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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2020-11-24 compared with 2019-11-27 · 51 added, 54 removed, 7 unchanged (94% of the section changed)

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

We are exposed to a variety of risks, including

changes in interest rates, foreign currency exchange rates, changes in the value of our marketable securities and inflation.

As of August 31, 2019, we had $3.3 million

in cash and cash equivalents, $25.2 million in short and long term bank deposits and $5.0 million in marketable securities.

We aim to preserve our financial assets, maintain

adequate liquidity and maximize return while minimizing exposure to market risks.

Such policy further provides that we should

hold most of our current assets in bank deposits.

As of today, the currency of our financial assets is mainly in U.S.

Marketable securities

We own 10,208,144 common shares of D.N.A and

117,000 ordinary shares of Entera, which are presented in our financial statements as marketable securities.

Marketable securities

are presented at fair value and their 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 the time 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 given the volume of securities we hold.

shares are traded on Nasdaq in U.S.

dollars, while D.N.A shares are traded on the Tel Aviv Stock Exchange and the D.N.A shares’

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

are exposed to a variety of risks, including changes in interest rates, foreign currency exchange rates, changes in the value

of our marketable securities and inflation.

of August 31, 2020, we had $19.3 million in cash and cash equivalents, $11 million in short term bank deposits and $13.5 million

in marketable securities.

aim to preserve our financial assets, maintain adequate liquidity and maximize return while minimizing exposure to market risks.

Such policy further provides that we should hold most of our current assets in bank deposits.

As of today, the currency of our

financial assets is mainly in U.S.

own 1,701,357 1 common shares of D.N.A,117,000 ordinary shares of Entera and other tradable mutual funds which are

presented in our financial statements as marketable securities.

Marketable securities are presented at fair value and their 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 the time 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 given the volume of securities we hold.

Entera shares are traded on Nasdaq in U.S.

while D.N.A shares are traded on the Tel Aviv Stock Exchange and the D.N.A shares’

price is denominated in NIS.

We are also exposed to changes in the market price of the Entera and D.N.A shares, as well as to exchange

rates fluctuations in the NIS currency compared to the U.S.

exposed to changes in the market price of the Entera and D.N.A shares, as well as to exchange rates fluctuations in the NIS currency

compared to the U.S.

dollar with respect to the D.N.A shares.

Interest Rate Risk

We invest a major portion of our cash surplus

in bank deposits in banks in Israel.

Since the bank deposits typically carry fixed interest rates, financial income over the holding

period is not sensitive to changes in interest rates, but only the fair value of these instruments.

However, our interest gains

from future deposits may decline in the future as a result of changes in the financial markets.

In any event, given the historic

low levels of the interest rate, we estimate that a further decline in the interest rate we are receiving will not result in a

material adverse effect to our business.

Foreign Currency Exchange Risk and Inflation

A significant portion of our expenditures,

including salaries, clinical research expenses, consultants’

fees and office expenses relate to our operations in Israel.

cost of those Israeli operations, as expressed in U.S.

dollars, is influenced by the extent to which any increase in the rate of

inflation in Israel is not offset (or is offset on a lagging basis) by a devaluation of the NIS in relation to the U.S.

dollar declines in value in relation to the NIS, it will become more expensive for us to fund our operations in Israel.

November 10, 2019, D.N.A announced a reverse split so that every 6 common shares will become 1 common share.

Consequently, our

10,208,144 shares become 1,701,357 shares.

invest a major portion of our cash surplus in bank deposits in banks in Israel.

Since the bank deposits typically carry fixed

interest rates, financial income over the holding period is not sensitive to changes in interest rates, but only the fair value

of these instruments.

However, our interest gains from future deposits may decline in the future as a result of changes in the

financial markets.

In any event, given the historic low levels of the interest rate, we estimate that a further decline in the

interest rate we are receiving will not result in a material adverse effect to our business.

Currency Exchange Risk and Inflation

significant portion of our expenditures, including salaries, clinical research expenses, consultants’

fees and office expenses

relate to our operations in Israel.

The cost of those Israeli operations, as expressed in U.S.

dollars, is influenced by the extent

to which any increase in the rate of inflation in Israel is not offset (or is offset on a lagging basis) by a devaluation of the

NIS in relation to the U.S.

dollar declines in value in relation to the NIS, it will become more expensive

for us to fund our operations in Israel.

In addition, as of August 31, 2020, we own net balances in NIS of approximately $160,000.

Assuming a 10% appreciation of the NIS

against the U.S.

dollar, we would experience exchange rate gain of approximately $80,000, while assuming a 10% devaluation of the

NIS against the U.S.

Assuming a 10% appreciation of the NIS against the U.S.

dollar, we would experience exchange rate gain of approximately $18,000,

while assuming a 10% devaluation of the NIS against the U.S.

dollar, we would experience an exchange rate loss of approximately

The exchange rate of the U.S.

dollar to the

NIS, based on exchange rates published by the Bank of Israel, was as follows:

Year Ended August 31,

exchange rate of the U.S.

dollar to the NIS, based on exchange rates published by the Bank of Israel, was as follows:

Average rate for period

Rate at period-end

We do not use any currency hedging transactions

of options or forwards to decrease the risk of financial exposure from fluctuations in the exchange rate of the U.S.

dollar against

do not use any currency hedging transactions of options or forwards to decrease the risk of financial exposure from fluctuations

in the exchange rate of the U.S.

dollar against the NIS.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

See Item 15 of this Annual Report on Form 10-K.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

AND FINANCIAL DISCLOSURE.

Item 15 of this Annual Report on Form 10-K.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

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

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk