What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2020-11-24 compared with 2019-11-27 · 326 added, 359 removed, 34 unchanged (95% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED

STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Price for our Common Stock

Our common stock is traded on Nasdaq and on

the Tel Aviv Stock Exchange, in each case under the symbol “ORMP.”

As of November 26, 2019, there were 17,398,112

shares of our common stock issued and outstanding held of record by approximately 40 registered stockholders.

We believe that a

significant number of stockholders hold their shares of our common stock in brokerage accounts and registered in the name of stock

depositories and are therefore not included in the number of stockholders of record.

Unregistered Sales of Equity Securities and Use of Proceeds

No unregistered sales of equity securities were

made during the three months ended August 31, 2019.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Price for our Common Stock

common stock is traded on Nasdaq and on the Tel Aviv Stock Exchange, in each case under the symbol “ORMP.”

of November 24, 2020, there were 23,675,530 shares of our common stock issued and outstanding held of record by approximately

36 registered stockholders.

We believe that a significant number of stockholders hold their shares of our common stock in brokerage

accounts and registered in the name of stock depositories and are therefore not included in the number of stockholders of record.

Sales of Equity Securities and Use of Proceeds

unregistered sales of equity securities were made during the three months ended August 31, 2020.

SELECTED FINANCIAL DATA.

The selected data presented below under the

captions “Statements of Comprehensive Loss Data”

and “Balance Sheet Data”

for, and as of the end of, each

of the fiscal years in the five-year period ended August 31, 2019, are derived from, and should be read in conjunction with, our

audited consolidated financial statements.

The selected information contained in this

table should also be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results

of Operations”

and the consolidated financial statements and related notes thereto included elsewhere in this Annual Report

on Form 10-K.

The selected consolidated statements of comprehensive loss data for fiscals 2019, 2018 and 2017 and the selected

consolidated balance sheet data as of August 31, 2019 and 2018, are derived from the audited consolidated financial statements

included elsewhere in this Annual Report.

The statement of operations data for the years ended August 31, 2016 and 2015 and the

balance sheet data as of August 31, 2017, 2016 and 2015 are derived from audited financial statements not included in this Annual

selected data presented below under the captions Statements of Comprehensive Loss and Balance Sheet for, and as of the end of,

each of the fiscal years in the five-year period ended August 31, 2020, are derived from, and should be read in conjunction with,

our audited consolidated financial statements.

selected information contained in this table should also be read in conjunction with “Management’s Discussion and

Analysis of Financial Condition and Results of Operations”

and the consolidated financial statements and related notes thereto

included elsewhere in this Annual Report on Form 10-K.

The selected consolidated statements of comprehensive loss data for fiscals

2020 and 2019 and the selected consolidated balance sheet data as of August 31, 2020 and 2019, are derived from the audited consolidated

financial statements included elsewhere in this Annual Report.

The statement of operations data for the years ended August 31,

2018, 2017 and 2016 and the balance sheet data as of August 31, 2018, 2017 and 2016 are derived from financial statements not

included in this Annual Report.

The historical results presented below are not necessarily indicative of future results.

(in thousands of dollars except share and per share data)

Statements of Comprehensive Loss:

Cost of revenues (income)

Research and development expenses

General and administrative expenses

Financial income

Financial expenses

Loss before taxes on income

Taxes on income (Tax benefit)

Net loss for the year

Loss per common share –

the year ended

thousands except share and per share data)

of Comprehensive Loss:

of revenues (income)

and development expenses

and administrative expenses

before taxes on income

loss for the year

per common share –

basic and diluted

Weighted average common shares outstanding

As of August 31,

in thousands of dollars except share and per share data

average common shares outstanding

(in thousands of dollars )

Balance Sheet Data:

Cash, cash equivalents, short-term deposits, restricted cash and marketable securities

equivalents, short-term deposits, restricted cash and marketable securities

Other current assets

Long-term deposits and other assets

Long-term marketable securities

Long-term deposits

and other assets

Long-term marketable

Current liabilities

1 unchanged sentence

Stockholders’

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of our

financial condition and results of operations should be read in conjunction with the consolidated financial statements and the

related notes included elsewhere herein and in our consolidated financial statements.

In addition to our consolidated financial statements,

the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.

Our actual results

could differ materially from those discussed in the forward-looking statements.

Factors that could cause or contribute to these

differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly in “Cautionary Statement

Regarding Forward-Looking Statements”

discussed in Note 1(k) to our audited consolidated financial statements included in this Annual Report on Form 10-K, the Company

changed the manner in which it accounts for revenues from contracts with customers during fiscal 2019.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

following discussion and analysis of our financial condition and results of operations should be read in conjunction with the

consolidated financial statements and the related notes included elsewhere herein and in our consolidated financial statements.

addition to our consolidated financial statements, the following discussion contains forward-looking statements that reflect our

plans, estimates and beliefs.

