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Item 7. Management’s Discussion and Analysis

2026-03-26 compared with 2025-03-27 · 420 added, 291 removed, 32 unchanged (96% of the section changed)

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

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

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

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

our plans, estimates and beliefs.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion

and analysis of our financial condition and results of operations should be read in conjunction with the audited consolidated financial

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

In addition to our audited

consolidated financial statements, the following discussion contains forward-looking statements that reflect our plans, estimates and

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

Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form

10-K, particularly in “Cautionary Statement Regarding Forward-Looking Statements” and “Item 1A.

Factors that could cause or

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

Statement Regarding Forward-Looking Statements” and “Item 1A.

Risk Factors.”

of Operations

are a pharmaceutical company engaged in the research and development of innovative pharmaceutical solutions with a technology platform

that allows for the oral delivery of therapeutic proteins.

have developed an oral dosage form intended to withstand the harsh environment of the gastrointestinal tract and effectively deliver

active insulin or other proteins.

The formulation is not intended to modify the proteins chemically or biologically, and the dosage form

is designed to be safe to ingest.

January 11, 2023, we announced that the Phase 3 oral insulin trial (ORA-D-013-1) did not meet its primary or secondary endpoints.

a result, we terminated this trial and a parallel Phase 3, ORA-D-013-2 clinical trial.

In 2023, we completed an analysis of the ORA-D-013-1

Phase 3 trial data and found that subpopulations of patients with pooled specific parameters, such as BMI, baseline HbA1c and age, responded

well to oral insulin.

Based on this analysis, we submitted a protocol for a new Phase 3 clinical trial to the FDA.

We are additionally

examining our existing pipeline and have commenced an evaluation process of potential strategic opportunities, with the goal of enhancing

value for our stockholders.

detailed above, in September 2023, we entered into the 2023 Scilex Transaction, which included a senior secured promissory note (Tranche

A Note) and warrants.

In October 2024, we participated in the 2024 Refinancing, purchasing a portion of the Tranche B Note and acquiring

royalty rights under a Purchase and Sale Agreement.

Additional agreements secured the right to receive royalties from certain products

We believe that these transactions collectively strengthened our financial position and expanded our commercial interests.

of Operations

The table and discussion that follows includes a comparison of our

results of operations and liquidity and capital resources for the years ended December 31, 2024 and 2023.

For a comparison of our results

of operations and financial condition for the year ended December 31, 2023 and the year ended December 31, 2022, see “Item 7.

Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year

ended December 31, 2023, filed with the SEC on March 6, 2024.

Overview of Operations

We are a pharmaceutical company

engaged in the research and development of innovative pharmaceutical solutions with a technology platform that allows for the oral delivery

of therapeutic proteins.

In addition, we allocate capital to strategic investments in healthcare and life sciences companies that we believe

complement our long-term business objectives and technology focus.

For additional information

regarding our business and operations, please refer to Item 1 – Business.

Reportable Segment

Our single reportable segment is focused on research

and development activities related to our proprietary products and technologies.

Recent Developments

Scilex Warrant Agreement

In October 2025, we agreed to defer an amortization

payment due from Scilex on October 1, 2025 under the amortization schedule included in the Tranche B Notes.

The deferred amortization

payment was subsequently paid to us in November 2025.

In consideration for this deferral, Scilex agreed to issue to us warrants to purchase

100,000 shares of Scilex’s common stock, par value $0.0001 per share with an exercise price of $20.

The warrants were issued on

February 19, 2026.

Lifeward Share Purchase Agreement

On January 12, 2026, we entered into a Share Purchase Agreement or,

the “Lifeward Share Purchase Agreement” with Lifeward and OraTech pursuant to which Lifeward acquired all of the outstanding

equity interests of OraTech from us or’ the “Share Purchase Transaction”.

Prior to the closing, we transferred to OraTech

all intellectual property and related assets relating to our POD™ (Protein Oral Delivery) technology platform, together with cash

to fund the next planned clinical trial and related development activities.

As a result, commencing on the closing date of March 25, 2026,

research and development expenses will be borne by Oratech.

In consideration for the acquisition of Oratech, Lifeward issued to

(i) Lifeward Ordinary Shares and pre-funded warrants to purchase Lifeward Ordinary Shares representing up to 49.99% of Lifeward’s

fully diluted equity capitalization at closing, subject to adjustments, which represents less than 45.0% of the outstanding Lifeward Ordinary

Shares at closing;

(ii) warrants to purchase Lifeward Ordinary Shares equal to the quotient of Lifeward’s net cash at closing divided

by an exercise price of $5.40 per share, reflecting Lifeward’s 12-for-1 reverse share split effected on February 24, 2026 (which

adjusted the original exercise price of $0.45 per share), subject to adjustments or, the “Share Purchase Warrants”;

revenue-sharing payments equal to 4% of the net revenue from Lifeward’s ReWalk Personal Exoskeleton products and related extended

warranties for up to 10 years following closing, subject to certain caps and early termination upon the occurrence of specified events.

The closing of the Share Purchase Transaction was subject to customary

closing conditions, including the approval of Lifeward’s shareholders for the issuance of more than 19.99% of Lifeward Ordinary

Shares in accordance with Nasdaq listing standards.

Such shareholder approval was obtained on March 12, 2026.

The closing of the Share

Purchase Transaction took place on March 25, 2026.

In connection with the transaction,

Lifeward agreed to file a resale registration statement with the SEC covering the Lifeward Ordinary Shares issued in the transaction and

those issuable upon exercise of the pre-funded warrants and warrants described above as soon as practicable following closing, but no

later than 75 days after closing, and to use commercially reasonable efforts to have such registration statement declared effective within

75 days after closing (or 105 days in the event of a full SEC review).

Pre-Funded Warrants and Share Purchase Warrants

The Share Purchase Warrants were immediately exercisable upon issuance

at an initial exercise price of $5.40 per share, reflecting Lifeward’s 12-for-1 reverse share split effected on February 24, 2026

(which adjusted the original exercise price of $0.45 per share), and expire five years from the date of issuance.

The exercise price is

subject to customary anti-dilution adjustments.

The Pre-Funded Warrants have an exercise price of $0.0012 per share

(reflecting the reverse-split adjusted price of the original $0.0001 per share), subject to customary adjustments, and will remain exercisable

until exercised in full.

We may not exercise any portion of the Pre-Funded

Warrants or Share Purchase Warrants to the extent that, after giving effect to such exercise, we and our affiliates would beneficially

own more than 45.0% of the outstanding Lifeward Ordinary Shares.

This limitation will automatically increase to 49.99% once (i) the Investors

no longer hold any Notes and (ii) the Investors have sold all Note Shares issued or issuable upon conversion of the Notes and related

We may increase the beneficial ownership limitation upon at least 61 days’ prior notice to Lifeward;

provided that, for

so long as certain Lifeward warrants outstanding as of the issuance date remain outstanding, any such increase will require Lifeward’s

consent, which may not be unreasonably withheld, conditioned or delayed.

In connection with the execution

of the Lifeward Share Purchase Agreement, we entered into a lock-up agreement for a period of 120 days after the Closing, without the

prior written consent of Lifeward.

Clinical Trial Management Agreement

In connection with the Lifeward Share Purchase Agreement, we agreed

to enter into a clinical trial management or, the “Clinical Trial Management Agreement” with Oratech, pursuant to which we

agreed to manage the clinical study of Oratech’s investigational oral insulin capsule product or, the “Study”, including

providing clinical trial management and administrative services through study completion or, the “Services”.

In consideration

for the Services, OraTech will reimburse us for all reasonable out-of-pocket expenses actually incurred by us in providing the Services

and payments made on behalf of OraTech to third parties and vendors, such as clinical sites, if applicable, subject to certain limitations

and maximum payments as set forth in the Clinical Trial Management Agreement.

The Clinical Trial Management Agreement will terminate upon

completion of the Study unless earlier terminated in accordance with the terms set forth therein.

Notes Securities Purchase Agreement

On January 12, 2026, we entered into a Securities Purchase Agreement

or, the “Lifeward Notes Purchase Agreement” with Lifeward and other investors pursuant to which we agreed to purchase, in

a private placement, up to $18,000,000 of senior secured convertible notes issued by Lifeward,

together with accompanying warrants to purchase Lifeward Ordinary Shares.

At the initial closing, we purchased $9,000,000 aggregate principal

amount of such notes or, the “Initial Notes”.

The Initial Notes bear interest at 8% per annum, payable semi-annually, and

mature three years from the date of issuance.

The Initial Notes are convertible into Lifeward Ordinary Shares at an initial conversion

price of $5.40 per share, reflecting Lifeward’s 12-for-1 reverse share split effected on February 24, 2026 (which adjusted the original

conversion price of $0.45 per share), subject to customary anti-dilution adjustments.

We also agreed to purchase an additional $9,000,000

aggregate principal amount of notes or, the “Additional Notes” and together with the Initial Notes, or, the “Notes”,

together with accompanying warrants, on substantially the same terms as the Initial Notes.

The closing of the Additional Notes is subject to customary closing

conditions and either:

(i) Lifeward achieving at least a 150%

increase in ReWalk unit sales compared to the trailing twelve-month period immediately preceding the Additional Closing;

(ii) the closing price of Lifeward Ordinary Shares equaling or exceeding

$13.80 per share , reflecting Lifeward’s 12-for-1 reverse

share split (which adjusted the original $1.15 threshold), for 10 consecutive trading days

immediately prior to the Additional Closing.

The closing of the Initial

Notes was subject to customary closing conditions, including the approval of Lifeward’s shareholders for the issuance of more

than 19.99% of Lifeward Ordinary Shares in accordance with Nasdaq listing standards.

shareholder approval was obtained on March 12, 2026.

In connection with the transaction, Lifeward agreed to file a resale

registration statement with the SEC covering the Lifeward Ordinary Shares issuable upon conversion of the Notes and exercise of the related

warrants within 30 days after the Initial Closing , and to use commercially reasonable efforts

to have the registration statement declared effective within 45 days thereafter (or 75 days in the event

of a full SEC review).

Results of Operations

The table and discussion that

follows includes a comparison of our results of operations and liquidity and capital resources for the years ended December 31, 2025 and

December 31, 2024.

For a comparison of our results of operations and financial condition for the year ended December 31, 2024 and the

year ended December 31, 2023, see “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations”

included in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 27, 2025.

Year ended December 31,

(dollar amounts in thousands, except per share data)

Cost of revenue

Research and development expenses

Sales and marketing

General and administrative expenses

Other income, net

Interest expenses

Financial income (expenses), net

Income (loss) before taxes on income

Taxes on income

Net income (loss) for the year

Net income (loss) attributable to Company’s stockholders

Net loss attributable to non-controlling interest

Income (loss) before tax expenses

Net income (loss) for the Year

Net income (loss) attributable to:

Non-controlling interest

Company’s stockholders

Basic income (loss) per share of common stock

Diluted income (loss) per share of common stock

Weighted average shares of common stock outstanding used in computing basic income (loss) per share of common stock

Weighted average shares of common stock outstanding used in computing diluted income (loss) per share of common stock

consist of proceeds related to the Amended and Restated Technology License Agreement, dated December 21, 2015, between us and HTIT, or

as further amended by the parties on June 3, 2016 and July 24, 2016, the HTIT License Agreement, that are recognized on a cumulative

basis when it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur, through the expected

product submission date by HTIT of June 2023.

We did not recognize revenues for the year ended December 31, 2024,

compared to revenues of approximately $1,340,000 for the year ended December 31, 2023.

The decrease was due to recognition of revenues

through June 30, 2023, the product submission date by HTIT.

and Development Expenses

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

of salaries, employee benefits, costs of materials, supplies, the cost of services provided by outside contractors, including services

related to our clinical trials, clinical trial expenses, the full cost of manufacturing drugs for use in research and preclinical development.

Weighted average number of shares of common stock used in computing basic income (loss) per share of common stock

Weighted average number of shares of common stock used in computing diluted income (loss) per share of common stock

On November 30, 2015, we entered

into a Technology License Agreement, with 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 or, the “HTIT License Agreement”.

7, 2025, we and HTIT entered into the JV Agreement, amending the Initial JV Agreement.

Pursuant to the terms of the JV Agreement, we and

HTIT irrevocably agreed to the mutual release and waiver of (i) any claims and demands against each party in connection with the HTIT

License Agreement, and (ii) all rights, obligations and liabilities set out and arising with respect to the performance of the HTIT License

We recognized $2,000,000 revenue

related to the HTIT License Agreement for the year ended December 31, 2025, while there were no revenues for the year ended December 31,

Cost of Revenues

On February 18, 2025, we received approval from Israel Innovation Authority

or, the “IIA”, to transfer all of our IIA-funded technology to OraTech in accordance with the terms of the JV Agreement.

approval was granted upon the condition that we pay the aggregate IIA grant amount, plus accrued interest, less all royalties paid to

On February 27, 2025, we fulfilled

our payment obligation by remitting approximately $2,046,000 to the IIA, and as result we have no further obligations to the IIA.

of the amount is recognized in cost of revenue for the year ended December 31, 2025.

The amount of $59,000 was recognized in previous

There were no costs of revenue for the year ended December 31, 2024.

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, costs of materials, supplies, the cost of services provided by outside contractors, including services related to

our clinical trials, clinical trial expenses, the full cost of manufacturing drugs for use in research and preclinical development.

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

trial costs are a significant component of research and development expenses and include costs associated with third-party contractors.

We outsource a substantial portion of our clinical trial activities, utilizing external entities such as CROs, independent clinical investigators

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

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

primarily by CROs.

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

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

trial and preclinical trial expenses include regulatory and scientific consultants’ compensation and fees, research expenses, purchase

of materials, cost of manufacturing of the oral insulin and exenatide capsules, payments for patient recruitment and treatment, as well

as salaries and related expenses of research and development staff.

Research and development expenses for the year ended December 31, 2024

decreased by 30% to approximately $6,324,000, compared to approximately $8,971,000 for the year ended December 31, 2023.

was mainly due to lower expenses related to our Phase 3 trials that were terminated and was partially offset by stock-based compensation

expenses and costs related to the new Phase 3 clinical trial preparations.

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

Under the R&D Law,

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

and development expenditures.

Clinical trial costs are a

significant component of research and development expenses and include costs associated with third-party contractors.

We outsource a substantial

portion of our clinical trial activities, utilizing external entities such as CROs, independent clinical investigators and other third-party

service providers to assist us with the execution of our clinical trials.

Clinical activities which

relate principally to clinical sites and other administrative functions to manage our clinical trials are performed primarily by CROs.

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

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

Clinical trial and preclinical

trial expenses include regulatory and scientific consultants’ compensation and fees, research expenses, purchase of materials, cost

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

expenses of research and development staff.

Research and development expenses

for the year ended December 31, 2025 decreased by 1% to approximately $6,381,000, compared to approximately $6,324,000 for the year ended

December 31, 2024.

The decrease was primarily attributable to lower raw materials expenses, which was partially offset by an increase

in CRO expenses.

Government Grants

The Government of Israel encourages

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

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

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

Each plan must be approved by the IIA.

August 2009 to March 2014, our subsidiary Oramed Ltd.

was awarded five government grants amounting to a total net amount of NIS 8,000,000

(approximately $2,214,000 during such period) from the IIA.

We used these funds to support further research and development and clinical

trials of our oral insulin capsule and oral GLP-1 analog candidate during the period from February 2009 to December 2014.

the years ended December 31, 2024 and 2023, we did not recognize any research and development grants.

Under the terms of the grants we had received from the IIA, we were obligated to pay royalties of 3% on all revenues derived from the

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

Royalties were generally

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

on the SOFR rate.

On February 27, 2025, we paid approximately $2,031,000 to the IIA, and, as result, we are free of our obligations to

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

However, when applying for a

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

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

still approve the grant.

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

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

If a company wants to increase the volume of manufacturing

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

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

object to such transfer within 30 days).

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

volume may be performed outside of Israel.

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

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

of the grant received (dollar linked) with the addition of interest at an annual rate based on the SOF R

rate, depending on the portion of the total manufacturing volume that is performed outside of Israel.

The approval we received from

the IIA for the License Agreement was subject to payment of increased royalties and an increased ceiling, all in accordance with the

provisions of the R&D Law.

The R&D Law generally

requires that a product developed under a program be manufactured in Israel.

However, when applying for a grant, the applicant may declare

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

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

This declaration will

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

to be granted.

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

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

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

In addition, upon the approval

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

In any case of transfer of manufacturing

out of Israel, the grant recipient is required to pay royalties at an increased rate, which may be substantial, and the aggregate repayment

amount is increased up to 120% or 150% of the grant received (dollar linked) with the addition of interest at an annual rate based on

the SOFR rate, depending on the portion of the total manufacturing volume that is performed outside of Israel.

The approval we received

from the IIA for the License Agreement was subject to payment of increased royalties and an increased ceiling, all in accordance with

the provisions of the R&D Law.

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

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

R&D Law also provides that know-how developed under an approved research and development program and any derivatives thereof may

not be transferred or licensed to third parties in Israel without the approval of the research committee, which approval may be subject

to the payment of royalties from the sale.

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

or development.

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

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

certain circumstances as follows:

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

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

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

(b) the grant recipient

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

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

the context of IIA approved research and development cooperation projects or consortia.

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

The R&D Law requires

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

the recipient that results in a non-Israeli entity or person becoming an interested party in the recipient, and requires the new non-Israeli

interested party to undertake to the IIA to comply with the R&D Law.

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

of additional information or representations in respect of certain such events.

For this purpose, “control” is defined as

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

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

control” refers to voting rights or the right to appoint directors or the chief executive officer.

An “interested party”

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

someone who has the right to appoint its chief executive officer or at least one director, and a company with respect to which any of

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

or more of the directors.

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

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

In addition, the Israeli government may from time to time audit sales of products

which it claims incorporate technology funded through IIA programs which may lead to additional royalties being payable on additional

and Marketing Expenses

and marketing expenses include the salaries and related expenses of our commercial functions, consulting costs and other general expenses.

We did not recognize any

sales and marketing expenses for the year ended December 31, 2024, compared to an income of approximately $287,000 for the year

ended December 31, 2023.

The income primarily resulted from the reversal of previously recognized expenses related to forfeited

employee stock options, following the termination of an executive officer in fiscal year 2023.

and Administrative Expenses

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

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

General and administrative expenses for the year ended December 31,

2024 decreased by 23% to approximately $6,457,000, compared to approximately $8,425,000 for the year ended December 31, 2023.

This decrease

was mainly due to the reversal of previously recognized expenses following the resignation of certain executive officers.

Interest expenses were approximately $853,000 for the year ended December

31, 2024, compared to approximately $2,037,000 for the year ended December 31, 2023, since the Short-Term Borrowings (as defined below)

received from Discount Bank Ltd.

were terminated during the second quarter of 2024 (see below).

Net financial loss was approximately $2,286,000 for the year ended

December 31, 2024, compared to approximately $22,894,000 net financial income for the year ended December 31, 2023.

The change was mainly

due to the revaluation of the investments in Scilex and lower interest income on deposits.

and Capital Resources

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

The R&D Law also provides

that know-how developed under an approved research and development program and any derivatives thereof may not be transferred or licensed

to third parties in Israel without the approval of the research committee, which approval may be subject to the payment of royalties from

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

Law further provides that the know-how developed under an approved research and development program and any derivatives thereof may not

be transferred or licensed to any third parties outside Israel absent IIA approval which may be granted in certain circumstances as follows:

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

IIA-funded know-how or the price paid in consideration for the sale of the grant recipient itself, as the case may be, in accordance with

certain formulas included in the tracks published under the R&D Law;

(b) the grant recipient receives know-how from a third party

in exchange for its IIA-funded know-how;

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

development cooperation projects or consortia.

The R&D Law imposes reporting

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

The R&D Law requires the grant recipient to notify

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

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

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

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

in respect of certain such events.

For this purpose, “control” is defined as the ability to direct the activities of a company

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

A person is presumed to have control if

such person holds 50% or more of the means of control of a company.

“Means of control” refers to voting rights or the right

to appoint directors or the chief executive officer.

An “interested party” of a company includes a holder of 5% or more of

its outstanding share capital or voting rights, its chief executive officer and directors, someone who has the right to appoint its chief

executive officer or at least one director, and a company with respect to which any of the foregoing interested parties holds 25% or

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

Failure to meet the R&D

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

as expose us to criminal proceedings.

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

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

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.

All grants were received before the year ended August 31, 2020, and

recorded as a reduction of research and development expenses at that time.

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, 2025, was approximately $2,213,000 ($2,570,000

including interest).

General and Administrative

General and administrative

expenses include the salaries and related expenses of our management, consulting expenses, legal and professional fees, travel expenses,

business development expenses, insurance expenses and other general expenses.

General and administrative

expenses for the year ended December 31, 2025 increased by 35% to approximately $8,720,000, compared to approximately $6,457,000 for the

year ended December 31, 2024.

The increase was mainly due to an increase in stock-based compensation expenses and an increase in professional

fees, which were partially offset by a decrease in D&O insurance expenses.

Interest Expenses

There were no interest expenses

for the year ended December 31, 2025, compared to approximately $853,000 for the year ended December 31, 2024, since the Short-Term Borrowings

(as defined below) received from Discount Bank Ltd.

were terminated during the second quarter of 2024.

Financial Income, Net

Net financial income was approximately

$89,454,000 for the year ended December 31, 2025, compared to approximately $3,139,000 net financial expenses for the year ended December

The increase was primarily due to the revaluation of the investment in Alpha Tau and Scilex.

Tax on income

During the year ended December 31, 2025, we recognized tax expenses

on income of approximately $11,308,000, compared to tax expenses on income of approximately $3,183,000 for year ended December 31, 2024.

The increase in tax expense is primarily attributable to deferred tax expenses of approximately $8,095,000, mainly related to our investment

in Alpha Tau, while the current tax expense is primarily attributable to Scilex.

Liquidity and Capital Resources

From our inception through December 31, 2025, we have incurred losses

9 unchanged sentences

In addition, we

hold various of interest in certain investments, including in Scilex and others, as further detailed in this report.

inception through December 31, 2024, we have not generated significant revenues from our operations.

Although, we have increased the

research and development activities related to the new Phase 3 clinical trial, our research and development activities have been significantly

reduced while we conducted a strategic review process, following the termination of the ORA-D-013-1 and ORA-D-013-2 Phase 3 trials.

the preparation and expected initiation of the revised phase 3 trial (ORA-D-013-3) we expect to increase our research and development

expenses, either directly or through OraTech.

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

level of expenditures for at least the next 12 months, although no assurance can be given that we will not need additional funds prior

to such time.

If there are increases in our operating expenses, we may need to seek additional financing during the next 12 months.

may also need additional funds to realize the decisions made as part of our strategic review process.

We cannot predict the outcome of

these activities.

August 8, 2023, we borrowed an aggregate of $99,550,000 pursuant to loan agreements from Israel Discount Bank Ltd., or the Short-Term

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%, were secured by certificates of deposits issued by Israel Discount Bank Ltd.

having an aggregate face amount of $99,550,000.

The net proceeds of the Short-Term Borrowings were used to fund the Tranche A Note.

The Short-Term Borrowings were paid in one payment

of principal and interest at each respective maturity.

As of December 31, 2024, we repaid the entire Short-Term Borrowings amount.

As of December 31, 2024, our

total current assets were approximately $143,221,000 and our total current liabilities were approximately $5,685,000.

On December 31,

2024, we had a working capital surplus of approximately $137,536,000 and an accumulated loss of approximately $176,616,000.

As of December

31, 2023, our total current assets were approximately $162,584,000 and our total current liabilities were approximately $53,214,000.

December 31, 2023, we had a working capital surplus of approximately $109,370,000 and an accumulated loss of approximately $157,556,000.

The increase in working capital surplus was mainly due an increase in cash and cash equivalents together with a decrease in short-term

borrowings that was partially offset by a decrease in short-term deposits and investments at fair value.

During the year ended December

31, 2024, cash and cash equivalents increased to approximately $54,420,000 from approximately $9,055,000 as of December 31, 2023.

increase was mainly due to the reasons described below.

Operating activities used

cash of approximately $8,412,000 in the year ended December 31, 2024, compared to approximately $10,295,000 used in the year ended December

Cash used in operating activities consisted mainly of changes in fair value of investments partially offset by net loss resulting

from research and development and general and administrative expenses.

Investing activities provided

cash of approximately $105,817,000 in the year ended December 31, 2024, compared to cash used for investing activities of approximately

$73,038,000 in the year ended December 31, 2023.

Cash provided by investing activities in the year ended December 31, 2024 consisted primarily

of proceeds from short-term deposits and proceeds from repayments by Scilex under the Tranche A Note.

Cash used by investing activities

in the year ended December 31, 2023 is mainly due to our investment in Scilex and the purchase of short-term deposits, partially offset

by the proceeds of short-term deposits.

Financing activities used cash of approximately $52,036,000 in the

year ended December 31, 2024, compared to cash of approximately $51,978,000 provided in the year ended December 31, 2023.

Cash used for

financing activities in the year ended December 31, 2024, consisted primarily of repayments of the Short-Term Borrowings and repurchases

of our shares.

Cash provided by financing activities in the year ended December 31, 2023, consisted primarily of the Short-Term Borrowings.

Our primary financing activities for the year ended December 31, 2024, were as follows:

March 2024, we entered into the ATM Agreement with Rodman & Renshaw LLC and StockBlock Securities

LLC as sales agents, or the Agents, pursuant to which we may issue and sell in transactions that

are deemed to be “at the market” offerings as defined in Rule 415 under the Securities

Act of 1933, as amended, or the Securities Act, shares of our common stock, par value $0.012 per

share, having a maximum aggregate offering price of up to $75,000,000 from time to time through the

sales of shares of common stock pursuant to the ATM Agreement will be made pursuant to an effective shelf registration statement

on Form S-3 (File No.

333-257926), which was declared effective by the SEC on July 26, 2021, the prospectus contained therein and

a prospectus supplement related thereto dated March 18, 2024, filed with the SEC.

The Agents may sell our common stock (A) in privately

negotiated transactions with our consent;

(B) as block transactions;

or (C) by any other method permitted by law deemed to be an

“at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act, including sales made directly

on The Nasdaq Capital Market or sales made into any other existing trading market for our common stock.

As of December 31, 2024,

no shares had been issued under the ATM Agreement.

June 2024, our Board authorized a stock buyback program pursuant to which we may, from time to time,

repurchase and retire up to $20,000,000 in maximum value of our common stock.

During the year ended December 31, 2024, we repurchased and retired

1,036,976 shares of our common stock under this program for approximately $2,494,000, including approximately $10,000 excise tax, at an

average price of $2.36 per share.

All repurchases were funded with cash on hand.

hold various of interest in certain investments, including in Scilex, Alpha Tau, Hapisga and others, as further detailed in this report.

From inception through December 31, 2025, we have not generated significant

revenues from our operations (other than recognizing deferred revenue related to the HTIT License Agreement, as described above).

we have increased the research and development activities related to the new Phase 3 clinical trial, our research and development activities

have been significantly reduced while we conducted a strategic review process, following the termination of the ORA-D-013-1 and ORA-D-013-2

Phase 3 trials.

Following the preparation and expected initiation of the revised oral insulin clinical trial, we expect to incur increased

research and development expenses in future periods, and we will need substantial additional funds.

These expenses will be incurred through

OraTech, as part of the Lifeward transaction.

For additional information regarding see note 21 to our consolidated financial statements

included in this Annual Report on Form 10-K.

However, additional financing

may not be available on acceptable terms, if at all, including due to the difficult conditions in the capital markets.

If we are unable

to secure additional financing, we may be required to reduce our operations, divest certain assets, or take other measures that could

materially adversely affect our reputation, business, financial condition or results of operations.

Based on our current cash

resources and commitments, we believe we will be able to maintain our current planned activities and the corresponding level of expenditures

for at least the next 12 months.

