UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2016
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 000-50298
ORAMED PHARMACEUTICALS INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware | 98-0376008 | |
(State
or Other Jurisdiction of Incorporation or Organization) |
(I.R.S.
Employer Identification No.) | |
Hi-Tech Park 2/4 Givat Ram PO Box 39098 Jerusalem, Israel |
91390 | |
(Address of Principal Executive Offices) | (Zip Code) |
+ 972-2-566-0001
(Registrant’s Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ | |
Non-accelerated filer | ☐ | (Do not check if a smaller reporting company) | Smaller reporting company | ☒ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
As of January 10, 2017, there were 13,283,352 shares of the issuer’s common stock, $0.012 par value per share, outstanding.
ORAMED PHARMACEUTICALS INC.
FORM 10-Q
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION | 1 | |
ITEM 1 - FINANCIAL STATEMENTS | 1 | |
ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 16 | |
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 21 | |
ITEM 4 - CONTROLS AND PROCEDURES | 21 | |
PART II - OTHER INFORMATION | 22 | |
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 22 | |
ITEM 6 - EXHIBITS | 22 |
As used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our” and the “Company” mean Oramed Pharmaceuticals Inc. and our wholly-owned Israeli subsidiary, Oramed Ltd., unless otherwise indicated. All dollar amounts refer to U.S. Dollars unless otherwise indicated.
On November 30, 2016, the exchange rate between the New Israeli Shekel, or NIS, and the dollar, as quoted by the Bank of Israel, was NIS 3.839 to $1.00. Unless indicated otherwise by the context, statements in this Quarterly Report on Form 10-Q that provide the dollar equivalent of NIS amounts or provide the NIS equivalent of dollar amounts are based on such exchange rate.
PART I – FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
ORAMED PHARMACEUTICALS INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF NOVEMBER 30, 2016
1 |
ORAMED PHARMACEUTICALS INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF NOVEMBER 30, 2016
TABLE OF CONTENTS
Page | |
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: | |
Balance sheets | 2 |
Statements of comprehensive loss | 3 |
Statement of changes in stockholders’ equity | 4 |
Statements of cash flows | 5 |
Notes to financial statements | 6-15 |
2 |
ORAMED PHARMACEUTICALS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. Dollars in thousands (except share and per share data)
(UNAUDITED)
November 30, | August 31, | |||||||
2016 | 2016 | |||||||
Assets | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 2,290 | $ | 3,907 | ||||
Short-term deposits | 24,069 | 24,254 | ||||||
Marketable securities | 3,690 | 2,855 | ||||||
Restricted cash | 16 | 16 | ||||||
Prepaid expenses and other current assets | 430 | 198 | ||||||
Total current assets | 30,495 | 31,230 | ||||||
LONG-TERM ASSETS: | ||||||||
Long-term deposits and investment | 14,057 | 11,043 | ||||||
Marketable securities | 350 | 530 | ||||||
Amounts funded in respect of employee rights upon retirement | 11 | 11 | ||||||
Property and equipment, net | 15 | 16 | ||||||
Total long-term assets | 14,433 | 11,600 | ||||||
Total assets | $ | 44,928 | $ | 42,830 | ||||
Liabilities and stockholders' equity | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable and accrued expenses | $ | 2,237 | $ | 1,411 | ||||
Deferred revenues (note 1a1) | 2,450 | 2,162 | ||||||
Related parties | 47 | 48 | ||||||
Total current liabilities | 4,734 | 3,621 | ||||||
LONG-TERM LIABILITIES: | ||||||||
Deferred revenues (note 1a1) | 15,682 | 12,604 | ||||||
Employee rights upon retirement | 14 | 14 | ||||||
Provision for uncertain tax position | 11 | 11 | ||||||
Other liabilities | 501 | 390 | ||||||
Total long-term liabilities | 16,208 | 13,019 | ||||||
COMMITMENTS (note 2) | ||||||||
STOCKHOLDERS' EQUITY: | ||||||||
Common stock, $0.012 par value (30,000,000 authorized shares; 13,268,226 and 13,183,425 shares issued and outstanding as of November 30, 2016 and August 31, 2016, respectively) | 158 | 157 | ||||||
Additional paid-in capital | 72,437 | 71,943 | ||||||
Accumulated other comprehensive income | 43 | 106 | ||||||
Accumulated loss | (48,652 | ) | (46,016 | ) | ||||
Total stockholders' equity | 23,986 | 26,190 | ||||||
Total liabilities and stockholders' equity | $ | 44,928 | $ | 42,830 |
The accompanying notes are an integral part of the condensed consolidated financial statements.
3 |
ORAMED PHARMACEUTICALS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
U.S. Dollars in thousands (except share and per share data)
(UNAUDITED)
Three months ended | ||||||||
November 30, | November 30, | |||||||
2016 | 2015 | |||||||
REVENUES | $ | (610 | ) | $ | - | |||
COST OF REVENUES | 187 | - | ||||||
RESEARCH AND DEVELOPMENT EXPENSES, NET | 2,353 | 1,901 | ||||||
GENERAL AND ADMINISTRATIVE EXPENSES | 468 | 548 | ||||||
OPERATING LOSS | 2,398 | 2,449 | ||||||
FINANCIAL INCOME | (186 | ) | (76 | ) | ||||
FINANCIAL EXPENSES | 24 | 17 | ||||||
LOSS BEFORE TAXES ON INCOME | 2,236 | 2,390 | ||||||
TAXES ON INCOME | 400 | - | ||||||
NET LOSS FOR THE PERIOD | $ | 2,636 | $ | 2,390 | ||||
UNREALIZED LOSS ON AVAILABLE FOR SALE SECURITIES | 63 | 406 | ||||||
TOTAL OTHER COMPREHENSIVE LOSS | 63 | 406 | ||||||
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD | $ | 2,699 | $ | 2,796 | ||||
LOSS PER SHARE OF COMMON STOCK: | ||||||||
BASIC AND DILUTED LOSS PER SHARE OF COMMON STOCK | $ | 0.20 | $ | 0.21 | ||||
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK USED IN COMPUTING BASIC AND DILUTED LOSS PER SHARE OF COMMON STOCK | 13,205,971 | 11,572,809 |
The accompanying notes are an integral part of the condensed consolidated financial statements.
4 |
ORAMED PHARMACEUTICALS INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
U.S. Dollars in thousands (except share data)
(UNAUDITED)
Accumulated | ||||||||||||||||||||||||
Additional | other | Total | ||||||||||||||||||||||
Common Stock | paid-in | comprehensive | Accumulated | stockholders' | ||||||||||||||||||||
Shares | $ | capital | income | loss | equity | |||||||||||||||||||
In thousands | ||||||||||||||||||||||||
BALANCE AS OF AUGUST 31, 2016 | 13,183 | $ | 157 | $ | 71,943 | $ | 106 | $ | (46,016 | ) | $ | 26,190 | ||||||||||||
CHANGES DURING THE THREE-MONTH PERIOD ENDED NOVEMBER 30, 2016: | ||||||||||||||||||||||||
SHARES ISSUED FOR SERVICES | 3 | * | 17 | - | - | 17 | ||||||||||||||||||
EXERCISE OF OPTIONS | 64 | 1 | 319 | - | - | 320 | ||||||||||||||||||
STOCK-BASED COMPENSATION | 18 | * | 158 | - | - | 158 | ||||||||||||||||||
NET LOSS | - | - | - | - | (2,636 | ) | (2,636 | ) | ||||||||||||||||
OTHER COMPREHENSIVE LOSS | - | - | - | (63 | ) | - | (63 | ) | ||||||||||||||||
BALANCE AS OF NOVEMBER 30, 2016 | 13,268 | $ | 158 | $ | 72,437 | $ | 43 | $ | (48,652 | ) | $ | 23,986 |
* Represents an amount of less than $1.
The accompanying notes are an integral part of the condensed consolidated financial statements.
5 |
ORAMED PHARMACEUTICALS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
(UNAUDITED)
Three months ended | ||||||||
November 30, | ||||||||
2016 | 2015 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (2,636 | ) | $ | (2,390 | ) | ||
Adjustments required to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Depreciation | 1 | 1 | ||||||
Exchange differences and interest on deposits and held to maturity bonds | (112 | ) | (34 | ) | ||||
Stock-based compensation | 158 | 320 | ||||||
Shares issued for services | 17 | 25 | ||||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses and other current assets | (232 | ) | 15 | |||||
Accounts payable, accrued expenses and related parties | 825 | (185 | ) | |||||
Deferred revenues | 3,366 | - | ||||||
Liability for employee rights upon retirement | - | 1 | ||||||
Other liabilities | 111 | - | ||||||
Total net cash provided by (used in) operating activities | 1,498 | (2,247 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchase of property and equipment | - | (2 | ) | |||||
Purchase of short-term deposits | (1,000 | ) | (600 | ) | ||||
Purchase of long-term deposits | (3,000 | ) | - | |||||
Purchase of held to maturity securities | (1,056 | ) | - | |||||
Proceeds from sale of short-term deposits | 1,320 | 1,420 | ||||||
Proceeds from maturity of held to maturity securities | 300 | - | ||||||
Total net cash provided by (used in) investing activities | (3,436 | ) | 818 | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from exercise of warrants and options | 320 | 164 | ||||||
Total net cash provided by financing activities | 320 | 164 | ||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 1 | 1 | ||||||
DECREASE IN CASH AND CASH EQUIVALENTS | (1,617 | ) | (1,264 | ) | ||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 3,907 | 3,213 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 2,290 | $ | 1,949 | ||||
SUPPLEMENTARY DISCLOSURE ON CASH FLOWS - | ||||||||
Interest received | $ | 56 | $ | 30 |
The accompanying notes are an integral part of the condensed consolidated financial statements.
6 |
ORAMED PHARMACEUTICALS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share data)
(UNAUDITED)
NOTE 1 - | SIGNIFICANT ACCOUNTING POLICIES: |
a. | General: |
1) | Incorporation and operations |
Oramed Pharmaceuticals Inc. (collectively with its subsidiary, the “Company”, unless the context indicates otherwise) was incorporated on April 12, 2002, under the laws of the State of Nevada. From incorporation until March 3, 2006, the Company was an exploration stage company engaged in the acquisition and exploration of mineral properties. On February 17, 2006, the Company entered into an agreement with Hadasit Medical Services and Development Ltd. (“Hadasit”) to acquire the provisional patent related to 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 11, 2011, the Company was reincorporated from the State of Nevada to the State of Delaware.
On November 30, 2015, the Company entered into a Technology License Agreement with Hefei Tianhui Incubation of Technologies Co. Ltd. (“HTIT”) and on December 21, 2015 the parties entered into an Amended and Restated Technology License Agreement, that was further amended by the parties on June 3, 2016 and July 24, 2016 (the “License Agreement”). According to the License Agreement, the Company granted HTIT an exclusive commercialization license in the territory of the Peoples Republic of China, Macau and Hong Kong (the “Territory”), related to the Company’s oral insulin capsule, ORMD-0801. Pursuant to the License Agreement, HTIT will conduct, at its own expense, certain pre-commercialization and regulatory activities with respect to the Subsidiary’s technology and ORMD-0801 capsule, and will pay to the Subsidiary (i) royalties of 10% on net sales of the related commercialized products to be sold by HTIT in the Territory (“Royalties”), and (ii) an aggregate of $37,500, of which $3,000 is payable immediately, $8,000 will be paid subject to the Company entering into certain agreements with certain third parties, and $26,500 will be payable upon achievement of certain milestones and conditions. In the event that the Company does not meet certain conditions, the Royalties rate may be reduced to a minimum of 8%. Following the expiration of the Company's patents covering the technology in the Territory (the “Patents”), the Royalties rate may be reduced, under certain circumstances, to 5%.
The Royalties term will commence upon the commercialization of the product and will end upon the later of the expiration of the Patents or fifteen years after the first commercialization of the product in the Territory.
Among others, the Company's involvement through the product submission date will include consultancy for the pre-commercialization activities in the Territory, as well as provide advice to HTIT on an ongoing basis.
7 |
ORAMED PHARMACEUTICALS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share data)
(UNAUDITED)
NOTE 1 - | SIGNIFICANT ACCOUNTING POLICIES (continued): |
The closing of the License Agreement was conditioned upon the approval of the Israel Innovation Authority of the Israeli Ministry of Economy & Industry ("IIA"), which was received on December 21, 2015.
The initial payment of $3,000 was received in January 2016 and the second payment of $6,500 was received in July 2016 following achievement of certain milestones. Subsequent to entering into the required agreements with certain third parties, as detailed in notes 2f and 2g, the Company received additional payments of $4,000 in July 2016 and $4,000 in October 2016.
In addition, on November 30, 2015, the Company entered into a Stock Purchase Agreement with HTIT (the “SPA”). According to the SPA, the Company issued 1,155,367 shares of common stock to HTIT for $12,000. The transaction closed on December 28, 2015.
The License Agreement and the SPA were considered a single arrangement with multiple deliverables. The Company allocated the total consideration of $49,500 between the License Agreement and the SPA according to their fair value, as follows: $10,617 was allocated to the issuance of common stock (less issuance expenses of $23), based on the quoted price of the Company's shares on the closing date of the SPA on December 28, 2015, and $38,883 to the License Agreement. Given the Company's continuing involvement through the expected product submission (June 2023), amounts received relating to the License Agreement are recognized over the period from which the Company is entitled to the respective payment, and the expected product submission date using a time-based model approach over the periods that the fees are earned.
In July 2015, according to the letter of intent signed between the parties or their affiliates, HTIT's affiliate paid the Subsidiary a non-refundable amount of $500 as a no-shop fee. The no-shop fee was deferred and the related revenue is recognized over the estimated term of the License Agreement.
Amounts that were allocated to the License Agreement as of November 30 2016 aggregated $19,383, all of which were received through the balance sheet date. Through November 30, 2016, the Company recognized revenue in the amount of $1,251, and deferred the remaining amount of $18,132.
2) | Development and liquidity risks |
The Company is engaged in research and development in the biotechnology field for innovative pharmaceutical solutions, including an orally ingestible insulin capsule to be used for the treatment of individuals with diabetes, and the use of orally ingestible capsules for delivery of other polypeptides, and has not generated significant revenues from its operations. Continued operation of the Company is contingent upon obtaining sufficient funding until it becomes profitable.
8 |
ORAMED PHARMACEUTICALS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share data)
(UNAUDITED)
NOTE 1 - | SIGNIFICANT ACCOUNTING POLICIES (continued): |
Successful completion of the Company’s development programs and its transition to normal operations is dependent upon obtaining necessary regulatory approvals from the U.S. Food and Drug Administration prior to selling its products within the United States, obtaining foreign regulatory approvals to sell its products internationally, or entering into licensing agreements with third parties. There can be no assurance that the Company will receive regulatory approval of any of its product candidates, and a substantial amount of time may pass before the Company achieves a level of revenues adequate to support its operations, if at all. The Company also expects to incur substantial expenditures in connection with the regulatory approval process for each of its product candidates during their respective developmental periods. Obtaining marketing approval will be directly dependent on the Company’s ability to implement the necessary regulatory steps required to obtain marketing approval in the United States and in other countries. The Company cannot predict the outcome of these activities.
b. | Loss per common share |
Basic and diluted net loss per common share are computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding for each period. Outstanding stock options, warrants and restricted stock units (“RSUs”) have been excluded from the calculation of the diluted loss per share because all such securities are anti-dilutive for all periods presented. The total number of common stock options, warrants and RSUs excluded from the calculation of diluted net loss was 2,470,494 and 3,109,787 for the three month periods ended November 30, 2016 and 2015, respectively, because the effect would be anti-dilutive.
c. | Condensed Consolidated Financial Statements Preparation |
The condensed consolidated financial statements included herein have been prepared in accordance with U.S. GAAP and on the same basis as the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2016 (the “2016 Form 10-K”). These condensed consolidated financial statements reflect all adjustments that are of a normal recurring nature and that are considered necessary for a fair statement of the results of the periods presented. Certain information and disclosures normally included in annual consolidated financial statements have been omitted in this interim period report pursuant to the rules and regulations of the Securities and Exchange Commission. Because the condensed consolidated interim financial statements do not include all of the information and disclosures required by U.S. GAAP for annual financial statements, they should be read in conjunction with the audited consolidated financial statements and notes included in the 2016 Form 10-K. The results for interim periods are not necessarily indicative of a full fiscal year’s results.
9 |
ORAMED PHARMACEUTICALS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share data)
(UNAUDITED)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (continued):
d. | Newly issued and recently adopted Accounting Pronouncements |
In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance on revenue from contracts with customers that will supersede most current revenue recognition guidance, including industry-specific guidance. The underlying principle is that an entity will recognize revenue upon the transfer of goods or services to customers in an amount that the entity expects to be entitled to in exchange for those goods or services. The guidance provides a five-step analysis of transactions to determine when and how revenue is recognized. Other major provisions include capitalization of certain contract costs, consideration of the time value of money in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The guidance is effective for the interim and annual periods beginning on or after December 15, 2017 (early adoption is permitted for the interim and annual periods beginning on or after December 15, 2016). The Company is currently evaluating the impact of the guidance on its consolidated financial statements.
NOTE 2 - | COMMITMENTS: |
a. | In March 2011, the Subsidiary sold shares of its investee company, Entera Bio Ltd. (“Entera”) to D.N.A Biomedical Solutions Ltd. (“D.N.A”), retaining a 3% interest as of March 2011, which is accounted for as a cost method investment (amounting to $1). In consideration for the shares sold to D.N.A, the Company received, among other payments, 4,202,334 ordinary shares of D.N.A (see also note 4). |
As part of this agreement, the Subsidiary entered into a patent transfer agreement according to which, the Subsidiary assigned to Entera all of its right, title and interest in and to the patent application that it has licensed to Entera since August 2010. Under this agreement, the Subsidiary is entitled to receive from Entera royalties of 3% of Entera’s net revenues (as defined in the agreement) and a license back of that patent application for use in respect of diabetes and influenza. As of November 30, 2016, Entera had not yet realized any revenues and had not paid any royalties to the Subsidiary.
In addition, as part of a consulting agreement with a third party, dated February 15, 2011, the Subsidiary is obliged to pay this third party royalties of 8% of the net royalties received in respect of the patent that was sold to Entera in March 2011.
b. | On January 3, 2017, the Subsidiary entered into a lease agreement for its office facilities in Israel. The lease agreement is for a period of 60 months commencing October 1, 2016. |
The annual lease payment will be New Israeli Shekel (“NIS”) 119 thousand ($31) from October 2016 through September 2018 and NIS 132 thousand ($34) from October 2018 through September 2021, and will be linked to the increase in the Israeli consumer price index (“CPI”) (as of November 30, 2016, the future lease payments until the expiration of the lease agreement will be $160, based on the exchange rate as of November 30, 2016).
As security for its obligation under this lease agreement, the Company provided a bank guarantee in an amount equal to three monthly lease payments.
c. | On March 3, 2016, the Subsidiary entered into an agreement for process development and production of its capsules and on November 24, 2016 into an amendment to such agreement with a vendor in an amount of up to Swiss Franc (“CHF”) 790 thousand ($778), CHF 145 thousand ($143) of which was recognized through November 30, 2016. |
d. | On May 11, 2016, the Subsidiary entered into a Master Service Agreement with a vendor to retain its services for a pre-clinical toxicology trial for an oral GLP-1 analog capsule for type 2 diabetes patients. As consideration for its services, the Subsidiary will pay the vendor a total amount of $1,200 during the term of the engagement and based on achievement of certain milestones, of which $492 was recognized through November 30, 2016. |
e. | On May 31, 2016, the Company entered into a consulting agreement with a third party advisor for a period of one year, pursuant to which such advisor will provide investor relations services and will be entitled to receive a monthly cash fee and 10,000 shares of the Company’s common stock that will be issued in four equal quarterly installments commencing August 1, 2016. As of November 30, 2016, the Company had issued to such advisor 5,000 shares. The fair value of the shares at the grant date was $37. |
10 |
ORAMED PHARMACEUTICALS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share data)
(UNAUDITED)
NOTE 2 - | COMMITMENTS (continued): |
f. | On June 13, 2016, the Subsidiary entered into a four-year service agreement with a third party and on December 19, 2016, this agreement and all of the third party rights and obligations thereunder were assigned to another third party. This agreement is part of the requirements of the License Agreement as described in note 1. This agreement will support the Company's research and development. The Subsidiary is obligated to pay the third party a total amount of up to €2,360 thousand ($2,526), out of which €800 thousand ($867) is a non-refundable fee to be paid within 12 months from the effective date, €300 thousand ($336) of which were recognized in research and development through November 30, 2016. The remaining fee will be paid over the term of the engagement and will be based on achievement of certain milestones. |
g. | On March 3, 2014, the Subsidiary entered into a Master Service Agreement with a vendor for the process development and production of one of its oral capsule ingredients in the amount of $311, $40 of which was recognized through November 30, 2016, and bonus payments of up to $600 that will be paid upon achieving certain milestones, as described in the agreement, none of which was recognized through November 30, 2016. |
On July 24, 2016, the Subsidiary entered into a General Technical Agreement with the same vendor, for the scale-up process development and production of the same capsule ingredients in the amount of $4,300 that will be paid over the term of the engagement and based on the achievement of certain development milestones, $2,065 of which were recognized in research and development through November 30, 2016. This agreement is part of the requirements of the License Agreement as described in note 1.
h. | On September 21, 2016, the Subsidiary entered into a Clinical Research Organization Service Agreement with a third party to retain it as a Clinical Research Organization (“CRO”) for its Phase 2a dose finding clinical trial for an oral insulin capsule for type 2 diabetes patients, which began in the fourth quarter of calendar year 2016. As consideration for its services, the Subsidiary will pay the CRO a total amount of approximately $819 during the term of the engagement and based on achievement of certain milestones, $527 of which were recognized through November 30, 2016. |
i. | Grants from the Bio-Jerusalem Fund (“Bio-Jerusalem”) |
The Subsidiary is committed to pay royalties to Bio-Jerusalem on proceeds from future sales at a rate of 4% and up to 100% of the amount of the grant received (Israeli CPI linked) at the total amount of $65. The Company received no grants from Bio-Jerusalem since fiscal year 2013.
Royalty expenses for the three month period ended November 30, 2016 of $47 are included in cost of revenues. As of November 30, 2016, the Subsidiary had realized revenues from its related project in the amount of $993.
j. | Grants from the IIA |
Under the terms of the Company’s funding from the IIA, royalties of 3.5% 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 LIBOR.
11 |
ORAMED PHARMACEUTICALS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share data)
(UNAUDITED)
NOTE 2 - | COMMITMENTS (continued): |
At the time the grants were received, successful development of the related projects was not assured.
The total amount that was received through November 30, 2016 was $2,194.
Royalty expenses for the three month period ended November 30, 2016 of $140 are included in cost of revenues and will be paid over the term of the License Agreement in accordance with the revenue recognized from the related project. As of November 30, 2016, the Subsidiary had realized revenues from its project in the amount of $993.
NOTE 3 - | FAIR VALUE: |
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:
Level 1: | Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. | |
Level 2: | Observable prices that are based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. | |
Level 3: | Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. |
As of November 30, 2016, the assets or liabilities measured at fair value are comprised of available for sale equity securities (level 1).
In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible.
As of November 30, 2016, the carrying amount of cash and cash equivalents, short-term deposits and other current assets, accounts payable and accrued expenses approximate their fair values due to the short-term maturities of these instruments.
As of November 30, 2016, the carrying amount of long-term deposits approximates their fair values due to the stated interest rates which approximate market rates.
The fair value of held to maturity bonds as presented in note 4 was based on a level 1 measurement.
The amounts funded in respect of employee rights are stated at cash surrender value which approximates its fair value.
12 |
ORAMED PHARMACEUTICALS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share data)
(UNAUDITED)
NOTE 4 - | MARKETABLE SECURITIES: |
The Company's marketable securities include investments in equity securities of D.N.A and in held to maturity bonds.
a. | Composition: |
November 30, 2016 | August 31, 2016 | ||||||||
Short-term: | |||||||||
D.N.A (see b below) | $ | 638 | $ | 701 | |||||
Held to maturity bonds (see c below) | 3,052 | 2,154 | |||||||
$ | 3,690 | $ | 2,855 | ||||||
Long-term: | |||||||||
Held to maturity bonds (see c below) | $ | 350 | $ | 530 |
b. | D.N.A |
The investment in D.N.A is reported at fair value, with unrealized gains and losses, recorded as a separate component of other comprehensive income in equity until realized. Unrealized losses that are considered to be other-than-temporary are charged to statement of operations as an impairment charge and are included in the consolidated statement of operations under impairment of available-for-sale securities.
The D.N.A ordinary shares are traded on the Tel Aviv Stock Exchange and have a quoted price. The fair value of those securities is measured at the quoted prices of the securities on the measurement date.
During the three month periods ended November 30, 2016 and 2015, the Company did not sell any of the D.N.A ordinary shares.
As of November 30, 2016, the Company owns approximately 8.7% of D.N.A’s outstanding ordinary shares.
The cost of the securities as of November 30, 2016 and August 31, 2016 is $595.
13 |
ORAMED PHARMACEUTICALS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share data)
(UNAUDITED)
NOTE 4 - | MARKETABLE SECURITIES (continued): |
c. | Held to maturity bonds |
The amortized cost and estimated fair value of held-to-maturity securities at November 30, 2016, are as follows:
November 30, 2016 | |||||||||||||
Amortized cost | Gross unrealized losses | Estimated | |||||||||||
Short-term: | |||||||||||||
Commercial bonds | $ | 3,021 | $ | (2 | ) | $ | 3,019 | ||||||
Accrued interest | 31 | - | 31 | ||||||||||
Long-term | 350 | (2 | ) | 348 | |||||||||
$ | 3,402 | $ | (4 | ) | $ | 3,398 |
As of November 30, 2016, the contractual maturities of debt securities classified as held-to-maturity are as follows: after one year through two years, $350, and the yield to maturity rates vary between 1.05% to 1.8%.
The amortized cost and estimated fair value of held-to-maturity securities at August 31, 2016, are as follows:
August 31, 2016 | |||||||||||||
Amortized cost | Gross unrealized gains | Estimated | |||||||||||
Short-term: | |||||||||||||
Commercial bonds | $ | 2,118 | $ | - | $ | 2,118 | |||||||
Accrued interest | 36 | - | 36 | ||||||||||
Long-term | 530 | 1 | 531 | ||||||||||
$ | 2,684 | $ | 1 | $ | 2,685 |
As of August 31, 2016, the contractual maturities of debt securities classified as held-to-maturity are as follows: after one year through two years, $530 and the yield to maturity rates vary between 0.96% to 1.8%.
14 |
ORAMED PHARMACEUTICALS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands (except share and per share data)
(UNAUDITED)
NOTE 5 - | STOCK-BASED COMPENSATION |
On November 1, 2016, the Company granted a total of 70,000 RSUs representing a right to receive 70,000 shares of the Company’s common stock to an employee of the Subsidiary. The RSUs vest in 19 installments, consisting of one installment of 9,000 shares on November 1, 2016 18 equal monthly installments of 1,500 shares each, commencing November 30, 2016 and 17,000 shares on each of April 30, 2017 and 2018. The total fair value of these RSUs on the date of grant was $463, using the quoted closing market share price of $6.62 on the Nasdaq Capital Market on the date of grant. The Company elected to recognize compensation cost for this award using the accelerated method based on the multiple-option award approach.
NOTE 6 - | RELATED PARTIES - TRANSACTIONS |
On July 1, 2008, the Subsidiary entered into a consulting agreement with KNRY Ltd. (“KNRY”), an Israeli company owned by the Company’s Chief Executive Officer ("CEO"), whereby the CEO, through KNRY, provides services to the Company (the “Consulting Agreement”). The Consulting Agreement is terminable by either party upon 60 days written notice. The Consulting Agreement provides that KNRY (i) will be paid a gross amount of NIS 50,400 ($13) per month for the CEO and (ii) will be reimbursed for reasonable expenses incurred in connection with the performance of the Consulting Agreement.
The Consulting Agreement has been amended several times. According to the latest amendment on November 28, 2016, the CEO's monthly payment was set at NIS 127,570 ($33) effective January 2017, and additional cost of $10 per year was approved for the use and maintenance of the CEO's car effective November 2016.
15 |
ITEM 2 - 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 condensed consolidated financial statements and the related notes included elsewhere herein and in our consolidated financial statements, accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report (as defined below).
Forward-Looking Statements
The statements contained in this Quarterly Report on Form 10-Q that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Words such as “expects,” “anticipates,” “intends,” “plans,” “planned expenditures,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this Quarterly Report on Form 10-Q. Additionally, statements concerning future matters are forward-looking statements. We remind readers that forward-looking statements are merely predictions and therefore inherently subject to uncertainties and other factors and involve known and unknown risks that could cause the actual results, performance, levels of activity, or our achievements, or industry results, to be materially different from any future results, performance, levels of activity, or our achievements, or industry results, expressed or implied by such forward-looking statements. Such forward-looking statements include, among other statements, statements regarding the following:
● | the expected development and potential benefits from our products in treating diabetes; | |
● | future milestones, conditions and royalties under the license agreement with Hefei Tianhui Incubation of Technologies Co. Ltd., or HTIT; | |
● | our research and development plans, including pre-clinical and clinical trials plans, the timing of conclusion of trials and trials’ results; | |
● | our expectation that in the upcoming years our research and development expenses, net, will continue to be our major expenditure; | |
● | our expectations regarding our short- and long-term capital requirements; | |
● | our outlook for the coming months and future periods, including but not limited to our expectations regarding future revenue and expenses; and | |
● | information with respect to any other plans and strategies for our business. |
16 |
Although forward-looking statements in this Quarterly Report on Form 10-Q reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended August 31, 2016, or our Annual Report, as filed with the Securities and Exchange Commission, or the SEC, on November 25, 2016, as well as those discussed elsewhere in our Annual Report and in this Quarterly Report on Form 10-Q. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report on Form 10-Q. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this Quarterly Report on Form 10-Q which attempts to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
Overview of Operations
We are a pharmaceutical company currently engaged in the research and development of innovative pharmaceutical solutions, including an oral insulin capsule to be used for the treatment of individuals with diabetes, and the use of orally ingestible capsules or pills for delivery of other polypeptides.
Recent business developments
Product Candidates
We completed a Phase IIb clinical trial on 180 type 2 diabetic patients that was conducted in 33 sites in the United States. This double-blind, randomized, 28-day study clinical trial was conducted under an Investigational New Drug application, or IND, with the U.S. Food and Drug Administration, or FDA. The clinical trial, designed to assess the safety and efficacy of ORMD-0801, investigated ORMD-0801 over a longer treatment period and had statistical power to give us greater insight into the drug’s efficacy. The trial was initiated in June 2015, was completed during April 2016 and indicated a statistically significant lowering of blood glucose levels relative to placebo across several endpoints. The trial successfully met its primary and most of its secondary and exploratory endpoints for safety and efficacy.
We also conducted a glucose clamp study of our oral insulin capsule on type 1 diabetic volunteers that was performed at The University of Texas Health Science Center at San Antonio. The glucose clamp is a method for quantifying insulin absorption in order to measure a patient’s insulin sensitivity and how well a patient metabolizes glucose. The patients' recruitment was completed in October 2016, and we anticipate receiving the results during the first quarter of calendar year 2017.
In October 2016, we initiated a Phase IIa dose finding clinical trial on approximately 30 adults type 2 diabetic patients. This randomized, double-blind trial is being conducted in order to define the optimal dosing of ORMD-0801 moving forward.
In September 2013, we submitted a pre-IND package to the FDA for ORMD-0901, our oral exenatide capsule, for a Phase II clinical trial on healthy volunteers and type 2 diabetic patients. We began a toxicology study in June 2016 and expect to file an IND and move directly into a large Phase II trial in the United States. In August 2015, we began a non-FDA approved clinical trial on type 2 diabetic patients. The trial was completed during the second quarter of calendar year 2016 and indicated positive results as it showed ORMD-0901 to be safe and well tolerated and also demonstrated encouraging trending efficacy data.
17 |
The table below gives an overview of our product pipeline (calendar quarters):
Phase I | Phase II | Phase III | Timeline | |||
ORMD-0801
oral insulin |
Type 2 diabetes |
|
Q1 ’14: Phase IIa completed Q2 ’16: Phase IIb multi-center study completed Q4 ’16: Phase IIa - dose finding study initiated |
|||
Type 1 diabetes | Q3 ’14: Phase IIa study completed |
|||||
ORMD-0901
oral GLP-1 |
Type 2 diabetes |
Q2 ’16: Toxicology study initiated Q2 ’16: Phase Ib ex-US study completed Q3 ’17: Phase II study projected initiation |
Out-Licensed Technology
On November 30, 2015, we, our Israeli subsidiary and HTIT entered into a Technology License Agreement, and on December 21, 2015 these parties entered into an Amended and Restated Technology License Agreement that was further amended by these parties on June 3, 2016 and July 24, 2016, or the License Agreement. According to the License Agreement, we granted HTIT an exclusive commercialization license in the territory of the People's Republic of China, Macau and Hong Kong, or the Territory, related to our oral insulin capsule, ORMD-0801. Pursuant to the License Agreement, HTIT will conduct, at its own expense, certain pre-commercialization and regulatory activities with respect to our technology and ORMD-0801 capsule, and will pay (i) royalties of 10% on net sales of the related commercialized products to be sold by HTIT in the Territory, or Royalties, and (ii) an aggregate of approximately $37.5 million, of which $3 million is payable immediately, $8 million will be paid in near term installments subject to our entry into certain agreements with certain third parties, and $26.5 million will be payable upon achievement of certain milestones and conditions. In the event that we will not meet certain conditions, the Royalties rate may be reduced to a minimum of 8%. Following the expiration of our patents covering the technology in the Territory, the Royalties rate may be reduced, under certain circumstances, to 5%. The initial payment of $3 million was received in January 2016. Following achievement of certain milestones, the second and third milestone payments of $6.5 million and $4 million, respectively, were received in July 2016, and the fourth milestone payment of $4 million was received in October 2016.
We also entered into a separate securities purchase agreement with HTIT, or the SPA, pursuant to which HTIT invested $12 million in us in December 2015 (see – “Liquidity and capital resources” below). In connection with the License Agreement and the SPA, we received a non-refundable payment of $500,000 as a no-shop fee.
Results of Operations
Comparison of three month periods ended November 30, 2016 and 2015
The following table summarizes certain statements of operations data of the Company for the three month periods ended November 30, 2016 and 2015 (in thousands of dollars except share and per share data):
Three months ended | ||||||||
November 30, | ||||||||
2016 | 2015 | |||||||
Revenues | $ | (610 | ) | $ | - | |||
Cost of revenues | 187 | - | ||||||
Research and development expenses | 2,353 | 1,901 | ||||||
General and administrative expenses | 468 | 548 | ||||||
Financial income, net | (162 | ) | (59 | ) | ||||
Taxes on income | 400 | - | ||||||
Net loss for the period | $ | 2,636 | $ | 2,390 | ||||
Loss per common share - basic and diluted | $ | 0.20 | $ | 0.21 | ||||
Weighted average common shares outstanding | 13,205,971 | 11,572,809 |
Revenues
Revenues consist of proceeds related to the License Agreement that are recognized over the term of the License Agreement through June 2023.
Revenues for the three month period ended November 30, 2016 totaled $610,000. No revenues were recorded for the three month period ended November 30, 2015.
18 |
Cost of revenues
Cost of revenues consists of royalties related to the License Agreement that will be paid over the term of the License Agreement in accordance with the revenue recognition accounting policy and the Israeli Law for the Encouragement of Industrial Research and Development, 1984, as amended.
Cost of revenues for the three month period ended November 30, 2016 totaled $187,000. No cost of revenues was recorded for the three month period ended November 30, 2015.
Research and development expenses
Research and development expenses include costs directly attributable to the conduct of research and development programs, including the cost of salaries, payroll taxes, employee benefits, costs of materials, supplies, the cost of services provided by outside contractors, including services related to our clinical trials, clinical trial expenses, the full cost of manufacturing drugs for use in research, and preclinical development. All costs associated with research and development are expensed as incurred.
Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors. We outsource a substantial portion of our clinical trial activities, utilizing external entities such as contract research organizations, or CROs, independent clinical investigators, and other third-party service providers to assist us with the execution of our clinical studies.
Clinical activities which relate principally to clinical sites and other administrative functions to manage our clinical trials are performed primarily by CROs. CROs typically perform most of the start-up activities for our trials, including document preparation, site identification, screening and preparation, pre-study visits, training, and program management.
Clinical trial and pre-clinical trial expenses include regulatory and scientific consultants’ compensation and fees, research expenses, purchase of materials, cost of manufacturing of the oral insulin and exenatide capsules, payments for patient recruitment and treatment, as well as salaries and related expenses of research and development staff.
Research and development expenses for the three month period ended November 30, 2016 increased by 23.8% to $2,353,000, from $1,901,000 for the three month period ended November 30, 2015. The increase is mainly attributable to expenses related to process development and production of our capsules and the required ingredients and is offset by a decrease in clinical trials due to completion of our Phase IIb clinical trial. Stock-based compensation costs for the three month period ended November 30, 2016 totaled $136,000, as compared to $184,000 during the three month period ended November 30, 2015. The decrease is mainly attributed to the progress in amortization of awards granted in prior periods and is partially offset by an increase due to restricted stock units granted to employees in November 2016.
Government grants
In the three month periods ended November 30, 2016 and 2015, we did not recognize any research and development grants. As of November 30, 2016, we incurred liabilities to pay royalties to the Israel Innovation Authority of the Israeli Ministry of Economy & Industry, or the IIA, of $606,000.
General and administrative expenses
General and administrative expenses include the salaries and related expenses of our management, consulting costs, legal and professional fees, traveling, business development costs, insurance expenses and other general costs.
General and administrative expenses for the three month period ended November 30, 2016 decreased by 14.6% to $468,000 from $548,000 for the three month period ended November 30, 2015. The decrease in costs related to general and administrative activities during the three month period ended November 30, 2016 is due to a decrease in stock-based compensation costs. This decrease was partially offset by an increase in salaries and consulting expenses. Stock-based compensation costs for the three month period ended November 30, 2016 totaled $23,000, as compared to $136,000 during the three month period ended November 30, 2015. The decrease is mainly attributed to the progress in amortization of awards granted in prior periods.
Financial income, net
Net financial income increased by 175% from net income of $59,000 for the three month period ended November 30, 2015 to net income of $162,000 for the three month period ended November 30, 2016. The increase is mainly due to an increase in income from bank deposits and held to maturity bonds as a result of the increase in cash and investment balances.
Taxes on income
We had taxes on income of $400,000 for the three month period ended November 30, 2016 as compared to no taxes on income for the three month period ended November 30, 2015. The increase is due to withholding tax deducted from revenues received from the License Agreement, since according to the Company’s estimations, the withholding tax is not expected to be utilized in the next five years.
19 |
Other comprehensive income
Unrealized loss on available for sale securities for the three month period ended November 30, 2016 and 2015 of $63,000 and $406,000, respectively, resulted from the decrease in fair value of the ordinary shares of D.N.A Biomedical Solutions Ltd. that we hold.
Liquidity and capital resources
From inception through November 30, 2016, we have incurred losses in an aggregate amount of $48,652,000. During that period we have financed our operations through several private placements of our common stock, as well as public offerings of our common stock, raising a total of $56,054,000, net of transaction costs. During that period, we also received cash consideration of $3,639,000 from the exercise of warrants and options. We will seek to obtain additional financing through similar sources in the future as needed. As of November 30, 2016, we had $2,290,000 of available cash, $38,126,000 of short-term and long-term bank deposits and $4,040,000 of marketable securities.
On November 30, 2015, we entered into the SPA, pursuant to which HTIT agreed to buy and we agreed to sell 1,155,367 shares of our common stock at a price of approximately $10.39 per share, for the aggregate amount of $12 million. The transaction closed on December 28, 2015.
Management continues to evaluate various financing alternatives for funding future research and development activities and general and administrative expenses through fundraising in the public or private equity markets. Although there is no assurance that we will be successful with those initiatives, management believes that it will be able to secure the necessary financing as a result of future third party investments. Based on our current cash resources, including the investment and recent milestone payments by HTIT, and commitments, we believe we will be able to maintain our current planned development activities and the corresponding level of expenditures for at least the next 12 months and beyond.
As of November 30, 2016, our total current assets were $30,495,000 and our total current liabilities were $4,734,000. On November 30, 2016, we had a working capital surplus of $25,761,000 and an accumulated loss of $48,652,000. As of August 31, 2016, our total current assets were $31,230,000 and our total current liabilities were $3,621,000. On August 31, 2016, we had a working capital surplus of $27,609,000 and an accumulated loss of $46,016,000. The decrease in working capital from August 31, 2016 to November 30, 2016 was primarily due to the investment of a portion of the milestone payments received related to the License Agreement in long-term bank deposits.
During the three month period ended November 30, 2016, cash and cash equivalents decreased to $2,290,000 from the $3,907,000 reported as of August 31, 2016, which is due to the reasons described below.
Operating activities provided cash of $1,498,000 in the three month period ended November 30, 2016, as compared to $2,247,000 used in the three month period ended November 30, 2015. Cash provided by operating activities in the three month period ended November 30, 2016 primarily consisted of changes in deferred revenues due to the License Agreement partially offset by net loss resulting from research and development and general and administrative expenses, while cash used for operating activities in the three month period ended November 30, 2015 primarily consisted of net loss resulting from research and development and general and administrative expenses, partially offset by stock-based compensation expenses.
20 |
Investing activities used cash of $3,436,000 in the three month period ended November 30, 2016, as compared to $818,000 that were provided in the three month period ended November 30, 2015. Cash used for investing activities in the three month period ended November 30, 2016 consisted primarily of the purchase of short-term and long-term bank deposits, as well as the purchase of marketable securities, while cash provided by investing activities in the three month period ended November 30, 2015 consisted primarily of the proceeds from short-term bank deposits.
Financing activities provided cash of $320,000 in the three month period ended November 30, 2016, as compared to $164,000 that were provided in the three month period ended November 30, 2015. Financing activities in the three month period ended November 30, 2016 consisted of proceeds from exercise of options while financing activities in the three month period ended November 30, 2015 consisted of proceeds from exercise of warrants.
Off-balance sheet arrangements
As of November 30, 2016, we had no off balance sheet arrangements that have had or that we expect would be reasonably likely to have a future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Policies
Our significant accounting policies are described in the notes to the consolidated financial statements as of August 31, 2016 included in our Annual Report.
Planned Expenditures
We invest heavily in research and development, and we expect that in the upcoming years our research and development expenses, net, will continue to be our major operating expense.
ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no significant change in our exposure to market risk during the three month period ended November 30, 2016. For a discussion of our exposure to market risk, refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” contained in our Annual Report.
ITEM 4 - CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of November 30, 2016. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended November 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
21 |
PART II – OTHER INFORMATION
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On November 7, 2016, we issued 2,500 shares of our common stock to Corporate Profile, LLC, or Corporate Profile, in payment of a portion of the consulting fee for investor relations services owed to Corporate Profile pursuant to a Letter Agreement and a Stock Purchase Agreement, dated May 18, 2016 between us and Corporate Profile. We issued these shares pursuant to an exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
ITEM 6 – EXHIBITS
Exhibit Number | Description | |
10.1* | Agreement and Amendment No. 5, dated November 28, 2016, to Consulting Agreements by and between Oramed Ltd. and KNRY, Ltd., entered into as of July 1, 2008, for the services of Nadav Kidron. | |
10.2* | Fourth Amendment to Employment Agreement, dated November 28, 2016, by and between Oramed Ltd. and Yifat Zommer. | |
10.3* | Indemnification Agreement, dated August 30, 2016, between Oramed Pharmaceuticals Inc. and Kevin Rakin. | |
31.1* | Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended. | |
31.2* | Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended. | |
32.1** | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350. | |
32.2** | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350. | |
101.1* | The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended November 30, 2016, formatted in XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Comprehensive Loss, (iii) Condensed Consolidated Statements of Changes in Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) the Notes to Condensed Consolidated Financial Statements. |
SIGNATURES Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized. 23 Exhibit
10.1 AGREEMENT
AND AMENDMENT NO. 5 This
AGREEMENT AND AMENDMENT NO. 5 (this “Fifth Amendment”) is made this 28 day of November, 2016 by and between ORAMED
Ltd., a company incorporated under the laws of the State of Israel, # 513976712 with an address at High-Tech Park 2/4, Givat
Ram, Jerusalem, Israel 93706 (the “Company”), and KNRY, Ltd., a company incorporated under the
laws of the State of Israel, # 513836502 with an address at 2 Elza Street, Jerusalem, Israel 93706 (the “Consultant”). WHEREAS: A. The
Company and the Consultant are parties to the Agreement dated as of July 1, 2008 (the “Original Agreement”), as amended
on July 18, 2013, on November 13, 2014, on July 21, 2015 and on June 27, 2016 (all the amendments together with the Original Agreement,
the “Service Agreement”), for services to be provided by Nadav Kidron Israeli I.D. number 027424282 (“Nadav”);
and B. The
Company and the Consultant wish to amend the Service Agreement to revise the terms of the Consultant compensation thereunder. NOW,
THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, the parties hereto covenant
and agree as follows: “Compensation.
Effective from January 2017 (inclusive), the Company shall pay to the Consultant in consideration for the performance of the Consulting
Services, a gross monthly amount of 127,570 + VAT (the “Consideration”), subject to the receipt by the Company
of an invoice from the Consultant. Each of the Consultant and Nadav hereby declares that neither of them has, nor shall have in
the future, any claims or demands in respect of amounts paid prior to May 2008.” “Company
car. Effective from November 2016 (inclusive), in addition to the Consideration, the Company shall provide the Consultant
with leased car with an aggregate cost of (a) leasing a car of category 4, and (b) additional $10,000 per year, for the use and
maintenance of Nadav, and shall forward to the Consultant a payment reflecting the gross up of the tax due as a result of the
use and maintenance of the car by Nadav.” [Signature
page follows.] IN
WITNESS WHEREOF the parties hereto have executed this Fifth Amendment effective as of the date and year first above written. 2 Exhibit
10.2 Fourth
Amendment to Employment Agreement This
Fourth Amendment to the Employment Agreement (this “Fourth Amendment”) is entered into as of this 28 day of
November 2016, by and between Yifat Zommer, an individual residing at Rehovot, Israel (the “Executive”),
and ORAMED Ltd., a company incorporated under the laws of the State of Israel, with an address at Hi-Tech Park 2/4 Givat
Ram, Jerusalem, Israel 91390 (the “Company”). WHEREAS,
the Company and the Executive entered into an Employment Agreement, dated as of April 19, 2009 (the “Original Agreement”),
which was amended on August 31, 2009 , on July 17, 2013 and on July 21, 2015 (the “Amendments”, and together
with the Original Agreement, the “Employment Agreement”); and WHEREAS,
Company and the Executive desire to amend some of terms and conditions of the Employment Agreement. NOW,
THEREFORE, the Company and the Executive agree as follows: 1. In Section 2.1(a) - Salary of the Original Agreement, the following paragraph is hereby added: As
of January 1st, 2017, the Executive shall be entitled to a gross monthly salary of NIS 36,680 (the “Salary”). 2. Except for the changes and/or additions stated herein, all the other terms of the Employment Agreement shall remain valid and
bind the parties without any change. In the case of a contradiction between the provisions of this Fourth Amendment and the provisions
of the Employment Agreement, the provisions of this Fourth Amendment shall prevail. Without limiting the generality of the foregoing,
the term “Agreement” as used in the Employment Agreement shall be deemed to be the Employment Agreement as amended
by this Fourth Amendment. IN
WITNESS WHEREOF, the parties have executed this Fourth Amendment to Employment Agreement as of November 28th, 2016. Exhibit 10.3 INDEMNIFICATION
AGREEMENT THIS
INDEMNIFICATION AGREEMENT (the “Agreement”) is made and entered into as of August 30, 2016 between Oramed
Pharmaceuticals Inc., a Delaware corporation (the “Company”), and Kevin Rakin (“Indemnitee”). WHEREAS,
highly competent persons have become more reluctant to serve corporations as directors or officers unless they are provided with
adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them
arising out of their service to and activities on behalf of the corporation; WHEREAS,
the By-laws and/or the Certificate of Incorporation of the Company require indemnification of the officers and directors of the
Company. Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (“DGCL”).
The By-laws and/or Certificate of Incorporation and the DGCL expressly provide that the indemnification provisions set forth therein
are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board of
Directors of the Company (the “Board”) officers and other persons with respect to indemnification; WHEREAS,
the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests
of the Company's stockholders and that the Company should act to assure such persons that there will be increased certainty of
such protection in the future; WHEREAS,
it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses
on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified; WHEREAS,
this Agreement is a supplement to and in furtherance of the By-laws and/or Certificate of Incorporation of the Company and any
resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of
Indemnitee thereunder; and NOW,
THEREFORE, in consideration of Indemnitee’s agreement to serve as an officer and director from and after the date hereof,
the parties hereto agree as follows: 1. Indemnity
of Indemnitee. The Company hereby agrees to hold harmless and indemnify Indemnitee to the fullest extent permitted by law,
as such may be amended from time to time. In furtherance of the foregoing indemnification, and without limiting the generality
thereof: (a) Proceedings
Other Than Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided
in this Section l(a) if, by reason of his Corporate Status (as hereinafter defined), the Indemnitee is, or is threatened
to be made, a party to or participant in any Proceeding (as hereinafter defined) other than a Proceeding by or in the right of
the Company. Pursuant to this Section 1(a), Indemnitee shall be indemnified against all Expenses (as hereinafter defined),
judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him, or on his behalf, in connection
with such Proceeding or any claim, issue or matter therein, if the Indemnitee acted in good faith and in a manner the Indemnitee
reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal Proceeding,
had no reasonable cause to believe the Indemnitee’s conduct was unlawful. (b) Proceedings
by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section
1(b) if, by reason of his Corporate Status, the Indemnitee is, or is threatened to be made, a party to or participant in any
Proceeding brought by or in the right of the Company. Pursuant to this Section 1(b), Indemnitee shall be indemnified against
all Expenses actually and reasonably incurred by the Indemnitee, or on the Indemnitee’s behalf, in connection with such
Proceeding if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to
the best interests of the Company; provided, however, if applicable law so provides, no indemnification against such Expenses
shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be
liable to the Company unless and to the extent that the Court of Chancery of the State of Delaware shall determine that such indemnification
may be made. (c) Indemnification
for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, to the
extent that Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise, in any
Proceeding, he shall be indemnified to the maximum extent permitted by law, as such may be amended from time to time, against
all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If Indemnitee is not wholly successful
in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters
in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on
his behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section and without limitation,
the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to
be a successful result as to such claim, issue or matter. 2. Additional
Indemnity. In addition to, and without regard to any limitations on, the indemnification provided for in Section 1
of this Agreement, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf if, by reason of his Corporate Status,
he is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of
the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee.
The only limitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company
shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the
presumptions, set forth in Sections 5 and 6 hereof) to be unlawful. 3. Contribution. (a) Whether
or not the indemnification provided in Sections 1 and 2 hereof is available in respect of any threatened, pending
or completed Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or
proceeding), the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such Proceeding
without requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution
it may have against Indemnitee. The Company shall not enter into any settlement of any Proceeding in which the Company is jointly
liable with Indemnitee (or would be if joined in such Proceeding) unless such settlement provides for a full and final release
of all claims asserted against Indemnitee. (b) Without
diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee
shall elect or be required by law to pay all or any portion of any judgment or settlement in any threatened, pending or completed
Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), the Company shall
contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred and paid
or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees
of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the
one hand, and Indemnitee, on the other hand, from the transaction or events from which such Proceeding arose; provided, however,
that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted
by reference to the relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee
who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other
hand, in connection with the transaction or events that resulted in such expenses, judgments, fines or settlement amounts, as
well as any other equitable considerations which applicable law may require to be considered. The relative fault of the Company
and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would
be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among
other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which
their liability is primary or secondary and the degree to which their conduct is active or passive. (c) The
Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by
officers, directors or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee. (d) To
the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee
for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee,
whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection
with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in
light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and
Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of
the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s). 3. Indemnification
for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason
of his Corporate Status, a witness, or is made (or asked) to respond to discovery requests, in any Proceeding to which Indemnitee
is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection
therewith. 4. Advancement
of Expenses. Notwithstanding any other provision of this Agreement, the Company shall advance all Expenses incurred by or
on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Corporate Status within thirty (30)
days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time
to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence
the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written undertaking by or on behalf of
Indemnitee to repay any Expenses advanced if it shall ultimately be determined by a final judicial determination (as to which
all rights of appeal therefrom have been exhausted or lapsed) that Indemnitee is not entitled to be indemnified against such Expenses.
Any advances and undertakings to repay pursuant to this Section 4 shall be unsecured and interest free. 5. Procedures
and Presumptions for Determination of Entitlement to Indemnification. It is the intent of this Agreement to secure for Indemnitee
rights of indemnity that are as favorable as may be permitted under the DGCL and public policy of the State of Delaware. Accordingly,
the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee
is entitled to indemnification under this Agreement: (a) To
obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith
such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and
to what extent Indemnitee is entitled to indemnification, provided that Indemnitee shall not be required to provide any documentation
or information which is privileged or otherwise protected from disclosure. The Secretary of the Company shall, promptly upon receipt
of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification. Notwithstanding
the foregoing, any failure of Indemnitee to provide such a request to the Company, or to provide such a request in a timely fashion,
shall not relieve the Company of any liability that it may have to Indemnitee unless, and to the extent that, such failure actually
and materially prejudices the interests of the Company. (b) Upon
written request by Indemnitee for indemnification pursuant to the first sentence of Section 5(a) hereof, a determination
with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following four methods,
which shall be at the election of Indemnitee, in his sole discretion: (1) by a majority vote of the disinterested directors, even
though less than a quorum, (2) by a majority vote of a committee of disinterested directors designated by a majority vote of the
disinterested directors, even though less than a quorum, (3) if there are no disinterested directors or if a Change of Control
shall have occurred after the date hereof, by Independent Counsel in a written opinion to the Board, a copy of which shall be
delivered to the Indemnitee, or (4) by a simple majority of the stockholders of the Company voting on the matter. For purposes
hereof, disinterested directors are those members of the Board who are not parties to the Proceeding in respect of which indemnification
is sought by Indemnitee. "Change
of Control" shall mean the occurrence of any of the following: (a)
any “person,” as such term is currently used in Section 13(d) of the Securities Exchange Act of 1934, as amended (the
“1934 Act”) (a “person”), becomes a “beneficial owner” (as such term is currently used
in Rule 13d-3 promulgated under the 1934 Act (a “Beneficial Owner”) of 30% or more of the Voting Stock (as
defined below) of the Company; (b)
the Board of Directors of the Company adopts any plan of liquidation providing for the distribution of all or substantially all
of the Company’s assets; (c)
all or substantially all of the assets or business of the Company are disposed of in any one or more transactions pursuant to
a sale, merger, consolidation or other transaction (unless the shareholders of the Company immediately prior to such sale, merger,
consolidation or other transaction beneficially own, directly or indirectly, in substantially the same proportion as they owned
the Voting Stock of the Company, more than fifty percent (50%) of the Voting Stock or other ownership interests of the entity
or entities, if any, that succeed to the business of the Company); (d)
the Company combines with another company and is the surviving corporation but, immediately after the combination, the shareholders
of the Company immediately prior to the combination hold, directly or indirectly, fifty percent (50%) or less of the Voting Stock
of the combined company; or (e)
Continuing Directors cease to constitute at least a majority of the Board of Directors of the Company. “Voting
Stock” of any entity shall mean the issued and outstanding share capital or other securities of any class or classes
having general voting power under ordinary circumstances, in the absence of contingencies, to elect the members of the board of
directors (or members of a similar managerial body if such entity has no board of directors) of such entity. “Continuing
Director” means a director who either was a director of the Company on the Commencement Date or who became a director
of the Company subsequent thereto and whose election, or nomination for election by the Company’s shareholders, was approved
by a majority of the Continuing Directors then on the Board of Directors of the Company. (c) If
the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 5(b) hereof,
the Independent Counsel shall be selected as provided in this Section 5(c). The Independent Counsel shall be selected by
the Board. Indemnitee may, within 10 days after such written notice of selection shall have been given, deliver to the Company
a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent
Counsel so selected does not meet the requirements of “Independent Counsel” as defined in this Agreement, and
the objection shall set forth with reasonable particularity the factual basis of such assertion. Absent a proper and timely objection,
the person so selected shall act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel
selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such
objection is without merit. If, within 20 days after submission by Indemnitee of a written request for indemnification pursuant
to Section 5(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee
may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection
which shall have been made by the Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment
as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person
with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section
5(b) hereof. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent
Counsel in connection with acting pursuant to Section 5(b) hereof, and the Company shall pay all reasonable fees and expenses
(including those incurred by Indemnitee) incident to the procedures of this Section 5(c), regardless of the manner in which
such Independent Counsel was selected or appointed. (d) In
making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination
shall presume that Indemnitee is entitled to indemnification under this Agreement. Anyone seeking to overcome this presumption
shall have the burden of proof and the burden of persuasion by clear and convincing evidence. Neither the failure of the Company
(including by its directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant
to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct,
nor an actual determination by the Company (including by its directors or Independent Counsel) that Indemnitee has not met such
applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable
standard of conduct. (e) Indemnitee
shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise
(as hereinafter defined), including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise
in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports
made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected by the Enterprise.
In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall
not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement. Whether or not the
foregoing provisions of this Section 5(e) are satisfied, it shall in any event be presumed that Indemnitee has at all times
acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company or, with
respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful. Anyone seeking
to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence. (f) If
the person, persons or entity empowered or selected under Section 5 to determine whether Indemnitee is entitled to indemnification
shall not have made a determination within thirty (30) days after receipt by the Company of the request therefor, the requisite
determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification
absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s
statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification
under applicable law; provided, however, that such 30-day period may be extended for a reasonable time, not to exceed an additional
thirty (30) days, if the person, persons or entity making such determination with respect to entitlement to indemnification in
good faith requires such additional time to obtain or evaluate documentation and/or information relating thereto; and provided,
further, that the foregoing provisions of this Section 5(f) shall not apply if the determination of entitlement to indemnification
is to be made by the stockholders pursuant to Section 5(b) of this Agreement and if (A) within fifteen (15) days after
receipt by the Company of the request for such determination, the Board or the Disinterested Directors, if appropriate, resolve
to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within sixty
(60) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within
fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within
forty (40) days after having been so called and such determination is made thereat. (g) Indemnitee
shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to
indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information
which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably
necessary to such determination. Any Independent Counsel, member of the Board or stockholder of the Company shall act reasonably
and in good faith in making a determination regarding the Indemnitee’s entitlement to indemnification under this Agreement.
Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person,
persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s
entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom. (h) The
Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to
avoid expense, delay, distraction, disruption and uncertainty. In the event that any Proceeding to which Indemnitee is a party
is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such
Proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on
the merits or otherwise in such Proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the
burden of persuasion by clear and convincing evidence. (i) The
termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon
a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely
affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful. 6. Remedies
of Indemnitee. (a) In
the event that (i) a determination is made pursuant to Section 5 of this Agreement that Indemnitee is not entitled to indemnification
under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 4 of this Agreement, (iii) no
determination of entitlement to indemnification is made pursuant to Section 5(b) of this Agreement within 30 days after
receipt by the Company of the request for indemnification (subject to extension, as provided in Section 5(f)), (iv) payment
of indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request
therefor or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee
is entitled to indemnification or such determination is deemed to have been made pursuant to Section 5 of this Agreement,
Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent
jurisdiction, of Indemnitee’s entitlement to such indemnification. Indemnitee shall commence such proceeding seeking an
adjudication within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to
this Section 6(a). The Company shall not oppose Indemnitee’s right to seek any such adjudication. (b) In
the event that a determination shall have been made pursuant to Section 5(b) of this Agreement that Indemnitee is not entitled
to indemnification, any judicial proceeding commenced pursuant to this Section 6 shall be conducted in all respects as
a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section
5(b). (c) If
a determination shall have been made pursuant to Section 5(b) of this Agreement that Indemnitee is entitled to indemnification,
the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 6, absent
(i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s misstatement
not materially misleading in connection with the application for indemnification, or (ii) a prohibition of such indemnification
under applicable law. (d) In
the event that Indemnitee, pursuant to this Section 6, seeks a judicial adjudication of his rights under, or to recover
damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability insurance policies
maintained by the Company, the Company shall pay on his behalf, in advance within ten (10) days after the receipt by the Company
of a statement from Indemnitee requesting such payment, any and all expenses (of the types described in the definition of Expenses
in this Agreement) actually and reasonably incurred by him in such judicial adjudication, regardless of whether Indemnitee ultimately
is determined to be entitled to such indemnification, advancement of expenses or insurance recovery. (e) The
Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 6 that the procedures
and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company
is bound by all the provisions of this Agreement. The Company shall indemnify Indemnitee against any and all Expenses and, if
requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefore) advance, to
the extent not prohibited by law, such expenses to Indemnitee, which are incurred by Indemnitee in connection with any action
brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors'
and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined
to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be. (f) Notwithstanding
anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be
required to be made prior to the final disposition of the Proceeding. 7. Non-Exclusivity;
Survival of Rights; Insurance; Primacy of Indemnification; Subrogation. (a) The
rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee
may at any time be entitled under applicable law, the Certificate of Incorporation, the By-laws, any agreement, a vote of stockholders,
a resolution of directors of the Company, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision
hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such
Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in the DGCL, whether
by statute or judicial decision, permits greater indemnification than would be afforded currently under the Certificate of Incorporation,
By-laws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits
so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and
every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not
prevent the concurrent assertion or employment of any other right or remedy. (b) To
the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees,
or agents or fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise that such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies
in accordance with its or their terms to the maximum extent of the coverage available for any director, officer, employee, agent
or fiduciary under such policy or policies. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof,
the Company has directors' and officers' liability insurance in effect, the Company shall give prompt notice of the commencement
of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result
of such proceeding in accordance with the terms of such policies. (c) In
the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including
execution of such documents as are necessary to enable the Company to bring suit to enforce such rights. (d) The
Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the
extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise. (e) The
Company's obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company
as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses
from such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. 8. Exception
to Right of Indemnification. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this
Agreement to make any indemnity in connection with any claim made against Indemnitee: (a) for
which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except
with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or (b) for
an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within
the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of state statutory
law or common law; or (c) in
connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part
of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless
(i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation, (ii) the Company provides the
indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law or (iii) such Proceeding
is brought by Indemnitee to assert, interpret or enforce his rights under this Agreement. 9. Duration
of Agreement. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is
an officer or director of the Company (or is or was serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter so long as
Indemnitee shall be subject to any Proceeding (or any proceeding commenced under Section 6 hereof) by reason of his Corporate
Status, whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which
indemnification can be provided under this Agreement. This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger,
consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors
and personal and legal representatives. 10. Security.
To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security
to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other
collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of
the Indemnitee. 11. Enforcement. (a) The
Company expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it hereby
in order to induce Indemnitee to serve as an officer or director of the Company, and the Company acknowledges that Indemnitee
is relying upon this Agreement in serving as an officer or director of the Company. (b) This
Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes
all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter
hereof. (c)
The Company shall not seek from a court, or agree to, a "bar order" which would have the effect of prohibiting or limiting
the Indemnitee's rights to receive advancement of expenses under this Agreement. 12. Definitions.
For purposes of this Agreement: (a) “Corporate
Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company
or any subsidiary thereof or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise
that such person is or was serving at the express written request of the Company. (b) “Disinterested
Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification
is sought by Indemnitee and who is not subject to any other relationship that may reasonably prejudice such director's determination
as to the Indemnitee's entitlement to indemnification hereunder. (c) “Enterprise”
shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise
that Indemnitee is or was serving at the express written request of the Company as a director, officer, employee, agent or fiduciary. (d) “Expenses”
shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements
or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating,
participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide
discovery in any Proceeding. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding
and any federal, state, local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payments
under this Agreement, including without limitation the premium, security for, and other costs relating to any cost bond, supersede
as bond, or other appeal bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by Indemnitee
or the amount of judgments or fines against Indemnitee. (e) “Independent
Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither
presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material
to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under
similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable
standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee
in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees of the
Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and
damages arising out of or relating to this Agreement or its engagement pursuant hereto. (f) “Proceeding”
includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation,
inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of
the Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be
involved as a party or otherwise, by reason of his or his Corporate Status, by reason of any action taken by him or of any inaction
on his part while acting in his Corporate Status; in each case whether or not he is acting or serving in any such capacity at
the time any liability or expense is incurred for which indemnification can be provided under this Agreement; including one pending
on or before the date of this Agreement, but excluding one initiated by an Indemnitee pursuant to Section 6 of this Agreement
to enforce his rights under this Agreement. 13. Severability.
The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other
provision. Without limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee indemnification
rights to the fullest extent permitted by applicable laws. In the event any provision hereof conflicts with any applicable law,
such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict. 14. Modification
and Waiver. No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing
by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 15. Notice
By Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise receiving any
summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may
be subject to indemnification covered hereunder. The failure to so notify the Company shall not relieve the Company of any obligation
which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially
prejudices the Company. 16. Notices.
All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively
given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent
during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after
having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications
shall be sent to Indemnitee at the address set forth below Indemnitee signature hereto, and to the Company, at its principal executive
offices to the attention of the President, or to such other address as may have been furnished to Indemnitee by the Company or
to the Company by Indemnitee, as the case may be. 17. Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same Agreement. This Agreement may also be executed and delivered by facsimile signature and in two
or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 18. Headings.
The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part
of this Agreement or to affect the construction thereof. 19. Governing
Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties with respect to the subject matter
of this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without
regard to its conflict of laws rules. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action
or proceeding arising out of or in connection with this Agreement shall be brought only in the Chancery Court of the State of
Delaware (the “Delaware Court”), and not in any other state or federal court in the United States of America
or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of
any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue
of any such action or proceeding in the Delaware Court, and (iv) waive, and agree not to plead or to make, any claim that any
such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum. SIGNATURE
PAGE TO FOLLOW
IN
WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement on and as of the day and year first above written. 15 Exhibit
31.1 CERTIFICATION
OF PRINCIPAL EXECUTIVE OFFICER PURSUANT
TO RULE 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED I,
Nadav Kidron, certify that: 1.
I have reviewed this quarterly report on Form 10-Q of Oramed Pharmaceuticals Inc.; 2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report; 3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report; 4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board
of directors (or persons performing the equivalent functions): /s/
Nadav Kidron Exhibit
31.2 CERTIFICATION
OF PRINCIPAL FINANCIAL OFFICER PURSUANT
TO RULE 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED I,
Yifat Zommer, certify that: 1.
I have reviewed this quarterly report on Form 10-Q of Oramed Pharmaceuticals Inc.; 2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report; 3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report; 4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: 5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board
of directors (or persons performing the equivalent functions): /s/
Yifat Zommer Exhibit
32.1 CERTIFICATION
OF PRINCIPAL EXECUTIVE OFFICER PURSUANT
TO 18 U.S.C. SECTION 1350 In
connection with the quarterly report of Oramed Pharmaceuticals Inc., or the Company, on Form 10-Q for the period ended November
30, 2016 as filed with the Securities and Exchange Commission on the date hereof, or the Report, I, Nadav Kidron, President and
Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, that to my knowledge: /s/
Nadav Kidron Exhibit
32.2 CERTIFICATION
OF PRINCIPAL FINANCIAL OFFICER PURSUANT
TO 18 U.S.C. SECTION 1350 In
connection with the quarterly report of Oramed Pharmaceuticals Inc., or the Company, on Form 10-Q for the period ended November
30, 2016 as filed with the Securities and Exchange Commission on the date hereof, or the Report, I, Yifat Zommer, Chief Financial
Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, that to my knowledge: /s/
Yifat Zommer
*
Filed
herewith
**
Furnished
herewith 22
ORAMED
PHARMACEUTICALS INC.
Date: January
11, 2017
By:
/s/
Nadav Kidron
Nadav
Kidron
President
and Chief Executive Officer
Date: January
11, 2017
By:
/s/ Yifat
Zommer
Yifat
Zommer
Chief
Financial Officer
(principal
financial and accounting officer)
1. Amendment
to Section 6. Section 6 of the Original Agreement is hereby amended and restated
in its entirety to read as follows:
2. Amendment
to Section 8. Section 6 of the Original Agreement is hereby amended and restated
in its entirety to read as follows:
3. Ratification.
As amended hereby, the Service Agreement is ratified and confirmed and all other terms
and conditions remain in full force and effect.
ORAMED
LTD.
KNRY
LTD.
Per:
/s/
Yifat Zommer
/s/
Nadav Kidron
Name:
Yifat
Zommer
Name:
Nadav
Kidron
Title:
Chief
Financial Officer and Secretary
Oramed Ltd.
/s/
Nadav Kidron
Nadav Kidron, CEO
/s/
Yifat Zommer
Yifat Zommer
2 3 4 5 6 7 8 9 10 11 12 13 14
COMPANY
ORAMED
PHARMACEUTICALS INC.
By:
/s/
Nadav Kidron
Name:
Nadav
Kidron
Title:
Chief
Executive Officer
INDEMNITEE
/s/ Kevin Rakin
Name:
Kevin Rakin
Address:
36 Church Lane, Westport, CT 06880, USA
a)
Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b)
Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based
on such evaluation; and
d)
Disclosed
in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
a)
All significant deficiencies and material weaknesses
in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: January
11, 2017
Nadav
Kidron
President and Chief Executive Officer
a)
Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b)
Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based
on such evaluation; and
d)
Disclosed
in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
a)
All significant deficiencies and material weaknesses
in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant’s internal control over financial reporting.
Dated: January
11, 2017
Yifat
Zommer
Chief Financial Officer
(1)
The
Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and
(2)
The
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company.
Dated: January
11, 2017
Nadav
Kidron
President and Chief Executive Officer
(1)
The
Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and
(2)
The
information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company.
Dated: January
11, 2017
Yifat
Zommer
Chief Financial Officer