ORAMED PHARMACEUTICALS INC. 10-K

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 and procedures as of December 31, 2023. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective. 37 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 and maintaining adequate internal control over our financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act. The Company’s internal control over financial reporting is defined as a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. 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 with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and ● provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have 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, we evaluated the effectiveness of our internal control over financial reporting as of December 31, 2023 based on the current framework for Internal Control-Integrated Framework (2013) 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 December 31, 2023 at a reasonable assurance level. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2023 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION. Termination of Rule 10b5–1 Trading Arrangements On January 8, 2024 , Mr. David Silberman , our Chief Financial Officer , terminated a trading plan before expiration that was previously entered into to satisfy the affirmative defense of Rule 10b5–1(c) under the Exchange Act. This plan was entered into on June 25, 2023 and was meant to expire upon the earlier of May 15, 2024 or when 128,625 of Oramed’s shares of common stock were sold, which was the aggregate maximum number of shares to be sold under the plan. On January 8, 2024 , Mr. Joshua Hexter , our Chief Operating and Business Officer , terminated a trading plan before expiration that was previously entered into to satisfy the affirmative defense of Rule 10b5–1(c) under the Exchange Act. This plan was entered into on June 28, 2023 and was meant to expire upon the earlier of June 27, 2025 or when 245,333 of Oramed’s shares of common stock were sold, which was the aggregate maximum number of shares to be sold under the plan. On February 6, 2024 , Mr. Netanel Derovan , our former Chief Legal Officer , terminated a trading plan before expiration that was previously entered into to satisfy the affirmative defense of Rule 10b5–1(c) under the Exchange Act. This plan was entered into on June 8, 2023 and was meant to expire upon the earlier of June 28, 2024 or when 88,250 of Oramed’s shares of common stock were sold, which was the aggregate maximum number of shares to be sold under the plan. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. Not applicable. 38 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. Directors and Executive Officers The name and age of each of our directors and executive officers, his or her position with us and the period during which such person has served as a director or executive officer of the Company are set forth below. Name Age Position Serving Since Nadav Kidron 49 President, Chief Executive Officer, Director and Chairman (effective as of June 30, 2022) 2006 Dr. Miriam Kidron 83 Chief Scientific Officer and Director 2006 David Silberman 40 Chief Financial Officer and Treasurer 2021 Joshua Hexter 53 Chief Operating & Business Officer 2019 Daniel Aghion 42 Director 2024 Dr. Arie Mayer 67 Director 2019 Leonard Sank 58 Director 2007 Benjamin Shapiro 40 Director 2023 Mr. Derovan, our former Chief Legal Officer and Secretary, ended his service with the Company on March 5, 2024. Dr. Miriam Kidron is Mr. Nadav Kidron’s mother. There are no other directors or officers of the 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 of our directors and of our executive officers who are not also directors, indicating the principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out. Mr. Nadav Kidron was appointed President, Chief Executive Officer and director in March 2006, and Chairman of the Board effective as of June 30, 2022. He is also a director of Israel Advanced Technology Industries organization, and until 2016 was a director of Entera Bio Ltd. In 2009, he was a fellow at the Merage Foundation for U.S.-Israel Trade Programs for executives in the life sciences 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, he was a legal intern at Wine, Mishaiker & Ernstoff Law Offices in Jerusalem, Israel. Mr. Kidron holds an LL.B. and an International MBA from Bar Ilan University, Israel. We believe that Mr. Kidron’s qualifications to serve on our Board include his familiarity with the Company as its founder, his experience in capital markets, as well as his knowledge and familiarity with corporate management. Dr. Miriam Kidron was appointed Chief Scientific Officer and director in March 2006. Dr. Kidron is a pharmacologist and a biochemist with a Ph.D. in biochemistry. From 1990 to 2007, Dr. Kidron was a senior researcher in the Diabetes Unit at Hadassah University Hospital in Jerusalem, Israel. 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. 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 her research, as well as her experience and relevant education in the fields of pharmacology and diabetes. 39 Mr. David Silberman was appointed Chief Financial Officer and Treasurer in July 2021. Prior to his appointment, from April 2018 to May 2021, Mr. Silberman served as a Corporate Financial Planning and Analysis associate director and director at Teva Pharmaceutical Industries Ltd., a global pharmaceutical company, committed to helping patients around the world to access affordable medicines and benefit from innovations to improve their health. From 2014 to 2018, Mr. Silberman served as Global Internal Audit senior manager at Teva Pharmaceutical Industries Ltd. From 2009 to 2014, Mr. Silberman provided internal audit and risk management services in the advisory department of Grant Thornton Fahn Kanne Control Management. From January 2009 until June 2009, Mr. Silberman worked in the audit department of KPMG, a certified public accounting firm. Mr. Silberman holds DCG and DSCG degrees from the French Ministry of Higher Study and Research and is a certified public accountant in Israel. Mr. Joshua Hexter was appointed Chief Operating and Business Officer in September 2019. Prior to his appointment, Mr. Hexter served as Chief Business Officer at BrainsWay Ltd. (Nasdaq/TASE: BWAY) from 2018 to 2019, a commercial stage medical device company focused on the development and sale of non-invasive neuromodulation products. From 2013 to 2018, Mr. Hexter served as Chief Operating Officer and VP Business Development of the Company and from 2007 to 2013, Mr. Hexter was a Director or Executive Director of BioLineRx Ltd. (Nasdaq/TASE: BLRX), a biopharmaceutical development company dedicated to identifying, in-licensing and developing innovative therapeutic candidates. Prior to his employment with BioLineRx, Mr. Hexter was a member of the board of directors and Chief Executive Officer of Biosensor Systems Design, Inc., a company developing market-driven biosensors. Mr. Hexter holds a bachelor’s degree from the University of Wisconsin and a master’s degree in management from Boston University. Dr. Daniel Aghion became a director in January 2024. Dr. Aghion has been a neurosurgeon at Memorial Neuroscience Institute in Florida since 2016, where he treats patients with a wide array of spine disorders, including severe degenerative spine diseases, spine trauma, cancer in the spine, spine tumors, peripheral nerve surgery and more. Dr. Aghion holds a Bachelor of Science degree from the University of Michigan and an MD from the Sackler School of Medicine at Tel Aviv University. He completed his residency at Rhode Island Hospital in 2015, and a complex spine fellowship at Johns Hopkins University in Baltimore in 2016. We believe that Dr. Aghion’s qualifications to serve on the Board include his extensive practical and academic medical background. Dr. Arie Mayer became a director in December 2019. Dr. Mayer is currently the Managing Director and Chairman of the Board of Sigma-Aldrich Israel Ltd. and has held that position since January 2010. Dr. Mayer has held various roles with Sigma-Aldrich Israel Ltd. since 1995 and was instrumental in introducing and developing the Cell Culture and Molecular Biology business for Sigma Aldrich Israel Ltd. Dr. Mayer holds a Bachelor of Science degree in chemistry from Hebrew University and a Ph.D. in biochemistry from Israel Institute of Technology. We believe that Dr. Mayer’s qualifications to serve on our Board include his experience as an executive in the biotechnology industry, with knowledge in managing large organizations, as well as his experience and relevant education in the fields of chemistry and biochemistry. Mr. Leonard Sank became a director in October 2007. Mr. Sank is a South African entrepreneur and businessman, whose interests lie in entrepreneurial endeavors and initiatives, with over 30 years’ experience of playing significant leadership roles in developing businesses. Mr. Sank serves on the boards of a few national 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 his experience serving as a director of many entities. 40 Mr. Benjamin Shapiro became a director in May 2023. Mr. Shapiro is a successful entrepreneur and business professional who co-founded The Daily Wire, a successful, industry leading, international media outlet in June 2015. Since May 2015, he has been host of “The Ben Shapiro Show,” a popular podcast, and he is the author of numerous New York Times best-selling books. Mr. Shapiro earned a B.A. in Political Science from UCLA in 2004, summa cum laude, and a law degree from Harvard Law School in 2007, cum laude. We believe that Mr. Shapiro’s qualifications to serve on the Board include his extensive operational experience and his business background and acumen. Board of Directors There are no agreements with respect to the election of directors. Each director is currently elected for a period of one year at our annual meeting of stockholders and serves until the next such meeting and until his or her successor is duly elected or until his or her earlier resignation or removal. The Board may also appoint additional directors. A director so chosen or appointed will hold office until the next annual meeting of stockholders and until his or her successor is duly elected and qualified or until his or her earlier resignation or removal. The Board has determined that Dr. Daniel Aghion, Dr. Arie Mayer, Leonard Sank and Benjamin Shapiro are independent as defined under the rules promulgated by the Nasdaq. Except for Dr. Arie Mayer, who serves on the Board of Directors of Oravax, a company 63% owned by us, none of the independent directors has any material relationship with us besides serving on our Board. 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 other things: character and integrity; ability to review critically, evaluate, question and discuss information provided, to exercise effective business judgment and 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 fiscal year ended December 31, 2023, our Board held thirteen meetings and took action by written consent on eight occasions. All of our directors attended at least 75% of the aggregate number of meetings of the Board and the committees that were held during the period such director served on the Board. Board members are encouraged to attend our annual meetings of stockholders. Board Evaluation Process Our Board is committed to continuous improvement and conducts a board and committee evaluation process each year, to ensure that our Board maintains optimal composition and functions effectively. As part of this process, the members of our Board complete a confidential written assessment of the performance, oversight and composition of the Board and its committees that is submitted to the Company secretary. The results are then reported back to the full Board. After the evaluations, the Board and management work to improve upon any issues presented during the evaluation process and to identify opportunities that may lead to further improvement. 41 Committees Audit Committee and Audit Committee Financial Expert The members of our Audit Committee are Dr. Daniel Aghion, Dr. Arie Mayer and Leonard Sank. Our Board has determined that Dr. Arie Mayer is an “audit committee financial expert” as set forth in Item 407(d)(5) of Regulation S-K based on his experience as set forth above, and that all members of the Audit Committee are “independent” as defined by the rules of the SEC and the Nasdaq rules and regulations. The Audit Committee operates under a written charter that is posted on the “Investors” section of our website, www.oramed.com. The primary responsibilities of our Audit Committee include: ● Overseeing the accounting and financial reporting processes of the Company and the audits of the financial statements of the Company; ● 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 to the general public and (ii) our internal financial and accounting controls; ● Reviewing the Company’s policies with respect to cyber security risks and relevant contingent liabilities and risks that may be material to the Company; ● Recommending, establishing and monitoring procedures designed to improve the quality and reliability of the disclosure of our financial condition and results of operations; and ● Reviewing major financial risk exposures and the steps management has taken to monitor and control such exposures, and discussing the guidelines and polices to govern the process by which risk assessment and management is undertaken. Our Audit Committee met five times and took action by written consent on four occasions during the fiscal year ended December 31, 2023. Compensation Committee The members of our Compensation Committee are Dr. Daniel Aghion, Dr. Arie Mayer and Leonard Sank. The Board has determined that all of the members of the Compensation Committee are “independent” as defined by the rules of the SEC and Nasdaq rules and regulations. The Compensation Committee operates under a written charter that is posted on the “Investors” section of our website, www.oramed.com. The primary responsibilities of our Compensation Committee include: ● Reviewing, negotiating and approving, or recommending for approval by our Board the salaries and incentive compensation of our executive officers; ● Administering our equity based plans and making recommendations to our Board with respect to our incentive-compensation plans and equity-based plans; ● Making recommendations to our Board with respect to director compensation; and ● Authority to exercise all rights, authority and functions of the Board under our Clawback Policy. The Compensation Committee meets as often as it deems necessary, without the presence of any executive officer when approving compensation, except that the Company’s Chief Executive Officer, at the discretion of the Compensation Committee, may be present during the approval of, or deliberations with respect to, the compensation of other executive officers. The Compensation Committee may delegate any authority granted to it to one or more subcommittees of the Compensation Committee, in its sole discretion. Our Compensation Committee met four times and took action by written consent on four occasions during the fiscal year ended December 31, 2023. 42 Nominating Committee The members of our Nominating Committee are Dr. Arie Mayer and Leonard Sank. The Board has determined that all of the members of the Nominating Committee are “independent” as defined by the rules of the SEC and Nasdaq rules and regulations. The Nominating Committee operates under a written charter that is posted on the “Investors” section of our website, www.oramed.com. The primary responsibilities of our Nominating Committee include: ● Overseeing the composition and size of the Board, developing qualification criteria for Board members based on background, skills, experience and diversity, and actively seeking, interviewing and screening individuals qualified to become Board members for recommendation to the Board; ● Recommending the composition of the Board for each annual meeting of stockholders; and ● Reviewing periodically with the Chairman of the Board and the Chief Executive Officer the succession plans relating to positions held by directors, and making recommendations to the Board with respect to the selection and development of individuals to occupy those positions. Our Nominating Committee met twice and took action by written consent on one occasion during the fiscal year ended December 31, 2023. Delinquent Section 16(a) Reports Based solely upon a review of Forms 3, 4 and 5, and amendments thereto, furnished to us during the fiscal year ended December 31, 2023, we believe that during the fiscal year ended December 31, 2023, our executive officers, directors and all persons who own more than ten percent of a registered class of our equity securities complied with all Section 16(a) filing requirements, except that our directors and officers failed to timely file a Form 4 reporting their annual equity grants granted on April 17, 2023, due to a technical issue. The Form 4s reporting these grants were filed on April 20, 2023. 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 Business Conduct is located at our website at www.oramed.com. We intend to satisfy the disclosure requirement regarding any amendment to, or a waiver from, a provision of the Code of Ethics that applies to our Chief Executive Officer, Chief Financial Officer or controller, or persons performing similar functions and that relates to the Code of Ethics by posting such information on our website, www.oramed.com. ITEM 11. EXECUTIVE COMPENSATION. Compensation Discussion and Analysis This section explains the policies and decisions that shape our executive compensation program, including its specific objectives and elements, as it relates to our “named executive officers,” or NEOs. Our NEOs for the year ended December 31, 2023 are those three individuals listed in the “Summary Compensation Table” below. The Compensation Committee believes that our executive compensation is appropriately designed to incentivize our NEOs to work for our long-term prosperity, is reasonable in comparison with the levels of compensation provided by comparable companies and reflects a reasonable cost. We believe our NEOs are critical to the achievement of our corporate goals, through which we can drive stockholder value. The Compensation Committee of our Board is comprised solely of independent directors as defined by Nasdaq and non-employee directors as defined by Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. The Compensation Committee has the authority and responsibility to review and approve the compensation of our President and Chief Executive Officer and other executive officers. Other information concerning the structure, roles and responsibilities of our Compensation Committee is set forth in “Board Meetings and Committees—Compensation Committee” section. 43 Our executive compensation program and our NEOs’ compensation packages are designed around the following objectives: ● attract, hire, and retain talented and experienced executives; ● motivate, reward and retain executives whose knowledge, skills and performance are critical to our success; ● ensure fairness among the executive management team via recognizing the contributions of each executive to our success; ● focus executive behavior on achievement of our corporate objectives and strategy; and ● align the interests of management and stockholders by providing management with longer-term incentives through equity ownership. The Compensation Committee reviews the allocation of compensation components regularly to ensure alignment with strategic and operating goals, competitive market practices and legislative changes. The Compensation Committee does not apply a specific formula to determine the allocation between cash and non-cash forms of compensation. Certain compensation components, such as base salaries, benefits and perquisites, are intended primarily to attract, hire, and retain well-qualified executives. Other compensation elements, such as long-term incentive opportunities, are designed to motivate and reward performance. Long-term incentives are intended to reward NEOs for our long-term performance and executing our business strategy, and to strongly align NEOs’ interests with those of stockholders. With respect to equity compensation, the Compensation Committee makes awards to executives under our Amended and Restated 2019 Incentive Plan, or the 2019 Plan. Executive compensation is paid or granted based on such matters as the Compensation Committee deems appropriate, including our financial and operating performance and the alignment of the interests of the executive officers and our stockholders. Elements of Compensation Our executive officer compensation program is comprised of: (i) base salary or monthly compensation; (ii) discretionary bonus; (iii) long-term equity incentive compensation in the form of stock option and RSU grants; and (iv) benefits and perquisites. In establishing overall executive compensation levels and making specific compensation decisions for our NEOs in the year ended December 31, 2023, the Compensation Committee considered a number of criteria, including the executive’s position, scope of responsibilities, prior base salary and annual incentive awards and expected contribution. Generally, our Compensation Committee reviews and, as appropriate, approves compensation arrangements for the NEOs from time to time but not less than once each year. The Compensation Committee also takes into consideration the President and Chief Executive Officer’s recommendations for executive compensation of the other NEOs. The President and Chief Executive Officer generally presents these recommendations at the time of our Compensation Committee’s review of executive compensation arrangements. During the fiscal year ended December 31, 2023, the Compensation Committee received consulting services from Aon Solutions UK Limited., or Aon, with regard to management compensation. The Compensation Committee engaged the consultant to review the Company’s current compensation plans for its management and collect and analyze data regarding management compensation at other companies comparable to the Company, in order to provide a competitive compensation benchmark. Aon collected SEC filings data regarding U.S. and Israeli compensation practices and developed a peer group of the following U.S. and Israeli companies: ALX Oncology Holdings Inc., Anavex Life Sciences Corp., Arbutus BioPharma Corporation, Atossa Therapeutics Inc., aTyr Pharma, Inc., Chimerix, Inc., Compugen Ltd., Fulcrum Therapeutics, Inc., Gamida Cell Ltd., Immunic, Inc., Lyra Therapeutics, Inc., Marinus Pharmaceuticals, Inc., MediciNova, Inc., Minerva Neurosciences, Inc., Rani Therapeutics, Inc., Relmada Therapeutics, Inc., Vistagen Therapeutics, Inc. and Zevra Therapeutics, Inc.. Following its review, Aon provided recommendations for cash and equity compensation at various percentiles for the Compensation Committee’s consideration. 44 Base Salary The Compensation Committee performs a review of base salaries and monthly compensation for our NEOs from time to time as appropriate. In determining salaries, the Compensation Committee members also take into consideration the scope of the NEOs’ responsibilities and independent third-party market data, such as compensation surveys to industry, individual experience and performance and contribution to our clinical, regulatory, commercial and operational performance. None of the factors above has a dominant weight in determining the compensation of our NEOs, and our Compensation Committee considers the factors as a whole when considering such compensation. In addition, our Compensation Committee uses comparative data regarding compensation paid by peer companies in order to obtain a general understanding of current trends in compensation practices and ranges of amounts being awarded by other public companies, and not as part of an analysis or a formula. We believe that a competitive base salary and monthly compensation is a necessary element of any compensation program that is designed to attract and retain talented and experienced executives. We also believe that attractive base salaries can motivate and reward executives for their overall performance. Base salary and monthly compensation are established in part based on the individual experience, skills and expected contributions to our performance, as well as such executive’s performance during the prior year. Generally, we believe that executives’ base salaries should be targeted near the median of the range of salaries for executives in similar positions with similar responsibilities, experience and performance at comparable companies. Compensation adjustments are made occasionally based on changes in an executive’s level of responsibility, company progress or on changed local and specific executive employment market conditions. In the year ended December 31, 2023, our Compensation Committee increased the base salary of one of our NEOs by 10% (effective January 1, 2023) as it deemed this to be a reasonable rate based on, among other factors, such NEO’s responsibilities and the report received from Deloitte Israel & Co. during the year ended December 31, 2022, as it determined the salary was not in line with market compensation. In January 2024, our Compensation Committee increased the base salary of our NEOs by 10% (effective January 1, 2024, and in the case of our Chief Financial Officer, 5% effective January 1, 2024 and an additional 5% effective June 1, 2024) as it deemed this to be a reasonable rate based on, among other factors, such NEO’s responsibilities and the report from Aon, as it determined the salary was not in line with market compensation. Performance Based Bonus Our NEOs are eligible to receive discretionary annual bonuses based upon performance. The amount of annual bonus to our NEOs is based on various factors, including, among others, the achievement of scientific and business goals and our financial and operational performance. The Compensation Committee takes into account the overall performance of the individuals, as well as the overall performance of the Company over the period being reviewed and the recommendation of management. For any given year, the compensation objectives vary, but relate generally to strategic factors such as developments in our clinical path, the execution of a license agreement for the commercialization of product candidates, the establishment of key strategic collaborations, the build-up of our pipeline and financial factors such as capital raising. Bonuses are awarded generally based on corporate performance, with adjustments made within a range for individual performance, at the discretion of the Compensation Committee. The Compensation Committee determines, on a discretionary basis, the size of the entire bonus pool and the amount of the actual award to each NEO. The overall payment is also based on historic compensation of the NEOs. We believe that annual bonuses payable based on the achievement of short-term corporate goals incentivize our NEOs to create stockholder value and attain short-term performance objectives. 45 Long-Term Equity Incentive Compensation Long-term incentive compensation allows the NEOs to share in any appreciation in the value of our common stock. The Compensation Committee believes that stock participation aligns executive officers’ interests with those of our stockholders. Equity incentive awards are generally made at the commencement of employment and following a significant change in job responsibilities, or to meet other special retention or performance objectives. The amounts of the awards are designed to reward past performance and create incentives to meet long-term objectives. Awards are made at a level expected to be competitive within the biotechnology industry, as well as with Israeli-based companies. Awards are made on a discretionary basis and not pursuant to specific criteria set out in advance. In determining the amount of each grant, the Compensation Committee also takes into account the number of shares held by the executive prior to the grant. The vesting schedule for NEOs generally provides for annual installments for new grants, though the Compensation Committee also utilizes quarterly vesting from time to time, as well as performance-based vesting. The Compensation Committee believes that time-based vesting encourages recipients to build stockholder value over a long period of time and that performance-based vesting encourages recipients to achieve goals that benefit the Company. As part of its engagement in the year ended December 31, 2023 described above, Aon also provided consulting services in connection with grants of equity awards to our executive officers. Aon reviewed annual long-term incentive grants at peer companies, as well as such grants made by companies in the broader market, based on a blend of Black-Scholes valuations and grants as a percentage of the applicable company’s capitalization. Following such consultation, the Compensation Committee is considering alternative models and equity vehicles for future equity-based grants. Benefits and Perquisites Generally, benefits available to NEOs are available to all employees on similar terms and include welfare benefits, paid time-off, life and disability insurance and other customary or mandatory social benefits in Israel. We provide some of our NEOs with a phone and a company car, which are customary benefits in Israel to managers and officers. We do not believe that the benefits and perquisites described above deviate materially from the customary practice for compensation of executive officers by other companies similar in size and stage of development in Israel. These benefits represent a relatively small portion of the executive officers’ total compensation. Say-on-Pay Vote Our stockholders approved, on an advisory basis, our executive compensation program at our annual meeting of stockholders held on June 30, 2022. We did not seek or receive any specific feedback from our stockholders concerning our executive compensation program during the past fiscal year. The Compensation Committee did not specifically rely on the results of the prior vote in making any compensation-related decisions during the fiscal year ended December 31, 2023. 46 SUMMARY COMPENSATION TABLE The following table sets forth the compensation earned by our NEOs for the fiscal years ended December 31, 2023 and 2022. Name and Principal Position Year Salary ($) (1) Bonus ($) (1)(2) RSUs Awards ($) (3) Option Awards ($) (4) All Other Compensation ($) (1)(5) Total ($) Nadav Kidron 2023 462,988 242,576 904,920 - 48,738 1,659,222 President, Chief Executive Officer and Chairman (6) 2022 491,131 275,150 4,847,380 875,241 344,718 6,833,620 Dr. Miriam Kidron 2023 347,405 139,123 605,480 - 17,423 1,109,431 Chief Scientific Officer and director (7) 2022 378,569 140,231 1,938,580 588,947 23,879 3,070,206 David Silberman 2023 156,070 62,027 277,180 - 41,434 536,711 Chief Financial Officer 2022 155,125 49,732 759,405 261,754 43,184 1,269,200 (1) Amounts paid for Salary, Bonus and All Other Compensation that were originally denominated in NIS were translated into U.S. Dollars at the then current exchange rate for each payment. (2) Bonuses were granted at the discretion of the Compensation Committee. (3) For RSU awards, the amounts reflect the grant date fair value, as calculated pursuant to ASC Topic 718 “Compensation–Stock Compensation.” The assumptions used to determine the fair value of the RSU awards are set forth in note 10 to our audited consolidated financial statements. Our NEOs will not realize the value of these awards in cash unless and until the awards vest and the underlying shares are issued and subsequently sold. (4) The amounts reflect the grant date fair value, as calculated pursuant to ASC Topic 718, of these option awards. The assumptions used to determine the fair value of the option awards are set forth in note 10 to our audited consolidated financial statements. Our NEOs will not realize the value of these awards in cash unless and until these awards are exercised and the underlying shares subsequently sold. (5) See “All Other Compensation Table” below. (6) Until November 1, 2022, Mr. Kidron received certain compensation from Oramed Ltd. through KNRY, Ltd., an Israeli entity owned by Dr. Miriam Kidron, or KNRY. Beginning on November 1, 2022, Mr. Kidron receives certain compensation from the Company through Shnida Ltd., an Israeli entity owned by Mr. Kidron, and certain compensation from Oramed Ltd. For additional information see “—Employment and Consulting Agreements” below. (7) Dr. Kidron receives compensation from Oramed Ltd. through KNRY. See “—Employment and Consulting Agreements” below. 47 All Other Compensation Table The “All Other Compensation” amounts set forth in the Summary Compensation Table above consist of the following: Name Year Automobile- Related Expenses ($) Manager’s Insurance (1)($) Education Fund ($) Relocation Expenses (2)($) Total ($) Nadav Kidron 2023 21,191 21,711 5,836 - 48,738 2022 9,774 3,703 682 330,559 344,718 Dr. Miriam Kidron 2023 17,423 - - - 17,423 2022 23,879 - - - 23,879 David Silberman 2023 14,666 21,888 4,880 - 41,434 2022 16,095 21,835 5,254 - 43,184 (1) Manager’s insurance and education funds are customary benefits provided to employees based in Israel. Manager’s insurance is a combination of severance savings (in accordance with Israeli law), defined contribution tax-qualified pension savings and disability insurance premiums. An education fund is a savings fund of pre-tax contributions to be used after a specified period of time for educational or other permitted purposes. (2) Relocation expenses represents additional compensation for the period during which Mr. Kidron was in the United States. These expenses mainly include relocation expenses, supplemental living expenses, accommodation allowances, education allowances, health insurance and related costs. Employment and Consulting Agreements On July 1, 2008, Oramed Ltd. entered into a consulting agreement with KNRY, whereby Nadav Kidron, through KNRY, provided services as President and Chief Executive Officer of both the Company and Oramed Ltd., or the Nadav Kidron Consulting Agreement. The Nadav Kidron Consulting Agreement was terminated, effective November 1, 2022, and replaced with the agreements as further described below. Additionally, on July 1, 2008, Oramed Ltd. entered into a consulting agreement with KNRY whereby Dr. Miriam Kidron, through KNRY, provides services as Chief Scientific Officer of both the Company and Oramed Ltd., or the Miriam Kidron Consulting Agreement. The Miriam Kidron Consulting Agreement is terminable by either party upon 140 days prior written notice. The agreement, as amended, provides that KNRY will be reimbursed for reasonable expenses incurred in connection with performance of the agreement. Pursuant to the agreement, each of KNRY and Dr. Miriam Kidron agreed that during the term of the agreement and for a 12-month period thereafter, none of them will compete with Oramed Ltd. nor solicit employees of Oramed Ltd. Starting January 1, 2024, Dr. Miriam Kidron receives a monthly consulting fee of NIS 117,040. The Nadav Kidron Consulting Agreement was terminable by either party upon 140 days prior written notice. The agreement, as amended, provided that KNRY will be reimbursed for reasonable expenses incurred in connection with performance of the agreement. Pursuant to the agreement, KNRY and Nadav Kidron each agreed that during the term of the agreement and for a 12-month period thereafter, none of them will compete with Oramed Ltd. nor solicit employees of Oramed Ltd. From September 1, 2021 until termination, Nadav Kidron received a monthly consulting fee of NIS 146,705. Following the relocation of Nadav Kidron to the State of Israel, the Company entered into two agreements with Mr. Kidron, replacing the Nadav Kidron Consulting Agreement, substantially on the same terms, in order to allocate his time and services between the Company and Oramed Ltd. 48 Effective November 1, 2022, the Company entered into a consulting agreement with Shnida Ltd., whereby Nadav Kidron, through Shnida Ltd., provides services as President and Chief Executive Officer of the Company. The agreement is terminable by either party upon 140 days prior written notice. The agreement provides that Shnida Ltd. will be reimbursed for reasonable expenses incurred in connection with performance of the agreement. Effective as of January 1, 2024, Nadav Kidron receives a monthly consulting fee of NIS 96,825. Pursuant to the agreement, Shnida Ltd. and Nadav Kidron each agree that during the term of the agreement and for a 12-month period thereafter, none of them will compete with the Company nor solicit employees of the Company. In addition, we, through Oramed Ltd., have entered into an employment agreement with Nadav Kidron, effective as of November 1, 2022, pursuant to which, effective as of January 1, 2024, Mr. Kidron receives gross monthly salary of NIS 51,591 in consideration for his services as President and Chief Executive Officer of Oramed Ltd. In addition, Mr. Kidron is provided with a phone and a company car pursuant to the terms of his agreement. We, through Oramed Ltd., have entered into an employment agreement with David Silberman as of May 23, 2021, pursuant to which Mr. Silberman was appointed as Chief Financial Officer, Treasurer and Secretary of the Company and Oramed Ltd., effective July 5, 2021. In accordance with the employment agreement, as amended, Mr. Silberman’s current gross monthly salary is NIS 49,810, effective January 1, 2024 and will increase to NIS 52,300, effective June 1, 2024. In addition, Mr. Silberman is provided with a phone and a company car allowance pursuant to the terms of his agreement. We have entered into indemnification agreements with our directors and officers pursuant to which we agreed to indemnify each director and officer for 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. Potential Payments upon Termination or Change-in-Control We have no plans or arrangements in respect of remuneration received or that may be received by our NEOs to compensate such officers in the event of termination of employment (as a result of resignation or retirement). According to our NEOs’ employment agreements, upon a termination in connection with a change-in-control that occurs during the period that is three months prior and 12 months after the event, the following “double trigger” change-in-control provisions shall apply: ● The President and Chief Executive Officer will be entitled to receive 18 months severance. ● All other NEOS will be entitled to receive 12 months severance. ● Severance shall be defined as base salary plus bonuses over the severance period. For U.S.-based persons, COBRA payments equivalent to healthcare benefits values will be provided over the severance period. ● Full vesting acceleration of all outstanding unvested equity incentives. Pension, Retirement or Similar Benefit Plans We have no arrangements or plans under which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive stock options, RSUs or restricted shares at the discretion of our Compensation Committee in the future. 49 Policy Relating to Recovery of Erroneously Awarded Compensation Our Board has adopted an executive compensation clawback policy, administered by our Compensation Committee, which provides for the recoupment (or clawback) from current and former executive officers of certain compensation in the event of an accounting restatement resulting from material noncompliance with financial reporting requirements under the federal securities laws of the United States. In the event the Company is required to prepare an accounting restatement of its financial statements due to the Company’s material non-compliance with any financial reporting requirement under the securities laws, the Compensation Committee will require prompt reimbursement or forfeiture of any excess incentive compensation (as defined in the clawback policy) received by any covered executive officer during the three completed fiscal years immediately preceding the date on which the Company is required to prepare an accounting restatement. OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023 The following table sets forth information concerning stock options and stock awards held by the NEOs as of December 31, 2023. Option Awards Stock Awards Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Option Exercise Price ($) Option Expiration Date Number of shares that have not vested (#) Market value of shares that have not vested ($) Nadav Kidron 47,134 (1) - 12.45 4/9/24 49,000 (2) - 7.77 6/30/27 97,000 (3) - 8.14 1/31/28 196,500 (4)(5) - 3.16 2/26/29 190,000 (6) - 4.80 1/8/30 112,500 (7) 37,500 (7) 10.40 2/3/31 26,750 (8) 80,250 (8) 13.89 1/3/32 87,095 (9) 29,032 (9) 3.91 9/17/32 582,500 (12)(13)(14)(15) 1,345,575 Dr. Miriam Kidron 47,134 (1) - 12.45 4/9/24 69,999 (16) - 7.77 6/30/27 47,000 (17) - 8.14 1/31/28 104,000 (18)(5) - 3.16 2/26/29 100,000 (19) 4.80 1/8/30 75,000 (20) 25,000 (20) 10.40 2/3/31 54,000 (21) 18,000 (21) 13.89 1/3/32 24,059 (22) 8,020 (22) 3.91 9/17/32 408,584 (23)(24)(25)(26) 943,829 David Silberman 25,000 (28) 25,000 (28) 20.19 9/1/31 8,000 (29) 24,000 (29) 13.89 1/3/32 7,121 (30) 2,374 (30) 3.91 9/17/32 176,375 (31)(32)(33)(34) 407,426 (1) On April 9, 2014, 47,134 options were granted to each of Nadav Kidron and Dr. Miriam Kidron under the 2008 Plan at an exercise price of $12.45 per share; 15,710 of such options vested on April 30, 2014 and the remainder vested in eight equal monthly installments, commencing on May 31, 2014. The options have an expiration date of April 9, 2024. (2) On June 30, 2017, 147,000 options were granted to Nadav Kidron under the 2008 Plan at an exercise price of $7.77 per share; 49,000 of such options vested on December 31, 2017 and the remainder vested in two equal installments of 49,000 on each of December 31, 2018 and December 31, 2019, subject to the Company share price reaching the target of $9.50 and $12.50 per share, respectively. The options expire on June 30, 2027. As of December 31, 2021, 98,000 of these options were forfeited. 50 (3) On January 31, 2018, 97,000 options were granted to Nadav Kidron under the 2008 Plan at an exercise price of $8.14 per share; 97,000 of such options vested in four equal installments of 24,250 on each of January 1, 2019, January 1, 2020, January 1, 2021 and January 1, 2022. The options expire on January 31, 2028. (4) On February 26, 2019, 196,500 options were granted to Nadav Kidron under the 2008 Plan at an exercise price of $3.16 per share; 196,500 of such options vested in four equal installments of 49,125 on each of December 31, 2019, December 31, 2020, December 31, 2021 and December 31, 2022. The options expire on February 26, 2029. For additional information please see footnote 5 below. (5) On September 11, 2019, these options were canceled and re-granted under the 2019 Plan in the same amounts and under the same terms as the original grants. (6) On January 8, 2020, 190,000 options were granted to Nadav Kidron under the 2019 Plan at an exercise price of $4.80 per share. 190,000 of the options vested in four equal installments of 47,500 on each of December 31, 2020, December 31, 2021, December 31, 2022 and December 31, 2023. The options expire on January 8, 2030. (7) On February 3, 2021, 150,000 options were granted to Nadav Kidron under the 2019 Plan at an exercise price of $10.40 per share. 112,500 of the options vested in three equal installments of 37,500 on each of December 31, 2021, December 31, 2022 and December 31, 2023, and the remainder of 37,500 shall vest on December 31, 2024. The options expire on February 3, 2031. (8) On January 3, 2022, 107,000 options were granted to Nadav Kidron under the 2019 Plan at an exercise price of $13.89 per share. 26,750 options vested on January 1, 2023, and the remainder shall vest in three equal installments of 26,750 on each of January 1, 2024, January 1, 2025 and January 1, 2026. The options expire on January 3, 2032. (9) On September 18, 2022, 116,127 options were granted to Nadav Kidron under the Oravax Medical Inc. 2021 Long-Term Incentive Plan at an exercise price of $3.91 per share. 87,095 of the options vested in three installments on each of September 18, 2022, December 31, 2022 and December 31, 2023 and the remaining 29,032 options shall vest on December 31, 2024. The options expire on September 17, 2032. (10) On November 13, 2014, 9,788 RSUs, representing a right to receive shares of the Company’s common stock, were granted to Nadav Kidron. The RSUs vested in two equal installments, each of 4,894 shares, on November 30 and December 31, 2014. The shares of common stock underlying the RSUs will be issued upon request of the grantee. (11) On February 23, 2015, 79,848 RSUs, representing a right to receive shares of the Company’s common stock, were granted to Nadav Kidron. The RSUs vested in 23 installments consisting of one installment of 6,654 shares on February 28, 2015 and 22 equal monthly installments of 3,327 shares each, commencing March 31, 2015. The shares of common stock underlying the RSUs will be issued upon request of the grantee. (12) On February 3, 2021, 300,000 RSUs, representing a right to receive shares of the Company’s common stock, were granted to Nadav Kidron. 100,000 RSUs vested in one installment on August 31, 2021 and the remainder shall vest per the following: 100,000 shares shall vest upon our common stock achieving a specified price per share, and 100,000 shall vest upon our achievement of certain business objectives. (13) On January 3, 2022, 63,000 RSUs representing a right to receive shares of the Company’s common stock were granted to Nadav Kidron. 15,750 RSUs vested on January 1, 2023 and the shares of common stock underlying the RSUs will be issued upon request of the grantee. 47,250 shall vest in three equal installments of 15,750 on each of January 1, 2024, January 1, 2025 and January 1, 2026. (14) On July 28, 2022, 126,000 RSUs representing a right to receive shares of the Company’s common stock were granted to Nadav Kidron. 126,000 RSUs shall vest in three equal installments of 42,000 on each of January 1, 2024, January 1, 2025 and January 1, 2026. 51 (15) On April 17, 2023, 279,000 RSUs representing a right to receive shares of the Company’s common stock were granted to Nadav Kidron. 69,750 RSUs vested in three equal quarterly installments of 23,250 starting May 1, 2023 and the remainder of 209,250 shall vest in nine equal quarterly installments of 23,250 starting February 1, 2024. (16) On June 30, 2017, 69,999 options were granted to Dr. Miriam Kidron under the 2008 Plan at an exercise price of $7.77 per share; Such options vested in three equal installments of 23,333 on each of December 31, 2017, December 31, 2018 and December 31, 2019. The options have an expiration date of June 30, 2027. (17) On January 31, 2018, 47,000 options were granted to Dr. Miriam Kidron under the 2008 Plan at an exercise price of $8.14 per share; 47,000 of such options vested in four equal installments of 11,750 on each of January 1, 2019, January 1, 2020, January 1, 2021 and January 1, 2022. The options expire on January 31, 2028. (18) On February 26, 2019, 104,000 options were granted to Dr. Miriam Kidron under the 2008 Plan at an exercise price of $3.16 per share; 104,000 of such options vested in four equal installments of 26,000 on each of December 31, 2019, December 31, 2020, December 31, 2021 and December 31, 2022. The options expire on February 26, 2029. For additional information please see footnote 5 above. (19) On January 8, 2020, 100,000 options were granted to Dr. Miriam Kidron under the 2019 Plan at an exercise price of $4.80 per share. 100,000 of the options vested in four equal installments of 25,000 on each of December 31, 2020, December 31, 2021, December 31, 2022 and December 31, 2023. The options expire on January 8, 2030. (20) On February 3, 2021, 100,000 options were granted to Dr. Miriam Kidron under the 2019 Plan at an exercise price of $10.40 per share. 75,000 of such options vested in three equal installments of 25,000 on each of on each of December 31, 2021, December 31, 2022 and December 31, 2023 and the remaining 25,000 options shall vest on December 31, 2024. The options expire on February 3, 2031. (21) On January 3, 2022, 72,000 options were granted to Dr. Miriam Kidron under the 2019 Plan at an exercise price of $13.89 per share. 18,000 of such options vested on January 1, 2023 and the remaining 54,000 of the options shall vest in three equal installments of 18,000 on each of January 1, 2024, January 1, 2025 and January 1, 2026. The options expire on January 3, 2032. (22) On September 18, 2022, 32,079 options were granted to Dr. Miriam Kidron under the Oravax Medical Inc. 2021 Long-Term Incentive Plan at an exercise price of $3.91 per share. 24,059 of the options vested in three installments on each of September 18, 2022, December 31, 2022 and December 31, 2023 and the remaining 8,020 options shall vest on December 31, 2024. The options expire on September 17, 2032. (23) On February 3, 2021, 200,000 RSUs, representing a right to receive shares of the Company’s common stock, were granted to Dr. Miriam Kidron. 66,666 RSUs vested in one installment on August 31, 2021 and the remainder shall vest per the following: 66,667 shares shall vest upon our common stock achieving a specified price per share, and 66,667 shall vest upon our achievement of certain business objectives. (24) On January 3, 2022, 42,000 RSUs representing a right to receive shares of the Company’s common stock were granted to Dr. Miriam Kidron. 10,500 vested on January 1, 2023 and 31,500 shall vest in three equal installments of 10,500 on each of January 1, 2024, January 1, 2025 and January 1, 2026. 52 (25) On July 28, 2022, 84,000 RSUs representing a right to receive shares of the Company’s common stock were granted to Dr. Miriam Kidron. 84,000 shall vest in three equal installments of 26,000 on each of January 1, 2024, January 1, 2025 and January 1, 2026. (26) On April 17, 2023, 213,000 RSUs representing a right to receive shares of the Company’s common stock were granted to Dr. Miriam Kidron. 53,250 RSUs vested in three equal quarterly installments of 17,750 starting May 1, 2023 and the remainder of 159,750 shall vest in nine equal quarterly installments of 17,750 starting February 1, 2024. The shares of common stock underlying the RSUs will be issued upon request of the grantee. (27) On April 17, 2023, 53,500 performance-based RSUs representing a right to receive shares of the Company’s common stock were granted to Dr. Miriam Kidron. 120,000 RSUs vested in one installment on May 26, 2023, upon our common stock achieving a specified price per share. The shares of common stock underlying the RSUs will be issued upon request of the grantee. (28) On September 1, 2021, 50,000 options were granted to David Silberman under the 2019 Plan at an exercise price of $20.19 per share. 25,000 options vested on June 27, 2022 and June 27, 2023 and the remainder shall vest in two equal installments of 12,500 options on each of June 27, 2024 and June 27, 2025. The options expire on September 1, 2031. (29) On January 3, 2022, 32,000 options were granted to David Silberman under the 2019 Plan at an exercise price of $13.89 per share. 8,000 options vested on January 1, 2023 and the remainder shall vest in three equal installments of 8,000 on each of January 1, 2024, January 1, 2025 and January 1, 2026. The options expire on January 3, 2032. (30) On September 18, 2022, 9,495 options were granted to David Silberman under the Oravax Medical Inc. 2021 Long-Term Incentive Plan at an exercise price of $3.91 per share. 7,121 of the options vested in two installments on each of September 18, 2022 and December 31, 2022 and the remaining 2,374 options shall vest on December 31, 2024. The options expire on September 17, 2032. (31) On September 1, 2021, 50,000 RSUs, representing a right to receive shares of the Company’s common stock, were granted to David Silberman. These RSUs vest as follows: (i) 33,333 shall vest upon our common stock achieving a price per share of $25 for at least 20 days out of any 30-day trading period and (a) if the first condition was met any time before June 27, 2022, then the RSUs would have vested in three equal installments (on June 27, 2022, June 27, 2023 and June 27, 2024), (b) if the first condition is met any time between June 27, 2022 and June 27, 2023, then 1/3 of the RSUs will vest immediately, and the remainder will vest in two equal installments (on June 27, 2023 and June 27, 2024), (c) if the first condition is met any time between June 27, 2023 and June 27, 2024, then 2/3 of the RSUs will vest immediately, and the remaining 1/3 will vest on June 27, 2024) and (d) if the first condition is met any time after June 27, 2024, then the RSUs will vest immediately; and (ii) 16,667 upon achievement of a certain licensing agreement as specified by the Board and (a) if the first condition was met any time before June 27, 2022, then the RSUs would have vested in three equal installments (on June 27, 2022, June 27, 2023 and June 27, 2024), (b) if the first condition is met any time between June 27, 2022 and June 27, 2023, then 1/3 of the RSUs will vest immediately, and the remainder will vest in two equal installments (on June 27, 2023 and June 27, 2024), (c) if the first condition is met any time between June 27, 2023 and June 27, 2024, then 2/3 of the RSUs will vest immediately, and the remaining 1/3 will vest on June 27, 2024) and (d) if the first condition is met any time after June 27, 2024, then the RSUs will vest immediately. (32) On January 3, 2022, 19,000 RSUs representing a right to receive shares of the Company’s common stock were granted to David Silberman. 4,750 RSUs vested on January 1, 2023 and 14,250 shall vest in three equal installments of 4,750 on each January 1, 2024, January 1, 2025 and January 1, 2026. 53 (33) On July 28, 2022, 39,000 RSUs representing a right to receive shares of the Company’s common stock were granted to David Silberman. 39,000 shall vest in three equal installments of 13,000 on each of January 1, 2024, January 1, 2025 and January 1, 2026. (34) On April 17, 2023, 97,500 RSUs representing a right to receive shares of the Company’s common stock were granted to David Silberman. 24,375 RSUs vested in three equal quarterly installments of 8,125 starting May 1, 2023 and the 73,125 shall vest in nine equal quarterly installments of 8,125 starting February 1, 2024. DIRECTOR COMPENSATION The following table provides information regarding compensation earned by, awarded or paid to each person for serving as a director who is not an executive officer during the fiscal year ended December 31, 2023: Name of Director Fees Earned or Paid in Cash ($) Stock Awards (1)(2)($) Option Awards (1)(2)($) All Other Compensation ($) Total ($) Dr. Arie Mayer (3) 58,875 68,400 - - 127,275 Yadin Rozov (5) 40,125 68,400 - - 108,525 Leonard Sank 43,875 68,400 - - 112,275 Benjamin Shapiro (6) 20,000 49,000 - - 69,000 (1) As of December 31, 2023, our non-employee directors then in office held options to purchase shares of our common stock and RSUs as follows: Name of Director Aggregate Number of Shares Underlying Stock Awards Aggregate Number of Shares Underlying Option Awards Dr. Arie Mayer (4) 39,000 45,398 Yadin Rozov (5) 37,875 7,500 Leonard Sank 39,000 59,867 Benjamin Shapiro (6) 15,000 - 54 (2) The amounts reflect the grant date fair value, as calculated pursuant to ASC 718, of these option awards. The assumptions used to determine the fair value of the option awards are set forth in note 10 to our audited consolidated financial statements included in the Annual Report. Our directors will not realize the value of these awards in cash unless and until these awards are exercised and the underlying shares subsequently sold. (3) Includes $15,000 in additional director fees paid to Dr. Mayer in his capacity as a director during the fiscal year ended December 31, 2023. (4) Includes 15,398 option awards granted by Oravax for Dr. Mayer’s service as a member of the Board of Directors of Oravax. (5) Mr. Rozov resigned from the Board on January 17, 2024. (6) Mr. Shapiro joined the Board on May 1, 2023. Our directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our Board. Based on a report provided to the Compensation Committee by Aon in 2023, effective as of January 1, 2024, each independent director is entitled to receive as remuneration for his or her service as a member of the Board a sum equal to $30,000 and a grant of 5,070 RSUs per annum. The Chairman of our Board is entitled to receive an additional sum equal to $25,500. The members of our Audit Committee are each entitled to receive an additional sum equal to $6,000 and a grant of 2,230 RSUs. The members of our Compensation Committee are each entitled to receive an additional sum equal to $4,500 and a grant of 1,520 RSUs. The members of our Nominating Committee are each entitled to receive an additional sum equal to $4,000 and a grant of 505 RSUs. All cash remuneration is to be paid quarterly after the close of each quarter. The RSUs vest on April 1, July 1, October 1 and January 1 of each year, subject to Compensation Committee approval each year. Our executive officers did not receive additional compensation for service as directors. The Board may award special remuneration to any director undertaking any special services on behalf of us other than services ordinarily required of a director. Other than as described above, we have no present formal plan for compensating our directors for their service in their capacity as directors. Other than indicated above, no director received and/or accrued any compensation for his services as a director, including committee participation and/or special assignments during the year ended December 31, 2023. 55 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. Stock Option Plans Our Board adopted the 2008 Plan and the 2019 Plan in order to attract and retain quality personnel. The 2008 Plan, which is no longer utilized for new grants, provided for the grant of stock options, restricted stock, RSUs, and stock appreciation rights, collectively referred to as “awards.” Under the 2008 Plan, as amended, 2,400,000 shares were reserved for the grant of awards. As of December 31, 2023, options with respect to 2,287,989 shares had been granted, of which 275,673 had been forfeited, 308,804 had been exercised and 1,310,586 have expired. As of December 31, 2023, 525,824 RSUs had been granted, of which 89,636 have vested and the shares of common stock underlying those RSUs have not been issued and 34,118 have been forfeited. The 2019 Plan provides for the grant of stock options, restricted stock, RSUs, and stock appreciation rights, collectively referred to as “awards.” Under the 2019 Plan, 1,000,000 shares were initially reserved for the grant of awards. On June 29, 2020, and August 3, 2020, respectively, our Board and stockholders approved to amend and restate the 2019 Plan, the principal change being an increase in the number of shares of common stock available under the 2019 Plan from 1,000,000 shares to 3,000,000 shares. On June 30, 2022, our Board and stockholders approved to amend and restate the 2019 Plan, the principal change being an increase in the number of shares of common stock available under the 2019 Plan from 3,000,000 shares to 7,500,000 shares. Stock options granted under the 2019 Plan may be either incentive stock options under the provisions of Section 422 of the Code, or non-qualified stock options. Under the amended 2019 Plan, 7,500,000 shares are reserved for the grant of awards, which may be issued at the discretion of our Board from time to time. As of December 31, 2023, options with respect to 1,863,646 shares have been granted, of which 232,918 had been forfeited, 66,978 had been exercised and none of them were expired. As of December 31, 2023, 3,015,600 RSUs had been granted, of which 122,500 have vested and the shares of common stock underlying those RSUs have not been issued and 371,751 have been forfeited. Since the Company had granted options during the time after the 2008 Plan allegedly terminated, and out of an abundance of caution, the Company canceled these grants and re-granted certain of the options under 2019 Plan in the same amounts and under the same terms as the original grants. The following table sets forth additional information with respect to our equity compensation plans as of December 31, 2023: Plan category Number of securities to be issued upon exercise of outstanding options, RSUs and rights (a) Weight- average exercise price of outstanding options, RSUs and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) Equity compensation plans approved by security holders 3,791,038 $ 4.10 3,365,488 Equity compensation plans not approved by security holders - - - Total 3,791,038 $ 4.10 3,365,488 Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain information regarding the beneficial ownership of our common stock as of March 6, 2024 by: (1) each person who is known by us to own beneficially more than 5% of our common stock; (2) each of our current directors; (3) each of our NEOs; and (4) all of our directors and executive officers as a group. On such date, we had 40,519,160 shares of common stock outstanding. 56 As used in the table below and elsewhere in this form, the term “beneficial ownership” with respect to a security consists of 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 direct the disposition, with respect to the security through any contract, arrangement, understanding, relationship or otherwise, including a right to acquire such power(s) during the 60 days following March 6, 2024. Inclusion of shares in the table does not, however, constitute an admission that the named stockholder is a direct or indirect beneficial owner of those shares. Unless otherwise indicated, (1) each person or entity named in the table has sole voting power and 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 and (2) the address of each of the individuals named below is: c/o Oramed Pharmaceuticals Inc., 1185 Avenue of the Americas, Third Floor, New York, New York 10036. Name and Address of Beneficial Owner Number of Shares Percentage of Shares Beneficially Owned Nadav Kidron #+ 2,103,947 (1) 5.6 % Dr. Miriam Kidron #+ 795,299 (2) 1.9 % David Silberman+ 151,375 (3) * Dr. Daniel Aghion # 2,206 (4) * Dr. Arie Mayer # 55,641 (5) * Leonard Sank # 87,395 (6) * Benjamin Shapiro # 1,909,602 (7) 4.7 % All current executive officers and directors, as a group (eight persons) 5,685,443 (8) 13.9 % * Less than 1% # Director + NEO (1) Includes 745,634 shares of common stock issuable upon the exercise of outstanding stock options, 50,667 shares of common stock issuable upon the vesting of RSUs, and 163,136 shares of common stock underlying vested RSUs that are issuable upon request. Mr. Nadav’s beneficial ownership includes the 218,603 shares of common stock held by Xiaopeng Li, a former director of the Company, over which he holds a proxy. (2) Includes 479,133 shares of common stock issuable upon the exercise of outstanding stock options, 42,375 shares of common stock issuable upon the vesting of RSUs, and 187,625 shares of common stock underlying vested RSUs that are issuable upon request. (3) Includes 41,000 shares of common stock issuable upon the exercise of outstanding stock options and 19,500 shares of common stock issuable upon the vesting of RSUs. (4) Includes 2,206 shares of common stock issuable upon the vesting of RSUs. (5) Includes 25,000 shares of common stock issuable upon the exercise of outstanding stock options and 4,832 shares of common stock issuable upon the vesting of RSUs. (6) Includes 54,867 shares of common stock issuable upon the exercise of outstanding stock options and 4,832 shares of common stock issuable upon the vesting of RSUs. (7) Includes 2,935 shares of common stock issuable upon the vesting of RSUs. (8) Includes 1,501,134 shares of common stock issuable upon the exercise of options beneficially owned by the referenced persons, 127,347 shares of common stock issuable upon the vesting of RSUs and 350,761 shares of common stock underlying vested RSUs that are issuable upon request. 57 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. During the years ended December 31, 2023 and 2022, except for compensation arrangements described elsewhere herein, we did not participate in any transaction, and we are not currently participating in any proposed transaction, or series of transactions, in which the amount involved exceeded the lesser of $120,000 or one percent of the average 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 percent beneficial 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 from unaffiliated third parties. Based on our experience in the business sectors in which we operate and the terms of our transactions with unaffiliated third parties, we believe that all of the transactions described below met this policy standard at the time they occurred. All related person transactions are approved by our Board. The Board has determined that Dr. Daniel Aghion, Dr. Arie Mayer, Leonard Sank and Benjamin Shapiro are independent as defined under the rules promulgated 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 PricewaterhouseCoopers International Limited, for services rendered to us during the fiscal years ended December 31, 2023 and 2022: 2023 2022 Audit Fees (1) $ 132,501 $ 130,000 Audit-Related Fees (2) 1,500 45,000 Tax Fees (3) 31,363 20,000 All Other Fees - - Total Fees $ 165,364 $ 195,000 (1) Amount represents fees paid for professional services for the audit of our consolidated financial statements, review of our interim condensed consolidated financial statements included in quarterly reports and services that are normally provided by our independent registered public accounting firm in connection with statutory and regulatory filings or engagements. (2) Represents fees paid for services rendered in connection with at-the-market offering related fees for fiscal year 2022, and fees rendered in connection with the Israeli Innovation Authority requirements. Represents fees paid for services rendered with the Israeli Innovation Authority requirements. (3) Represents fees paid for tax consulting services. SEC rules require that before the independent registered public accounting firm are engaged by us to render any auditing or permitted non-audit related service, the engagement be: (1) pre-approved by our Audit Committee; or (2) entered into pursuant to pre-approval policies and procedures established by the Audit Committee, provided the policies and procedures are detailed as to the particular service, the Audit Committee is informed of each service, and such policies and procedures do not include delegation of the Audit Committee’s responsibilities to management. The Audit Committee pre-approves all services provided by our independent registered public accounting firm. All of the above services and fees were reviewed and approved by the Audit Committee before the services were rendered. 58 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Index to Financial Statements The following consolidated financial statements are filed as part of this Annual Report on Form 10-K: Page REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB name: Kesselman & Kesselman C.P.A.s, PCAOB ID: 1309 and Auditor Location: Tel Aviv, Israel ) F-1 CONSOLIDATED FINANCIAL STATEMENTS: Balance sheets F-2 Statements of income (loss) F-3 Statements of changes in equity F-4 Statements of cash flows F-5 Notes to financial statements F-6 - F-34 59 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of Oramed Pharmaceuticals Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Oramed Pharmaceuticals Inc. and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of income (loss), changes in equity and cash flows for the years then ended, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Investments at fair value As described in Note 4 to the consolidated financial statements, the Company has $110,188 thousand investments at fair value recorded as of December 31, 2023 relating to the note and warrants issued to the Company by Scilex Holding Company. Management applied significant judgment in estimating the fair value of the investments recorded, which also impacted the results of operations of the Company by approximately $15,638 thousand for the change in fair value of such investments in the year ended December 31, 2023. The fair value estimation involved the use of significant estimates and assumptions with respect to the repayment date of the note and the related amounts of the note and warrants. The principal considerations for our determination that performing procedures relating to investments at fair value is a critical audit matter are (i) the high degree of auditor judgment and subjectivity in performing procedures relating to the fair value measurement of the investments recorded, due to significant judgment by management when developing the estimate; (ii) significant audit effort in evaluating the significant assumptions relating to the repayment date of the note and the related amounts of the note and warrants; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included, among others (i) reading the related agreements and (ii) testing management’s process for estimating the fair value of the investments. Testing management’s process included evaluating the appropriateness of the valuation methods, testing the completeness and accuracy of the data provided by management, and evaluating the reasonableness of significant assumptions related to the repayment date. Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s models. /s/ Kesselman & Kesselman Certified Public Accountants (Isr.) A member firm of PricewaterhouseCoopers International Limited Tel Aviv, Israel March 6, 2024 We have served as the Company’s auditor since 2008. Kesselman & Kesselman, Trade Tower, 25 Hamered Street, Tel-Aviv 6812508, Israel, P.O Box 50005 Tel-Aviv 6150001 Telephone: +972 -3- 7954555, Fax:+972 -3- 7954556, www.pwc.com/il F- 1 ORAMED PHARMACEUTICALS INC. CONSOLIDATED BALANCE SHEETS In thousands (except share and per share data) December 31, 2023 2022 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 9,055 $ 40,464 Short-term deposits (note 2) 95,279 111,513 Marketable securities (note 3) - 3,743 Investments at fair value (note 4) 57,713 - Prepaid expenses and other current assets 537 1,389 Total current assets 162,584 157,109 LONG-TERM ASSETS: Long-term deposits 7 7 Investments at fair value (note 4) 51,035 - Marketable securities (note 3) 1,807 - Other non-marketable equity securities (note 5) 3,524 2,700 Amounts funded in respect of employee rights upon retirement 27 24 Property and equipment, net 873 815 Operating lease right of use assets 694 987 Total long-term assets 57,967 4,533 Total assets $ 220,551 $ 161,642 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses (note 6) $ 1,609 $ 4,158 Short-term borrowings (note 7) 51,013 - Deferred revenues - 1,340 Payable to related parties (note 13b) 325 1 Operating lease liabilities 267 247 Total current liabilities 53,214 5,746 LONG-TERM LIABILITIES: Long-term deferred revenues 4,000 4,000 Employee rights upon retirement 28 21 Provision for uncertain tax position (note 12f) 11 11 Operating lease liabilities 342 647 Other liabilities 63 61 Total long-term liabilities 4,444 4,740 COMMITMENTS (note 8) EQUITY EQUITY ATTRIBUTABLE TO COMPANY’S STOCKHOLDERS’: Common stock, $ 0.012 par value ( 60,000,000 authorized shares as of December 31, 2023 and December 31, 2022; 40,338,979 and 39,563,888 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively) 485 476 Additional paid-in capital 320,892 314,417 Accumulated deficit ( 157,556 ) ( 163,081 ) Total stockholders’ equity 163,821 151,812 Non-controlling interests ( 928 ) ( 656 ) Total equity 162,893 151,156 Total liabilities and equity $ 220,551 $ 161,642 The accompanying notes are an integral part of the consolidated financial statements. F- 2 ORAMED PHARMACEUTICALS INC. CONSOLIDATED STATEMENTS OF INCOME (LOSS) In thousands (except share and per share data) Year ended December 31, Year ended December 31, 2023 2022 REVENUES $ 1,340 $ 2,703 RESEARCH AND DEVELOPMENT EXPENSES ( 8,971 ) ( 27,639 ) SALES AND MARKETING 287 ( 1,851 ) GENERAL AND ADMINISTRATIVE EXPENSES ( 8,425 ) ( 13,811 ) OPERATING LOSS ( 15,769 ) ( 40,598 ) INTEREST EXPENSES (note 11b) ( 2,037 ) - FINANCIAL INCOME (EXPENSES), NET (note 11a) 22,894 2,934 INCOME (LOSS) BEFORE TAX EXPENSES 5,088 ( 37,664 ) TAX EXPENSES - ( 100 ) NET LOSS (INCOME) $ 5,088 $ ( 37,764 ) NET INCOME (LOSS) ATTRIBUTABLE TO: COMPANY’S STOCKHOLDERS 5,525 ( 36,561 ) NON-CONTROLLING INTERESTS ( 437 ) ( 1,203 ) NET INCOME (LOSS) $ 5,088 $ ( 37,764 ) BASIC INCOME (LOSS) PER SHARE OF COMMON STOCK $ 0.14 $ ( 0.94 ) DILUTED INCOME (LOSS) PER SHARE OF COMMON STOCK $ 0.14 $ ( 0.94 ) WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK USED IN COMPUTING BASIC INCOME (LOSS) PER SHARE OF COMMON STOCK 40,315,068 38,997,649 WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK USED IN COMPUTING DILUTED INCOME (LOSS) PER SHARE OF COMMON STOCK 40,566,901 38,997,649 The accompanying notes are an integral part of the consolidated financial statements. F- 3 ORAMED PHARMACEUTICALS INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY in thousands Attributable to Company’s Stockholders Additional Total Non- Common Stock paid-in Accumulated stockholders’ controlling Total Shares $ capital deficit equity interests Equity In thousands BALANCE AS OF JANUARY 1, 2023 39,564 476 314,417 ( 163,081 ) 151,812 ( 656 ) 151,156 SHARES ISSUED FOR SERVICES 3 * 9 - 9 - 9 ISSUANCE OF COMMON STOCK, NET 193 2 2,426 - 2,428 - 2,428 STOCK-BASED COMPENSATION 579 7 4,040 - 4,047 - 4,047 STOCK-BASED COMPENSATION OF SUBSIDIARY - - - - - 165 165 NET INCOME (LOSS) - - - 5,525 5,525 ( 437 ) 5,088 BALANCE AS OF DECEMBER 31, 2023 40,339 485 320,892 ( 157,556 ) 163,821 ( 928 ) 162,893 * Represents an amount of less than $1. Attributable to Company’s Stockholders Additional Total Non- Common Stock paid-in Accumulated stockholders’ controlling Total Shares $ capital deficit equity interests Equity In thousands BALANCE AS OF JANUARY 1, 2022 38,158 459 292,514 ( 126,520 ) 166,453 157 166,610 SHARES ISSUED FOR SERVICES 3 * 22 - 22 - 22 ISSUANCE OF COMMON STOCK, NET 1,213 15 11,485 - 11,500 - 11,500 EXERCISE OF WARRANTS AND OPTIONS 39 * 62 - 62 - 62 STOCK-BASED COMPENSATION 151 2 11,117 - 11,119 - 11,119 STOCK-BASED COMPENSATION OF SUBSIDIARY - - - - - 390 390 TAX WITHHOLDINGS RELATED TO STOCK-BASED COMPENSATION SETTLEMENTS - - ( 783 ) - ( 783 ) - ( 783 ) NET LOSS - - - ( 36,561 ) ( 36,561 ) ( 1,203 ) ( 37,764 ) BALANCE AS OF DECEMBER 31, 2022 39,564 476 314,417 ( 163,081 ) 151,812 ( 656 ) 151,156 The accompanying notes are an integral part of the consolidated financial statements. F- 4 ORAMED PHARMACEUTICALS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS In thousands Year ended December 31, Year ended December 31, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 5,088 $ ( 37,764 ) Adjustments required to reconcile net income (loss) to net cash used in operating activities: Depreciation 196 58 Gain from selling fixed assets - ( 13 ) Exchange differences and interest on deposits and held to maturity bonds ( 2,172 ) ( 1,550 ) Changes in fair value of investments ( 16,392 ) 763 Stock-based compensation 4,212 11,509 Shares issued for services 9 22 Funds in respect of employee rights upon retirement ( 3 ) - Accrued interest on short-term borrowings to maturity 1,463 - Changes in operating assets and liabilities: Prepaid expenses and other current assets 852 268 Accounts payable, accrued expenses and related parties ( 2,225 ) ( 376 ) Net changes in operating lease 8 ( 93 ) Deferred revenues ( 1,340 ) ( 703 ) Liability for employee rights upon retirement 7 ( 1 ) Other liabilities 2 ( 38 ) Total net cash used in operating activities ( 10,295 ) ( 27,918 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment ( 254 ) ( 496 ) Proceeds from selling fixed assets - 24 Purchase of short-term deposits ( 91,369 ) ( 151,700 ) Purchase of long-term deposits - ( 5 ) Long-term investments ( 99,550 ) ( 2,700 ) Proceeds from long-term investments 5,000 - Proceeds from redemption of short-term deposits 109,760 178,200 Proceeds from maturity of held to maturity securities 3,375 6,886 Funds in respect of employee rights upon retirement - 2 Total net cash provided by (used in) investing activities ( 73,038 ) 30,211 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock, net of issuance costs 2,428 11,500 Proceeds from exercise of warrants and options - 62 Loans received 99,550 - Loans repaid ( 50,000 ) - Tax withholdings related to stock-based compensation settlements - ( 783 ) Total net cash provided by financing activities 51,978 10,779 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS ( 54 ) ( 64 ) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 31,409 ) 13,008 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 40,464 27,456 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 9,055 $ 40,464 (A) SUPPLEMENTARY DISCLOSURE ON CASH FLOWS: Taxes paid $ - $ 100 Interest paid $ 574 $ - Interest received $ 5,156 $ 1,844 (B) SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES: Recognition of operating lease right of use assets and liabilities - 730 The accompanying notes are an integral part of the consolidated financial statements F- 5 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In thousands (except share and per share data) NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES: a. General 1) Incorporation and operations Oramed Pharmaceuticals Inc. (collectively with its subsidiaries, the “Company,” unless the context indicates otherwise), a Delaware corporation, was incorporated on April 12, 2002. On February 17, 2006, the Company entered into an agreement with Hadasit Medical Services and Development Ltd. to acquire the provisional patent related to an orally ingestible insulin capsule to be used for the treatment of individuals with diabetes. On May 14, 2007, the Company incorporated a wholly-owned subsidiary in Israel, Oramed Ltd. (the “Subsidiary”), which is engaged in research and development. On July 30, 2019, the Subsidiary incorporated a wholly-owned subsidiary in Hong Kong, Oramed HK Limited (the “Hong Kong Subsidiary”). As of December 31, 2023, the Hong Kong Subsidiary has no operations. On March 18, 2021, the Company entered into a license agreement (the “Oravax License Agreement”) with Oravax Medical Inc. (“Oravax”) and into a stockholders agreement (the “Stockholders Agreement”) with Akers Biosciences Inc., Premas Biotech Pvt. Ltd., Cutter Mill Capital LLC (“Cutter Mill”) and Run Ridge LLC (“Run Ridge”). According to the Stockholders Agreement, Oravax issued 1,890,000 shares of its capital stock to the Company, representing 63 % of the issued and outstanding share capital of Oravax, on a fully diluted basis, as of the date of issuance. Consequently, Oramed consolidates Oravax in its consolidated financial statements since that time. On November 23, 2021, Oravax incorporated a wholly-owned subsidiary in Israel, Oravax Medical Ltd., which is engaged in research and development. Effective January 1, 2022, Oravax transferred its rights and obligations under the Oravax License Agreement to Oravax Medical Ltd. On January 11, 2023, the Company announced that the ORA-D-013-1 Phase 3 trial did not meet its primary or secondary endpoints. As a result, the Company terminated this trial and a parallel Phase 3, ORA-D-013-2 clinical trial. As these results are considered a triggering event, the Company evaluated all of its long lived assets which include fixed assets and operating lease right-of-use assets in the first quarter of 2023 and concluded that no impairment was required. In 2023, the Company completed an analysis of the data from the ORA-D-013-1 Phase 3 trial and found that subpopulations of patients with pooled specific parameters, such as body mass index (BMI), baseline HbA1c and age, responded well to oral insulin. These subsets exhibited an over 1 % placebo adjusted, statistically significant, reduction in HbA1c. Based on this analysis, the Company is working on a protocol for a new Phase 3 clinical trial to be submitted to the U.S. Food and Drug Administration (the “FDA”). Concurrently, the Company is examining its existing pipeline and has commenced an evaluation process of potential strategic opportunities, with the goal of enhancing value for the Company’s stockholders. F- 6 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued): 2) Development and liquidity risks The Company is engaged in research and development in the biotechnology field for 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 for delivery of other polypeptides, and has not generated significant revenues from its operations. Following the termination of the ORA-D-013-1 and ORA-D-013-2 Phase 3 trials, the Company’s research and development activities have been significantly reduced while it conducted a strategic review process. As a result, the Company is currently incurring lower research and development and sales and marketing expenses. The Company is working on a protocol for a new Phase 3 clinical trial to be submitted to the FDA. Concurrently, the Company is examining its existing pipeline and has commenced an evaluation process of potential strategic opportunities. Based on the Company’s current cash resources and commitments, the Company believes it will be able to maintain its current planned development activities and the corresponding level of expenditures for at least the next 12 months, although no assurance can be given that the Company will not need additional funds prior to such time. If there are unexpected increases in its operating expenses, the Company may need to seek additional financing during the next 12 months. The Company may also need additional funds to realize the decisions made as part of its strategic review process. The Company cannot predict the outcome of these activities. On August 7, 2023, the Company entered into a Stock Purchase Agreement, as subsequently amended on August 9, 2023 and August 21, 2023, (the “Sorrento SPA”), with Sorrento Therapeutics, Inc. (“Sorrento”), to acquire certain equity securities of Scilex Holding Company (“Scilex”), owned by Sorrento (the “Purchased Securities”), for a purchase price of $ 105,000 . Sorrento and its affiliated debtor, Scintilla Pharmaceuticals, Inc. (“Scintilla” and together with Sorrento, the “Debtors”) are in Chapter 11 bankruptcy proceedings. On August 9, 2023, the Company entered into a Senior Secured, Super-Priority Debtor-in-Possession Loan and Security Agreement (the “Senior DIP Loan Agreement”) with the Debtors in the principal amount of $ 100,000 , which included a non-refundable closing fee of $ 450 paid in full out of the proceeds. This amount was subsequently drawn in full by the Debtors and was intended to be used by the Company as a credit for the consideration for the Purchased Securities, with an additional $ 5,000 in cash to be paid by the Company at closing. Thereafter, the Company and Sorrento continued discussions and negotiations relating to the sale contemplated under the Sorrento SPA. On September 21, 2023, the Company entered into and consummated the transactions contemplated by a Securities Purchase Agreement (the “Scilex SPA”) with Scilex and Acquiom Agency Services LLC. Pursuant to the Scilex SPA, in exchange for Scilex assuming outstanding obligations of Sorrento under the Senior DIP Loan Agreement (the “DIP Assumption”) and for the ability to credit the amounts assumed under the DIP Assumption in exchange for certain equity securities of Scilex owned by Sorrento, Scilex (i) issued to the Company (A) a Senior Secured Promissory Note due 18 months from the date of issuance in the principal amount of $ 101,875 (the “Note”), which includes accrued and unpaid interest of $ 875 under the Senior DIP Loan Agreement and $ 1,000 of fees added to the principal amount of the Note, (B) the Closing Penny Warrant (as defined herein), and (C) the Subsequent Penny Warrants (as defined herein), and (ii) caused the Transferred Warrants (as defined herein) to be transferred to the Company. For further details, see note 4. On August 8, 2023, the Company borrowed an aggregate of $ 99,550 pursuant to loan agreements from Israel Discount Bank Ltd. For further details, see note 7. F- 7 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued): b. Basis of presentation The consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles in the United States of 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 and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the financial statements date and the reported revenues and 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-based compensation and to the investments at fair value (for further details, see note 4). d. Functional currency The currency of the primary economic environment in which the operations of the Company and its subsidiaries are conducted is the U.S. dollar (“$” or “dollar”). Therefore, the functional currency of the Company and its subsidiaries is the dollar. Transactions and balances originally denominated in dollars are presented at their original amounts. Balances in foreign currencies are translated into dollars using historical and current exchange rates for non-monetary and monetary balances, respectively. For foreign transactions and other items reflected in the statements of operations, the following exchange rates are used: (1) for transactions – exchange rates 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 subsidiaries. All inter-company transactions and balances have been eliminated in consolidation. f. Cash equivalents The Company considers all short-term, highly liquid investments, which include short-term deposits with original maturities of three months 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. g. Fair value measurement: The Company measures fair value and discloses fair value measurements for financial assets. Fair value is based on the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, the guidance establishes 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 fair value 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 the asset 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 to Level 3 inputs. F- 8 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued): The Company’s financial assets subject to fair value measurements on a recurring basis and the level of inputs used in such measurements were as follows: December 31, 2023 Level 1 Level 2 Level 3 Fair Value Assets: Marketable Securities DNA 297 - - 297 Entera 70 - - 70 Transferred Warrants (see note 4) 1,440 - - 1,440 Closing Penny Warrant (see note 4) - 9,180 - 9,180 Subsequent Penny Warrants (see note 4) - - 6,502 6,502 The Note (see note 4) - - 93,066 93,066 $ 1,807 $ 9,180 $ 99,568 $ 110,555 December 31, 2022 Level 1 Level 2 Level 3 Fair Value Assets: Marketable Securities DNA 352 - - 352 Entera 85 - - 85 $ 437 $ - $ - $ 437 The fair value of the investment in non-marketable equity securities as presented in note 5 was based on a Level 3 measurement. As of December 31, 2023, the carrying amounts of cash equivalents, short-term deposits, Short-Term Borrowings (as defined in note 7) and accounts payable approximate their fair values due to the short-term maturities of these instruments. As of December 31, 2022, the carrying amounts of cash equivalents, short-term deposits and accounts payable approximate their fair values due to the short-term maturities of these instruments. The amounts funded in respect of employee rights are stated at cash surrender value which approximates its fair value. h. Marketable securities 1. Equity securities The Company measured the securities (investments in equity securities of DNA GROUP (T.R.) Ltd. (“DNA”), Entera Bio Ltd. (“Entera”) and the Transferred Warrants) at fair value, with changes in fair value recognized in earnings. 2. Held to maturity securities All debt securities are classified as held-to-maturity because the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts to maturity. F- 9 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued): i. Other non-marketable equity securities The Company also invested in non-marketable equity securities, through an investment in a privately held company. This equity investment does not have a readily determinable fair value. The investment is measured under the measurement alternative in Accounting Standards Codification (“ASC”) 321 “Investments – Equity Securities” to the extent such an investment is not subject to consolidation or the equity method. Under the measurement alternative, this equity investment is carried at cost, less any impairment, adjusted for changes resulting from observable price changes in transactions for an identical or similar investment of the same issuer. The investment would be impaired in accordance with the provisions of ASC 820 “Fair Value Measurement” if, based on a qualitative assessment of impairment indicators, the fair value of the investment is less than its carrying amount. If considered impaired, the difference between the carrying amount and fair value would be recorded in the consolidated statement of operations. For further details, see note 5. j. Investments, at fair value The Company invested in the Note and received Penny Warrants issued by Scilex (see note 4), for which it has elected the fair value option. Under the Fair Value Option Subsections of ASC Subtopic 825-10, Financial Instruments – Overall, the Company has the irrevocable option to report financial assets at fair value on an instrument-by-instrument basis. Changes in fair value are recorded under financial income, net and include interest income on the Note. Alongside the Note and the Penny Warrants, Scilex issued to the Company the Transferred Warrants. The Transferred Warrants meet the definition of a derivative under ASC 815 “Derivatives and Hedging,” and therefore will also be measured at fair value. Changes in the fair value of the Warrants are recorded under financial income, net. k. Concentration of credit risks Financial instruments that subject the Company to credit risk consist primarily of cash and cash equivalents, short and long-term deposits, which are deposited in major financial institutions, marketable securities, and the Note (as defined herein). The Company is of the opinion that the credit risk in respect of these balances is remote, except for the Note (as defined herein) for which the credit risk is reflected in its fair value measurement (for further details, see note 4). l. Income taxes 1. Deferred taxes Deferred taxes are determined utilizing the asset and liability method based on the estimated future tax effects of differences between the financial accounting and tax bases of assets and liabilities under the applicable tax laws. Deferred tax balances are computed using the tax rates expected to be in effect when those differences reverse. A valuation allowance in respect of deferred tax assets is provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has provided a full valuation allowance with respect to its deferred tax assets. See note 12. Taxes that would apply in the event of disposal of investments in the Israeli subsidiary have not been taken into account in computing deferred taxes, 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 tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained 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 ultimate settlement. Such liabilities are classified as long-term, unless the liability is expected to be resolved within 12 months from the balance sheet date. The Company’s policy is to include interest and penalties related to unrecognized tax benefits within income tax expenses. F- 10 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued): m. Revenue recognition HTIT On November 30, 2015, the Company entered into a Technology License Agreement, with Hefei Tianhui Incubator of Technologies Co. Ltd. (“HTIT”) and on December 21, 2015, the parties entered into an Amended and Restated Technology License Agreement that was further amended by the parties on June 3, 2016 and July 24, 2016 (the “HTIT License Agreement”). As of December 31, 2023, an aggregate amount of $ 22,382 was allocated to the HTIT License Agreement, all of which were received through the balance sheet date. Through December 31, 2023, the Company recognized revenue associated with this agreement in the aggregate amount of $ 20,382 , of which $ 1,340 was recognized in the twelve month period ended December 31, 2023, and deferred the remaining amount of $ 2,000 , which is presented as long-term deferred revenues on the consolidated balance sheet. Medicox On November 13, 2022, the Company entered into a distribution license agreement (“Medicox License Agreement”) with Medicox Co., Ltd. (“Medicox”). The Medicox License Agreement grants Medicox an exclusive license to apply for regulatory approval and distribute ORMD-0801 in the Republic of Korea. For further details, see note 8c. Under ASC 606 “Revenue from Contracts with Customers,” the Company identified Medicox as a customer and the Medicox License Agreement as a contract with a customer. The Company identified a performance obligation in the Medicox License Agreement to stand-ready and provide Medicox with support in its commercialization efforts in the Republic of Korea. This performance obligation includes a non-distinct distribution license for ORMD-0801, which the Company views a predominant item in the combined performance obligation. The Company concluded that the license is not distinct, as no party other than the Company is capable of providing related services to Medicox, and both the license and related services are necessary for the customer to obtain a regulatory approval in the Republic of Korea. In addition, the agreement covers the terms of future manufacturing services, that are contingent on the completion and success of the commercialization efforts. The Medicox License Agreement contains a fixed consideration of $ 2,000 , which was received by the Company during the year ended December 31, 2022 and is currently presented under long-term deferred revenues. It also contains variable consideration of contractual milestone payments and sales-based royalties. The Company’s obligation to stand-ready and support Medicox will be recognized on a straight-line basis over the period the Company expects to provide support to Medicox. As of December 31, 2023, this support has not commenced, and no revenue was recognized from the Medicox License Agreement. If Medicox proceeds with the regulatory approval process in the Republic of Korea, the Company expects most of the revenue to be recognized at a later stage, going forward. The Company notes that its Phase 3 trial did not meet its primary or secondary endpoints (see note 1a.1). If Medicox chooses to terminate the agreement as a result of the outcome of the Phase 3 trials, the Company will accelerate revenue recognition and recognize it at such time. F- 11 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued): n. Research and development Research and development expenses include costs directly attributable to the conduct of research and development programs, including the cost of salaries, employee benefits, the cost of supplies, the cost of services provided by outside contractors, including services related to the Company’s clinical trials, clinical trial expenses and the full cost of manufacturing drug 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. The Company outsources a substantial portion of its clinical trial activities, utilizing external entities such as Clinical Research Organizations (“CROs”), independent clinical investigators, and other third-party service providers to assist the Company with the execution of its clinical trials. For each clinical trial that the Company conducts, clinical trial costs are expensed immediately. o. Stock-based compensation Equity awards granted to employees are accounted for using the grant date fair value method. The grant date fair value is determined as follows: for stock options and restricted stock units (“RSUs”) with an exercise price using the Black Scholes pricing model, for stock options and RSUs with market conditions using a Monte Carlo model and for RSUs with service conditions based on the grant date share price. The fair value of share based payment awards is recognized as an expense over the requisite service period. The expected term is the length of time until the expected dates of exercising the award and is estimated using the simplified method due to insufficient specific historical information of employees’ exercise behavior, unless the award includes a market condition, in which case the contractual term is used. The volatility is based on a historical volatility, by statistical analysis of the weekly share price for past periods. The Company elected to recognize compensation cost for awards granted to employees that have a graded vesting schedule using the accelerated method based on the multiple-option award approach. For awards with only market conditions, compensation expense is not reversed if the market conditions are not satisfied. The Company elects to account for forfeitures as they occur. p. Earnings (loss) per common share Basic net earnings (loss) per common share are computed by dividing the net earnings (loss) attributable to stockholders for the period by the weighted average number of shares of common stock outstanding for each period, including vested RSUs. Outstanding stock options, warrants and RSUs have been excluded from the calculation of the diluted loss per share because all such securities are anti-dilutive for the year ended December 31, 2022. For the diluted earnings per share calculation for the year ended December 31, 2023, the weighted average number of shares outstanding during the year is adjusted for the potential dilution that could occur in connection with employee share-based payment, using the treasury stock method. The weighted average number of stock options, warrants, and RSUs that has been excluded from the calculation of the diluted income per share as of December 31, 2023 was 1,227,506 shares. The weighted average number of stock options, warrants and RSUs excluded from the calculation of diluted net loss was 3,356,203 for the year ended December 31, 2022. F- 12 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued): q. Leases The Company leases real estate and cars for use in its operations, which are classified as operating leases. In addition to rent, the leases may require the Company to pay directly for fees, insurance, maintenance and other operating expenses. The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right of use assets and operating lease liabilities in the consolidated balance sheets. Right of use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at the commencement date to determine the present value of the lease payments. Lease expenses are recognized on a straight-line basis over the lease term. The Company elected the short-term lease recognition exemption for all leases with a term shorter than 12 months. This means that for those leases, the Company does not recognize ROU assets or lease liabilities but recognizes lease expenses over the lease term on a straight line basis. The Company also elected the practical expedient to not separate lease and non-lease components for all of its leases. Lease terms will include options to extend or terminate the lease when it is reasonably certain that the Company will either exercise or not exercise the option to renew or terminate the lease. The Company’s lease agreements have remaining lease terms ranging from 1 year to 4 years. Some of these agreements include options to extend the leases for up to an additional 5 years and some include options to terminate the leases immediately. See also note 8e. r. New accounting pronouncements Recently adopted accounting pronouncements In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2016-13 “Financial Instruments—Credit Losses—Measurement of Credit Losses on Financial Instruments.” This guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance became effective for the fiscal year beginning after December 15, 2022, including interim periods within that year. The Company adopted the provisions of this update as of January 1, 2023, with no material impact on its consolidated financial statements. F- 13 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued): Recently issued accounting pronouncements, not yet adopted In November 2023, the FASB issued ASU 2023-07 “Segment Reporting: Improvements to Reportable Segment Disclosures.” This guidance expands public entities’ segment disclosures primarily by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures required under ASC 280 “Segment Reporting”. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments are required to be applied retrospectively to all prior periods presented in an entity’s financial statements. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements related disclosures. In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” This guidance is intended to enhance the transparency and decision-usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to disclosure regarding rate reconciliation and income taxes paid both in the U.S. and in foreign jurisdictions. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 on a prospective basis, with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures. NOTE 2 - SHORT-TERM DEPOSITS: Composition : December 31, 2023 2022 Annual interest rate Amount Annual interest rate Amount Dollar deposits 6.35 - 6.81 % $ 95,279 0.93 - 6.81 % $ 111,513 NOTE 3 - MARKETABLE SECURITIES: a. Composition: The Company’s marketable securities include investments in equity securities of DNA, Entera and the Transferred Warrants (as defined herein; for further details regarding the Transferred Warrants, see note 4). As of December 31, 2022, marketable securities also included held to maturity securities. December 31, 2023 2022 Short-term: DNA (see b below) $ - $ 352 Entera (see c below) - 85 Held to maturity securities (see d below) - 3,306 $ - $ 3,743 Long-term: DNA (see b below) $ 297 $ - Entera (see c below) 70 - Transferred Warrants (see note 4) 1,440 - $ 1,807 $ - F- 14 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 3 - MARKETABLE SECURITIES (continued) : b. DNA DNA’s ordinary shares are traded on the Tel Aviv Stock Exchange. The fair value of those securities is measured at the quoted prices of the securities on the measurement date. During the years ended December 31, 2023 and 2022, the Company did not sell any of DNA’s ordinary shares. As of December 31, 2023, the Company owns approximately 1.4 % of DNA’s outstanding ordinary shares. The cost of the securities as of both December 31, 2023 and 2022 was $ 595 . c. Entera Entera ordinary shares have been traded on the Nasdaq Capital Market since June 28, 2018. The Company measures the investment at fair value from such date, since it has a readily determinable fair value (prior to such date the investment was accounted for as a cost method investment (amounting to $ 1 )). d. Held to maturity securities The Company did not have any held to maturity securities as of December 31, 2023. The amortized cost and estimated fair value of held-to-maturity securities as of December 31, 2022, are as follows: December 31, 2022 Amortized cost Gross unrealized gains (losses) Estimated fair value Average yield to maturity rate Short-term: Commercial bonds $ 3,258 $ ( 82 ) $ 3,176 1.07 % Accrued interest 48 - 48 $ 3,306 $ ( 82 ) $ 3,224 NOTE 4 - INVESTMENTS, AT FAIR VALUE: Scilex Transaction On September 21, 2023 (the “Closing Date”), the Company entered into and consummated the transactions (collectively, the “Transaction”) contemplated by the Scilex SPA with Scilex and Acquiom Agency Services LLC. Pursuant to the Scilex SPA, in exchange for the DIP Assumption and for the ability to credit the amounts assumed under the DIP Assumption in exchange for certain equity securities of Scilex owned by Sorrento, Scilex (i) issued to the Company (A) the Note, (B) a warrant to purchase up to an aggregate of 4,500,000 shares of common stock of Scilex, par value $ 0.0001 per share (“Scilex Common Stock”), with an exercise price of $ 0.01 per share and containing certain restrictions on exercisability (the “Closing Penny Warrant”), and (C) warrants to purchase up to an aggregate of 8,500,000 shares of Scilex Common Stock (the “Subsequent Penny Warrants” and together with the Closing Penny Warrant, the “Penny Warrants”), each with an exercise price of $ 0.01 per share and each with certain restrictions on exercisability, and (ii) caused certain outstanding warrants to purchase up to an aggregate of 4,000,000 shares of Scilex Common Stock with an exercise price of $ 11.50 per share to be transferred to the Company (the “Transferred Warrants” and together with the Penny Warrants, the “Warrants”). In addition, on the Closing Date, Scilex reimbursed $ 1,910 of the Company’s Transaction expenses pursuant to the Scilex SPA. F- 15 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 4 - INVESTMENTS, AT FAIR VALUE (continued) : Pursuant to the terms of the Scilex SPA, Scilex agreed to certain restrictions on additional issuances of equity securities. In connection with the Transaction, the Company and Sorrento mutually agreed to terminate the Sorrento SPA and to release all claims the Company and Sorrento may have against one another, and Scilex completed the acquisition of the Purchased Securities. The Note The principal of the Note issued on September 21, 2023 is $ 101,875 , which includes accrued and unpaid interest of $ 875 under the Senior DIP Loan Agreement and $ 1,000 of fees added to the principal amount of the Note. The Note matures on March 21, 2025 or upon an uncured event of default, subject to certain mandatory prepayments, and bears interest at a rate per annum equal to Term SOFR (as defined in the Note) plus 8.5 % (subject to a Term SOFR floor of 4.0 %), to be paid in-kind, by being capitalized and added to the principal amount of the Note on a monthly basis. The Scilex SPA provides for principal payments of (i) $ 5,000 on December 21, 2023, (ii) $ 15,000 on March 21, 2024, and (iii) $ 20,000 on each of June 21, 2024, September 21, 2024, and December 21, 2024, and for the entire remaining principal balance of the Note to be paid on March 21, 2025. If the Note is not repaid in full on or prior to March 21, 2024, an exit fee equal to approximately $ 3,056 shall be payable upon repayment of the Note in full. The Note constitutes senior secured indebtedness of Scilex and is guaranteed by all existing or future formed, direct and indirect, domestic subsidiaries of Scilex and is secured by a first priority security interest in and liens on all of the assets of Scilex, subject to customary and mutually agreed permitted liens and except for certain specified exemptions. Mandatory prepayments under the Note are required following the earlier of (a) April 1, 2024 and (b) the date upon which certain of Scilex’s outstanding indebtedness are repaid in full. Mandatory prepayments may be triggered by certain future equity and debt issuances by Scilex. Voluntary prepayments may be made at Scilex’s discretion; provided that, if made prior to the one-year anniversary of the Closing Date, Scilex will also be required to pay a 50 % interest make-whole on the portion of the Note so prepaid. The Note includes customary events of default, upon which the Note will bear interest at a default rate of Term SOFR plus 15.0 %, which shall be payable in-kind, by being capitalized and added to the principal amount of the Note on a monthly basis. If the Note is accelerated upon an event of default, Scilex is required to repay the principal amount of the Note at a mandatory default rate of 125 % of such principal amount (together with 100 % of accrued and unpaid interest thereon and all other amounts due in respect of the Note). Until the obligations under the Note are repaid in full, the Company has the right to designate one non-voting observer to attend meetings of the board of directors and committees of Scilex and its subsidiaries. Pursuant to the terms of the Scilex SPA, the Company received the first principal payment of $ 5,000 on December 21, 2023. Closing Penny Warrant The Closing Penny Warrant will be exercisable upon the earliest of (i) March 14, 2025, (ii) the date on which the Senior Secured Note has been repaid in full and (iii) the Management Sale Trigger Date (as defined therein), if any, and will expire on the date that is the fifth anniversary of the issuance date (i.e., September 21, 2028). For purposes of the Closing Penny Warrant (as well as the Subsequent Penny Warrants), the Management Sale Trigger Date is generally the first date that either Dr. Henry Ji, Scilex’s Executive Chairperson, or Mr. Jaisim Shah, Scilex’s Chief Executive Officer and President and a member of Scilex’s Board of Directors, engages in certain sales or other similar transfers of shares of Common Stock or other of the Issuer’s or any of its subsidiaries’ securities, subject to certain exceptions in connection with financings or similar transactions. The exercise price of the Closing Penny Warrant is $ 0.01 per share, subject to adjustment. F- 16 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 4 - INVESTMENTS, AT FAIR VALUE (continued) : Subsequent Penny Warrants Scilex issued four Subsequent Penny Warrants to the Company, each for 2,125,000 shares of Scilex Common Stock, one of which shall vest and become exercisable on the date that is the later of (i) each of March 19, 2024, June 17, 2024, September 15, 2024 or December 14, 2024 (the “Subsequent Penny Warrant Vesting Date”) and (ii) the earliest of (A) March 14, 2025, (B) the date on which the Senior Secured Note has been repaid in full and (C) the Management Sale Trigger Date (as defined therein), if any. Each Subsequent Penny Warrant will expire on the date that is the fifth anniversary of the issuance date; provided that, if the Senior Secured Note is repaid in full prior to the Subsequent Penny Warrant Vesting Date applicable to such Subsequent Penny Warrant, such Subsequent Penny Warrant will expire on the date the Senior Secured Note is repaid in full. The Company may exercise the Penny Warrants by means of a “cashless exercise.” The Penny Warrants may not be exercised if the Company, together with its affiliates, would beneficially own in excess of 9.9 % of the number of shares of Scilex Common Stock outstanding immediately after giving effect to such exercise; provided, that the Company may increase or decrease such limitation upon 61 days’ prior notice to Scilex. Transferred Warrants The Transferred Warrants are listed on the Nasdaq Capital Market, have an exercise price of $ 11.50 per share, are fully exercisable and expire on November 10, 2027 . The Company accounted for the Transferred Warrants as derivatives measured at fair value. The Company elected the fair value option for the Note and the Penny Warrants in order to reduce operational complexity of bifurcating embedded derivatives. Changes in fair value are recorded under financial income, net and include interest income on the Note. The valuation was performed, as of December 31, 2023, based on several scenarios which some of them took into account a partial or full early repayment of the Note. Each scenario took into consideration the present value of the Note’s cash flows (including the exit fee and the prepayment premium) and the Warrants’ value. The total value of the Transaction (and of each of its components) was valued on a weighted average of the different scenarios. The discount rate of the Note was based on the B- rating Zero curve in addition to a risk premium which takes into account the credit risk of Scilex and ranged between 51.92 % to 52.84 %. The fair value of the Transferred Warrants was based on their closing price on the Nasdaq Capital Market. The fair value of the Penny Warrants was calculated based on the closing price of the Scilex stock on the Nasdaq Capital Market, taking into account several scenarios which assume a partial or full early repayment of the Note, when applicable. On the Closing Date, the fair value of the Transaction was $ 101,875 . As of December 31, 2023, the fair value of the Transaction was $ 110,188 , split between the Note ($ 93,066 , of which $ 57,713 is presented under short-term investments at fair value and $ 35,353 is presented under long-term investments at fair value), the Closing Penny Warrant ($ 9,180 ), the Subsequent Penny Warrants ($ 6,502 ), both presented under long-term investments at fair value and the Transferred Warrants ($ 1,440 ) presented under long-term marketable securities. This resulted in a gain of $ 15,638 , attributed mainly to the change in fair value of the Note and the Warrants. The difference between the Note’s fair value and aggregate unpaid principal balance (which includes interest payable on maturity) is $ 7,801 . F- 17 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 5 - OTHER NON-MARKETABLE EQUITY SECURITIES: On August 26, 2022, the Company entered into a stock purchase agreement with Diasome Pharmaceuticals, Inc. (“Diasome”), a privately-held company, pursuant to which the Company purchased shares of Series B preferred stock of Diasome for an aggregate purchase price of approximately $ 2,700 . Following the purchase, the Company holds less than 5 % of the issued and outstanding stock of Diasome. The stock purchase agreement provides the Company with the option to purchase additional preferred shares of stock on a pro rata basis at similar terms to the terms and conditions of the current round contingent upon Diasome achieving certain milestones. The Company’s non-marketable equity securities are an investment in a company without a readily determinable fair value. The Company accounts for this investment under the measurement alternative in ASC 321, whereby the equity investment is recorded at cost, less impairment. The carrying amount is subsequently remeasured to its fair value in accordance with the provisions of ASC 820 when observable price changes occur as of the date the transaction occurred, or it is impaired. Any adjustments to the carrying amount are recorded in the statements of comprehensive income (loss). During the year ended December 31, 2023, the Company recorded an $ 824 increase in value due to the closing in June 2023 of a Series C preferred investment round in Diasome. The change was recorded using the transaction price of similar securities issued by Diasome, adjusted for contractual rights and obligations of the securities held by the Company. NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES: Composition: December 31, 2023 2022 Accounts payable $ 551 $ 2,175 Payroll and related accruals 453 529 Institutions - 11 Accrued liabilities 605 1,443 $ 1,609 $ 4,158 NOTE 7 - SHORT-TERM BORROWINGS: On August 8, 2023, the Company borrowed an aggregate of $ 99,550 pursuant to loan agreements from Israel Discount Bank Ltd. (the “Short-Term Borrowings”). The Short-Term Borrowings mature on dates ranging from August 11, 2023 to May 24, 2024, bear interest ranging from 6.66 % to 7.38 %, and are secured by certificates of deposits issued by Israel Discount Bank Ltd. having an aggregate face amount of $ 99,550 . The net proceeds of the Short-Term Borrowings were used to fund the Transaction (for further details, see note 4). The Short-Term Borrowings are paid in one payment of principal and interest at each respective maturity. As of December 31, 2023, $ 50,000 was repaid under the Short-Term Borrowings. The aggregate remaining annual principal payments on debt until maturity are as follows: Annual Principal Payments 2024 49,550 Total $ 49,550 NOTE 8 - COMMITMENTS: a. In March 2011, the Subsidiary sold shares of its investee company, Entera, to DNA, retaining 117,000 ordinary shares (after giving effect to a stock split by Entera in July 2018). In consideration for the shares sold to DNA, the Company received, among other payments, ordinary shares of DNA (see also note 3). As part of this agreement, the Subsidiary entered into a patent transfer agreement (the “Patent Transfer Agreement”), according to which the Subsidiary assigned to Entera all of its rights to a patent application related to the oral administration of proteins that it has licensed to Entera since August 2010, in return for royalties of 3 % of Entera’s net revenues and a license back of that patent application for use in respect of diabetes and influenza. As of December 31, 2023, Entera had not paid any royalties to the Subsidiary. On December 11, 2018, Entera announced that it had entered into a research collaboration and license agreement with Amgen, Inc. (“Amgen”). To the extent that the license granted to Amgen results in net revenues as defined in the Patent Transfer Agreement, the Subsidiary will be entitled to the aforementioned royalties. As part of a consulting agreement with a third party dated February 15, 2011, the Subsidiary is obliged to pay this third party royalties of 8 % of the net royalties received in respect of the patent that was sold to Entera in March 2011. F- 18 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 8 - COMMITMENTS (continued): b. According to the HTIT License Agreement, the Company granted HTIT an exclusive commercialization license in the territory of the People’s Republic of China, Macau and Hong Kong (the “Territory”), related to the Company’s oral insulin capsule, ORMD-0801 (the “Product”). Pursuant to the HTIT License Agreement, HTIT will conduct, at its own expense, certain pre-commercialization and regulatory activities with respect to the Subsidiary’s technology and ORMD-0801 capsule, and will pay to the Subsidiary (i) royalties of 10% on net sales of the related commercialized products to be sold by HTIT in the Territory (“Royalties”), and (ii) an aggregate of $37,500, of which $3,000 was payable immediately, $8,000 will be paid subject to the Company entering into certain agreements with certain third parties, and $26,500 will be paid upon achievement of certain milestones and conditions. In the event that the Company does not meet certain conditions, the Royalties rate may be reduced to a minimum of 8%. Following the final expiration of the Company’s patents covering the technology in the Territory in 2033, the Royalties rate may be reduced, under certain circumstances, to 5%. The royalty payment obligation shall apply during the period of time beginning upon the first commercial sale of the Product in the Territory, and ending upon the later of (i) the expiration of the last-to-expire licensed patents in the Territory; and (ii) 15 years after the first commercial sale of the Product in the Territory. The HTIT License Agreement shall remain in effect until the expiration of the royalty term. The License Agreement contains customary termination provisions. Among others, the Company’s involvement through the product submission date includes consultancy for the pre-commercialization activities in the Territory, as well as advisory services to HTIT on an ongoing basis. As of December 31, 2023, the Company has received milestone payments in an aggregate amount of $ 20,500 as follows: the initial payment of $ 3,000 was received in January 2016. Following the achievement of certain milestones, the second and third payments of $ 6,500 and $ 4,000 , respectively, were received in July 2016, the fourth milestone payment of $ 4,000 was received in October 2016 and the fifth milestone payment of $ 3,000 was received in January 2019. On August 21, 2020, the Company received a letter from HTIT, disputing certain pending payment obligations of HTIT under the TLA. The payment obligation being disputed is $ 6,000 , out of which only an amount of $ 2,000 has been received and has been included in deferred revenue in each of the consolidated balance sheets as of the years ended December 31, 2023, and December 31, 2022. The Company wholly disputed the claims made by HTIT and is planning to resolve any such claims as part of the Company’s discussions with HTIT. For the Company’s revenue recognition policy, see note 1m. On January 22, 2024, the Company and its wholly-owned subsidiary, Oramed Ltd., entered into a Joint Venture Agreement (the “JV Agreement”), with Hefei Tianhui Biotech Co., Ltd. (“HTIT Biotech”), and Technowl Limited, a wholly-owned indirect subsidiary of HTIT Biotech (“HTIT Sub,” and together with HTIT Biotech, “HTIT”), pursuant to which, subject to the terms and conditions set forth in the JV Agreement, the parties will establish a joint venture (the “JV”), based on the Company’s oral drug delivery technology. For further details, see note 14. F- 19 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 8 - COMMITMENTS (continued): c. On November 13, 2022, the Company entered the Medicox License Agreement with Medicox. The Medicox License Agreement grants Medicox an exclusive license to apply for regulatory approval and distribute ORMD-0801 in the Republic of Korea. The Medicox License Agreement is for ten years, but the parties have the right to terminate it with a 180 days-notice. Medicox will comply with agreed distribution targets and will purchase ORMD-0801 at an agreed upon transfer price per capsule. In addition, Medicox will pay the Company up to $ 15,000 in developmental milestones, $ 2,000 of which were received by the Company in 2022, and up to 15 % royalties on gross sales. Medicox will also be responsible for obtaining a regulatory approval in the Republic of Korea. For the Company’s revenue recognition policy, see note 1m. d. Grants from the Israel Innovation Authority (“IIA”) Under the terms of the Company’s funding from the IIA, royalties of 3 % are payable on sales of products developed from a project so funded, up to a maximum amount equaling 100 %- 150 % of the grants received (dollar linked) with the addition of interest at an annual rate based on SOFR. At the time the grants were received, successful development of the related projects was not assured. The total amount that was received through December 31, 2023 was $ 2,208 ($ 2,559 including interest). All grants were received before the year ended August 31, 2020 and recorded as a reduction of research and development expenses at that time. As of December 31, 2023, the liability to the IIA was $ 59 . The royalty expenses which are related to the funded project were recognized in cost of revenues in the relevant periods. e. Leases On August 2, 2020, the Subsidiary entered into a lease agreement for its facilities in Israel. The lease agreement is for a period of 60 months commencing September 1, 2020. The Subsidiary has the option to extend the period for another 60 months. The annual lease payment, including management fees, as of December 31, 2023 is approximately NIS 435 ($ 120 ). As security for its obligation under this lease agreement, the Company provided a bank guarantee in an amount equal to three monthly lease payments. For accounting purposes, the lease period is 60 months. On December 2, 2021, the Subsidiary entered into an addendum (the “Addendum”) to the current lease agreement for its facilities in Israel. The Addendum refers to the lease of an additional space of 264 square meters for a period of 60 months commencing February 1, 2022. The Subsidiary has the option to extend the period for another 60 months. The annual lease payment, including management fees, is approximately NIS 435 ($ 120 ). As security for its obligation under the Addendum, the Company provided a bank guarantee in an amount equal to three monthly lease payments. For accounting purposes, the lease commenced on February 1, 2022 as the Subsidiary did not have access to the space until that date. For accounting purposes, the lease period is 60 months. The total expenses related to leases were $ 236 for the year ended December 31, 2023, and $ 264 for the year ended December 31, 2022. F- 20 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 8 - COMMITMENTS (continued): The right-of-use asset and lease liability are initially measured at the present value of the lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate based on the information available at the date of determining the present value of the lease payments. The Company’s incremental borrowing rate is estimated to approximate the interest rate on similar terms and payments and in economic environments where the leased asset is located. The Company has various operating leases for office space and vehicles that expire through 2027. Below is a summary of the Company’s operating right-of-use assets and operating lease liabilities as of December 31, 2023 and 2022: December 31, 2023 December 31, 2022 Operating right-of-use assets $ 694 $ 987 Operating lease liabilities, current 267 247 Operating lease liabilities long-term 342 647 Total operating lease liabilities $ 609 $ 894 Weighted Average of Remaining Lease Term Operating leases 2.5 3.41 Weighted Average Discount Rate Operating leases 3.15 % 3.15 % Operating cash flows from operating lease for the years ended December 31, 2023 and 2022 were $ 267 and $ 214 , respectively. Lease payments for the Company’s right-of-use assets over the remaining lease periods as of December 31, 2023 are as follows: December 31, 2023 2024 $ 282 2025 222 2026 120 2027 10 Total undiscounted lease payments 634 Less: Interest* ( 25 ) Present value of lease liabilities $ 609 * Future lease payments were discounted by 3 %- 5.75 % interest rate. f. Legal expenses Following the Company’s 2019 annual meeting of stockholders, a complaint was filed in the Court of Chancery of the State of Delaware against the Company and the members of the Board of Directors. On April 27, 2022, the Court of Chancery of the State of Delaware approved the terms of a settlement between the Company and the plaintiff in the complaint, awarding the plaintiff an amount of $ 850 in attorneys’ fees, which was paid on April 28, 2022 and included in general and administrative expenses in the first quarter of 2022. All other details of the settlement were previously agreed by the parties and acted upon at the Company’s 2021 annual meeting of stockholders. F- 21 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 8 - COMMITMENTS (continued): g. Investment in Diasome Pharmaceuticals, Inc. On August 26, 2022, the Company entered into a stock purchase agreement with Diasome Pharmaceuticals, Inc. (“Diasome”) pursuant to which the Company purchased shares of Series B preferred stock of Diasome for an aggregate purchase price of approximately $ 2,700 . Following the purchase, the Company holds less than 5 % of the issued and outstanding stock of Diasome on a diluted basis. The stock purchase agreement provides the Company with the option to purchase additional preferred shares of stock on a pro rata basis at similar terms to the terms and conditions of the current round contingent upon Diasome achieving certain milestones. The Company accounts for the investment under the measurement alternative in ASC 321, whereby the equity investment is recorded at cost, less impairment. The carrying amount will be subsequently remeasured to its fair value in accordance with the provisions of ASC 820 when observable price changes occur as of the date the transaction occurred, or it is impaired. Any adjustments to the carrying amount are recorded in net income. NOTE 9 - STOCKHOLDERS’ EQUITY: The following are the significant capital stock transactions that took place during the year ended December 31, 2023 and 2022: a. On July 15, 2021, the Company entered into a new equity distribution agreement (the “New Equity Distribution Agreement”) with Canaccord Genuity, pursuant to which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $ 100,000 from time to time through Canaccord Genuity. The New Equity Distribution Agreement replaced the Equity Distribution Agreement, once it had been exhausted. Any shares sold will be sold pursuant to the Company’s effective shelf registration statement on Form S-3 including a prospectus dated July 15, 2021. The Company paid 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 New Equity Distribution Agreement. As of December 31, 2022, 273,997 shares were respectively issued under the New Equity Distribution Agreement for aggregate net proceeds of $ 5,129 . b. On September 1, 2021, the Company entered into a controlled equity offering agreement (the “Cantor Equity Distribution Agreement”) with Cantor Fitzgerald & Co., as agent, pursuant to which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $ 100,000 , through a sales agent, subject to certain terms and conditions. Any shares sold will be sold pursuant to the Company’s effective shelf registration statement on Form S-3 including a prospectus dated July 26, 2021 and prospectus supplement dated September 1, 2021. The Company paid 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 Cantor Equity Distribution Agreement. As of December 31, 2023 and through March 6, 2024, 1,971,447 shares were issued under the Cantor Equity Distribution Agreement for aggregate net proceeds of $ 26,253 . F- 22 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 9 - STOCKHOLDERS’ EQUITY (continued): c. On November 3, 2021, the Company entered into a securities purchase agreement with several institutional and accredited investors (the “Purchasers”), pursuant to which the Company agreed to sell, in a registered direct offering (the “Offering”), an aggregate of 2,000,000 shares of the Company’s common stock to the Purchasers for an offering price of $ 25 per share. The closing of the sale of the shares occurred on November 5, 2021. The net proceeds to the Company from the Offering, after deducting the placement agent’s fees and expenses and the Company’s Offering expenses, were approximately $ 46,375 . d. As of December 31, 2023, the Company had outstanding warrants exercisable starting February 25, 2020 for 20,000 shares of common stock at an exercise price of $ 4.13 per share and expiring on April 15, 2029. The following table presents the warrant activity for the years ended December 31, 2023 and 2022: Year ended December 31, 2023 2022 Warrants Weighted- Average Exercise Price Warrants Weighted- Average Exercise Price Warrants outstanding at beginning of year 150,705 $ 4.71 158,375 $ 4.78 Issued - $ - - $ - Exercised - $ - 4,200 $ 4.80 Expired 130,705 $ 4.80 3,470 $ 7.81 Warrants outstanding at end of year 20,000 $ 4.13 150,705 $ 4.71 Warrants exercisable at end of year 20,000 $ 4.13 150,705 $ 4.71 NOTE 10 - STOCK-BASED COMPENSATION: The Company makes awards only under the 2019 Plan, under which, the Company had reserved a pool of 7,500,000 shares of the Company’s common stock which may be issued at the discretion of the Board of Directors from time to time. Under this 2019 Plan, each option or RSU 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 each grant. The maximum term of the options and RSUs is 10 years. The following are the significant stock options and RSUs transactions with employees, board members and non-employees made during the years ended December 31, 2023 and 2022: a. On January 3, 2022, the Company granted an aggregate of 150,000 shares of the Company’s common stock to its President and Chief Executive Officer. The total fair value of these shares on the date of grant was $ 2,084 , using the quoted closing market share price of $ 13.89 on the Nasdaq Capital Market on the date of grant. b. On January 3, 2022, the Company granted an aggregate of 207,500 RSUs representing a right to receive shares of the Company’s common stock to the Company’s employees and members of the Board of Directors as follows: 63,000 to the President and Chief Executive Officer; 42,000 to the Chief Scientific Officer; 21,000 to the Chief Operating and Business Officer, 19,000 to the Chief Financial Officer and Treasurer, 19,000 to the Chief Commercial Officer, 18,000 to the Chief Legal Officer and Secretary (effective as of the time his employment with the Company commenced on January 9, 2022), an aggregate of 24,000 to four board members and 1,500 to an employee. The RSUs vest in four equal annual installments on each of January 1, 2023, 2024, 2025 and 2026. The total fair value of these RSUs on the date of grant was $ 2,849 , using the quoted closing market share price of $ 13.89 on the Nasdaq Capital Market on the date of grant and $ 12.03 for the Chief Legal Officer’s grant (equivalent to the closing price of the Company’s common stock on January 10, 2022, which represents the first trading date after his employment with the Company commenced). F- 23 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 10 - STOCK-BASED COMPENSATION (continued): c. On January 3, 2022, the Company granted options to purchase an aggregate of 321,500 shares of the Company’s common stock to the Company’s employees and board members at an exercise price of $ 13.89 per share (equivalent to the closing price of the Company’s common stock on the date of grant) as follows: 107,000 to the President and Chief Executive Officer; 72,000 to the Chief Scientific Officer; 36,000 to the Chief Operating and Business Officer, 32,000 to the Chief Financial Officer and Treasurer and 32,000 to the Chief Commercial Officer, an aggregate of 40,000 to four board members and 2,500 to an employee. The options vest in four equal annual installments on each of January 1, 2023, 2024, 2025 and 2026. As of December 31, 2023, 82,875 of such options are vested. These options expire on January 3, 2032 . The total fair value of these options on the date of grant was $ 2,630 , using the Black Scholes option-pricing model and was based on the following assumptions: stock price of $ 13.89 ; dividend yield of 0 % for all years; expected volatility of 63.05 %; risk-free interest rates of 1.46 %; and expected term of 6.25 years. d. On January 3, 2022, the Company granted options to purchase an aggregate of 30,000 shares of the Company’s common stock to the Company’s Chief Legal Officer and Secretary (effective as of the time his employment with the Company commenced on January 9, 2022), at an exercise price of $ 12.03 per share (equivalent to the closing price of the Company’s common stock on January 10, 2022, which represents the first trading date after his employment with the Company commenced). The options vest in four equal annual installments on each of January 1, 2023, 2024, 2025 and 2026. As of December 31, 2022, none of such options are vested. These options expire on January 3, 2032 . The total fair value of these options on the date of grant was $ 214 , using the Black Scholes option-pricing model and was based on the following assumptions: stock price of $ 12.03 ; dividend yield of 0 % for all years; expected volatility of 63.22 %; risk-free interest rates of 1.60 %; and expected term of 6.25 years. e. On May 2, 2022, the Company granted 4,500 RSUs representing a right to receive shares of the Company’s common stock to Mr. Yadin Rozov, a former member of the Company’s board of directors. The RSUs shall vest in four equal annual installments on each of May 2, 2023, 2024, 2025 and 2026. The total fair value of these RSUs on the date of grant was $ 23 , using the quoted closing market share price of $ 5.14 on the Nasdaq Capital Market on the last trading day before the date of grant. f. On May 2, 2022, the Company granted options to purchase an aggregate of 7,500 shares of the Company’s common stock to Mr. Yadin Rozov, a former member of the Company’s board of directors, at an exercise price of $ 5.14 per share (equivalent to the closing price of the Company’s common stock on the last trading day before the date of grant). The options shall vest in four equal annual installments on each of May 2, 2023, 2024, 2025 and 2026. As of December 31, 2022, none of such options are vested. These options expire on May 2, 2032 . The total fair value of these options on the date of grant was $ 24 , using the Black Scholes option-pricing model and was based on the following assumptions: stock price of $ 5.14 ; dividend yield of 0 % for all years; expected volatility of 65.26 %; risk-free interest rates of 3.03 % and expected term of 6.26 years. g. On July 28, 2022, the Company granted an aggregate of 404,100 RSUs representing a right to receive shares of the Company’s common stock to the Company’s executive officers, employees and board members. The RSUs granted to certain employees, executive officers and board members shall vest in three equal annual installments on each of January 1, 2024, 2025 and 2026 and the RSUs granted to certain employees will vest in three equal annual installments on each of January 1, 2023, 2024 and 2025. The total fair value of these RSUs on the date of grant was $ 3,423 , using the quoted closing market share price of $ 8.47 on the Nasdaq Capital Market on the date of grant. F- 24 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 10 - STOCK-BASED COMPENSATION (continued): h. On July 28, 2022, the Company granted 34,000 shares of the Company’s common stock to each of the Company’s President and Chief Executive Officer and Chief Scientific Officer. These shares vested in full on August 1, 2022. The total fair value of these shares on the date of grant was $ 576 , using the quoted closing market share price of $ 8.47 on the Nasdaq Capital Market on the date of grant. i. On July 28, 2022, the Company granted an aggregate of 175,500 performance based RSUs (“PSUs”) representing a right to receive shares of the Company’s common stock to the Company’s executive officers. The PSUs were to vest in two installments upon achievement of the following milestones: (i) two thirds were to vest upon receipt of positive topline data in the first oral insulin Phase 3 clinical trial; and (ii) one third was to vest upon completion of enrollment of the second oral insulin Phase 3 clinical trial by June 30, 2023. Following the results of the ORA-D-013-1 Phase 3 trial and the termination of the ORA-D-013-2 Phase 3 trial, these performance goals have not been met and the PSUs did not vest. The total fair value of these PSUs on the date of grant was $ 1,486 , using the quoted closing market share price of $ 8.47 on the Nasdaq Capital Market on the date of grant. j. On September 18, 2022, Oravax granted options to purchase an aggregate of 328,318 shares of Oravax’s common stock to employees and board members of Oravax and to other service providers at an exercise price of $ 3.91 per share. The options will vest in four annual installments as follows: the first installment vested immediately on the grant date and the remaining three installments shall vest on each of December 31, 2022, 2023 and 2024. These options expire on September 18, 2032 . The total fair value of these options on the date of grant was $ 665 , using the Black Scholes option pricing model and was based on the following assumptions: stock price of $ 3.91 ; dividend yield of 0 % for all years; expected volatility of 52.87 %; risk-free interest rates of 3.62 %; and expected term of 5.49 years. k. On April 17, 2023, the Company granted an aggregate of 868,500 RSUs representing a right to receive shares of the Company’s common stock to executive officers and board members of the Company. The RSUs will vest in twelve equal quarterly installments starting May 1, 2023. The total fair value of these RSUs on the date of grant was $ 1,980 , using the quoted closing market share price of $ 2.28 on the Nasdaq Capital Market on the date of grant. l. On April 17, 2023, the Company granted an aggregate of 245,500 performance based RSUs (“PSUs”) representing a right to receive shares of the Company’s common stock to executive officers of the Company. The PSUs vested on May 26, 2023, upon the Company’s common stock achieving and maintaining a specified price per share. The total fair value of these PSUs on the date of grant was $ 550 , using the Monte-Carlo model. m. On May 1, 2023, the Company granted an aggregate of 20,000 RSUs representing a right to receive shares of the Company’s common stock to a new board member. The RSUs will vest in twelve quarterly installments starting May 1, 2023. The total fair value of these RSUs on the date of grant was $ 49 , using the quoted closing market share price of $ 2.45 on the Nasdaq Capital Market on the date of grant. n. During 2023, 132,000 stock options and 110,917 unvested RSUs were forfeited, due to termination of the employment of an executive officer, resulting in a reversal of $ 663 in sales and marketing expenses. F- 25 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 10 - STOCK-BASED COMPENSATION (continued): o. Options to employees, directors and non-employees The fair value of each option grant is estimated on the date of grant using the Black Scholes option-pricing model or Monte Carlo model with the following range of assumptions: For options granted in the year ended December 31, 2023 2022 Expected option life (years) - 6.25 - 6.26 Expected stock price volatility (%) - 63.05 - 65.26 Risk free interest rate (%) - 1.46 - 3.03 Expected dividend yield (%) - 0.0 A summary of the status of the stock options granted to employees and directors as of December 31, 2023 and 2022 and changes during the year ended on those dates, is presented below: Year ended December 31, 2023 2022 Number of options Weighted average exercise price Number of options Weighted average exercise price $ $ Options outstanding at beginning of year 2,041,676 8.47 1,942,117 7.14 Changes during the year: Granted - - 359,000 13.55 Forfeited ( 132,000 ) 14.81 ( 48,334 ) 10.59 Expired - - ( 144,000 ) 4.08 Exercised - - ( 67,107 ) 5.03 Options outstanding at end of year 1,909,676 8.03 2,041,676 8.47 Options exercisable at end of year 1,479,426 7.15 1,261,426 6.86 Weighted average fair value of options granted during the year $ - $ 7.99 Expenses recognized in respect of stock options granted to employees and directors, for the years ended December 31, 2023 and 2022, were $ 811 and $ 2,662 , respectively. No options were granted during the year ended December 31, 2023. The total intrinsic value of employees’ options exercised during the year ended December 31, 2022 was $ 243 . F- 26 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 10 - STOCK-BASED COMPENSATION (continued): The following table presents summary information concerning the options granted to employees and directors outstanding as of December 31, 2023: Exercise prices Number outstanding Weighted Average Remaining Contractual Life Weighted average exercise price $ Years $ 1-6 857,250 5.85 3.94 6.23-9.12 283,008 3.80 7.96 10.40-20.19 769,418 6.52 12.62 1,909,676 5.82 8.03 1,479,426 options granted to employees and directors were outstanding and exercisable as of December 31, 2023, compared to 1,261,426 as of December 31, 2022. As of December 31, 2023, there were $ 707 of unrecognized compensation costs related to non-vested options previously granted to employees and directors. The unrecognized compensation costs are expected to be recognized over a weighted average period of 0.8 years. A summary of the status of the stock options granted to non-employees outstanding as of December 31, 2023 and 2022, and changes during the years ended December 31, 2023 and 2022, is presented below: Year ended December 31, 2023 2022 Number of options Weighted average exercise price Number of options Weighted average exercise price $ $ Options outstanding at beginning of year 47,000 4.31 51,500 4.26 Changes during the year: Granted - - - - Exercised - - ( 4,500 ) 3.74 Forfeited - - - - Expired - - - - Options outstanding at end of year 47,000 4.31 47,000 4.31 Options exercisable at end of year 47,000 4.31 47,000 4.31 Weighted average fair value of options granted during the year $ - $ - The Company recorded no stock-based compensation related to non-employees’ awards during the years ended December 31, 2023 and 2022. During the year ended December 31, 2023, no options were exercised. During the year ended December 31, 2022, 4,500 options were exercised by non-employees for a total intrinsic value of $ 24 . F- 27 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 10 - STOCK-BASED COMPENSATION (continued): The following table presents summary information concerning the options granted to non-employees outstanding as of December 31, 2023: Range of exercise prices $ Number outstanding Weighted Average Remaining Contractual Life Years Weighted Average Exercise Price $ 3.74 -5.08 47,000 5.98 4.31 47,000 options granted to non-employees were outstanding and exercisable as of December 31, 2023. As of December 31, 2023, there were no unrecognized compensation costs related to non-vested options previously granted to non-employees. p. Restricted stock units The following table summarizes the activities for unvested RSUs granted to employees and directors for the years ended December 31, 2023 and 2022: Year ended December 31, 2023 2022 Number of RSUs Outstanding at the beginning of period 1,561,570 801,303 Granted 1,134,000 1,009,600 Issued ( 574,791 ) ( 217,333 ) Forfeited ( 286,417 ) ( 32,000 ) Outstanding at the end of the period 1,834,362 1,561,570 Vested during the period 521,625 218,000 Vested and unissued at period end 212,136 265,302 The Company recorded compensation expenses related to RSUs of $ 3,210 for the year ended December 31, 2023 and $ 8,365 for the year ended December 31, 2022. As of December 31, 2023, there were unrecognized compensation costs of $ 2,693 related to RSUs. The unrecognized compensation costs are expected to be recognized over a weighted average period of 1 year. F- 28 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 10 - STOCK-BASED COMPENSATION (continued): The following table summarizes the activities for unvested RSUs granted to non-employees for the years ended December 31, 2023 and 2022: Year ended December 31, 2023 2022 Number of RSUs Outstanding at the beginning of period 4,000 8,000 Granted - - Issued ( 4,000 ) ( 4,000 ) Forfeited - - Outstanding at the end of the period - 4,000 Vested during the period 4,000 4,000 Vested and unissued at period end - - The Company recorded compensation expenses related to RSUs of $ 26 for the year ended December 31, 2023, compared to $ 92 compensation expenses recorded for the year ended December 31, 2022. As of December 31, 2023, there were no unrecognized compensation costs related to RSUs. NOTE 11 - FINANCIAL INCOME AND EXPENSES: a. Financial income Year ended December 31, 2023 2022 Income from interest on the Senior DIP Loan Agreement and deposits $ 8,016 $ 3,473 Exchange rate differences, net - 176 Income from interest on corporate bonds 10 100 Revaluation of securities, net 16,461 - Other 143 5 $ 24,630 $ 3,754 b. Financial expenses Year ended December 31, 2023 2022 Exchange rate differences, net $ 124 $ - Bank and broker commissions 29 14 Loss from securities, net - 43 Revaluation of securities, net 69 763 Fees regarding Scilex transaction 1,514 - Interest expenses 2,037 - $ 3,773 $ 820 F- 29 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 12 - TAXES ON INCOME: Taxes on income included in the consolidated statements of operations represent current taxes due to taxable income of the Company and its Israeli subsidiary. a. Corporate taxation in the U.S. The applicable corporate tax rate for the Company is 21 %. As of December 31, 2023, the Company and Oravax Medical Inc. had an accumulated tax loss carryforward of approximately $ 28,000 (as of December 31, 2022, $ 24,000 ). Under U.S. tax laws, subject to certain limitations, carryforward tax losses originating in tax years beginning after January 1, 2018, have no expiration date, but they are limited to 80 % of the company’s taxable income in any given tax year. Carryforward tax losses originating in tax years beginning prior to January 1, 2018, expire 20 years after the year in which incurred. In the case of the Company, subject to potential limitations in accordance with the relevant law, the net loss carryforward will expire in the years 2026 through 2037. b. Corporate taxation in Israel The Subsidiary is taxed in accordance with Israeli tax laws. The corporate tax rate applicable to 2023 and 2022 is 23 %. As of December 31, 2023, the Subsidiary and Oravax Medical Ltd. had an accumulated tax loss carryforward of approximately $ 102,000 (as of December 31, 2022, approximately $ 87,000 ). Under the Israeli tax laws, carryforward tax losses have no expiration date. c. Deferred income taxes December 31, 2023 2022 In respect of: Net operating loss carryforward $ 27,757 $ 27,610 Research and development expenses 2,731 5,195 Revaluation of investments ( 2,611 ) - Other temporary differences 596 - Less - valuation allowance ( 28,473 ) ( 32,805 ) Net deferred tax assets $ - $ - Deferred taxes are determined based on temporary differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a full valuation allowance. F- 30 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 12 - TAXES ON INCOME (continued): d. Income (Loss) before taxes on income and income taxes included in the income statements of operations Year ended December 31, 2023 2022 Income (loss) before taxes on income: U.S. $ 11,604 $ ( 11,164 ) Outside U.S. ( 6,516 ) ( 26,500 ) $ 5,088 $ ( 37,664 ) Taxes on income (tax benefit): Current: U.S. - - Outside U.S. - ( 100 ) $ - $ ( 100 ) e. Reconciliation of the statutory tax benefit to effective tax expense Following is a reconciliation of the theoretical tax expense, assuming all income is taxed at the regular tax rates applicable to companies in the United States, and the actual tax expense: Year ended December 31, 2023 2022 Income (loss) before income taxes as reported in the consolidated statement of comprehensive loss $ 5,088 $ ( 37,664 ) Statutory tax (benefit) expense – 21 % 1,068 ( 7,909 ) Increase (decrease) in income taxes resulting from: Change in the balance of the valuation allowance for deferred tax ( 4,332 ) 7,290 Disallowable deductions 731 1,152 Influence of different tax rate applicable to the Subsidiary and Oravax Medical Ltd. ( 305 ) ( 533 ) Prior year true-up 2,838 - Withholding tax, see note 12d above - 100 Uncertain tax position - - Taxes on income for the reported year $ - $ 100 F- 31 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 12 - TAXES ON INCOME (continued): f. Uncertainty in Income Taxes ASC 740, “Income Taxes” requires significant judgment in determining what constitutes an individual tax position as well as assessing the outcome of each tax position. Changes in judgment as to recognition or measurement of tax positions can materially affect the estimate of the effective tax rate and consequently, affect the operating results of the Company. The Company recognizes interest and penalties related to its tax contingencies as income tax expense. The following table summarizes the activity of the Company unrecognized tax benefits: Year ended December 31, 2023 2022 Balance at Beginning of Year $ 11 $ 11 Decrease in uncertain tax positions for the current year - - Balance at End of Year $ 11 $ 11 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 2020 through 2022. The Subsidiary is subject to Israeli income tax examinations for the tax years of 2017 through 2022. g. Valuation Allowance Rollforward Period ended Balance at beginning of period Additions Balance at end of period Allowance in respect of carryforward tax losses: Year ended December 31, 2023 $ 32,805 $ ( 4,332 ) $ 28,473 Year ended December 31, 2022 26,659 6,146 32,805 F- 32 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 13 - RELATED PARTY TRANSACTIONS: a. On July 1, 2008, the Subsidiary entered into two consulting agreements with KNRY Ltd. (“KNRY”), an Israeli company owned by the Chief Scientific Officer, whereby the President and Chief Executive Officer and the Chief Scientific Officer, through KNRY, provide services to the Company (the “Consulting Agreements”). The Consulting Agreements are both terminable by either party upon 140 days, prior written notice. The Consulting Agreements, as amended, provide that KNRY will be reimbursed for reasonable expenses incurred in connection with performance of the Consulting Agreements and that the monthly consulting fee paid to the President and Chief Executive Officer and the Chief Scientific Officer is NIS 146,705 ($ 40 ) and 106,400 ($ 29 ), respectively. In addition to the Consulting Agreements, based on a relocation cost analysis, the Company paid for certain direct costs, related taxes and expenses incurred in connection with the relocation of the President and Chief Executive Officer to New York. During the ten month period ended October 31, 2022, such relocation expenses totaled $ 331 . Following the relocation of the President and Chief Executive Officer to the State of Israel, the Company entered into two agreements with the President and Chief Executive Officer, replacing his above-mentioned consulting agreement through KNRY, substantially on the same terms, in order to allocate his time and services between the Company and the Subsidiary. Effective November 1, 2022, the Company entered into a consulting agreement with Shnida Ltd. (“Shnida”), whereby the President and Chief Executive Officer, through Shnida, provides services as President and Chief Executive Officer of the Company. The agreement is terminable by either party upon 140 days prior written notice. The agreement provides that Shnida will be reimbursed for reasonable expenses incurred in connection with performance of the agreement. Effective as of January 1, 2024, the President and Chief Executive Officer receives a monthly consulting fee of NIS 96,825 ($ 27 ), plus value added tax. Pursuant to the agreement, Shnida and the President and Chief Executive Officer each agree that during the term of the agreement and for a 12-month period thereafter, none of them will compete with the Company nor solicit employees of the Company. In addition, the Company, through the Subsidiary, has entered into an employment agreement with the President and Chief Executive Officer, effective as of November 1, 2022, pursuant to which, effective as of January 1, 2024, the President and Chief Executive Officer receives gross monthly salary of NIS 51,591 ($ 14 ) in consideration for his services as President and Chief Executive Officer of the Subsidiary. In addition, the President and Chief Executive Officer is provided with a phone and a company car pursuant to the terms of his agreement. b. Balances with related parties: December 31, 2023 2022 Accounts payable and accrued expenses - Shnida $ 160 $ - Accounts payable and accrued expenses - KNRY $ 165 $ 1 c. Expenses to related parties: Year ended December 31, 2023 2022 KNRY $ 486 $ 800 Shnida 445 146 Nadav Kidron (President and Chief Executive Officer) $ 296 $ 674 F- 33 ORAMED PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued) In thousands (except share and per share data) NOTE 14 - SUBSEQUENT EVENTS: 1. On January 4, 2024, the Company granted an aggregate of 150,000 RSUs representing a right to receive shares of the Company’s common stock to the Company’s board members. The RSUs granted to the board members will vest in three equal annual installments on each of January 1, 2025, 2026 and 2027. The total fair value of these RSUs on the date of grant was $ 359 , using the quoted closing market share price of $ 2.39 on the Nasdaq Capital Market on the date of grant. 2. On January 4, 2024, the Company granted an aggregate of 37,610 RSUs representing a right to receive shares of the Company’s common stock to the Company’s board members. The RSUs granted to certain board members will vest in four quarterly installments on each of April 1, 2024, July 1, 2024, October 1, 2024 and January 1, 2025. The total fair value of these RSUs on the date of grant was $ 90 , using the quoted closing market share price of $ 2.39 on the Nasdaq Capital Market on the date of grant. 3. On January 4, 2024, the Company granted an aggregate of 950,500 RSUs representing a right to receive shares of the Company’s common stock to the Company’s executive officers and one employee. The RSUs granted to executive officers and one employee will vest in twelve equal quarterly installments starting January 8, 2024. The total fair value of these RSUs on the date of grant was $ 2,272 , using the quoted closing market share price of $ 2.39 on the Nasdaq Capital Market on the date of grant. 4. On January 4, 2024, the Company granted an aggregate of 294,000 PSUs representing a right to receive shares of the Company’s common stock to executive officers of the Company. The PSUs shall vest upon the Company’s common stock achieving and maintaining a specified price per share. The total fair value of these PSUs on the date of grant was $ 691 , using the Monte-Carlo model. 5. On January 22, 2024, the Company and its wholly-owned subsidiary, Oramed Ltd., entered into the JV Agreement, with HTIT Biotech and HTIT Sub, pursuant to which, subject to the terms and conditions set forth in the JV Agreement, the parties will establish a JV, based on the Company’s oral drug delivery technology. The JV will focus on the development and worldwide commercialization of innovative products based on the Company’s oral insulin and POD™ (Protein Oral Delivery) pipeline and HTIT’s manufacturing capabilities and technologies. The parties intend for the JV to use the protocol the Company is currently working on to initiate a Phase 3 oral insulin trial in the United States. The Company and HTIT will initially hold equal shares in the JV, with each owning 50 % of the equity. The Board of Directors will initially consist of equal representation from HTIT and the Company. HTIT will contribute to the JV $ 70,000 in cash, while the Company will contribute $ 20,000 (comprised of $ 10,000 in cash and $ 10,000 in shares of the Company’s common stock that will be subject to certain registration rights) and will transfer intellectual property related to its oral insulin and POD™ technology, as well as other assets in the Company’s pipeline. HTIT will have an option to invest additional funds into the JV up to an aggregate amount of $ 20,000 , thereby increasing its equity holdings and board representation. The Company will be entitled to receive a 3 % royalty on gross revenues of the JV generated from Company-related assets. The consummation of the JV Agreement is subject to and contingent upon the parties entering into additional agreements within a three-month period, including an asset transfer agreement for the transfer of the Company’s intellectual property to the JV, a commercial supply agreement for the manufacture and supply of products by HTIT to the JV, as well as other documents and agreements to regulate the relationship of the parties and the JV to be formed pursuant to the JV Agreement. There is no assurance that the parties will complete and sign these additional agreements within the agreed timeline or at all. If such agreements are not signed within the agreed timeframe, then either party may apply a 30-day extension, after which the JV Agreement may be terminated and voided by either party. Thereafter, the consummation of the JV transaction is further subject to the satisfaction or waiver of certain other closing conditions within a three-month period following the completion of the aforesaid ancillary agreements. If the closing conditions are not met within the agreed timeframe, then either party may apply a 30-day extension, after which the JV Agreement may be terminated and voided by either party. In addition, completion of the transactions contemplated under the JV Agreement is subject to the satisfaction or waiver of customary and certain other closing conditions. 6. On January 30, 2024, the Company granted an aggregate of 3,750 RSUs representing a right to receive shares of the Company’s common stock to one of the Company’s board members. The RSUs granted to the board member will vest in four quarterly installments on each of April 1, 2024, July 1, 2024, October 1, 2024 and January 1, 2025. The total fair value of these RSUs on the date of grant was $ 11 , using the quoted closing market share price of $ 2.98 on the Nasdaq Capital Market on the date of grant. F- 34 (b) Exhibits 3.1 Composite Copy of Certificate of Incorporation, as amended as of January 22, 2013, corrected February 8, 2013, as amended as of July 25, 2014, corrected September 5, 2017 and as further amended as of August 3, 2020 (incorporated by reference from our annual report on Form 10-K filed November 24, 2020) 3.3 Fourth Amended and Restated By-laws (incorporated by reference from our current report on Form 8-K filed February 27, 2023). 4.1 Specimen Common Stock Certificate (incorporated by reference from our registration statement on Form S-1 filed February 1, 2013). 4.2 Description of Securities (incorporated by reference from our annual report on Form 10-K filed March 6, 2023). 10.1+ Consulting Agreement by and between Oramed Pharmaceuticals Inc. and Shnida Ltd., entered into as of November 1, 2022, for the services of Nadav Kidron (incorporated by reference from our annual report on Form 10-K filed March 6, 2023). 10.2+* Amendment, dated April 27, 2023, to Consulting Agreement by and between Oramed Pharmaceuticals Inc. and Shnida Ltd., entered into as of November 1, 2022, for the services of Nadav Kidron. 10.3+* Amendment, dated January 8, 2024, to Consulting Agreement by and between Oramed Pharmaceuticals Inc. and Shnida Ltd., entered into as of November 1, 2022, for the services of Nadav Kidron. 10.4+ Employment Agreement by and between Oramed Ltd. and Nadav Kidron, entered into as of November 1, 2022 (incorporated by reference from our annual report on Form 10-K filed March 6, 2023). 10.5+* Amendment, dated April 27, 2023, to Employment Agreement by and between Oramed Ltd. and Nadav Kidron, entered into as of November 1, 2022. 10.6+* Amendment, dated January 8, 2024, to Employment Agreement by and between Oramed Ltd. and Nadav Kidron, entered into as of November 1, 2022. 10.7+ Consulting Agreement by and between Oramed Ltd. and KNRY, Ltd., entered into as of July 1, 2008, for the services of Miriam Kidron (incorporated by reference from our current report on Form 8-K filed July 2, 2008). 10.8+ Amendment, dated November 13, 2014, to Consulting Agreement by and between Oramed Ltd. and KNRY, Ltd., entered into as of July 1, 2008, for the services of Miriam Kidron (incorporated by reference from our annual report on Form 10-K filed November 14, 2014). 10.9+ Amendment, dated July 13, 2013, to Consulting Agreement by and between Oramed Ltd. and KNRY, Ltd., entered into as of July 1, 2008 for the services of Miriam Kidron (incorporated by reference from our annual report on Form 10-K filed November 14, 2014). 10.10+ Amendment, dated July 21, 2015, to Consulting Agreements by and between Oramed Ltd. and KNRY, Ltd., entered into as of July 1, 2008, for the services of Miriam Kidron (incorporated by reference from our annual report on Form 10-K filed November 25, 2015). 10.11+ Amendment, dated June 27, 2016, to Consulting Agreements by and between Oramed Ltd. and KNRY, Ltd., entered into as of July 1, 2008, for the services of Miriam Kidron (incorporated by reference from our annual report on Form 10-K filed November 25, 2016). 10.12+ Amendment, dated June 30, 2017, to Consulting Agreements by and between Oramed Ltd. and KNRY, Ltd., entered into as of July 1, 2008, for the services of Miriam Kidron (incorporated by reference from our annual report on Form 10-K filed November 29, 2017). 10.13+ Amendment, dated January 10, 2020, to Consulting Agreements by and between Oramed Ltd. and KNRY, Ltd., entered into as of July 1, 2008, for the services of Miriam Kidron (incorporated by reference from our quarterly report on Form 10-Q filed April 6, 2020). 60 10.14+ Amendment, dated September 19, 2021, to Consulting Agreements by and between Oramed Ltd. and KNRY, Ltd., entered into as of July 1, 2008, for the services of Miriam Kidron (incorporated by reference from our annual report on Form 10-K filed November 24, 2021). 10.15+* Amendment, dated April 27, 2023, to Consulting Agreements by and between Oramed Ltd. and KNRY, Ltd., entered into as of July 1, 2008, for the services of Miriam Kidron. 10.16+* Amendment, dated January 8, 2024, to Consulting Agreements by and between Oramed Ltd. and KNRY, Ltd., entered into as of July 1, 2008, for the services of Miriam Kidron. 10.17+ Employment Agreement, dated May 23, 2021, by and between Oramed Ltd. and David Silberman (incorporated by reference from our quarterly report on Form 10-Q filed July 14, 2021). 10.18+ First Amendment, dated September 19, 2021, to Employment Agreement, by and between Oramed Ltd. and David Silberman (incorporated by reference from our annual report on Form 10-K filed November 24, 2021). 10.19+ Second Amendment, dated October 25, 2022, to Employment Agreement, by and between Oramed Ltd. and David Silberman (incorporated by reference from our annual report on Form 10-K filed March 6, 2023). 10.20+* Third Amendment, dated April 27, 2023, to Employment Agreement, by and between Oramed Ltd. and David Silberman. 10.21+* Fourth Amendment, dated January 8, 2024, to Employment Agreement, by and between Oramed Ltd. and David Silberman. 10.22+* Representative Form of Indemnification Agreements between Oramed Pharmaceuticals Inc. and each of our directors and officers. 10.23+ Oramed Pharmaceuticals Inc. Second Amended and Restated 2008 Stock Incentive Plan (incorporated by reference from our definitive proxy statement on Schedule 14A filed August 4, 2016). 10.24+ Form of Restricted Stock Unit Notice and Restricted Stock Unit Agreement (incorporated by reference from our annual report on Form 10-K filed November 14, 2014). 10.25+ Form of Restricted Stock Unit Notice and Restricted Stock Unit Agreement between the Company and the Chief Scientific Officer or Chief Exectuvie Officer (incorporated by reference from our annual report on Form 10-K filed November 29, 2017). 10.26+ Form of Notice of Stock Option Award and Stock Option Award Agreement (incorporated by reference from our current report on Form 8-K filed July 2, 2008). 10.27+ Oramed Pharmaceuticals Inc. 2019 Stock Incentive Plan (incorporated by reference from our definitive proxy statement on Schedule 14A filed August 6, 2019). 10.28+ Oramed Pharmaceuticals Inc. Amended and Restated 2019 Stock Incentive Plan (incorporated by reference from our definitive proxy statement on Schedule 14A filed June 30, 2020). 10.29+ Amendment to Oramed Pharmaceuticals Inc. Amended and Restated 2019 Stock Incentive Plan (incorporated by reference from our definitive proxy statement on Schedule 14A filed June 2, 2022). 10.30+ Form of Notice of Stock Option Award and Stock Option Award Agreement (incorporated by reference from our annual report on Form 10-K filed November 27, 2019). 10.31+ Form of Restricted Stock Unit Notice and Restricted Stock Unit Agreement (incorporated by reference from our annual report on Form 10-K filed March 6, 2023). 61 10.32 Patent Transfer Agreement, dated February 22, 2011, between Oramed Ltd. and Entera Bio Ltd. (incorporated by reference from our registration statement on Form S-1 filed March 25, 2011). 10.33 Amended and Restated Technology License Agreement, dated December 21, 2015, between Hefei Tianhui Incubator of Technologies Co., Ltd., Oramed Pharmaceuticals, Inc. and Oramed Ltd. (Confidential treatment has been granted for portions of this document) (incorporated by reference from our quarterly report on Form 10-Q filed January 13, 2016). 10.34 Amendment to the Amended and Restated Technology License Agreement, dated June 3, 2016, between Hefei Tianhui Incubator of Technologies Co., Ltd., Oramed Pharmaceuticals, Inc. and Oramed Ltd. (Confidential treatment has been requested for portions of this document. The confidential portions will be omitted and filed separately, on a confidential basis, with the Securities and Exchange Commission) (incorporated by reference from our annual report on Form 10-K filed November 25, 2016). 10.35 Amendment to the Amended and Restated Technology License Agreement, dated July 24, 2016, between Hefei Tianhui Incubator of Technologies Co., Ltd., Oramed Pharmaceuticals, Inc. and Oramed Ltd. (Confidential treatment has been requested for portions of this document. The confidential portions will be omitted and filed separately, on a confidential basis, with the Securities and Exchange Commission) (incorporated by reference from our annual report on Form 10-K filed November 25, 2016). 10.36 Joint Venture Agreement, dated January 22, 2024, among Oramed Pharmaceuticals Inc., Oramed Ltd., Hefei Tianhui Biotech Co., Ltd. and Technowl Limited (incorporated by reference from our current report on Form 8-K filed January 23, 2024). 10.37 Equity Distribution Agreement, dated September 1, 2021, by and between the Company and Cantor Fitzgerald & Co. (incorporated by reference from our current report on Form 8-K filed September 1, 2021). 10.38 License Agreement, dated as of March 18, 2021, between the Company, Oramed Ltd. and Oravax Medical Inc. (incorporated by reference from our current report on Form 8-K filed March 19, 2021). 10.39 Stockholders Agreement, dated as of March 18, 2021, between Oramed Pharmaceuticals Inc., Akers Biosciences Inc., Premas Biotech PVT Ltd., Cutter Mill Capital LLC, and Run Ridge LLC. (incorporated by reference from our Form 8-K filed March 19, 2021). 10.40§ Securities Purchase Agreement, dated September 21, 2023 by and between Scilex Holding Company and Oramed Pharmaceuticals Inc. (incorporated by reference from our current report on Form 8-K filed September 26, 2023). 10.41 Senior Secured Promissory Note, dated September 21, 2023 issued to Oramed Pharmaceuticals Inc. by Scilex Holding Company (incorporated by reference from our current report on Form 8-K filed September 26, 2023). 10.42 Warrant No. ORMP CS-1 to Purchase Common Stock of Scilex Holding Company (incorporated by reference from our current report on Form 8-K filed September 26, 2023). 10.43 Warrant No. ORMP CS-2 to Purchase Common Stock of Scilex Holding Company (incorporated by reference from our current report on Form 8-K filed September 26, 2023). 10.44 Warrant No. ORMP CS-3 to Purchase Common Stock of Scilex Holding Company (incorporated by reference from our current report on Form 8-K filed September 26, 2023). 10.45 Warrant No. ORMP CS-4 to Purchase Common Stock of Scilex Holding Company (incorporated by reference from our current report on Form 8-K filed September 26, 2023). 10.46 Warrant No. ORMP CS-5 to Purchase Common Stock of Scilex Holding Company (incorporated by reference from our current report on Form 8-K filed September 26, 2023). 62 10.47 Scilex Holding Company Specimen Warrant Certificate (incorporated by reference from our current report on Form 8-K filed September 26, 2023). 10.48 Registration Rights Agreement, dated September 21, 2023, by and between Oramed Pharmaceuticals Inc. and Scilex Holding Company (incorporated by reference from our current report on Form 8-K filed September 26, 2023). 10.49§ Subsidiary Guarantee, dated September 21, 2023, by and among Oramed Pharmaceuticals, Acquiom Agency Services LLC, Scilex Holding Company, and certain subsidiaries of Scilex Holding Company party thereto (incorporated by reference from our current report on Form 8-K filed September 26, 2023). 10.50 Security Agreement, dated September 21, 2023, by and among Oramed Pharmaceuticals, Acquiom Agency Services LLC, Scilex Holding Company, and certain subsidiaries of Scilex Holding Company party thereto (incorporated by reference from our current report on Form 8-K filed September 26, 2023). 10.51 Mutual Termination and Release Agreement, dated September 21, 2023, by and between Sorrento Therapeutics, Inc. and Oramed Pharmaceuticals, Inc. (incorporated by reference from our current report on Form 8-K filed September 26, 2023). 10.52+ Oravax Medical, Inc. 2021 Long-Term Incentive Plan (incorporated by reference from our annual report on Form 10-K filed March 6, 2023). 10.53+ Oravax Stock Option Agreement (incorporated by reference from our annual report on Form 10-K filed March 6, 2023). 21.1 Subsidiaries (incorporated by reference from our annual report on Form 10-K filed November 24, 2021). 23.1* Consent of Kesselman & Kesselman, 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, as amended. 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, as amended. 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. 97.1* Oramed Pharmaceuticals Inc. Clawback Policy, adopted November 9, 2023 101.1* The following financial statements from the Company’s annual report on Form 10-K for the year ended December 31, 2023, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Loss, (iii) Consolidated Statements of Changes in Stockholders’ Equity, (iv) Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements, tagged as blocks of text and in detail. 104.1* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). * Filed herewith. ** Furnished herewith. + Management contract or compensation plan. § Certain exhibits and similar attachments to this agreement have been omitted in accordance with Item 601(a)(5) of Regulation S-K. A copy of any omitted exhibit or other attachment will be furnished supplementary to the SEC upon request. ITEM 16. FORM 10-K SUMMARY. None. 63 SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ORAMED PHARMACEUTICALS INC. /s/ Nadav Kidron Nadav Kidron, President and Chief Executive Officer Date: March 6, 2024 Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ Nadav Kidron March 6, 2024 Nadav Kidron, President and Chief Executive Officer and Director (principal executive officer) /s/ David Silberman March 6, 2024 David Silberman, Chief Financial Officer (principal financial and accounting officer) /s/ Daniel Aghion March 6, 2024 Daniel Aghion, Director /s/ Miriam Kidron March 6, 2024 Miriam Kidron, Director /s/ Arie Mayer March 6, 2024 Arie Mayer, Director /s/ Leonard Sank March 6, 2024 Leonard Sank, Director /s/ Benjamin Shapiro March 6, 2024 Benjamin Shapiro, Director 64