Our actual results could differ materially from those discussed in the forward-looking statements.

Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual 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 orally ingestible insulin capsule to be used

for the treatment of individuals with diabetes, and the use of orally ingestible capsules or pills for delivery of other polypeptides.

Factors.”

of Operations

are a pharmaceutical company currently engaged in the research and development of innovative pharmaceutical solutions, including

an orally ingestible insulin capsule to be used for the treatment of individuals with diabetes, and the use of orally ingestible

capsules or pills for delivery of other polypeptides.

An overview of our current clinical studies can be found in “Item

Business.”

of this Annual Report on Form 10-K.

Results of Operations

Critical accounting policies

Our significant accounting policies are more

fully described in the notes to our accompanying consolidated financial statements.

We believe that 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 we prepared in accordance with U.S.

Business - Research and Development.”

of Operations

accounting policies

significant accounting policies are more fully described in the notes to our accompanying consolidated financial statements.

believe that the accounting policies below are critical for one to fully understand and evaluate our financial condition and results

of operations.

discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements,

which we prepared in accordance with U.S.

generally accepted accounting principles, or GAAP.

The preparation of our consolidated financial statements requires us to make

estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and

liabilities at the date of the consolidated financial statements, as well as the reported revenues and expenses during the reporting

The preparation of our consolidated

financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities

and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported

revenues and expenses during the reporting periods.

On an ongoing basis, we evaluate such estimates and judgments.

We base our estimates on historical experience and on various

other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments

about the carrying value of assets and liabilities that are not readily apparent from other sources.

Actual results may differ

from these estimates under different assumptions or conditions.

Revenue recognition :

recognized when delivery has occurred, evidence of an arrangement exists, title and risks and rewards for the products are transferred

to the customer and collection is reasonably assured.

Under Accounting Standards Codification, or

ASC, 605 (which was the authoritative revenue recognition guidance applied for all periods prior to September 1, 2018) given the

Company’s continuing involvement through the expected product submission in June 2023, amounts received relating to the License

Agreement were recognized over the period from which we were entitled to the respective payment, and the expected product submission

date using a time-based model approach over the periods that the fees were earned.

However, under ASC 606, we are required to recognize

the total transaction price (which includes consideration related to milestones once the criteria for recognition have been satisfied)

using the input method over the period the performance obligation is fulfilled.

Accordingly, once the consideration associated

with a milestone is included in the transaction price, incremental revenue is recognized immediately based on the period of time

that has elapsed towards complete satisfaction of the performance obligation.

Since the customer benefits from the services

as the entity performs, revenue is recognized over time through the expected product submission date in June 2023, using the input

The Company used the input method to measure the process for the purpose of recognizing revenue, which approximates the

straight line attribution.

The Company used significant judgment when it determined the product submission date.

Under ASC 606, the consideration that the

Company would be entitled to upon the achievement of contractual milestones, which are contingent upon the occurrence of future

events, are a form of variable consideration.

When assessing the portion, if any, of such milestones-related consideration to be

included in the transaction price, the Company first assesses the most likely outcome for each milestone and excludes the consideration

related to milestones of which the occurrence is not considered the most likely outcome.

The Company then evaluates if any of the

variable consideration determined in the first step is constrained by including in the transaction price variable consideration

to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when

the uncertainty associated with the variable consideration is subsequently resolved.

The Company used significant judgment

when it determined the first step of variable consideration.

Comparison of Fiscal 2019 to Fiscal 2018

The following table summarizes certain statements

of operations data for us for the twelve month periods ended August 31, 2019 and 2018:

Year ended August 31,

estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results

of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent

from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

of options and warrants :

We grant options to purchase shares of our common stock to employees and consultants and have

and may in the future issue warrants in connection with some of our financings and to certain other consultants.

account for share-based payments to employees, directors and consultants in accordance with the guidance that requires awards

classified as equity awards to be accounted for using the grant-date fair value method.

The fair value of share-based payment

transactions is based on the Black Scholes option-pricing model or Monte Carlo model when appropriate and is recognized as an

expense over the vesting period.

elected to recognize compensation cost for awards to employees, directors and consultants that have a graded vesting schedule

using the accelerated method based on the multiple-option award approach.

recognition :

Revenue is recognized when delivery has occurred, evidence of an arrangement exists, title and risks and

rewards for the products are transferred to the customer and collection is reasonably assured.

Accounting Standards Codification, or ASC, 605 (which was the authoritative revenue recognition guidance applied for all periods

prior to September 1, 2018) given our continuing involvement through the expected product submission in June 2023, amounts received

relating to the License Agreement were recognized over the period from which we were entitled to the respective payment, and the

expected product submission date using a time-based model approach over the periods that the fees were earned.

under ASC 606, we are required to recognize the total transaction price (which includes consideration related to milestones once

the criteria for recognition have been satisfied) using the input method over the period the performance obligation is fulfilled.

Accordingly, once the consideration associated with a milestone is included in the transaction price, incremental revenue is recognized

immediately based on the period of time that has elapsed towards complete satisfaction of the performance obligation.

the customer benefits from the services as the entity performs, revenue is recognized over time through the expected product submission

date in June 2023, using the input method.

The Company used the input method to measure the process for the purpose of recognizing

revenue, which approximates the straight line attribution.

The Company used significant judgment when it determined the product

submission date.

ASC 606, the consideration that the Company would be entitled to upon the achievement of contractual milestones, which are contingent

upon the occurrence of future events, are a form of variable consideration.

When assessing the portion, if any, of such milestones-related

consideration to be included in the transaction price, the Company first assesses the most likely outcome for each milestone and

excludes the consideration related to milestones of which the occurrence is not considered the most likely outcome.

Company then evaluates if any of the variable consideration determined in the first step is constrained by including in the transaction

price variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue

recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

used significant judgment when it determined the first step of variable consideration.

of Fiscal 2020 to Fiscal 2019

following table summarizes certain statements of operations data for us for the twelve month periods ended August 31, 2020 and

Operating Data:

(dollar amounts in thousands)

Cost of revenues (income)

Cost of revenues

Research and development expenses

7 unchanged sentences

Weighted average common shares outstanding

Revenues consist of proceeds related to the

License Agreement that are recognized over the period from which the Company is entitled to the respective payments and through

Revenues for fiscal 2019 increased by 10%

to $2,703,000 from $2,449,000 for fiscal 2018.

The increase is mainly attributed to milestone payments received during fiscal 2019

in connection with the License Agreement which are recognized through the expected product submission date using a cost-to-cost

model approach.

Cost of revenues (income)

Cost of revenues consists of royalties related

to the License Agreement that will be paid over the term of the License Agreement in accordance with revenue recognition accounting

and the Law for the Encouragement of Industrial Research, Development and Technological Innovation, 1984, as amended, including

any regulations or tracks promulgated thereunder, or the R&D Law.

Cost of revenues for fiscal 2019 increased

to expense of $90,000 compared to income of $86,000 for fiscal 2018.

The increase is attributed to an adjustment that was made

during fiscal 2018 and related to a decrease in the royalties rate we are obligated to pay to the IIA from 3.5% to 3% due to the

amendment of the applicable regulations.

As a result, during fiscal 2018 we recorded income which effected our cost of revenues.

Research and development expenses

Research and development expenses include costs

directly attributable to the conduct of research and development programs, including the cost of salaries, employee benefits, costs

of 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 drugs for use 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-party contractors.

We outsource a substantial portion

of our clinical trial activities, utilizing external entities such as CROs, independent clinical investigators and other third-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 performed primarily by CROs.

CROs typically

perform most of the start-up activities for our trials, including document preparation, site identification, screening and 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, purchase of materials, cost of manufacturing

of the oral insulin and exenatide capsules, payments for patient recruitment and treatment, as well as salaries and related expenses

of research and development staff.

From August 2009 to March 2014, Oramed Ltd.

was awarded five government grants amounting to a total net amount of NIS 8 million (approximately $2,194,000) from the IIA.

used the funds to support further research and development and clinical studies of our oral insulin capsule and oral GLP-1 analog

during the period from February 2009 to December 2014.

The five grants are subject to repayment according to the terms determined

by the IIA and applicable law.

consist of proceeds related to the License Agreement that are recognized over the period from which the Company is entitled to

the respective payments and through June 2023.

for fiscal 2020 totaled $2,710,000, consistent with $2,703,000 for fiscal 2019.

of revenues consists of royalties related to the License Agreement that will be paid over the term of the License Agreement in

accordance with revenue recognition accounting and the Law for the Encouragement of Industrial Research, Development and Technological

Innovation, 1984, as amended, including any regulations or tracks promulgated thereunder, or the R&D Law.

of revenues for fiscal 2020 decreased to no expense compared to expense of $90,000 for fiscal 2019.

The decrease is attributable

to a milestone payment which was received during fiscal 2019.

and development expenses

and development expenses include costs directly attributable to the conduct of research and development programs, including the

cost of salaries, employee benefits, costs of 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 drugs for use in research and

preclinical development.

All costs associated with research and development are expensed as incurred.

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 other third-party service providers to assist us with the execution of our clinical studies.

activities which relate principally to clinical sites and other administrative functions to manage our clinical trials are performed

primarily by CROs.

CROs typically perform most of the start-up activities for our trials, including document preparation, site

identification, screening and preparation, pre-study visits, training and program management.

trial and pre-clinical trial expenses include regulatory and scientific consultants’

compensation and fees, research expenses,

purchase of materials, cost of manufacturing of the oral insulin and exenatide capsules, payments for patient recruitment and

treatment, as well as salaries and related expenses of research and development staff.

August 2009 to March 2014, Oramed Ltd.

was awarded five government grants amounting to a total net amount of NIS 8 million (approximately

$2,194,000) from the IIA.

We used the funds to support further research and development and clinical studies of our oral insulin

capsule and oral GLP-1 analog during the period from February 2009 to December 2014.

The five grants are subject to repayment

according to the terms determined by the IIA and applicable law.

See “—Government grants”

Research and development expenses for fiscal

2019 increased by 13% to $13,522,000 from $11,979,000 for fiscal 2018.

The increase is mainly attributed to expenses related

to our Phase IIb three-month dose-ranging clinical trial and our oral leptin development and is partially offset by a decrease

in expenses related to toxicology studies and scale-up process development and production of our oral capsule ingredients.

fiscal 2019, stock-based compensation costs totaled $231,000, as compared to $575,000 during fiscal 2018.

The decrease is mainly

attributable to the progress in amortization of awards granted in prior periods.

Government grants

The Government of Israel encourages research

and development projects through the IIA, pursuant to the R&D Law.

Under the R&D Law, a research and development plan that

meets specified criteria is generally eligible for a grant of up to 50% of certain approved research and development expenditures.

Research and development

expenses for fiscal 2020 decreased by 24% to $10,235,000 from $13,522,000 for fiscal 2019.

The decrease is mainly attributed to

expenses related to our Phase IIb three-month dose-ranging clinical trial which was terminated during fiscal 2020 and is partially

offset by an increase in regulatory expenses and an increase in raw material expenses related to our phase III trial.

During fiscal

2020, stock-based compensation costs totaled $458,000, as compared to $218,000 during fiscal 2019.

The increase is mainly attributable

to new grants in fiscal 2020.

Government of Israel encourages research and development projects through the IIA, pursuant to the R&D Law.

Under the R&D

Law, a research and development plan that meets specified criteria is generally eligible for a grant of up to 50% of certain approved

research and development expenditures.

Each plan must be approved by the IIA.

In fiscals 2019 and 2018, we did not recognize

any research and development grants.

As of August 31, 2019, we incurred a liability to pay royalties to the IIA of $390,810.

Under the terms of the grants we received from

the IIA, we are obligated to pay royalties of 3% on all revenues derived from the sale of the products developed pursuant to the

funded plans, including revenues from licensed ancillary services.

Royalties are generally payable up to a maximum amount equaling

100% of the grants received (dollar linked) with the addition of interest at an annual rate based on the LIBOR rate.

The R&D Law generally requires that a product

developed under a program be manufactured in Israel.

However, when applying for a grant, the applicant may declare that part of

the manufacturing will be performed outside of Israel or by non-Israeli residents and if the IIA is convinced that performing some

of the manufacturing abroad is essential for the execution of the program, it may still approve the grant.

This declaration will

be a significant factor in the determination of the IIA as to whether to approve a program and the amount and other terms of the

benefits to be granted.

If a company wants to increase the volume of manufacturing outside of Israel after the grant has been approved,

it may transfer up to 10% of the company’s approved Israeli manufacturing volume, measured on an aggregate basis, outside

of Israel after first notifying the IIA thereof (provided that the IIA does not object to such transfer within 30 days).

upon the approval of the IIA, a portion greater than 10% of the manufacturing volume may be performed outside of Israel.

case of transfer of manufacturing out of Israel, the grant recipient is required to pay royalties at an increased rate, which may

be substantial, and the aggregate repayment amount is increased up to 120%, 150% or 300% of the grant, depending on the portion

of the total manufacturing volume that is performed outside of Israel.

The approval we received from the IIA for the License Agreement

was subject to payment of increased royalties and an increased ceiling, all in accordance with the provisions of the R&D Law.

The R&D Law further permits the IIA, among other things, to approve the transfer of manufacturing rights outside of Israel

in exchange for the import of different manufacturing into Israel as a substitute, in lieu of the increased royalties.

The R&D Law also provides that know-how

developed under an approved research and development program may not be transferred or licensed to third parties in Israel without

the approval of the research committee.

Such approval is not required for the sale or export of any products resulting from such

research or development.

The R&D Law further provides that the know-how developed under an approved research and development

program may not be transferred or licensed to any third parties outside Israel absent IIA approval which may be granted in certain

circumstances as follows:

(a) the grant recipient pays to the IIA a portion of the sale or license price paid in consideration

for the purchase or license of such IIA-funded know-how or the price paid in consideration for the sale of the grant recipient

itself, as the case may be, in accordance with certain formulas included in the R&D Law;

(b) the grant recipient receives know-how

from a third party in exchange for its IIA-funded know-how;

or (c) such transfer of IIA-funded know-how is made in the context

of IIA approved research and development cooperation projects or consortia.

The R&D Law imposes reporting requirements

with respect to certain changes in the ownership of a grant recipient.

The R&D Law requires the grant recipient to notify the

IIA of any change in control of the recipient or a change in the holdings of the means of control of the recipient that results

in a non-Israeli entity becoming an interested party in the recipient, and requires the new non-Israeli interested party to undertake

to the IIA to comply with the R&D Law.

In addition, the rules of the IIA may require the provision of additional information

or representations in respect of certain such events.

fiscals 2020 and 2019, we did not recognize any research and development grants.

As of August 31, 2020, our liability to pay royalties

to the IIA was $317,000.

the terms of the grants we received from the IIA, we are obligated to pay royalties of 3% on all revenues derived from the sale

of the products developed pursuant to the funded plans, including revenues from licensed ancillary services.

Royalties are generally

payable up to a maximum amount equaling 100% of the grants received (dollar linked) with the addition of interest at an annual

rate based on the LIBOR rate.

R&D Law generally requires that a product developed under a program be manufactured in Israel.

However, when applying for

a grant, the applicant may declare that part of the manufacturing will be performed outside of Israel or by non-Israeli residents

and if the IIA is convinced that performing some of the manufacturing abroad is essential for the execution of the program, it

may still approve the grant.

This declaration will be a significant factor in the determination of the IIA as to whether to approve

a program and the amount and other terms of the benefits to be granted.

If a company wants to increase the volume of manufacturing

outside of Israel after the grant has been approved, it may transfer up to 10% of the company’s approved Israeli manufacturing

volume, measured on an aggregate basis, outside of Israel after first notifying the IIA thereof (provided that the IIA does not

object to such transfer within 30 days).

In addition, upon the approval of the IIA, a portion greater than 10% of the manufacturing

volume may be performed outside of Israel.

In any case of transfer of manufacturing out of Israel, the grant recipient is required

to pay royalties at an increased rate, which may be substantial, and the aggregate repayment amount is increased up to 120%, 150%

or 300% of the grant, depending on the portion of the total manufacturing volume that is performed outside of Israel.

we received from the IIA for the License Agreement was subject to payment of increased royalties and an increased ceiling, all

in accordance with the provisions of the R&D Law.

The R&D Law further permits the IIA, among other things, to approve

the transfer of manufacturing rights outside of Israel in exchange for the import of different manufacturing into Israel as a

substitute, in lieu of the increased royalties.

R&D Law also provides that know-how developed under an approved research and development program may not be transferred or

licensed to third parties in Israel without the approval of the research committee.

Such approval is not required for the sale

or export of any products resulting from such research or development.

The R&D Law further provides that the know-how developed

under an approved research and development program may not be transferred or licensed to any third parties outside Israel absent

IIA approval which may be granted in certain circumstances as follows:

(a) the grant recipient pays to the IIA a portion of the

sale or license price paid in consideration for the purchase or license of such IIA-funded know-how or the price paid in consideration

for the sale of the grant recipient itself, as the case may be, in accordance with certain formulas included in the R&D Law;

(b) the grant recipient receives know-how from a third party in exchange for its IIA-funded know-how;

or (c) such transfer of

IIA-funded know-how is made in the context of IIA approved research and development cooperation projects or consortia.

R&D Law imposes reporting requirements with respect to certain changes in the ownership of a grant recipient.

Law requires the grant recipient to notify the IIA of any change in control of the recipient or a change in the holdings of the

means of control of the recipient that results in a non-Israeli entity becoming an interested party in the recipient, and requires

the new non-Israeli interested party to undertake to the IIA to comply with the R&D Law.

In addition, the rules of the IIA

may require the provision of additional information or representations in respect of certain such events.

For this purpose, “control”

is defined as the ability to direct

the activities of a company other than any ability arising solely from serving as an officer or director of the company.

is presumed to have control if such person holds 50% or more of the means of control of a company.

is defined as the ability to direct the activities of a company other than any ability 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 the means of control of a

“Means of control”

1 unchanged sentence

An “interested party”

a company includes a holder of 5% or more of its outstanding share capital or voting rights, its chief executive officer and directors,

someone who 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 interested parties holds 25% or more of the outstanding share capital or voting rights or has the right to

appoint 25% or more of the directors.

Failure to meet the R&D Law’s requirements

may subject us to mandatory repayment of grants received by us (together with interest and penalties), as well as expose us to

criminal proceedings.

In addition, the Israeli government may from time to time audit sales of products which it claims incorporate

technology funded through IIA programs which may lead to additional royalties being payable on additional products.

General and administrative expenses

General and administrative expenses include

the salaries and related expenses of our management, consulting costs, legal and professional fees, travel expenses, business development

costs, insurance expenses and other general costs.

General and administrative expenses decreased

by 9% from $4,083,000 for fiscal 2018 to $3,722,000 for fiscal 2019.

The decrease in costs incurred related to general and administrative

activities during fiscal 2019, is primarily attributable to a decrease in stock-based compensation costs and is partially offset

by an increase in salaries and related expenses.

During fiscal 2019, as part of our general and administrative expenses, we incurred

expenses of $591,000 related to stock-based compensation costs, as compared to $972,000 during fiscal 2018.

The decrease is mainly

attributable to the progress in amortization of awards granted in prior periods and to option forfeitures during the period.

Financial income, net

Net financial income, net was $576,000 for fiscal

2019 as compared to net financial income of $800,000 for fiscal 2018.

The decrease is mainly attributable to a decrease in fair

market value of some investments and to the change in accounting method which classifies such losses under profit and loss rather

than other comprehensive income.

Taxes on income

Taxes on income were $300,000 recognized for

fiscal 2019 as compared to no tax expenses in fiscal 2018.

The increase is due to the withholding taxes during 2019 in connection

with the receipt of a milestone payment pursuant to the License Agreement, while no withholding taxes applied in fiscal 2018.

Comparison of Fiscal 2018 to Fiscal 2017

For a discussion of fiscal 2018 compared to

fiscal 2017, see Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual

Report on Form 10-K for the fiscal year ended August 31, 2018.

Liquidity and Capital Resources

From our inception through August 31, 2019,

we have incurred losses in an aggregate amount of $81,103,000.

During that period we have financed our operations through several

private placements of our common stock, as well as public offerings of our common stock, raising a total of $77,790,000, net of

transaction costs.

During that period we also received cash consideration of $5,879,000 from the exercise of warrants and

We will seek to obtain additional financing through similar sources in the future as needed.

As of August 31, 2019, we

had $3,329,000 of available cash, $25,253,000 of short term and long term deposits and $4,996,000 of marketable

Management continues to evaluate various financing

alternatives for funding future research and development activities and general and administrative expenses through fundraising

in the public or private equity markets.

Although there is no assurance that we will be successful with those initiatives, management

believes that it will be able to secure the necessary financing as a result of future third party investments.

Based on our current

cash resources and commitments, we believe we will be able to maintain our current planned development activities and the corresponding

level of expenditures for at least the next 12 months.

As of August 31, 2019, our total current assets

were $33,324,000 and our total current liabilities were $5,308,000.

On August 31, 2019, we had a working capital surplus of $28,016,000

and an accumulated loss of $81,103,000.

As of August 31, 2018, our total current assets were $31,037,000 and our total current

liabilities were $4,553,000.

On August 31, 2018, we had a working capital surplus of $26,484,000 and an accumulated loss of $69,223,000.

The increase in working capital surplus from August 31, 2018 to August 31, 2019 was primarily due to an increase in short term

During fiscal 2019, cash and cash equivalents

decreased to $3,329,000 from $4,996,000 as of August 31, 2019, which is due to the reasons described below.

Operating activities used cash of $12,940,000

in fiscal 2019 compared to $14,657,000 used in fiscal 2018.

Cash used in operating activities in fiscal 2019 primarily consisted

of net loss resulting from research and development and general and administrative expenses and changes in stock based compensation,

while cash used by operating activities in fiscal 2018 primarily consisted of net loss resulting from research and development

and general and administrative expenses and changes in deferred revenues.

Investing activities used cash of $11,259,000

in fiscal 2019, as compared to $7,004,000 provided in fiscal 2018.

Cash used in investing activities in fiscal 2019 consisted primarily

of the proceeds from short term deposits, partially offset by the acquisition of short and long term marketable securities, while

cash provided by investing activities in fiscal 2018 consisted primarily of the purchase of bank deposits and marketable securities,

partially offset by the sale of short-term deposits and maturity of marketable securities.

There were no financing activities in 2019 compared

to cash provided by financing activities of $22,654,000 in fiscal 2018.

Cash provided by financing activities during fiscal 2018

consisted of proceeds from our issuance of common stock and warrants and proceeds from exercise of warrants and options.

financing activities in fiscal 2018 were as follows:

● On July 2, 2018, we entered into a Securities Purchase Agreement with each of three investors, or the Purchasers, pursuant

to which we agreed to sell, an aggregate of 2,892,000 units, or the Units, each Unit consisting of one share of our common stock

and a warrant to purchase one share of common stock at an exercise price of $7.25 per share, or the Warrants, to the Purchasers

for an offering price of $6.25 per Unit, or the Offering.

The Warrants became exercisable commencing six months following their

issuance for a period of three and one-half years from the date of issuance.

The closing of the sale of the Units occurred on July

The net proceeds to us from the Offering, after deducting the placement agent’s fees and expenses and our Offering

expenses were approximately $16,484,000.

● On July 2, 2018, we entered into a letter agreement with H.C.

Wainwright & Co., LLC, or HCW, pursuant to which HCW agreed

to serve as exclusive placement agent in any offering by us occurring between July 2, 2018 and August 1, 2018.

For its services

in the Offering, HCW received a fee equal to 7% of the gross proceeds raised in the Offering and a management fee of 1% of the

gross proceeds raised in the Offering, up to $50,000 for non-accountable expenses as well as warrants to purchase up to 115,680

shares of our common stock, exercisable for a period of three and one-half years from the date of issuance and with an exercise

price of $7.8125 per share.

Upon the exercise of the Warrants, HCW will receive a fee equal to 7% of the gross proceeds raised

as a result of such exercise.

● During fiscal 2019, no warrants or options were exercised.

During fiscal 2018, 138,071 warrants were exercised for cash and

resulted in the issuance of 138,071 shares of common stock and 50,750 options were exercised for cash and resulted in the issuance

of 50,750 shares of common stock.

The cash consideration received for the exercise of warrants was $790,000 and the cash consideration

received for the exercise of options was $207,000.

● In October and November 2018 and February and May 2019, we issued a total of 13,194 shares of our common stock, valued approximately

$54,000, in the aggregate, to certain service providers as remuneration for services rendered.

● On September 5, 2019, we entered into an Equity Distribution Agreement, or the Sales Agreement, pursuant to which we may, from

time to time and at our option, issue and sell shares of our common stock having an aggregate offering price of up to $15,000,000,

through a sales agent, subject to certain terms and conditions.

Any shares sold will be sold pursuant to our effective shelf registration

statement on Form S-3 including a prospectus dated February 2, 2017, as supplemented by a prospectus supplement dated September

We will pay the sales agent a cash commission of 3.0% of the gross proceeds of the sale of any shares sold through the

sales agent under the Sales Agreement.

As of August 31, 2019, no shares were sold under the Sales Agreement.

Contractual Obligations

The following table summarizes our significant

contractual obligations and commercial commitments at August 31, 2019, and the effects such obligations are expected to have on

our liquidity and cash flows in future periods (in thousands):

of a company includes a holder of 5% or more of its outstanding share capital or voting rights,

its chief executive officer and directors, someone who 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 interested parties holds 25% or more of the outstanding share capital

or voting rights or has the right to appoint 25% or more of the directors.

to meet the R&D Law’s requirements may subject us to mandatory repayment of grants received by us (together with interest

and penalties), as well as expose us to criminal proceedings.

In addition, the Israeli government may from time to time audit

sales of products which it claims incorporate technology funded through IIA programs which may lead to additional royalties being

payable on additional products.

and administrative expenses

and administrative expenses include the salaries and related expenses of our management, consulting costs, legal and professional

fees, travel expenses, business development costs, insurance expenses and other general costs.

General and administrative

expenses increased by 14% from $3,722,000 for fiscal 2019 to $4,232,000 for fiscal 2020.

The increase in costs incurred related

to general and administrative activities during fiscal 2020, is primarily attributable to an increase in costs related to the directors

and officers insurance policy and an increase in legal expenses and increase in stock-based compensation costs and is partially

offset by a decrease in travel expenses and a decrease in costs related to patents.

During fiscal 2020, as part of our general

and administrative expenses, we incurred expenses of $714,000 related to stock-based compensation costs, as compared to an expense

of $591,000 during fiscal 2019.

The increase is mainly attributable to new grants during fiscal 2020.

financial income, was $246,000 for fiscal 2020 as compared to net financial income of $576,000 for fiscal 2019.

The decrease is

mainly attributable to a decrease in the fair market value of some investments.

taxes on income were recognized for fiscal 2020 as compared to $300,000 for fiscal 2019.

The decrease is due to withholding taxes

in connection with the receipt of a milestone payment pursuant to the License Agreement during 2019.

2019 compared with Fiscal 2018

a discussion of fiscal 2019 compared with fiscal 2018, see Management’s Discussion and Analysis of Financial Condition and

Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended August 31, 2019.

and Capital Resources

our inception through August 31, 2020, we have incurred losses in an aggregate amount of $92,614,000.

During that period we have

financed our operations through several private placements of our common stock, as well as public offerings of our common stock,

raising a total of $101,509,000, net of transaction costs.

During that period we also received cash consideration of $5,892,000

from the exercise of warrants and options.

We will seek to obtain additional financing through similar sources in the future as

As of August 31, 2020, we had $19,296,000 of available cash, $11,060,000 of short term deposits and $13,472,000 of marketable

continues to evaluate various financing alternatives for funding future research and development activities and general and administrative

expenses through fundraising in the public or private equity markets.

Although there is no assurance that we will be successful

with those initiatives, management believes that it will be able to secure the necessary financing as a result of future third

party investments.

Based on our current cash resources and commitments, we believe we will be able to maintain our current planned

development activities and the corresponding level of expenditures for at least the next 12 months.

of August 31, 2020, our total current assets were $40,511,000 and our total current liabilities were $4,536,000.

On August 31,

2020, we had a working capital surplus of $35,975,000 and an accumulated loss of $92,614,000.

As of August 31, 2019, our total

current assets were $33,324,000 and our total current liabilities were $5,308,000.

On August 31, 2019, we had a working capital

surplus of $28,016,000 and an accumulated loss of $81,103,000.

The increase in working capital surplus from August 31, 2019 to

August 31, 2020 was primarily due to an increase in cash and cash equivalents.

fiscal 2020, cash and cash equivalents increased to $19,296,000 from $3,329,000 as of August 31, 2019, which is due to the reasons

described below.

activities used cash of $12,440,000 in fiscal 2020 compared to $12,940,000 used in fiscal 2019.

Cash used in operating activities

in fiscal 2020 and 2019 primarily consisted of net loss resulting from research and development and general and administrative

expenses and changes in stock based compensation.

activities provided cash of $4,626,000 in fiscal 2020, as compared to $11,259,000 used in fiscal 2019.

Cash provided in investing

activities in fiscal 2020 consisted primarily of the proceeds from short term deposits and redemption of held to maturity securities,

partially offset by the acquisition of short and long terms marketable securities, while cash used in investing activities in

fiscal 2019 consisted primarily of the proceeds from short term deposits, partially offset by the acquisition of short and long

term marketable securities.

activities provided cash of $23,786,000 in fiscal 2020, as compared to no financing activities in fiscal 2019.

Cash provided by

financing activities during fiscal 2020 consisted of proceeds from our issuance of common stock and warrants and proceeds from

exercise of warrants and options.

Our primary financing activities in fiscal 2020 were as follows:

fiscal 2020, no warrants were exercised and 12,253 options were exercised for cash and

resulted in the issuance of 12,253 shares of common stock.

The cash consideration received

for the exercise of options was $12,253.

During fiscal 2019, no warrants or options were

September and November 2019 and February and May 2020, we issued a total of 10,000 shares

of our common stock, valued approximately $38,000, in the aggregate, to certain service

providers as remuneration for services rendered.

September 5, 2019, we entered into an Equity Distribution Agreement, or the Sales Agreement,

pursuant to which we may, from time to time and at our option, issue and sell shares

of our common stock having an aggregate offering price of up to $15,000,000 through a

sales agent, subject to certain terms and conditions.

Any shares sold will be sold pursuant

to our effective shelf registration statement on Form S-3 including a prospectus and

prospectus supplement, each dated February 10, 2020 (which superseded a prior registration

statement, prospectus and prospectus supplement that related to shares sold under the

Sales Agreement).

We will pay the sales agent a cash commission of 3.0% of the gross

proceeds of the sale of any shares sold through the sales agent under the Sales Agreement.

As of August 31, 2020, 839,537 shares were issued under the Sales Agreement for aggregate

net proceeds of $3,879,000.

February 27, 2020, we entered into an underwriting agreement with National Securities

Corporation, or the Underwriter, in connection with a public offering, or the Offering

of 5,250,000 shares of our common stock, at an offering price of $4.00 per share.

also granted the Underwriter a 45-day option to purchase from us up to an additional

787,500 shares of common stock at the public offering price, or the Over-Allotment Option.

In connection with the Offering, we also agreed to issue to the Underwriter, or its designees,

warrants, or the Underwriter’s Warrants, to purchase up to an aggregate of 7% of

the shares of common stock sold in the Offering (including any additional shares sold

during the 45-day option period), at an exercise price of $4.80 per share.

The Underwriter’s

Warrants issued in the Offering will be exercisable at any time and from time to time,

in whole or in part, commencing six months from issuance for a period of three years

from the date of issuance.

The closing of the sale of the Offering occurred on March

On April 9, 2020, we issued 180,561 shares of our common stock and 12,640 Underwriter’s

Warrants pursuant to a partial exercise by the Underwriter of the Over-Allotment Option,

or the Partial Over-Allotment Option Exercise.

The net proceeds to us from the Offering,

including from the Partial Over-Allotment Option Exercise, after deducting the underwriting

discount and our Offering expenses were $19,894,000.

following table summarizes our significant contractual obligations and commercial commitments at August 31, 2020, and the effects

such obligations are expected to have on our liquidity and cash flows in future periods (in thousands):

Contractual Obligations

Less than 1 year

Clinical research study obligations

Purchase and technology transfer obligations

Operating lease obligations

1 unchanged sentence

Accrued severance pay, net

Off-Balance Sheet Arrangements

As of August 31, 2019, we had no off balance

sheet arrangements that have had or that we expect would be reasonably likely to have a future material effect on our financial

condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital

Planned Expenditures

We invest heavily in research and development,

and we expect that in the upcoming years our research and development expenses, net, will continue to be our major operating expense.

Sheet Arrangements

of August 31, 2020, we had no off balance sheet arrangements that have had or that we expect would be reasonably likely to have

a future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations,

liquidity, capital expenditures or capital resources.

invest heavily in research and development, and we expect that in the upcoming years our research and development expenses, net,

will continue to be our major operating expense.

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

What changed 10-K

Item 5. Market for Registrant’s Common Equity