tax rates applicable to the Subsidiary 276,338 502,086 1,588,322 Uncertain tax position (205,062) 90,218 23,210 Taxes on income for the reported year $(205,062) $90,218 $35,714 F - 35 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 15 - TAXES ON INCOME (continued): e.Uncertainty in Income Taxes ASC No.740 "Income Taxes" requires significant judgment in determining what constitutes an individual tax position as well as assessing theoutcome of each tax position. Changes in judgment as to recognition or measurement of tax positions can materially affect the estimate of theeffective tax rate and consequently, affect the operating results of the Company. The Company recognizes interest and penalties related to itstax contingencies as income tax expense. As of August 31, 2013 and 2012, the Company recorded zero and $15,539, respectively, ofpenalties related to tax contingencies.The following table summarizes the activity of the Company unrecognized tax benefits: Year ended August 31 2013 2012 Balance at Beginning of Year $228,272 $138,054 Increase (decrease) in uncertain tax positions for the current year (205,062) 90,218 Balance at End of Year $23,210 $228,272 The decrease in uncertain tax positions for the year ended August 31, 2013, is a result of the expiration of the statute of limitations withrespect to the 2008 tax year of the Subsidiary. The Company does not expect unrecognized tax expenses to change significantly over the next 12 months.The Company is subject to U.S. Federal income tax examinations for the tax years of 2008 through 2013. The Subsidiary is subject to Israeli income tax examinations for the tax years of 2009 through 2013. F - 36 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 16 - RELATED PARTIES - TRANSACTIONS: a.During each of the fiscal years of 2013 and 2012 the Company paid to directors $39,361 and $30,000, respectively, for managerial services. b.As to the agreements with Hadasit, see note 8a. c.On July 1, 2008, the Subsidiary entered into a consulting agreement with KNRY Ltd. (“KNRY”), an Israeli company owned by Nadav Kidron,whereby Mr. Nadav Kidron, through KNRY, will provide services as President and Chief Executive Officer of both Oramed and the Subsidiary(the “Nadav Kidron Consulting Agreement”). Additionally, on July 1, 2008, the Subsidiary entered into a consulting agreement with KNRYwhereby Dr. Miriam Kidron, through KNRY, will provide services as Chief Medical and Technology Officer of both Oramed and theSubsidiary (the “Miriam Kidron Consulting Agreement” and together with the Nadav Kidron Consulting Agreement, the “ConsultingAgreements”). The Consulting Agreements replaced the employment agreements entered into between the Company and KNRY, dated as ofAugust 1, 2007, pursuant to which Nadav Kidron and Miriam Kidron, respectively, provided services to the Company and the Subsidiary. TheConsulting Agreements are both terminable by either party upon 60 days prior written notice. The Consulting Agreements provide thatKNRY (i) will be paid, under each of the Consulting Agreements, in NIS a gross amount of NIS 50,400 per month (as of August 31, 2012 themonthly payment in the Company's functional currency was $12,512) and (ii) will be reimbursed for reasonable expenses incurred inconnection with performance of the Consulting Agreements. On July 17, 2013, the Subsidiary entered into amendments to the Consulting Agreements with KNRY, according to which, Nadav Kidron'sannual payment was set at $250,000, and in addition to such payment he will be granted the use of a company car and a one time cashbonus of $60,000, and Miriam Kidron’s annual payment was set at $200,000, and in addition to such payment she was granted the use of acompany car and a one time cash bonus of $20,000, both effective July 1, 2013. d.As to options granted to related parties, see notes 10a and 10f. e.Balances with related parties: August 31 2013 2012 Accounts Receivable - KNRY $1,377 $404 Accounts Receivable – Nadav Kidron* $3,153 - Accounts payable and accrued expenses - KNRY $64,355 - * Down payment for travel expenses. f.Expenses to related parties: August 31 2013 2012 KNRY $448,080 $318,271 F - 37 ORAMED PHARMACEUTICALS INC.