ORAMED PHARMACEUTICALS INC.

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES:

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 March 18, 2021, the Company entered into a license agreement with Oravax Medical Inc. (“Oravax”) and holds 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 July 1, 2024, the Company incorporated a wholly-owned subsidiary in Nevada, Oramed NewCo, Inc. (“OraTech”), which intends to serve as the company for the joint venture with Hefei Tianhui Biotech Co., Ltd. (“HTIT”), see note 15 (b)

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, on September 12, 2024 the Company submitted protocol ORA-D-013-3 Phase 3 to focus on the subpopulations with the higher probability to show efficacy. The Company intends to initiate a study during 2025. Moreover, 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.

See note 4 regarding 2023 Scilex Transaction and 2024 Refinancing.

See note 7 regarding Short-Term Borrowings.

See note 15 regarding JV Supplemental Agreement.

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”).

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).

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.

The Company debited the common stock account by the par value of the shares retired and allocated the excess of the repurchase price over the par value of the shares to additional paid in capital.

The consolidated financial statements include the accounts of the Company and its subsidiaries. All inter-company transactions and balances have been eliminated in consolidation.

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.

The Company measures fair value and discloses fair value measurements for financial assets and liabilities. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between 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:

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:

As of December 31, 2024, and 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.

The amounts funded in respect of employee rights are stated at cash surrender value which approximates its fair value.

The Company measured the securities (investments in equity securities of DNA group (T.R.) Ltd. (“DNA”), Entera Bio Ltd. (“Entera”) and Scilex Holding Company (“Scilex”) at fair value, with changes in fair value recognized in earnings. The Company intends to exercise these investments during 2025, and has classified the marketable securities as short-term accordingly.

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 income (loss). For further details, see note 5.

The Company invested in the Tranche A Note (as defined in note 4), Tranche B Note (as defined in note 4) (collectively the “Notes”), Penny Warrants and Royalty Purchase Agreement issued by Scilex, 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.

Scilex also issued to the Company the Note A Transferred Warrants and Note B Warrants (as defined in note 4) that meet the definition of a derivative under ASC 815 “Derivatives and Hedging”. Therefore, the Warrants will be measured at fair value initially and on every reporting period.

The Company entered into a loan agreement to finance a real estate project. The Company decided to designate the Profit Sharing Loan Agreement (as define in note 4) as a whole under the Fair-Value option in accordance with ASC Topic 825 “Financial Instruments”.

Changes in the fair value are recorded under financial income (expenses), net.

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, Profit Sharing Loan Agreement, Royalty Purchase Agreement and the Notes. The Company is of the opinion that the credit risk in respect of these balances is remote, except for the Profit Sharing Loan Agreement, Royalty Purchase Agreement and the Notes for which the Company is of the opinion there is a credit risk, which is reflected in its fair value measurement (for further details, see note 4).

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.

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.

HTIT

On November 30, 2015, the Company 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 (the “HTIT License Agreement”).

As of December 31, 2024, an aggregate amount of $22,382 was allocated to the HTIT License Agreement, all of which were received through December 31, 2024. 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 year 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. The Company did not recognize revenue related to the HTIT License Agreement in the year ended December 31, 2024. See note 15 regarding the JV Supplemental Agreement.

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 8b.

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, 2024, 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.

Research and development expenses include costs directly attributable to the conduct of research and development programs, including the cost of salaries, stock-based compensation, 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.

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 with an exercise price and only service conditions using the Black Scholes pricing model, for stock options and restricted stock units (“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 market conditions, compensation expense is not reversed if the market conditions are not satisfied.

The Company elects to account for forfeitures as they occur.

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 unvested RSUs have been excluded from the calculation of the diluted loss per share for the year ended December 31, 2024 because all such securities are anti-dilutive for the year ended December 31, 2024.

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 difference in the denominator results from the dilutive impact of 251,833 RSUs.

The weighted average number of stock options, warrants and RSUs excluded from the calculation of diluted income (loss) per share was 4,582,421 and 1,227,506 for the years ended December 31, 2024 and December 31, 2023, respectively.

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 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 4 months to 2.5 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 Note 8d.

Recently adopted accounting pronouncements

In November 2023, the Financial Accounting Standard Board (the “FASB”) issued Accounting Standards Update (“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 Company adopted this standard in the current period retrospectively to all prior periods presented in its financial statements, see note 13.

Recently issued accounting pronouncements, not yet adopted

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 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.

In November 2024, the FASB issued ASU 2024-03 “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”, which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement as well as disclosures about selling expenses. ASU 2024-03 is effective for years beginning after December 15, 2026, and interim periods within years beginning after December 15, 2027, with early adoption permitted, and may be applied either prospectively or retrospectively. 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:

NOTE 3 - MARKETABLE SECURITIES:

The Company’s marketable securities include investments in equity securities of DNA, Entera and Scilex.

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, 2024 and 2023, the Company did not sell any of DNA’s ordinary shares. As of December 31, 2024, the Company owns approximately 1.4% of DNA’s outstanding ordinary shares.

The cost of the securities as of both December 31, 2024 and 2023 was $595.

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.

NOTE 3 - MARKETABLE SECURITIES(continued):

Scilex ordinary shares are traded on the Nasdaq Capital Market. The fair value of those securities is measured at the quoted prices of the securities on the measurement date.

On November 4, 2024 the Company exercised 6,500,000 of the Penny Warrant to shares. (for more details, see note 4).

NOTE 4 - INVESTMENTS, AT FAIR VALUE:

2023 Scilex Transaction and 2024 Refinancing

2023 Scilex Transaction

On September 21, 2023, the Company entered into and consummated the transactions (collectively, the “2023 Scilex Transaction”) contemplated by a securities purchase agreement with Scilex, pursuant to which Scilex issued to the Company:

2023 Scilex Transaction and 2024 Refinancing (continued)

2023 Scilex Transaction (continued)

The Company accounted for the Transferred Warrants as derivatives measured at fair value.

The Company elected the fair value option for the Tranche A Note and the Penny Warrants in order to reduce operational complexity of bifurcating embedded derivatives. Changes in value are recorded under financial income (expense), net and include interest income on the Tranche A Note.

The valuation was performed based on several scenarios. Each scenario took into consideration the present value of the Tranche A Note’s cash flows (including the exit fee and the prepayment premium) and the Warrants’ value. The total value of the 2023 Scilex Transaction (and of each of its components) was valued on a weighted average of the different scenarios.

The discount rate of the Tranche A 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 112% to 113%.

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 common stock on the Nasdaq Capital Market.

On September 20, 2024, the Company and Scilex entered into an extension agreement (the “Extension Agreement”) to extend the due date of the September 21, 2024 payment. Pursuant to the Extension Agreement, Scilex paid to the Company $2,000 on September 23, 2024, which payment is to be applied as follows: (i) $1,700 to the payment due under the Tranche A Note on March 21, 2025 and (ii) $300 to purchase the Transferred Warrants.

The table below represents the fair value composition of the Tranche Note A:

As of December 31, 2023, the fair value of the Tranche A Note was less than the aggregate unpaid principal balance (which includes interest payable on maturity) by $7,801.

As of December 31, 2024, the fair value of the Tranche A Note was less than the aggregate unpaid principal balance (which includes interest payable on maturity) by $8,114.

2024 Refinancing

In October 2024, the Company entered into the transactions (collectively, the “2024 Refinancing”) pursuant to which Scilex issued to the Company:

a. Convertible Notes SPA

The Company entered into a securities purchase agreement (the “Convertible Notes SPA”) with certain institutional investors (together with the Company, the “Buyers”) and Scilex to refinance a portion of the Tranche A Note and pay off certain other indebtedness of Scilex. Pursuant to the Convertible Notes SPA, the Buyers purchased in a registered offering by Scilex (i) a new tranche B of senior secured convertible notes of Scilex in the aggregate principal amount of $50,000 (the “Tranche B Notes”) repayable on a quarterly basis for 2 years, which Tranche B Notes are convertible into shares of Scilex common stock and (ii) warrants to purchase up to 7,500,000 shares of Scilex common stock (the “Tranche B warrants”). The Company purchased 50% of Tranche B Notes and Tranche B Warrants and therefore holds an aggregate principal amount of $25,000 of the Tranche B Notes and 3,750,000 Tranche B Warrants.

Scilex received from the Company, in consideration for the Tranche B Notes and the Tranche B Warrants issued to the Company, an exchange and reduction of the principal outstanding balance under the Tranche A Note of $22,500.

b. Royalty Purchase Agreement

The Company and certain institutional investors (together with the Company, the “RPA Purchasers”) entered into a Purchase and Sale Agreement (the “Royalty Purchase Agreement”) with Scilex and Scilex Pharmaceuticals Inc. (“Scilex Pharma”). Pursuant to the Royalty Purchase Agreement, the RPA Purchasers acquired the right to receive, in the aggregate,8% of net sales worldwide for 10 years (the “Purchased Receivables”) with respect to ZTlido (lidocaine topical system)1.8%, SP-103 (lidocaine topical system)5.4%, and any related, improved, successor, replacement or varying dosage forms of the foregoing. The Company acquired the right to receive 50% of the Purchased Receivables and therefore holds the right to receive 4% royalties.

In consideration for its interest in the Purchased Receivables, the Company exchanged and reduced $2,500 of the principal balance under the Tranche A Note.

c. ZTlido Rest of the World Binding Agreement

The Company and certain other institutional investors and Scilex entered into a binding term sheet (the “ROW License Term Sheet”), regarding a license and development agreement (the: “Lido License Agreement”), with respect to services, compositions, products, dosages and formulations comprising lidocaine, including without limitation, the product and any future product defined as a “Product” under Scilex Pharma’s existing (i) Product Development Agreement, dated as of May 11, 2011, with Oishi Koseido Co., Ltd. (“Oishi”), and Itochu Chemical Frontier Corporation (“Itochu”), as amended, and (ii) the associated Commercial Supply Agreement, dated February 16, 2017, between Scilex, Oishi and Itochu, as amended.

Subject to determination of a final structure for the transactions contemplated by the ROW License Term Sheet, it is anticipated that the Company and such institutional investors will hold the Lido License Agreement through a joint venture, RoyaltyVest, Inc. (“RoyaltyVest”).

In consideration for the rights to be provided under the proposed Lido License Agreement, as more fully described in the ROW License Term Sheet, (a) RoyaltyVest will invest (whether through cash consideration or in-kind payment through the provision of services) $200 per year toward expanding the Product, (b) Scilex will grant RoyaltyVest a worldwide, exclusive right, license and interest to all products rights for the development, out-licensing, commercialization of any Product outside of the United States and other territories, other than certain excluded designated territories (the “ROW Territory”), and (c) each of RoyaltyVest and Scilex will receive 50% percent of the net revenue (less expenses) generated from any Product in the ROW Territory.

The term sheet is subject to entering into a definitive agreement (see note 15) and subject to the consent of Oishi and Itochu to the Lido License Agreement.

As of December 31, 2024, the fair value of the ROW License was immaterial, inter alia, as it remains contingent upon third-party approvals and the future execution of agreements.

The institutional investors who are parties to the Convertible Notes SPA, Royalty Purchase Agreement and ROW License Term Sheet are all inter-related.

Following the refinancing as described above, on October 8, 2024, Scilex used $12,500 of the net proceeds from the proceeds of the Tranche B Note for the partial repayment of the outstanding balance under the Tranche A Note.

The Company elected the fair value option for the Tranche B Note and the Royalty Purchase Agreement, The Note B Warrants meet the definition of a derivative, and therefore will be measured at fair value. Changes in value are recorded under financial income (expense), net and include interest income on the Tranche B Note.

The valuation of the Tranche B Note’s was performed based on the binomial model, using a discount rate of 110.33%. Presented below is the summary of the assumptions and estimates that were used for the valuation:

The fair value of the Note B Warrants was calculated based on Black and Scholes model.

Presented below is the summary of the assumptions and estimates that were used for the valuation of the Warrants:

The value of the Royalty Purchase Agreement was calculated according to the royalty payment schedule and the aggregation of discounted cash flows derived from the royalty payments, using a discount rate of 110.33%.

As of December 31, 2024, the fair value of the Tranche B Note was less than the aggregate unpaid principal balance (which includes interest payable on maturity) is $9,833.

The table below represents the fair value composition of the Tranche B Note:

The table below represents the fair value cycle of 2023 Scilex Transaction and 2024 Refinancing Transaction throughout December 31, 2023 and December 31, 2024:

Financial income (expenses) recognized in respect of 2023 Scilex Transaction and 2024 Refinancing, for the years ended December 31, 2024 and 2023, were ($4,359) and $13,313, respectively.

The table below represents the fair value breakdown as of December 31, 2024:

For more details see note 15, subsequent events.

On September 4, 2024, the Company entered into a loan agreement (the “Profit Sharing Loan Agreement”) with Rabi Binyamin 4 Tama 38 Ltd. (the “Borrower”) to finance a real estate project (the “Project”). According to the terms of the Profit Sharing Loan Agreement, Oramed agreed to loan NIS 5.5 million ($1,523) (the “Loan Principal”) to the Borrower. NIS 4.7 million ($1,307) was loaned upon signing the Profit Sharing Loan Agreement and an additional NIS 0.8 million ($216) will be loaned upon certain milestones which are expected to occur in the first half of 2025. Upon completion of the Project, the Company is entitled to receive the Loan Principal and the greater of: (i)20% annual interest of the Loan Principal and (ii)40% of the Project profits.

The Company decided to designate the Profit Sharing Loan Agreement as a whole under the Fair-Value option in accordance with ASC Topic 825 “Financial Instruments”. The valuation of the Profit Sharing Loan Agreement was based on various project profit scenarios derived from the appraiser’s report. The Company used the Wang Transform model, a risk-neutral probabilities method, with an expected term of 4.01 years, a curve rate of 13.9% and a risk spread of 0.43%.

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 consolidated 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. During the year ended December 31, 2024, there was no change in the value of the Diasome investment.

NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

Composition:

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 Tranche A Note (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, 2024, the Company repaid the entire Short-Term Borrowings amount.

NOTE 8 - COMMITMENTS:

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, 2024 was $2,214 ($2,587 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, 2024, 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.

As of December 31, 2024, the Company has paid a total amount of $556 to the IIA.

For additional details see note 15.

NOTE 8 - COMMITMENTS(continued):

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, 2024 is approximately NIS 435 ($119). 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 ($119). 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 $265 for the year ended December 31, 2024, and $236 for the year ended December 31, 2023.

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, 2024 and 2023:

Operating cash flows from operating lease for the years Ended December 31, 2024 and 2023 were $264 and $267, respectively.

Lease payments for the Company’s right-of-use assets over the remaining lease periods as of December 31, 2024 are as follows:

NOTE 8 - COMMITMENTS(continued):

On September 23, 2024, the Subsidiary entered into a Clinical Research Organization Services Agreement with a third party, to retain it as a clinical research organization (“CRO”). The services covered by the agreement include strategic planning, expert consultation, data processing, regulatory, clerical, project management and other research and development services requested by the Company for the Phase 3 clinical trial. As consideration for its services, the Company will pay the CRO a total amount of $11,577 during the term of the engagement and based on achievement of certain milestones, of which $775 recognized in research and development expenses through December 31, 2024.

NOTE 9 - STOCKHOLDERS’ EQUITY:

The following are the significant capital stock transactions that took place during the years ended December 31, 2024 and 2023:

NOTE 9 - STOCKHOLDERS’ EQUITY (continued):

The following table presents the warrant activity for the years ended December 31, 2024 and 2023:

In June 2024, the Company’s board of directors authorized a stock buyback program pursuant to which the Company may, from time to time, repurchase and retire up to $20,000 in maximum value of its common stock. The stock buyback program does not obligate the Company to purchase any shares and expires in 12 months. The authorization for the stock buyback program may be terminated, increased or decreased by the Company’s board of directors in its discretion at any time.

During 2024, the Company repurchased and retired 1,036,976 shares of its common stock under this program for approximately $2,494, including $10 excise tax, at an average price of $2.36 per share. All repurchases were funded with cash on hand.

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 intoone 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, RSUs transactions with employees and board members made during the years ended December 31, 2024 and 2023:

A summary of the status of the stock options granted to employees and directors as of December 31, 2024 and 2023 and changes during the years ended on those dates, is presented below:

Expenses recognized in respect of stock options granted to employees and directors, for the years Ended December 31, 2024 and 2023, were $213 and $811, respectively.

The following table presents summary information concerning the options granted to employees and directors outstanding as of December 31, 2024:

As of December 31, 2024, there were $122 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 0.6 years.

47,000 options granted to non-employees were outstanding and exercisable as of December 31, 2024 and 2023. The Company recorded no stock-based compensation related to non-employees’ awards during the years ended December 31, 2024 and 2023. During the years ended December 31, 2024 and 2023, no options were exercised.

As of December 31, 2024, there were no unrecognized compensation costs related to non-vested options previously granted to non-employees.

The following table presents summary information concerning the options granted to non-employees outstanding as of December 31, 2024:

The following table summarizes the activities for unvested RSUs and PSUs granted to employees and directors for the years ended December 31, 2024 and 2023:

The Company recorded compensation expenses related to RSUs of $3,787 for the year ended December 31, 2024 and $3,210 for the year ended December 31, 2023.

As of December 31, 2024, there were unrecognized compensation costs of $1,630 related to RSUs. The unrecognized compensation costs are expected to be recognized over a weighted average period of 0.68 year.

The Company recorded compensation expenses related to RSUs granted to non-employees of $26 for the year ended December 31, 2023. No compensation expenses recorded for the year ended December 31, 2024.

As of December 31, 2024, there were no unrecognized compensation costs related to RSUs.

The Company recorded total compensation expenses of $4,053 and $4,212 for the years ended December 31, 2024 and 2023, respectively. $1,998 and $1,718 were included in Research and Development expenses, $2,055 and $2,933 were included in General and Administrative expenses and $0 and $(440) were included in Sales and Marketing for the years ended December 31, 2024 and 2023, respectively.

For additional information regarding RSUs and PSUs granted in 2025, see note 15.

NOTE 11 - FINANCIAL INCOME AND EXPENSES:

NOTE 12 - TAXES ON INCOME:

Taxes on income included in the consolidated statements of comprehensive income (loss) represent current taxes due to taxable income of the Company.

The applicable corporate tax rate for the Company is 21%.

As of December 31, 2024, the Company has utilized all of its outstanding net operating loss (“NOL”). Oravax had an accumulated tax loss carryforward of approximately $3,386 (as of December 31, 2023, $3,374). 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.

The Subsidiary is taxed in accordance with Israeli tax laws. The corporate tax rate applicable to 2024 and 2023 is 23%.

As of December 31, 2024, the Subsidiary and Oravax Medical Ltd. had an accumulated tax loss carryforward of approximately $114,000 (as of December 31, 2023, approximately $102,000). Under the Israeli tax laws, carryforward tax losses have no expiration date.

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.

NOTE 12 - TAXES ON INCOME(continued):

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:

NOTE 12 - TAXES ON INCOME(continued):

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:

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 2023.

The Subsidiary is subject to Israeli income tax examinations for the tax years of 2019 through 2023.

NOTE 13 - SEGMENT REPORTING:

The Company’s Chief Executive Officer, serving as the Chief Operating Decision Maker (CODM), evaluates operational performance and makes resource allocation decisions based on net income (loss), which is reported in the consolidated statements of comprehensive income (loss). The Company has determined that it operates in a single reportable segment, focused on research and development activities related to its proprietary products and technologies.

The CODM monitors budgeted versus actual net income (loss), using this measure to assess segment performance and guide financial planning, which is consistent with the financial statements. In addition to its research and development activities, the Company holds financial investments, including a material investment in Scilex, see note 4. The CODM monitors these investments separately from operational performance. Income and expenses related to financial instruments are reported as finance income (expenses) in the consolidated statements of comprehensive income (loss), reflecting their distinct nature from core business operations.

NOTE 14 - RELATED PARTY TRANSACTIONS:

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 as of January 1, 2024, the monthly consulting fee of the Chief Scientific Officer is NIS 117,040 ($32). Effective as of July 1, 2024, the monthly consulting fee of the Chief Scientific Officer is NIS 134,550 ($37).

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 ($26). Effective as of July 1, 2024, the monthly consulting fee of the President and Chief Executive Officer is NIS 111,349 ($31). 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. Effective as of July 1, 2024, the President and Chief Executive Officer receives gross monthly salary of NIS 59,330 ($16) 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.

NOTE 14 - RELATED PARTY TRANSACTIONS (continued):

NOTE 15 - SUBSEQUENT EVENTS:

On January 2, 2025, the Company granted 1,023,000 RSUs representing a right to receive shares of the Company’s common stock to the Company’s executive officers. The total amount of the RSUs shall vest in equal quarterly installments of approximately 85,249 over a three year period starting with the first quarterly vesting on January 1, 2025. The total fair value of these RSUs on the date of grant was $2,465 based on the quoted closing market share price of $2.41 on the Nasdaq Capital Market on the date of grant.

On January 2, 2025, the Company granted 328,500 PSUs representing a right to receive shares of the Company’s common stock to the Company’s executive officers. The total amount of the PSUs shall vest upon at the earliest of (1) the closing of a joint venture (“JV”) transaction with HTIT; or (2) the repayment to the Company of the value of its principal investment in Scilex plus 10%. The total fair value of these PSUs on the date of grant was $792 based on the quoted closing market share price of $2.41 on the Nasdaq Capital Market on the date of grant.

The Company modified 294,000 outstanding PSUs that were granted to the Company’s Executive Officers, adjusting the vesting criteria and performance targets. The Company will recognize stock-based compensation expense equal to the unrecognized grant-date fair value of the original award plus any incremental fair value arising from the modification over the remaining requisite service period.

As of March 27, 2025, all PSUs that granted to the Company’s Executive Officers achieved the first updated performance target.

Tranche B Note Consent

On January 2, 2025, the Company and other Tranche B Noteholders entered into deferral and consent agreements with Scilex (the “Tranche B Consent”), deferring Scilex’s first amortization payment under the Tranche B Note to October 8, 2026. In consideration, the Company received $877 ($555 of the principal amount and $322 accrued interest), and 2,500,000 Scilex Common Stock shares.

In addition, as part of the Tranche B Consent and contingent upon certain conditions that were met:

Tranche A Note Maturity Date Extension Amendment

On January 21, 2025, the Company entered into an amendment to the Tranche A Note (the “Tranche A Extension Amendment”), extending the maturity date from March 21, 2025, to December 31, 2025 (the “Extended Maturity Date”). Interest will continue to accrue and be payable on the Extended Maturity Date. In consideration of the extension, the Company received 3,250,000 shares of Scilex Common Stock.

Lidocaine License Agreement

As part of the binding term sheet signed with Scilex under the Tranche B Note, on February 22, 2025, the Company, through its 50% ownership in RoyaltyVest, entered into an additional License Agreement with Scilex. Under this agreement, RoyaltyVest acquired exclusive rights to develop, manufacture, and commercialize lidocaine-based products, including ZTlido (lidocaine topical system 1.8%) and SP-103, outside the United States. As part of the arrangement, RoyaltyVest and Scilex will each receive 50% of the net profits from the commercialization of these products. Given the Company’s 50% ownership in RoyaltyVest, Oramed effectively holds a 25% share in the profits generated under this agreement.

In January 2025, the Company entered into an agreement to acquire a parcel of land in Mevaseret Zion, Israel for a total purchase price of NIS 5,800 ($1,586). The transaction is structured in installments, and as of March 27, 2025, the Company has paid $1,210 toward the acquisition price. Under the agreement, the developer is responsible for executing all development-related activities, and the company and the developer will share the profits upon the future sale of the property. The Company is currently evaluating the appropriate accounting treatment.

On February 7, 2025, the Company and HTIT entered into a Joint Venture Agreement (the “JV Agreement”), amending the original agreement signed on January 22, 2024. The JV was formed to advance the development and commercialization of oral insulin, combining the Company’s proprietary technology and funding with HTIT’s manufacturing capabilities. Through this partnership, the JV will have the technology, resources, and production capacity to bring oral insulin to market.

The initial closing, set for April 30, 2025, includes an investment of $40,000 by HTIT and $7,500 by the Company into OraTech. Additionally, the Company will transfer all its intellectual property rights to OraTech. Upon completion, both HTIT and the Company will receive OraTech shares.

The second closing, contingent on Nasdaq listing approval, involves a $20,000 investment by HTIT and an additional $7,500 investment by the Company. It is expected to close by May 31, 2025, but no later than September 1, 2025.

The agreement also outlines the spin-off of OraTech, requiring regulatory filings and the distribution of at least 60% of the Company’s stake in OraTech to its shareholders. Both the Company and HTIT agreed to a 120-day lock-up period post-listing, restricting share sales.

As part of the JV Agreement, HTIT will receive $20,000 at the initial closing and $10,000 at the second closing under a Supply Agreement with OraTech.

on February 18, 2025, the Company received approval from the Israel Innovation Authority (IIA) to transfer all of its IIA-funded technology to OraTech in accordance with the terms of the JV agreement. This approval was granted upon the condition that the Company pays the aggregate IIA grant amount, plus accrued interest, less all royalties paid to date.

On February 27, 2025, the Company fulfilled its payment obligation by remitting $2,031 to the IIA, and as result the Company has no further obligations to the IIA.

On March 4, 2025, the Company, through RoyaltyVest, participated in a registered direct offering by BioXcel Therapeutics, Inc. (Nasdaq: BTAI) (“BioXcel”), acquiring 2,000,000 shares of BioXcel’s common stock and accompanying warrants to purchase up to an additional 2,000,000 shares. The shares and warrants were purchased at a combined offering price of $3.50 per share and warrant, representing 50% of the total 4,000,000 shares issued in the offering. The warrants have an exercise price of $4.20 per share, are immediately exercisable, and will expire five years from the date of issuance.

BioXcel is a biopharmaceutical company leveraging artificial intelligence to develop innovative medicines in neuroscience and immuno-oncology. Its lead programs focus on treatments for agitation in neuropsychiatric disorders and other central nervous system conditions.

As of March 27, 2025, the Company, through RoyaltyVest, has sold 869,992 shares and continues to hold 1,130,008 shares of BioXcel common stock.

On March 24, 2025, the Company entered into a loan agreement to finance a purchase of a real estate asset in Jerusalem Israel in the amount of $22,650. The loan has a one-year maturity and is secured by a first-ranking mortgage on a property valued at approximately $800,000, providing significant collateral coverage. The loan bears an annual interest rate of 12%.