On August 8, 2023, we borrowed

an aggregate of $99,550,000 pursuant to loan agreements from Israel Discount Bank Ltd or, 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%, were secured

Short-Term Borrowings mature on dates ranging from August 11, 2023 to May 24, 2024, bear interest ranging from 6.66% to 7.38%, were secured

by certificates of deposits issued by Israel Discount Bank Ltd.

having an aggregate face amount of $99,550,000.

The net proceeds

of the Short-Term Borrowings were used to fund the Tranche A Note.

The Short-Term Borrowings were paid in one payment of principal

and interest at each respective maturity.

The net proceeds of the

Short-Term Borrowings were used to fund the Tranche A Note.

The Short-Term Borrowings were paid in one payment of principal and interest

at each respective maturity.

As of December 31, 2025, we repaid the entire Short-Term Borrowings amount.

the results of the Phase 3 trials for our oral insulin capsule candidate, ORMD-0801, we conducted a comprehensive analysis of the data

to understand if there is a path forward for our oral insulin candidate, and we worked on a protocol for a new Phase 3 clinical trial

that was submitted to the FDA.

Conducting this clinical trial, whether independently or as part of OraTech, will require significant

funds and resources.

Concurrently, we are examining our existing pipeline and have commenced an evaluation process of potential strategic

opportunities, with the goal of enhancing value for our stockholders.

At this time, we cannot foresee how these strategic decisions will

impact our financial results and operations.

previous years, we primarily invested in research and development.

If we proceed to conduct a new clinical trial for our oral insulin

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

however, if this clinical trial is conducted through OraTech, these costs will be borne by Oratech and not by us.

Accounting Estimates

Our significant accounting policies are more fully described in the

notes to our accompanying consolidated financial statements.

We believe that the accounting policy below is critical for one to fully

understand and evaluate our financial condition and results of operations.

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

we prepared in accordance with U.S.

As of December 31, 2025, our total current assets were approximately

$133,271,000 and our total current liabilities were approximately $19,086,000.

On December 31, 2025, we had a working capital surplus

of approximately $114,185,000 and an accumulated loss of approximately $123,436,000.

As of December 31, 2024, our total current assets

were approximately $143,221,000 and our total current liabilities were approximately $5,685,000.

On December 31, 2024, we had a working

capital surplus of approximately $137,536,000 and an accumulated loss of approximately $176,616,000.

The decrease in working capital surplus

was mainly due to dividends payable together with a decrease in cash and cash equivalents and short-term deposits that was partially offset

by an increase in investments at fair value and marketable securities.

During the year ended December

31, 2025, cash and cash equivalents decreased to approximately $45,947,000 from approximately $54,420,000 as of December 31, 2024.

decrease was mainly due to the reasons described below.

Operating activities used cash of approximately $9,145,000 in the year

ended December 31, 2025, compared to approximately $8,412,000 used in the year ended December 31, 2024.

Cash used in operating activities

primarily consisted of research and development expenses, and general and administrative expenses.

Investing activities provided cash of approximately $5,443,000 in the

year ended December 31, 2025, compared to approximately $105,817,000 provided in the year ended December 31, 2024.

Cash provided by investing

activities in the year ended December 31, 2025 consisted primarily of proceeds from short-term deposits and proceeds from repayments by

Scilex, partially offset by purchase of short-term deposits and investments at fair value in Alpha Tau, Hapisga, Lifeward and marketable

Cash provided by investing activities in the year ended December 31, 2024, consisted primarily of proceeds from short-term

deposits and proceeds from repayments by Scilex under the Tranche A Note.

Financing activities used

cash of approximately $4,741,000 in the year ended December 31, 2025, compared to cash of approximately $52,036,000 used in the year ended

December 31, 2024.

Cash used for financing activities in the year ended December 31, 2025, consisted primarily of purchase of treasury

Cash used in financing activities in the year ended December 31, 2024, consisted primarily of repayments of the Short-Term Borrowings

and repurchases of our shares.

Our primary financing activities

for the year ended December 31, 2025, were as follows:

June 2024, our Board authorized a stock buyback and retirement program pursuant to which we may, from time to time, repurchase up to

$20,000,000 in maximum value of our common stock.

Share repurchases may be executed through various means, including, without limitation,

open market transactions, privately negotiated transactions or otherwise in compliance with Rule 10b-18 under the Exchange Act or, the

“Buy-Back Program”.

The Buy-Back Program does not obligate us to purchase any shares and expires in 12 months.

The authorization

for the Buy-Back Program may be terminated, increased or decreased by our Board in its discretion at any time.

On May 21, 2025, our board

of directors authorized a one-year extension of the Buy-Back Program, which was set to expire in June 2026.

● During 2025 and 2024, we have repurchased and retired shares of our

common stock under the Buy-Back Program.