(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) NOTE 17 - SUBSEQUENT EVENTS: a.During October and November 2013, the Subsidiary sold in aggregate of 1,025,991 of the D.N.A shares for a total of $43,208. As ofNovember 25, 2013, the Group owns approximately 10.6% of D.N.A’s outstanding ordinary shares. b.In November 2013, the Company issued 10,000 shares to an advisor. See also note 8h. F - 38 All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions, or areinapplicable, and therefore have been omitted.(b) Exhibits3.1*Composite Copy of Certificate of Incorporation, as amended as of January 22, 2013 and corrected February 8, 2013.3.2Amended and Restated By-laws (incorporated by reference from our current report on Form 8-K filed February 1, 2013).4.1Specimen Common Stock Certificate (incorporated by reference from our registration statement on Form S-1 filed February 1, 2013).4.2Common Stock Purchase Warrant issued to Attara Fund, Ltd. on January 10, 2011, and transferred to Regals Fund LP on March 11, 2012(incorporated by reference from our quarterly report on Form 10-Q filed January 13, 2011).4.3Amendment No. 1, dated August 28, 2012, to Common Stock Purchase Warrant transferred to Regals Fund LP on March 11, 2012 (incorporated byreference from our annual report on Form 10-K/A filed December 21, 2012).4.4Amendment No. 2, dated November 13, 2012, to Common Stock Purchase Warrant transferred to Regals Fund LP on March 11, 2012 (incorporatedby reference from our quarterly report on Form 10-Q/A filed December 27, 2012).4.5Amendment No. 3, dated November 29, 2012, to Common Stock Purchase Warrant transferred to Regals Fund LP on March 11, 2012 (incorporatedby reference from our registration statement on Form S-1 filed February 1, 2013). 56 4.6Form of Common Stock Purchase Warrant used in 2010-2011 private placement (incorporated by reference from our registration statement on FormS-1 filed March 24, 2011).4.7Form of Common Stock Purchase Warrant used in 2012 private placements (incorporated by reference from our annual report on Form 10-K filedDecember 12, 2012).4.8Form of Common Stock Purchase Warrant issued to Regals Fund LP (incorporated by reference from our annual report on Form 10-K/A filedDecember 21, 2012).4.9Amendment No. 1 to Form of Common Stock Purchase Warrant issued to Regals Fund LP (incorporated by reference from our registration statementon Form S-1 filed February 1, 2013).4.10Common Stock Purchase Warrant issued to Regals Fund LP on November 29, 2012 (incorporated by reference from our quarterly report on Form 10-Q/A filed December 27, 2012)4.11Option of Oramed Pharmaceuticals Inc. issued to Dr. Miriam Kidron on August 14, 2007 (incorporated by reference from our registration statementon Form S-8 filed December 22, 2009).4.12Amendment No. 1, dated August 28, 2012, to Option of Oramed Pharmaceuticals Inc. issued to Dr. Miriam Kidron on August 14, 2007 (incorporatedby reference from our registration statement on Form S-1 filed February 1, 2013).10.1+Consulting Agreement by and between Oramed Ltd. and KNRY, Ltd., entered into as of July 1, 2008 for the services of Nadav Kidron (incorporatedby reference from our current report on Form 8-K filed on July 2, 2008).10.2+Consulting Agreement by and between Oramed Ltd. and KNRY, Ltd., entered into as of July 1, 2008 for the services of Miriam Kidron (incorporatedby reference from our current report on Form 8-K filed on July 2, 2008).10.3+Oramed Pharmaceuticals Inc. 2008 Stock Incentive Plan (incorporated by reference from our current report on Form 8-K filed on July 2, 2008).10.4+Form of Notice of Stock Option Award and Stock Option Award Agreement (incorporated by reference from our current report on Form 8-K filed onJuly 2, 2008).10.5+Employment Agreement dated as of April 19, 2009, by and between Oramed Ltd. and Yifat Zommer (incorporated by reference from our currentreport on Form 8-K filed on April 22, 2009).10.6+Clinical Trial Agreement dated September 11, 2011, between Oramed Ltd., Hadasit Medical Research Services and Development Ltd., MiriamKidron and Daniel Schurr (incorporated by reference from our annual report on Form 10-K/A filed December 21, 2012).10.7+Clinical Trial Agreement dated July 8, 2009, between Oramed Ltd., Hadasit Medical Research Services and Development Ltd., Miriam Kidron andItamar Raz (incorporated by reference from our current report on Form 8-K filed July 9, 2009). 57 10.8Agreement dated January 7, 2009, between Oramed Pharmaceuticals Inc. and Hadasit Medical Research Services and Development Ltd.(incorporated by reference from our current report on Form 8-K filed January 7, 2009).10.9Joint Venture Agreement dated June 1, 2010, between Oramed Ltd. and LASER Detect Systems Ltd (now known as D.N.A Biomedical SolutionsLtd.) (incorporated by reference from our quarterly report on Form 10-Q filed July 14, 2010).10.10Manufacturing and Supply Agreement dated July 5, 2010, between Oramed Ltd. and Sanofi-Aventis Deutschland GMBH (incorporated by referencefrom our current report on Form 8-K filed July 14, 2010).10.11Securities Purchase Agreement between Oramed Pharmaceuticals Inc. and Attara Fund, Ltd., dated as of December 21, 2010 (incorporated byreference from our quarterly report on Form 10-Q filed January 13, 2011).10.12Share Purchase Agreement dated February 22, 2011, between Oramed Ltd. and D.N.A Biomedical Solutions Ltd. (incorporated by reference from ourregistration statement on Form S-1 filed March 24, 2011).10.13Patent Transfer Agreement dated February 22, 2011, between Oramed Ltd. and Entera Bio Ltd. (incorporated by reference from our registrationstatement on Form S-1 filed March 24, 2011).10.14Form of Securities Purchase Agreement used in 2010-2011 private placement (incorporated by reference from our registration statement on Form S-1filed March 24, 2011).10.15+Form of Indemnification Agreements dated March 11, 2011, between Oramed Pharmaceuticals Inc. and each of our directors and officers(incorporated by reference from our definitive proxy statement on Schedule 14A filed on January 31, 2011).10.16+Agreement dated June 21, 2011, with Dr. Michael Berelowitz (incorporated by reference from our current report on Form 8-K filed June 22, 2011).10.17Form of Securities Purchase Agreement used in 2012 private placements (incorporated by reference from our annual report on Form 10-K/A filedDecember 21, 2012).10.18Form of Securities Purchase Agreement used in 2012 private placement with Regals Fund LP. (incorporated by reference from our annual report onForm 10-K/A filed December 21, 2012).10.19Master Services Agreement dated September 27, 2012, between Oramed Ltd. and Medpace, Inc. (incorporated by reference from our annual report onForm 10-K filed December 12, 2012).10.20MEDPACE Task Order Number: 1 dated September 27, 2012, between Oramed Ltd. and Medpace, Inc. (portions of this exhibit have been omittedpursuant to an order granting confidential treatment provided by the SEC on January 8, 2013) (incorporated by reference from our annual report onForm 10-K filed December 12, 2012).10.21Securities Purchase Agreement dated October 30, 2012, between Oramed Pharmaceuticals Inc. and D.N.A Biomedical Solutions Ltd. (incorporatedby reference from our annual report on Form 10-K/A filed December 21, 2012).10.22Letter Agreement, dated as of November 29, 2012, between Oramed Pharmaceuticals Inc. and Regals Fund LP. (incorporated by reference from ourregistration statement on Form S-1 filed February 1, 2013). 58 10.23+Employment Agreement, dated April 14, 2013, between Oramed Ltd. and Joshua Hexter (incorporated by reference to Exhibit 10.1 of our currentreport on Form 8-K filed April 16, 2013).10.24Form of Securities Purchase Agreement used in 2013 registered direct offering (incorporated by reference from our current report on Form 8-K filedJuly 10, 2013).21.1*Subsidiary.23.1*Consent of Kesselman & Kesselman, Independent Registered Public Accounting Firm.23.2* Consent of MaloneBailey, LLP (formerly, Malone & Bailey, PC), Independent Registered Public Accounting Firm.31.1*Certification Statement of the Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, asamended.31.2*Certification Statement of the Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, asamended.32.1**Certification Statement of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350.32.2**Certification Statement of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350.101.1**The following financial statements from the Company’s annual report on Form 10-K for the year ended August 31, 2013, formatted in XBRL(eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive Loss, (iii) ConsolidatedStatements of Changes in Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements, taggedas blocks of text and in detail.____________________ * Filed herewith.** Furnished herewith.+ Management contract or compensation plan.SIGNATURESPursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to besigned on its behalf by the undersigned, thereunto duly authorized. ORAMED PHARMACEUTICALS INC./s/ NADAV KIDRONNadav Kidron,President and Chief Executive OfficerDate: November 26, 2013 59 Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalfof the registrant and in the capacities and on the dates indicated./s/ NADAV KIDRON November 26, 2013 Nadav Kidron, President and Chief Executive Officer and Director (principal executive officer) /s/ YIFAT ZOMMER November 26, 2013 Yifat Zommer, Chief Financial Officer (principal financial and accounting officer) /s/ MIRIAM KIDRON November 26, 2013 Miriam Kidron, Chief Medical and Technology Officer and Director /s/ LEONARD SANK November 26, 2013 Leonard Sank, Director Harold Jacob, Director /s/ MICHAEL BERELOWITZ November 26, 2013 Michael Berelowitz, Director /s/ GERALD OSTROV November 26, 2013 Gerald Ostrov, Director 60 Exhibit 3.1 CERTIFICATE OF INCORPORATIONOF ORAMED PHARMACEUTICALS INC.As amended as of January 22, 2013 andcorrected February 8, 2013.FIRST: The name of the Corporation is: ORAMED PHARMACEUTICALS INC. SECOND: The address of the Corporation's registered office in the State of Delaware is 1811 Silverside Road, in the City of Wilmington, County ofNew Castle, 19810. The name of its registered agent at such address is Vcorp Services, LLC. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the laws of theGeneral Corporation Law of the State of Delaware. FOURTH: The total number of shares of capital stock which the Corporation shall have authority to issue is sixteen million six hundred and sixty-six thousand six hundred and sixty-seven (16,666,667) shares of Common Stock, at a par value of $0.012 per share. FIFTH: The name and address of the sole incorporator is as follows: NameAddressNadav KidronHi-Tech Park 2/5 Givat-Ram PO Box 39098 Jerusalem 91390 Israel SIXTH: Unless required by law or determined by the chairman of the meeting to be advisable, the vote by stockholders on any matter, includingthe election of directors, need not be by written ballot. SEVENTH: The Corporation reserves the right to increase or decrease its authorized capital stock, or any class or series thereof, and to reclassify thesame, and to amend, alter, change or repeal any provision contained in the Certificate of Incorporation under which the Corporation is organized or in anyamendment thereto, in the manner now or hereafter prescribed by law, and all rights conferred upon stockholders in said Certificate of Incorporation or anyamendment thereto are granted subject to the aforementioned reservation.  EIGHTH: The Board of Directors shall have the power at any time, and from time to time, to adopt, amend and repeal any and all By-laws of theCorporation. NINTH: To the fullest extent permitted by the Delaware General Corporation Law, as the same exists or may hereafter be amended, a director ofthis Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. Anyrepeal or modification of the foregoing provisions of this Article NINTH by the stockholders of the Corporation shall not adversely affect any right orprotection of a director of the Corporation existing at the time of such repeal or modification. TENTH: 1. The Corporation shall indemnify to the maximum extent permitted by law any person who was or is a party or is threatened to bemade a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the factthat such person is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer,employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, finesand amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, all as more fully set forthin the By-laws of the Corporation, as amended or repealed from time to time. 2. The indemnification and other rights set forth in this Article TENTH shall not be deemed exclusive of any other rights to which those seekingindemnification or advancement of expenses may be entitled under any Bylaw, agreement, vote of stockholders or disinterested directors or otherwise, bothas to action in such person’s official capacity and as to action in another capacity while holding such office. 3. Any repeal or modification of the foregoing provisions of this Article TENTH by the stockholders of the Corporation shall not adversely affect anyright or protection of a director, officer, employee or agent of the Corporation existing at the time of such repeal or modification. 2Exhibit 21.1SUBSIDIARYOramed Ltd. - Incorporated in the State of Israel Exhibit 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-190497 and 333-187343) and Form S-8 (Nos. 333-190222 and 333-163919) of Oramed Pharmaceuticals Inc. of our report dated November 26, 2013 relating to the financial statements which appears in thisAnnual Report on Form 10-K for the fiscal year ended August 31, 2013. /s/ Kesselman & KesselmanCertified Public Accountants (Isr.)A member firm of PricewaterhouseCoopers International Limited Tel Aviv, IsraelNovember 26, 2013 Exhibit 23.2 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference of our report dated December 10, 2007 relating to the inception through August 31, 2007 auditedfinancial statements of Oramed Pharmaceuticals Inc. which appear in this Annual Report on Form 10-K for that period in Oramed Pharmaceuticals Inc.’sRegistration Statements on Form S-3 (Registration Nos. 333-190497 and 333-187343) and Form S-8 (Registration Nos. 333-190222 and 333-163919). /s/ MaloneBailey, LLP MaloneBailey, LLPwww.malone-bailey.comHouston, Texas November 26, 2013 EXHIBIT 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a) AND 15d-14(a)UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED I, Nadav Kidron, certify that: 1. I have reviewed this Annual Report on Form 10-K of Oramed Pharmaceuticals Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting, to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant 's internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: November 26, 2013By: /s/ Nadav Kidron Nadav Kidron President and Chief Executive Officer EXHIBIT 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a) AND 15d-14(a)UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED I, Yifat Zommer, certify that: 1. I have reviewed this Annual Report on Form 10-K of Oramed Pharmaceuticals Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting, to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposesin accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, tothe registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controlover financial reporting. Date: November 26, 2013By: /s/ Yifat Zommer Yifat Zommer Chief Financial OfficerEXHIBIT 32.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICERPURSUANT TO 18 U.S.C. SECTION 1350 In connection with the annual report of Oramed Pharmaceuticals Inc., or the Company, on Form 10-K for the period ended August 31, 2013, as filedwith the Securities and Exchange Commission on the date hereof, or the Report, I, Nadav Kidron, President, Chief Executive Officer and a Director of theCompany, certify, pursuant to 18 U.S.C. Section 1350, that to my knowledge: 1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: November 26, 2013/s/ Nadav Kidron Nadav Kidron, President and Chief Executive Officer EXHIBIT 32.2 CERTIFICATION OF CHIEF FINANCIAL OFFICERPURSUANT TO 18 U.S.C. SECTION 1350 In connection with the annual report of Oramed Pharmaceuticals Inc., or the Company, on Form 10-K for the period ended August 31, 2013, as filedwith the Securities and Exchange Commission on the date hereof, or the Report, I, Yifat Zommer, Chief Financial Officer of the Company, certify, pursuant to18 U.S.C. Section 1350, that to my knowledge: 1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: November 26, 2013/s/ Yifat Zommer Yifat Zommer, Chief Financial Officer 

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