In 2025, we repurchased 899,609 shares for $2,155, including $6 of excise tax, at an average

price of $2.39 per share and in 2024, we repurchased 1,036,976 shares for $2,494, including $10 of excise tax, at an average price of

$2.4 per share.

All repurchases were funded with cash on hand.

October 20, 2025, we entered a separate share repurchase agreement with HTIT pursuant to which HTIT sold back to us 1,155,367 shares

of common stock at a purchase price of $2.23 per share for an aggregate price of $2,584,000, including $8 of excise tax.

Following such

repurchase, the shares were cancelled and retired.

Trend Information

Concurrently, we are examining

our existing pipeline and have commenced an evaluation process of potential strategic opportunities, with the goal of enhancing value

for our stockholders.

At this time, we cannot foresee how these strategic decisions will impact our financial results and operations.

Planned Expenditures

In previous years, we primarily invested in research and development.

If we proceed to conduct a new clinical trial for our oral insulin candidate, we expect that in the upcoming years our research and development

expenses will continue to be our major operating expense;

however, if this clinical trial is conducted through OraTech, these costs will

be borne by OraTech and not by us.

In addition, consistent with our broader corporate strategy, we may allocate capital to selected strategic

initiatives and collaborations intended to support long-term growth and diversification of our business.

Critical Accounting Estimates

Our significant accounting

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

We believe that the accounting policy

below is critical for one to fully understand and evaluate our financial condition and results of operations.

The discussion and analysis

of our financial condition and results of operations is based on our consolidated financial statements, which we prepared in accordance

generally accepted accounting principles, or GAAP.

The preparation of our consolidated financial

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

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

during the reporting periods.

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

We base our estimates on historical experience

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

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

Actual results may differ from these

estimates under different assumptions or conditions.

at fair value :

On September 21, 2023 and on October 7, 2024 we entered into the 2023 Scilex Transaction and 2024 Refinancing,

respectively.

We elected the fair value option for each of the components under 2023 Scilex Transaction and 2024 Refinancing in order

to reduce operational complexity of bifurcating embedded derivatives.

Changes in value are recorded under financial income, net and include

interest income on the Notes and Royalties received.

the fair value of the components above required significant judgment with regards to the expected repayment date of the Notes which also

impacts the number of Subsequent Penny Warrants to be issued to us.

The preparation of our consolidated financial statements requires us to make

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

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

ongoing basis, we evaluate such estimates and judgments.

We base our estimates on historical experience and on various other factors that

we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of

assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates under different

assumptions or conditions.

Investments at fair

On September 21, 2023 and on October 7, 2024 we entered into the 2023 Scilex Transaction and 2024 Refinancing, respectively.

We elected the fair value option for each of the components under 2023 Scilex Transaction and 2024 Refinancing in order to reduce operational

complexity of bifurcating embedded derivatives.

Changes in value are recorded under financial income, net and include interest income

on the Notes and Royalties received.

Determining the fair value of the components above required significant

judgment with regards to the expected repayment date of the Notes.

The total value of the 2023 Scilex Transaction (and of each of its

components) was valued on a weighted average of the different scenarios.

On September 4, 2024, we entered into a loan agreement to finance a

real estate project or the Profit Sharing Loan Agreement.

We decided to designate the Profit Sharing Loan Agreement as a whole under the

fair-value option.

The valuation of the Profit Sharing Loan Agreement was based on various project profit scenarios derived from the appraiser’s

On September 4, 2024, we

entered into a loan agreement to finance a real estate project or the Profit Sharing Loan Agreement.

We decided to designate the Profit

Sharing Loan Agreement as a whole under the fair-value option.

The valuation of the Profit Sharing Loan Agreement was based on various

project profit scenarios derived from the appraiser’s report.

On March 24, 2025, we entered

into a loan agreement to finance a real estate project, Hapisga.

We decided to designate the loan agreement as a whole under the fair-value

The valuation of the loan agreement was calculated in accordance with the weighted average expected cashflows of the loan.

On April 24, 2025, we entered

into a share purchase agreement and a services agreement with Alpha Tau (“Alpha Tau SPA”, “Services Agreement”).

We decided to designate the Alpha Tau SPA and the Services Agreement as a whole under the fair-value option.

The valuation of the Alpha

Tau SPA was determined using the closing price of Alpha Tau’s ordinary shares, and the fair value of the warrants issued under the

Services Agreement are calculated based on Black-Scholes model.

On November 14, 2025, we entered into a secured

note with Lifeward, pursuant to which Lifeward borrowed $3,000,000.

The valuation of the note was determined using a binomial model.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK.

As a “smaller reporting company” as defined by Rule 12b-2

of the Securities Exchange Act of 1934 we are not required to provide information required by this item.

FINANCIAL STATEMENTS AND SUPPLEMENTARY

See Item 15 of this Annual

Report on Form 10-K.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURE.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis