Nevada
(State
or other jurisdiction
of
incorporation or organization)
|
2834
(Primary
Standard Industrial
Classification
Code Number)
|
98-0376008
(I.R.S.
Employer
Identification
No.)
|
Eliezer
M. Helfgott, Esq.
Blank
Rome LLP
405
Lexington Avenue
New
York, NY 10174
Telephone:
(212) 885-5431
Facsimile:
(917) 332-3065
|
Adam
M. Klein, Adv.
Goldfarb,
Levy, Eran, Meiri, Tzafrir & Co.
2
Weizmann Street
Tel-Aviv
64239, Israel
Telephone:
972-3-608-9947
Facsimile:
972-3-608-9855
|
Large
accelerated filer: ¨
|
Accelerated
filer: ¨
|
Non-accelerated
filer: ¨
|
Smaller
reporting company: x
|
(Do
not check if a smaller reporting company)
|
CALCULATION OF REGISTRATION FEE
|
|||||||||||||||
Title of each Class of
Security being registered
|
Amount being
Registered
|
Proposed
Maximum
Offering Price
Per Security
(1)
|
Proposed
Maximum
Aggregate
Offering
Price
|
Amount of
Registration
Fee
|
|||||||||||
Common
Stock
|
24,000,000
Shares
|
$ | 0.42 | (2) | $ | 10,080,000 | $ | 719 | |||||||
Warrants
|
12,000,000
Warrants
|
— | — | — | (3) | ||||||||||
Shares
of Common Stock underlying the Warrants
|
12,000,000
Shares
|
$ | 1.20 | (4) | $ | 14,400,000 | $ | 1,063 | |||||||
Placement
Agent Warrants
|
2,520,000
Warrants
|
(5) | $ | — | — | — | (3) | ||||||||
Shares
of Common Stock underlying the Placement Agent Warrants
|
2,520,000
Shares
|
$ | 0.42 | (2) | $ | 1,058,400 | $ | 76 | |||||||
Total:
|
$ | 1,858 |
(1)
|
Pursuant
to Rule 416(a) under the Securities Act of 1933, as amended (the “Act”),
this registration statement shall be deemed to cover any additional number
of shares of common stock as may be issued from time to time upon
conversion of the warrants to prevent dilution as a result of stock
splits, stock dividends or similar transactions. No additional
consideration will be received for the common stock, and therefore no
registration fee is required pursuant to Rule
457(i).
|
(2)
|
Estimated
in accordance with Rule 457(c) under the Act, solely for the purpose of
calculating the registration fee, based on the average bid and ask price
of our common stock on January 4, 2010, as reported on the OTC Bulletin
Board.
|
(3)
|
No
registration fee is required pursuant to Rule 457(g) under the
Act.
|
(4)
|
Estimated
solely for the purpose of calculating the registration fee pursuant to
Rule 457(g) under the Act, based on an exercise price of $1.20 per
share.
|
(5)
|
Represents
the maximum number of warrants to purchase our common stock that may be
issued to the placement agent in connection with the public
offering.
|
Public offering price
|
Placement agents’ fees(1)
|
Proceeds to us before
expenses
|
||||||||||
Per
Share
|
$ | _______ | $ | _______ | $ | _______ | ||||||
Per
Warrant
|
$ | _______ | $ | _______ | $ | _______ | ||||||
Total
|
$ | _______ | $ | _______ | $ | _______ |
Page
|
||||
Prospectus
Summary
|
1 | |||
Risk
Factors
|
5 | |||
Forward-Looking
Statements
|
14 | |||
Use
of Proceeds
|
14 | |||
Market
Price and Dividends
|
15 | |||
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
16 | |||
Our
Business
|
22 | |||
Description
of Property
|
30 | |||
Legal
Proceedings
|
31 | |||
Management
|
31 | |||
Executive Compensation
|
33 | |||
Security
Ownership of Certain Beneficial Owners and Management
|
37 | |||
Certain
Relationships and Related Transactions, and Director
Independence
|
39 | |||
Description
of Common Stock
|
40 | |||
Description
of Warrants
|
41 | |||
Plan
of Distribution
|
42 | |||
Disclosure
of Commission Position of Indemnification for Securities Act
Liabilities
|
43 | |||
Interests
of Named Experts and Counsel
|
43 | |||
Experts
|
43 | |||
Where
You Can Find More Information
|
44 | |||
Index
to Financial Statements
|
F-1 |
Issuer
|
Oramed
Pharmaceuticals Inc.
Hi-Tech
Park 2/5
Givat-Ram,
PO Box 39098
Jerusalem
91390, Israel
Telephone:
972-2-566-0001
|
|
Securities
offered
|
24,000,000
shares of common stock and warrants exercisable into 12,000,000 shares of
common stock1.
|
|
Absence
of a Public
Market
for the
Warrants
|
The
warrants offered in this prospectus are not traded on any public market
and we do not expect that there will be a public market in the foreseeable
future.
|
|
Trading
Market
|
The
common stock offered in this prospectus is quoted on the OTCBB under the
symbol “ORMP.OB”.
|
|
Common
stock
outstanding
(as of
January
10, 2010)
|
57,454,707
shares2.
|
|
Use
of Proceeds
|
We
will receive net proceeds of approximately $______ from the sale of the
shares of common stock and warrants and up to approximately $_______ from
the exercise of such warrants, to the extent they are
exercised. These proceeds are expected to be used to fully fund
our planned research and development activities in the fiscal year ending
August 31, 2010 as well as some of our other general and administrative
costs. See “Use of
Proceeds.”
|
|
Plan
of Distribution
|
We
have entered into a placement agent agreement with ___________________,
pursuant to which it has agreed to act as a non-exclusive placement agent
for us in connection with this offering. See “Plan of
Distribution.”
|
|
Risk
Factors
|
Please
read “Risk
Factors” and other information included in this prospectus for a
discussion of factors you should carefully consider before deciding to
invest in the securities offered in this
prospectus.
|
·
|
Clinical
trial results,
|
·
|
The
amount of cash resources and ability to obtain additional
funding,
|
|
·
|
Announcements
of research activities, business developments, technological innovations
or new products by companies or their
competitors,
|
·
|
Entering
into or terminating strategic
relationships,
|
·
|
Changes
in government regulation,
|
·
|
Departure
of key personnel,
|
·
|
Disputes
concerning patents or proprietary
rights,
|
·
|
Changes
in expense level,
|
·
|
Future
sales of our equity or equity-related
securities,
|
|
·
|
Public
concern regarding the safety, efficacy or other aspects of the products or
methodologies being developed,
|
·
|
Activities
of various interest groups or
organizations,
|
·
|
Media
coverage, and
|
·
|
Status
of the investment markets.
|
·
|
Control
of the market for the security by one or a few
broker-dealers;
|
·
|
“Boiler
room” practices involving high-pressure sales
tactics;
|
·
|
Manipulation
of prices through prearranged matching of purchases and
sales;
|
·
|
The
release of misleading information;
|
·
|
Excessive
and undisclosed bid-ask differentials and markups by selling
broker-dealers; and
|
|
·
|
Dumping
of securities by broker-dealers after prices have been manipulated to a
desired level, which hurts the price of the stock and causes investors to
suffer loss.
|
High
|
Low
|
|||||||
Fiscal
Year Ending August 31, 2010
|
||||||||
First
Quarter
|
$ | 0.64 | $ | 0.43 | ||||
Second
Quarter (through January 8, 2010)
|
$ | 0.48 | $ | 0.37 | ||||
Year
Ended August 31, 2009
|
||||||||
First
Quarter
|
$ | 0.76 | $ | 0.36 | ||||
Second
Quarter
|
$ | 0.52 | $ | 0.25 | ||||
Third
Quarter
|
$ | 0.62 | $ | 0.20 | ||||
Fourth
Quarter
|
$ | 0.59 | $ | 0.40 | ||||
Year
Ended August 31, 2008
|
||||||||
First
Quarter
|
$ | 0.48 | $ | 0.23 | ||||
Second
Quarter
|
$ | 0.67 | $ | 0.21 | ||||
Third
Quarter
|
$ | 0.66 | $ | 0.45 | ||||
Fourth
Quarter
|
$ | 1.00 | $ | 0.60 |
Year
ended
|
||||||||
Operating
Data:
|
August
31, 2009
|
August
31, 2008
|
||||||
Research
and development expenses
|
$ | 1,522,188 | $ | 1,210,494 | ||||
General
and administrative expenses
|
1,261,930 | 1,469,517 | ||||||
Financial
income, net
|
(21,047 | ) | (72,904 | ) | ||||
Loss
before taxes on income
|
(2,763,071 | ) | (2,607,107 | ) | ||||
Taxes
on income
|
(2,597 | ) | 162,164 | |||||
Net
loss for the period
|
$ | (2,760,474 | ) | $ | (2,769,271 | ) | ||
Loss
per common share – basic and diluted
|
$ | (0.05 | ) | $ | (0.06 | ) | ||
Weighted
average common shares outstanding
|
56,645,820 | 48,604,889 |
Category
|
Amount
|
|||
Research
& Development, net of OCS funds
|
$ | 3,112,000 | ||
General
& Administrative expenses
|
1,511,000 | |||
Finance
income, net
|
10,000 | |||
Taxes
on income
|
13,000 | |||
Total
|
$ | 4,626,000 |
Name
|
Age
|
Position
|
||
Nadav
Kidron
|
35
|
President,
Chief Executive Officer and Director
|
||
Miriam
Kidron
|
69
|
Chief
Medical and Technology Officer and Director
|
||
Leonard
Sank
|
44
|
Director
|
||
Harold
Jacob
|
55
|
Director
and member of the Scientific Advisory Board
|
||
Yifat
Zommer
|
36
|
Chief
Financial Officer, Treasurer and
Secretary
|
Name and Principal
Position
|
Year
(1)
|
Salary
($)
|
Option Awards
($)(2)
|
All Other
Compensation
($)(3)
|
Total
($)
|
|||||||||||||
Nadav
Kidron
|
2009
|
155,359 | 153,855 | 15,474 | 324,688 | |||||||||||||
President
and CEO and director (4)
|
2008
|
151,037 | 216,504 | 14,511 | 382,053 | |||||||||||||
Miriam
Kidron
|
2009
|
154,983 | 153,855 | 11,539 | 320,377 | |||||||||||||
Chief
Medical and Technology Officer and director (5)(6)
|
2008
|
145,405 | 216,504 | 10,774 | 372,683 | |||||||||||||
Yifat
Zommer
|
2009
|
20,468 | 19,946 | 11,245 | 51,659 | |||||||||||||
CFO
and Secretary (7)
|
||||||||||||||||||
Chaime
Orlev
|
2009
|
59,300 | — | 25,544 | 84,844 | |||||||||||||
CFO
and Secretary (8)
|
2008
|
23,484 | — | 7,981 | 31,466 |
(1)
|
The
information is provided for each fiscal year which begins on September 1
and ends on August 31.
|
(2)
|
The amounts
reflect the compensation expense in accordance with FAS 123(R) of these
option awards. The assumptions used to determine the fair value of the
option awards for fiscal years ended August 31, 2009 and 2008 are set
forth in the notes to our audited consolidated financial statements
included in our Form 10-K for fiscal year ended August 31, 2009. Our Named
Executive Officers will not realize the value of these awards in cash
unless and until these awards are exercised and the underlying shares
subsequently sold.
|
(3)
|
See
All Other Compensation Table below.
|
(4)
|
Mr.
Kidron was appointed as our President, CEO and Director on March 8, 2006
and received compensation from our subsidiary through KNRY, an Israeli
entity owned by Mr. Kidron. See “Employment and Consulting
Agreements.”
|
(5)
|
Dr.
Kidron was appointed as our Chief Medical and Technology Officer and
Director on March 8, 2006 and received compensation from our subsidiary
through KNRY, an Israeli entity owned by Mr. Kidron. See “Employment and
Consulting Agreements.”
|
(6)
|
See “Certain
Relationships and Related Transactions and Director Independence” for a
description of management fees received by Dr. Kidron from
Hadasit.
|
(7)
|
Ms.
Zommer was appointed as our CFO and Secretary on April 19,
2009.
|
(8)
|
Mr.
Orlev served as our CFO and Secretary from May 1, 2008 through March 31,
2009.
|
Name
|
Year
|
Automobile
Related
Expenses
($)
|
Manager’s
Insurance *
($)
|
Education
Fund*
($)
|
Total
($)
|
|||||||||||||
Nadav
Kidron
|
2009
|
15,474 | — | — | 15,474 | |||||||||||||
Miriam
Kidron
|
2009
|
11,539 | — | — | 11,539 | |||||||||||||
Chaime
Orlev
|
2009
|
15,662 | 7,762 | 2,120 | 25,544 | |||||||||||||
Yifat
Zommer
|
2009
|
6,540 | 3,163 | 1,542 | 11,245 |
Name
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
||||||||||
Nadav
Kidron
|
850,000 |
(1)
|
— | 0.45 |
08/01/12
|
|||||||||
720,000 |
(2)
|
144,000 |
(2)
|
0.54 |
05/06/18
|
|||||||||
Miriam
Kidron
|
3,361,360 |
(3)
|
— | 0.001 |
08/13/12
|
|||||||||
850,000 |
(1)
|
— | 0.45 |
08/01/12
|
||||||||||
720,000 |
(2)
|
144,000 |
(2)
|
0.54 |
05/06/18
|
|||||||||
Yifat
Zommer
|
— | 400,000 |
(4)
|
0.47 |
10/19/19
|
(1)
|
On
August 2, 2007, 850,000 options were granted to each of Nadav Kidron and
Miriam Kidron under the 2006 Stock Option Plan at an exercise price of
$0.45 per share; the options vested immediately and have an expiration
date of August 2, 2012.
|
(2)
|
On
May 7, 2008, 864,000 options were granted to each of Nadav Kidron and
Miriam Kidron under the 2008 Stock Option Plan at an exercise price of
$0.54 per share, 144,000 of such options vested immediately on the date of
grant and the remainder will vest in twenty equal monthly installments,
commencing on June 7, 2008. The options have an expiration date of May 7,
2018.
|
(3)
|
On
August 14, 2007 3,361,630 stock options were granted to Miriam Kidron, at
an exercise price of $0.001 per share; the options vested immediately and
have an expiration date of August 14, 2012. These options were not issued
pursuant to any outstanding award
plans.
|
(4)
|
On
June 3, 2009, 400,000 options were granted to Yifat Zommer under the 2008
Stock Option Plan at an exercise price of $0.47 per share. The options
vest in three equal annual installments, commencing October 19, 2010, and
expire on October 19, 2019.
|
Name of Director
|
Fees Earned or
Paid in Cash
($)
|
Option Awards
(1)
($)
|
Total
($)
|
|||||||||
Nadav
Kidron (2)
|
||||||||||||
Miriam
Kidron (2)
|
||||||||||||
Leonard
Sank
|
8,000 | 45,206 | 53,206 | |||||||||
Harold
Jacob
|
8,000 | 45,206 | 53,206 |
(1)
|
The
amounts reflect the compensation expense in accordance with FAS 123(R) of
these option awards. The assumptions used to determine the fair value of
the option awards are set forth in Note 8 of our audited consolidated
financial statements included in this prospectus. Our directors will not
realize the value of these awards in cash unless and until these awards
are exercised and the underlying shares subsequently
sold.
|
(2)
|
Please
refer to the summary compensation table for executive compensation with
respect to the named
individual.
|
Name and Address of
Beneficial Owner
|
Number of Shares
|
Percentage of Shares
Beneficially Owned
|
||||||
Nadav
Kidron †‡
10
Itamar Ben Avi St.
Jerusalem,
Israel
|
12,085,735 |
(1)
|
20.43 | % | ||||
Zeev
Bronfeld
6
Uri St.
Tel-Aviv,
Israel
|
6,158,517 | 10. 72 | % | |||||
Miriam
Kidron †‡
2
Elza St.
Jerusalem,
Israel
|
5,075,360 |
(2)
|
8.12 | % | ||||
Apollo
Nominees Inc
One
Financial Place Suite 100 Lower Collymore Rock
St.
Michael, Barbados
|
4,517,501 |
(3)
|
7.64 | % | ||||
Hadasit
Medical Research Services & Development Ltd
P.O.
Box 12000
Jerusalem,
Israel
|
4,141,532 | 7.21 | % | |||||
Leonard
Sank †
3
Blair Rd Camps Bay
Cape
Town, South Africa
|
4,082,650 |
(4)
|
6.90 | % | ||||
Harold
Jacob
Haadmur
Mebuyon 26
Jerusalem,
Israel
|
200,000 |
(5)
|
0.17 | % | ||||
Yifat
Zommer
P.O.
Box 39098,
Jerusalem,
Israel
|
— | — | ||||||
All
current executive officers and directors, as a group (five
persons)
|
36,261,295 |
(6)
|
61.36 | % |
*
|
Less
than 1%
|
†
|
Indicates
Director
|
‡
|
Indicates
Officer
|
(1)
|
Includes
1,714,000 shares of common stock issuable upon the exercise of outstanding
stock options.
|
(2)
|
Includes
5,075,360 shares of common stock issuable upon the exercise of outstanding
stock options.
|
(3)
|
Includes
1,645,834 shares of common stock issuable upon the exercise of warrants
beneficially owned by the referenced
entity.
|
(4)
|
Includes
1,725,000 shares of common stock issuable upon the exercise of warrants
beneficially owned by the referenced
entity.
|
(5)
|
Consists
of 200,000 shares of common stock issuable upon the exercise of
outstanding stock options.
|
(6)
|
Includes
11,193,527 shares of common stock issuable upon the exercise of
outstanding stock options.
|
Page
|
||
REPORT
OF INDEPENDENT REGISTERED PUBLIC
|
||
ACCOUNTING
FIRM - Report of Kesselman & Kesselman
|
F-2
|
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC
|
||
ACCOUNTING
FIRM - Report of Malone & Bailey, PC
|
F-3
|
|
CONSOLIDATED
FINANCIAL STATEMENTS:
|
||
Balance
Sheets
|
F-4
|
|
Statements
of Operations
|
F-5
|
|
Statements
of Changes in Stockholders’ Equity
|
F-6
|
|
Statements
of Cash Flows
|
F-7
|
|
Notes
to Financial Statements
|
F-8
|
Kesselman
& Kesselman
|
Tel
Aviv, Israel
|
November
25, 2009
|
August 31
|
||||||||
2009
|
2008
|
|||||||
Assets
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
and cash equivalents
|
$ | 1,716,866 | $ | 2,267,320 | ||||
Short
term investments (Note 2)
|
1,000,000 | 2,728,000 | ||||||
Restricted
cash (Note 1n)
|
16,000 | |||||||
Accounts
receivable - other
|
36,939 | 38,822 | ||||||
Prepaid
expenses
|
4,119 | 363,752 | ||||||
Grants
receivable from the Chief Scientist
|
400,405 | |||||||
Total
current assets
|
3,174,329 | 5,397,894 | ||||||
LONG TERM
DEPOSITS (Note 6b)
|
12,161 | 10,824 | ||||||
PROPERTY AND
EQUIPMENT, NET (Note 4)
|
75,361 | 98,296 | ||||||
Total
assets
|
$ | 3,261,851 | $ | 5,507,014 | ||||
Liabilities
and stockholders' equity
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Accounts
payable and accrued expenses (note 9)
|
$ | 321,344 | $ | 736,052 | ||||
Account
payable with former shareholder
|
47,252 | 47,252 | ||||||
Total
current liabilities
|
368,596 | 783,304 | ||||||
PROVISION
FOR UNCERTAIN TAX POSITION (Note 12f)
|
147,063 | 130,650 | ||||||
COMMITMENTS
(Note 6)
|
||||||||
STOCKHOLDERS’
EQUITY:
|
||||||||
Common
stock, $ 0.001 par value (200,000,000 authorized shares; 56,456,710 and
56,252,806 shares issued and outstanding as of August 31, 2009 and 2008,
respectively)
|
56,456 | 56,252 | ||||||
Additional
paid-in capital
|
12,698,414 | 11,785,012 | ||||||
Deficit
accumulated during the development stage
|
(10,008,678 | ) | (7,248,204 | ) | ||||
Total
stockholders' equity
|
2,746,192 | 4,593,060 | ||||||
Total
liabilities and stockholders’ equity
|
$ | 3,261,851 | $ | 5,507,014 |
Period
|
||||||||||||
from April
|
||||||||||||
12, 2002
|
||||||||||||
(inception)
|
||||||||||||
Year ended
|
through
|
|||||||||||
August 31
|
August 31,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
RESEARCH AND
DEVELOPMENT EXPENSES, NET (Note 10)
|
$ | 1,522,188 | $ | 1,210,494 | $ | 5,144,859 | ||||||
IMPAIRMENT
OF INVESTMENT
|
434,876 | |||||||||||
GENERAL
AND ADMINISTRATIVE
|
||||||||||||
EXPENSES
(note 11)
|
1,261,930 | 1,469,517 | 4,257,551 | |||||||||
OPERATING
LOSS
|
2,784,118 | 2,680,011 | 9,837,286 | |||||||||
FINANCIAL
INCOME
|
(38,602 | ) | (83,185 | ) | (136,108 | ) | ||||||
FINANCIAL
EXPENSE
|
17,555 | 10,281 | 147,933 | |||||||||
LOSS
BEFORE TAXES ON INCOME
|
2,763,071 | 2,607,107 | 9,849,111 | |||||||||
TAXES ON
INCOME (note 12)
|
(2,597 | ) | 162,164 | 159,567 | ||||||||
NET
LOSS FOR THE PERIOD
|
$ | 2,760,474 | $ | 2,769,271 | $ | 10,008,678 | ||||||
BASIC
AND DILUTED LOSS PER
|
||||||||||||
COMMON
SHARE
|
$ | (0.05 | ) | $ | (0.06 | ) | ||||||
WEIGHTED
AVERAGE NUMBER OF COMMON
|
||||||||||||
STOCK
USED IN COMPUTING BASIC AND
|
||||||||||||
DILUTED
LOSS PER COMMON STOCK
|
56,645,820 | 48,604,889 |
Deficit
|
||||||||||||||||||||
accumulated
|
||||||||||||||||||||
Additional
|
during the
|
Total
|
||||||||||||||||||
Common Stock
|
paid-in
|
development
|
stockholders'
|
|||||||||||||||||
Shares
|
$
|
capital
|
stage
|
equity
|
||||||||||||||||
BALANCE AS OF
APRIL 12, 2002 (inception)
|
34,828,200 | $ | 34,828 | $ | 18,872 | $ | 53,700 | |||||||||||||
CHANGES
DURING THE PERIOD FROM
APRIL 12, 2002 THROUGH AUGUST 31, 2007
(audited):
|
||||||||||||||||||||
SHARES
CANCELLED
|
(19,800,000 | ) | (19,800 | ) | 19,800 | - | ||||||||||||||
SHARES
ISSUED FOR INVESTMENT IN ISTI-NJ
|
1,144,410 | 1,144 | 433,732 | 434,876 | ||||||||||||||||
SHARES
ISSUED FOR OFFERING COSTS
|
1,752,941 | 1,753 | (1,753 | ) | - | |||||||||||||||
SHARES
ISSUED FOR CASH
|
27,181,228 | 27,181 | 2,095,800 | 2,122,981 | ||||||||||||||||
SHARES
ISSUED FOR SERVICES
|
125,000 | 125 | 98,625 | 98,750 | ||||||||||||||||
STOCK
BASED COMPENSATION RELATED TO OPTIONS GRANTED TO EMPLOYEES AND
DIRECTORS
|
1,968,547 | 1,968,547 | ||||||||||||||||||
STOCK
BASED COMPENSATION RELATED TO OPTIONS GRANTED TO
CONSULTANTS
|
177,782 | 177,782 | ||||||||||||||||||
DISCOUNT
ON CONVERTIBLE NOTE RELATED TO BENEFICIAL CONVERSION
FEATURE
|
108,000 | 108,000 | ||||||||||||||||||
CONTRIBUTIONS
TO PAID IN CAPITAL
|
18,991 | 18,991 | ||||||||||||||||||
COMPREHENSIVE
LOSS:
|
||||||||||||||||||||
NET
LOSS
|
(4,478,917 | ) | (4,478,917 | ) | ||||||||||||||||
OTHER
COMPREHENSIVE LOSS
|
(16 | ) | (16 | ) | ||||||||||||||||
IMPUTED
INTEREST
|
8,437 | 8,437 | ||||||||||||||||||
BALANCE
AS OF AUGUST 31, 2007
|
45,231,779 | 45,231 | 4,946,833 | (4,478,933 | ) | 513,131 | ||||||||||||||
RECEIPTS
ON ACCOUNT OF SHARES
AND
WARRANTS
|
6,061 | 6,061 | ||||||||||||||||||
SHARES
ISSUED FOR CONVERSION OF CONVERTIBLE NOTE
|
550,000 | 550 | 274,450 | 275,000 | ||||||||||||||||
SHARES
AND WARRANTS ISSUED FOR CASH – NET OF ISSUANCE EXPENSES
|
10,178,002 | 10,178 | 5,774,622 | 5,784,800 | ||||||||||||||||
SHARES
ISSUED FOR SERVICES
|
293,025 | 293 | 115,817 | 116,110 | ||||||||||||||||
STOCK
BASED COMPENSATION RELATED TO OPTIONS GRANTED TO EMPLOYEES AND
DIRECTORS
|
459,467 | 459,467 | ||||||||||||||||||
STOCK
BASED COMPENSATION RELATED TO OPTIONS GRANTED TO
CONSULTANTS
|
203,982 | 203,982 | ||||||||||||||||||
IMPUTED
INTEREST
|
3,780 | 3,780 | ||||||||||||||||||
NET
LOSS
|
(2,769,271 | ) | (2,769,271 | ) | ||||||||||||||||
BALANCE
AS OF AUGUST 31, 2008
|
56,252,806 | 56,252 | 11,785,012 | (7,248,204 | ) | 4,593,060 | ||||||||||||||
SHARES
ISSUED FOR SERVICES RENDERED
|
203,904 | 204 | 152,724 | 152,928 | ||||||||||||||||
SHARES
TO BE ISSUED FOR SERVICES RENDERED
|
203,699 | 203,699 | ||||||||||||||||||
STOCK
BASED COMPENSATION RELATED TO OPTIONS GRANTED TO EMPLOYEES AND
DIRECTORS
|
436,025 | 436,025 | ||||||||||||||||||
STOCK
BASED COMPENSATION RELATED TO OPTIONS GRANTED TO
CONSULTANTS
|
117,174 | 117,174 | ||||||||||||||||||
IMPUTED
INTEREST
|
3,780 | 3,780 | ||||||||||||||||||
NET
LOSS
|
(2,760,474 | ) | (2,760,474 | ) | ||||||||||||||||
BALANCE
AS OF AUGUST 31, 2009
|
56,456,710 | $ | 56,456 | $ | 12,698,414 | $ | (10,008,678 | ) | $ | 2,746,192 |
Period from April
12, 2002
(inception date)
through
|
||||||||||||
Year ended August 31
|
August 31,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
loss
|
$ | (2,760,474 | ) | $ | (2,769,271 | ) | $ | (10,008,678 | ) | |||
Adjustments
required to reconcile net loss to net cash used in operating
activities:
|
||||||||||||
Depreciation
and amortization
|
30,488 | 15,454 | 45,942 | |||||||||
Amortization
of debt discount
|
108,000 | |||||||||||
Exchange
differences on long term deposits
|
641 | (1,642 | ) | (1,001 | ) | |||||||
Stock
based compensation
|
553,199 | 663,449 | 3,362,977 | |||||||||
Common
stock issued for services
|
152,928 | 116,110 | 367,788 | |||||||||
Common
stock to be issued for services
|
203,699 | 203,699 | ||||||||||
Impairment
of investment
|
434,876 | |||||||||||
Imputed
interest
|
3,780 | 3,780 | 15,997 | |||||||||
Changes
in operating assets and liabilities:
|
||||||||||||
Prepaid
expenses and other current assets
|
(38,889 | ) | (390,668 | ) | (441,463 | ) | ||||||
Restricted
cash
|
(16,000 | ) | (16,000 | ) | ||||||||
Accounts
payable and accrued expenses
|
(414,708 | ) | 395,180 | 321,344 | ||||||||
Provision
for uncertain tax position
|
16,413 | 130,650 | 147,063 | |||||||||
Total
net cash used in operating activities
|
(2,268,923 | ) | (1,836,958 | ) | (5,459,456 | ) | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Purchase
of property and equipment
|
(7,553 | ) | (112,014 | ) | (121,303 | ) | ||||||
Short
term investments
|
(1,000,000 | ) | (2,728,000 | ) | (3,728,000 | ) | ||||||
Proceeds
from sale of short term investments
|
2,728,000 | 2,728,000 | ||||||||||
Lease
deposits, net
|
(1,978 | ) | (3,738 | ) | (11,160 | ) | ||||||
Total
net cash provided by (used in) investing activities
|
1,718,469 | (2,843,752 | ) | (1,132,463 | ) | |||||||
CASH
FLOWS FROM FINANCING
|
||||||||||||
ACTIVITIES:
|
||||||||||||
Proceeds
from sales of common stocks and warrants
- net of issuance expenses
|
5,029,801 | 7,961,481 | ||||||||||
Receipts
on account of shares issuances
|
6,061 | |||||||||||
Proceeds
from convertible notes
|
275,000 | |||||||||||
Proceeds
from short term note payable
|
120,000 | |||||||||||
Payments
of short term note payable
|
(120,000 | ) | ||||||||||
Shareholder
advances
|
66,243 | |||||||||||
Net
cash provided by financing activities
|
5,029,801 | 8,308,785 | ||||||||||
INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
(550,454 | ) | 349,091 | (550,454 | ) | |||||||
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
2,267,320 | 1,918,229 | ||||||||||
CASH
AND CASH EQUIVALENTS AT END OF
|
||||||||||||
PERIOD
|
$ | 1,716,866 | $ | 2,267,320 | $ | 1,716,866 | ||||||
Non
cash investing and financing activities:
|
||||||||||||
Receipts
on account of shares issuance - reclassified from liability to
shareholder's equity
|
$ | 6,061 | ||||||||||
Stock
issued for receipts on account of shares issuance and convertible
notes
|
$ | 1,030,000 | ||||||||||
Discount
on convertible note related to beneficial conversion
feature
|
$ | 108,000 | ||||||||||
Shares
issued for offering costs
|
$ | 1,753 | ||||||||||
Contribution
to paid in capital
|
$ | 18,991 |
|
a.
|
General:
|
|
b.
|
Accounting
principles
|
|
The
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles in the United States of America
(“U.S.
GAAP”).
|
|
c.
|
Use
of estimates in the preparation of financial
statements
|
|
d.
|
Functional
currency
|
|
e.
|
Principles
of consolidation
|
|
f.
|
Property
and equipment
|
%
|
||
Computers
and peripheral equipment
|
33
|
|
Office
furniture and equipment
|
15-33
|
|
g.
|
Income
taxes
|
1.
|
Deferred
taxes
|
2.
|
Uncertainty
in income tax
|
|
h.
|
Research
and development
|
|
i.
|
Cash
equivalents
|
|
j.
|
Comprehensive
loss
|
|
The
Company has no other comprehensive loss components other than net loss for
the fiscal years of 2008 and 2009.
|
|
k.
|
Loss
per share
|
|
l.
|
Impairment
in value of long-lived assets
|
|
m.
|
Stock
based compensation
|
|
n.
|
Fair
value measurement:
|
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 not quoted on active markets, but
corroborated by market data.
|
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.
|
|
o.
|
Concentration
of credit risks
|
|
p.
|
Newly
issued and recently adopted accounting
pronouncements:
|
1.
|
In
May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS 165”).
SFAS 165 sets forth the period after the balance sheet date during which
management of a reporting entity should evaluate events or transactions
that may occur for potential recognition or disclosure in the financial
statements, the circumstances under which an entity should recognize
events or transactions occurring after the balance sheet date in its
financial statements, and the disclosures that an entity should make about
events or transactions that occurred after the balance sheet date. SFAS
165 will be effective for interim or annual periods ending after June 15,
2009 and will be applied prospectively. The Company adopted the provisions
of FAS 165. The adoption of SFAS No. 165 did not have a material impact on
the Company’s condensed financial condition, results of operations or cash
flows.
|
2.
|
In
June 2009, the FASB issued SFAS No. 168 “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles
— A Replacement of FASB Statement No. 162” (“SFAS 168”). Statement 168
establishes the FASB Accounting Standards CodificationTM (Codification) as
the single source of authoritative U.S. generally accepted accounting
principles (U.S. GAAP) recognized by the FASB to be applied by
nongovernmental entities. Rules and interpretive releases of the SEC under
authority of federal securities laws are also sources of authoritative
U.S. GAAP for SEC registrants. SFAS 168 and the Codification are effective
for financial statements issued for interim and annual periods ending
after September 15, 2009. When effective, the Codification will supersede
all existing non-SEC accounting and reporting standards. All other
nongrandfathered non-SEC accounting literature not included in the
Codification will become nonauthoritative. Following SFAS 168, the FASB
will not issue new standards in the form of Statements, FASB Staff
Positions, or Emerging Issues Task Force Abstracts. Instead, the FASB will
issue Accounting Standards Updates, which will serve only to: (a) update
the Codification; (b) provide background information about the guidance;
and (c) provide the bases for conclusions on the change(s) in the
Codification. The Company does not expect that the adoption of SFAS 168 to
have a material impact on the Company’s financial
statements.
|
|
q.
|
Reclassifications
|
|
a.
|
Composition
of property and equipment, grouped by major classifications, is as
follows:
|
August
31
|
||||||||
2009
|
2008
|
|||||||
Cost:
|
||||||||
Leasehold
improvements
|
$ | 76,029 | $ | 76,029 | ||||
Office
furniture and equipment
|
19,941 | 17,684 | ||||||
Computers
and peripheral equipment
|
25,333 | 20,037 | ||||||
121,303 | 113,750 | |||||||
Less
- accumulated depreciation and amortization
|
45,942 | 15,454 | ||||||
$ | 75,361 | $ | 98,296 |
|
b.
|
Depreciation
expense totaled $30,488 and $15,454 in the years ended August
31, 2009 and 2008, respectively.
|
|
a.
|
Under
the terms of the First Agreement with Hadasit (note 1a above), the Company
retained Hadasit to provide consulting and clinical trial services. As
remuneration for the services provided under the agreement, Hadasit is
entitled to $200,000. The primary researcher for Hadasit is Dr. Miriam
Kidron, a director and officer of the Company. The funds paid to Hadasit
under the agreement are deposited by Hadasit into a research fund managed
by Dr. Kidron. Pursuant to the general policy of Hadasit with respect to
its research funds, Dr. Kidron receives from Hadasit a management fee in
the rate of 10% of all the funds deposited into this research
fund.
|
|
b.
|
The
Subsidiary has entered into operating lease agreements for vehicles used
by its employees for a period of 3
years.
|
|
c.
|
On
September 19, 2007 the Subsidiary entered into a lease agreement for its
office facilities in Israel. The lease agreement is for a period of 51
months, and will end at December 31, 2011. The monthly lease payment is
2,396 NIS and is linked to the increase in the Israeli consumer price
index, (as of August 31, 2009 the monthly payment in the Company's
functional currency is $629, the future annual lease payment under the
agreement are $7,548).
|
|
d.
|
During
January and April 2008 the Company entered into agreements with OnQ
consulting, a clinical research organization (CRO) located in
Johannesburg, South Africa, to conduct Phase 1B and 2B clinical trials on
its oral insulin capsules. The total cost estimated for the studies is
$229,681 of which $107,599 was paid through August 31,
2009.
|
|
e.
|
As
to a Clinical Trial Manufacturing Agreement with Swiss Caps AG, see note
8a.
|
|
f.
|
On
September 8, 2008, the Company entered into Clinical Research agreement
with ETI Karle Clinical Pvt. Ltd. (“ETI”), pursuant to the agreement ETI
will be conducting clinical trials for the Company in India. In
consideration for the services provided under the agreement, ETI will be
entitled to estimated cash compensation of $227,604, of
which $45,038 was paid though August 31,
2009.
|
|
g.
|
On
April 22, 2009, the subsidiary entered into a consulting service agreement
with ADRES
Advanced Regulatory Services Ltd. (“ADRES”) pursuant to which ADRES will
provide consulting services relating to quality assurance and regulatory
processes and procedures in order to assist the subsidiary in submission
of a U.S. IND according to FDA regulations. In consideration for the
services provided under the agreement, ADRES will be entitled to a total
cash compensation of $211,000, of which the amount $110,000 will be paid
as a monthly fixed fee of $10,000 each month for 11 months commencing May
2009, and the remaining $101,000 will be paid based on achievement of
certain milestones. $50,000 of the total amount was paid though August 31,
2009.
|
|
h.
|
Grants
from the Chief Scientist Office
("OCS")
|
|
a.
|
On
July 14, 2008, the Company entered into a Securities Purchase Agreement
with twenty-nine accredited investors for the sale of 8,524,669 units at a
purchase price of $0.60 per unit for total consideration of $5,114,799.
Each unit consisted of one share of the Company's common stock and one
common stock purchase warrant. Each warrant entitles the holder to
purchase half a share of common stock exercisable for three years at an
exercise price of $0.90 per share.
|
|
No
warrants were exercised throughout August 31,
2009.
|
|
b.
|
As
to shares issued as part of stock based compensation plan see Note
8.
|
c.
|
As
to a Clinical Trial Manufacturing Agreement with Swiss Caps AG, see note
8a.
|
|
a.
|
On
October 30, 2006 the Company entered into a Clinical Trial Manufacturing
Agreement with Swiss Caps AG (“Swiss”), pursuant to
which Swiss would manufacture and deliver the oral insulin capsule
developed by the Company. In consideration for the services being provided
to the Company by Swiss, the Company agreed to pay a certain predetermined
amounts which are to be paid in common stocks of the Company, the number
of stocks to be issued is based on the invoice received from Swiss, and
the stock market price 10 days after the invoice was issued. The Company
accounted the transaction with Swiss according to FAS 150 "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and
Equity".
|
|
b.
|
On
September 4, 2007, 300,000 options were granted to two outside
consultants, at an exercise price of $0.45 per share (equivalent to the
traded market price on the date of grant), the options vest in twelve
equal monthly installments over the first year and those options expired
on September 4, 2009. On September 4, 2009, these options were
expired.
|
|
c.
|
On
October 30, 2007, 100,000 options were granted to an advisory board
member, at an exercise price of $0.76 per share (over the traded market
price on the date of grant), the options vest in eighteen equal monthly
installments from the date of grant and expire on October 30,
2010.
|
|
d.
|
On
May 7, 2008, an aggregate of 1,728,000 options were granted to Nadav
Kidron, the Company’s President, Chief Executive Officer and director, and
Miriam Kidron, the Company’s Chief Medical and Technology Officer and
director, both are related parties through KNRY Ltd. (see note 13c), at an
exercise price of $0.54 per share (equivalent to the traded market price
on the date of grant), 288,000 of the options vested immediately on the
date of grant and the remainder will vest in twenty equal monthly
installments. These options expire on May 7,
2018.
|
|
e.
|
On
July 17, 2008, 100,000 options were granted to an advisory board member,
at an exercise price of $0.62 per share (equivalent to the traded market
price on the date of grant), the options vest in four equal quarterly
installments commencing on September 17, 2008 and expire on July 17,
2011.
|
|
f.
|
On
October 12, 2008, 828,000 options were granted to an employee of the
subsidiary, at an exercise price of $0.47 per share (equivalent to the
traded market price on the date of grant). The options vest in three equal
annual installments commencing on November 1, 2009 and expire on October
11, 2018. On March 31, 2009 the employee ended his services with the
Company and the options were forfeited before they had vested. The Company
recognized an expense of $71,406 during the six months ended February 28,
2009 and reversed that expense in the three months ended May 31, 2009.
|
g.
|
On
October 12, 2008, 56,000 options were granted to an employee of the
subsidiary, at an exercise price of $0.47 per share (equivalent to the
traded market price on the date of grant). The options vest in two equal
annual installments commencing on May 1, 2009 and expire on October 11,
2018.
|
|
|
h.
|
On
January 11, 2009, an aggregate of 600,000 options were granted to two
Board of Directors members and 150,000 options were granted to an employee
of the subsidiary. All 750,000 options were granted at an
exercise price of $0.43 per share (equivalent to the traded market price
on the date of grant). The options vest in three equal annual installments
commencing on January 1, 2010 and expire on January 10, 2019. On May 31,
2009 such employee left the Company and the options were forfeited before
they had vested. The Company recognized an expense of $4,354 during the
year and reversed that
expense.
|
|
i.
|
On
January 11, 2009, an aggregate of 300,000 options were granted to three
Scientific Advisory Board members, at an exercise price of $0.76 per share
(higher than the traded market price on the date of grant) The options
vest in four equal quarterly installments commencing on April 1, 2009 and
expire on January 10, 2019.
|
|
j.
|
On
June 3, 2009, 400,000 options were granted to an employee of the
subsidiary, at an exercise price of $0.47 per share (equivalent to the
traded market price on the date of grant). The options vest in three equal
annual installments, commencing October 19, 2010, and expire on October
19, 2019.
|
|
k.
|
On
August 20, 2009, 100,000 options were granted to an employee of the
subsidiary, at an exercise price of $0.42 per share (equivalent to the
traded market price on the date of grant). The options vest in three equal
annual installments commencing August 20, 2010, and expire on August 20,
2019.
|
For options granted in
|
|||||||
year ended August 31
|
|||||||
2009
|
2008
|
||||||
Expected
option life (years)
|
1.0-9.8
|
1.0-5.4
|
|||||
Expected
stock price volatility (%)
|
113.1-130.5
|
116.3-118.0
|
|||||
Risk
free interest rate (%)
|
0.7-3.6
|
2.2-3.4
|
|||||
Expected
dividend yield (%)
|
0.0
|
0.0
|
Year ended August 31,
|
||||||||||||||||
2009
|
2008
|
|||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||
Number
|
average
|
Number
|
average
|
|||||||||||||
of
|
exercise
|
of
|
exercise
|
|||||||||||||
options
|
price
|
options
|
price
|
|||||||||||||
$
|
$
|
|||||||||||||||
Options
outstanding at
|
||||||||||||||||
beginning of
year
|
7,289,360 | 0.29 | 5,561,360 | 0.21 | ||||||||||||
Changes
during the year:
|
||||||||||||||||
Granted – at market
price
|
2,134,000 | 0.45 | 1,728,000 | 0.54 | ||||||||||||
Forfeited
|
(978,000 | ) | 0.46 | |||||||||||||
Options
outstanding at end
|
||||||||||||||||
of year
|
8,445,360 | 0.31 | 7,289,360 | 0.29 | ||||||||||||
Options
exercisable at end
|
||||||||||||||||
of year
|
7,001,360 | 6,137,360 | ||||||||||||||
Weighted
average fair
|
||||||||||||||||
value of options
granted
|
||||||||||||||||
during the year
|
$ | 0.45 | $ | 0.45 |
Weighted
|
|||||||||||||||
Average
|
Weighted
|
||||||||||||||
Range of
|
Remaining
|
average
|
|||||||||||||
exercise
|
Number
|
Contractual
|
exercise
|
Aggregate
|
|||||||||||
prices
|
outstanding
|
Life
|
price
|
intrinsic value
|
|||||||||||
$
|
Years
|
$
|
$
|
||||||||||||
0.001
|
3,361,360 | 2.95 | 0.001 | 1,542,864 | |||||||||||
0.45
to 0.62
|
4,584,000 | 6.80 | 0.43 | 39,000 | |||||||||||
0.76
to 0.90
|
500,000 | 0.23 | 0.76 | - | |||||||||||
8,445,360 | 5.12 | 0.29 | 1,581,864 |
Weighted
|
|||||||||||||||
Average
|
Weighted
|
||||||||||||||
Range of
|
Remaining
|
average
|
|||||||||||||
exercise
|
Number
|
Contractual
|
exercise
|
Aggregate
|
|||||||||||
prices
|
exercisable
|
Life
|
price
|
intrinsic value
|
|||||||||||
$
|
Years
|
$
|
$
|
||||||||||||
0.001
|
3,361,360 | 2.95 | 0.001 | 1,542,864 | |||||||||||
0.45
to 0.62
|
3,140,000 | 5.57 | 0.49 | 17,000 | |||||||||||
0.76
to 0.90
|
500,000 | 0.23 | 0.76 | - | |||||||||||
7,001,360 | 4.26 | 0.24 | 1,559,864 |
Year ended August 31
|
|||||||||||||
2009
|
2008
|
||||||||||||
Weighted
|
Weighted
|
||||||||||||
Number
|
average
|
Number
|
average
|
||||||||||
of
|
exercise
|
of
|
exercise
|
||||||||||
options
|
price
|
options
|
price
|
||||||||||
$
|
$
|
||||||||||||
Options
outstanding at
|
|||||||||||||
beginning of
year
|
900,000 | 0.65 | 750,000 | 0.76 | |||||||||
Changes
during the year:
|
|||||||||||||
Granted – at market
price
|
150,000 | 0.71 | |||||||||||
Granted – at an
exercise
|
|||||||||||||
price above
market
|
|||||||||||||
Price
|
300,000 | 0.76 | 400,000 | 0.53 | |||||||||
Expired
|
(400,000 | ) | 0.76 | ||||||||||
Options
outstanding at end
|
|||||||||||||
of year
|
1,200,000 | 0.68 | 900,000 | 0.65 | |||||||||
Options
exercisable at end
|
|||||||||||||
of year
|
900,000 | 733,333 |
Weighted
|
||||||||||||||
Average
|
Weighted
|
|||||||||||||
Range of
|
Remaining
|
average
|
||||||||||||
exercise
|
Number
|
Contractual
|
exercise
|
Aggregate
|
||||||||||
prices
|
outstanding
|
Life
|
price
|
intrinsic value
|
||||||||||
$
|
Years
|
$
|
$
|
|||||||||||
0.45
to 0.62
|
400,000 | 0.48 | 0.49 | 3,000 | ||||||||||
0.76
to 0.90
|
800,000 | 3.85 | 0.77 | - | ||||||||||
1,200,000 | 2.73 | 0.68 | 3,000 |
Weighted
|
|||||||||||||
Average
|
Weighted
|
||||||||||||
Range of
|
Remaining
|
average
|
|||||||||||
exercise
|
Number
|
Contractual
|
exercise
|
Aggregate
|
|||||||||
prices
|
exercisable
|
Life
|
price
|
intrinsic value
|
|||||||||
$
|
Years
|
$
|
$
|
||||||||||
0.45
to 0.62
|
400,000 | 0.48 | 0.49 | 3,000 | |||||||||
0.76
to 0.90
|
500,000 | 0.55 | 0.77 | - | |||||||||
900,000 | 0.52 | 0.65 | 3,000 |
Year ended
|
||||||||
August 31,
|
||||||||
2009
|
2008
|
|||||||
Service
providers
|
$ | 274,291 | $ | 635,762 | ||||
Tax
provisions
|
12,504 | 31,514 | ||||||
Related
parties
|
28,062 | |||||||
Payroll
and related expenses
|
34,547 | 40,714 | ||||||
$ | 321,344 | $ | 736,052 |
Period from
April
|
||||||||||||
12, 2002
|
||||||||||||
(inception)
|
||||||||||||
Year ended
|
through
|
|||||||||||
August 31,
|
August 31,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
Clinical
trials
|
$ | 1,304,779 | $ | 538,056 | $ | 2,368,105 | ||||||
Payroll
and consulting fees
|
272,116 | 240,209 | 695,578 | |||||||||
Costs
for registration of patents
|
17,775 | 89,645 | 118,465 | |||||||||
Compensation
costs in respect of warrants
granted to employees,
directors and
consultants
|
264,861 | 285,336 | 2,216,663 | |||||||||
Other
|
63,062 | 57,248 | 146,453 | |||||||||
Less
– grants from the OCS
|
(400,405 | ) | (400,405 | ) | ||||||||
$ | 1,522,188 | $ | 1,210,494 | $ | 5,144,859 |
Period from
April
|
||||||||||||
12, 2002
|
||||||||||||
(inception)
|
||||||||||||
Year ended
|
through
|
|||||||||||
August 31
|
August 31,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
Compensation
costs in respect of warrants
granted to employees, directors
and
consultants
|
$ | 288,338 | $ | 378,113 | $ | 1,146,314 | ||||||
Professional
services
|
240,523 | 391,309 | 1,011,802 | |||||||||
Consulting
fees
|
155,359 | 151,037 | 480,678 | |||||||||
Travel
costs
|
132,531 | 141,862 | 410,704 | |||||||||
Write
off of debt
|
275,000 | |||||||||||
Business
development
|
73,286 | 154,357 | 227,643 | |||||||||
Payroll
and related expenses
|
205,122 | 95,244 | 300,366 | |||||||||
Insurance
|
25,068 | 23,630 | 48,698 | |||||||||
Other
|
141,703 | 133,965 | 356,346 | |||||||||
$ | 1,261,930 | $ | 1,469,517 | $ | 4,257,551 |
|
a.
|
Corporate
taxation in the U.S.
|
|
b.
|
Corporate
taxation in Israel:
|
|
c.
|
Deferred
income taxes:
|
August
31
|
||||||||
2009
|
2008
|
|||||||
In
respect of:
|
||||||||
Net
operating loss carryforward
|
$ | 1,507,587 | $ | 1,194,401 | ||||
Less
- Valuation allowance
|
(1,507,587 | ) | (1,194,401 | ) | ||||
Net
deferred tax assets
|
-,- | -,- |
|
d.
|
Income
loss before taxes on income and income taxes included in the income
statements:
|
Period
from
April |
||||||||||||
12,
2002
|
||||||||||||
(inception)
|
||||||||||||
Year
ended
|
through
|
|||||||||||
August
31
|
August
31,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
Loss
before taxes on income:
|
||||||||||||
U.S.
|
$ | 248,890 | $ | 2,315,686 | $ | 7,134,126 | ||||||
Outside
U.S.
|
2,514,181 | 291,421 | 2,877,149 | |||||||||
2,763,071 | 2,607,107 | 10,011,275 | ||||||||||
Taxes
on income:
|
||||||||||||
Current:
|
||||||||||||
U.S.
|
16,664 | 39,799 | 56,463 | |||||||||
Outside
U.S.
|
(19,261 | ) | 122,365 | 103,104 | ||||||||
$ | (2,597 | ) | $ | 162,164 | $ | 159,567 |
|
e.
|
Reconciliation
of the theoretical tax expense to actual tax
expense
|
Period
from
April
|
||||||||||||
12,
2002
|
||||||||||||
(inception)
|
||||||||||||
Year
ended
|
through
|
|||||||||||
August
31
|
August
31,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
Loss
before income taxes as reported in the consolidated statement of
operations
|
$ | (2,763,071 | ) | $ | (2,607,107 | ) | $ | (9,849,111 | ) | |||
Computed
“expected” tax benefit
|
(967,075 | ) | (912,487 | ) | (3,447,189 | ) | ||||||
Increase
(decrease) in income taxes resulting from:
|
||||||||||||
Change
in the balance of the valuation allowance for deferred tax
losses
|
528,143 | 714,048 | 1,722,544 | |||||||||
Disallowable
deductions
|
149,043 | 200,916 | 1,431,509 | |||||||||
Increase
in taxes resulting from different tax rates applicable to non U.S.
subsidiary
|
270,879 | 29,037 | 305,640 | |||||||||
Uncertain
tax position
|
16,413 | 130,650 | 147,063 | |||||||||
Taxes
on income for the reported year
|
$ | (2,597 | ) | $ | 162,164 | $ | 159,667 |
|
f.
|
Uncertainty
in Income Taxes
|
|
a.
|
During
the fiscal years of 2008 and 2009 the Company paid to directors $15,000
and $16,000, respectively, for managerial
services.
|
|
b.
|
As
to the agreements with Hadasit, see note
6a.
|
|
c.
|
On
July 1, 2008, the subsidiary entered into a consulting agreement with KNRY
Ltd. (“KNRY”), an Israeli company owned by Nadav Kidron, whereby Mr. Nadav
Kidron, through KNRY, will provide services as President and Chief
Executive Officer of both Oramed and the subsidiary (the “Nadav Kidron
Consulting Agreement”). Additionally, on July 1, 2008, the
subsidiary entered into a consulting agreement with KNRY whereby Dr.
Miriam Kidron, through KNRY, will provide services as Chief Medical and
Technology Officer of both Oramed and the subsidiary (the “Miriam Kidron
Consulting Agreement” and together with the Nadav Kidron Consulting
Agreement, the “Consulting Agreements”). The Consulting
Agreements replaced the employment agreements entered into between the
Company and KNRY, dated as of August 1, 2007, pursuant to which Nadav
Kidron and Miriam Kidron, respectively, provide services to Oramed and the
subsidiary.
|
|
a)
|
On
September 11, 2009, the Company issued 569,887 shares of its common stock
to Swiss as remuneration for the services provided, in the amount of
$203,699.
|
|
b)
|
On
November 23, 2009, 100,000 options were granted to a consultant of the
subsidiary at an exercise price of $0.76 per share. The options vest in
three equal annual installments commencing on November 23, 2010 and will
expire on November 23, 2014.
|
|
c)
|
On
November 23, 2009, 36,000 options were granted to an employee of the
subsidiary at an exercise price of $0.46 per share. The options vest in
three equal annual installments commencing on November 23, 2010 and will
expire on November 23, 2019.
|
ITEM
13.
|
OTHER EXPENSES OF ISSUANCE AND
DISTRIBUTION
|
Amount
|
||||
SEC
fee
|
$ | 2,106 | ||
Legal
fees and expenses
|
$ | 33,000 | ||
Accountant’s
fees and expenses
|
$ | 2,500 | ||
Printing
expenses
|
$ | 1,300 | ||
Miscellaneous
|
$ | 1,094 | ||
Total
|
$ | 40,000 |
ITEM
14.
|
INDEMNIFICATION OF DIRECTORS
AND OFFICERS
|
ITEM
15.
|
RECENT SALES OF UNREGISTERED
SECURITIES
|
ITEM
16.
|
EXHIBITS AND FINANCIAL
STATEMENT SCHEDULES
|
ITEM
17.
|
UNDERTAKINGS
|
Oramed
Pharmaceuticals Inc.
|
||
By:
|
||
/s/
Nadav Kidron
|
||
Name:
|
Nadav
Kidron
|
|
Title:
|
President,
Chief Executive Officer and
Director
|
Signature
|
Title
|
Date
|
||
/s/
Nadav Kidron
|
||||
Nadav
Kidron
|
President,
Chief Executive Officer and
|
January
11, 2010
|
||
Director
(principal executive officer)
|
||||
/s/
Yifat Zommer
|
||||
Yifat
Zommer
|
Chief
Financial Officer, Treasurer and
|
January
11, 2010
|
||
Secretary
(principal financial and
|
||||
accounting
officer)
|
||||
/s/
Miriam Kidron
|
||||
Miriam
Kidron
|
Chief
Medical and Technology Officer
|
January
11, 2010
|
||
and
Director
|
||||
/s/ Leonard
Sank
|
||||
Leonard
Sank
|
Director
|
January
11, 2010
|
||
/s/ Harold
Jacob
|
||||
Harold
Jacob
|
Director
and Member of the Scientific
|
January
11, 2010
|
||
Advisory
Board
|
Exhibit
|
||
No.
|
Description
|
|
3.1*
|
Articles
of Incorporation.
|
|
3.2
|
Bylaws
(incorporated by reference from our Current Report on Form 8-K filed on
April 10, 2006).
|
|
3.3
|
Articles
of Merger filed with the Nevada Secretary of State on March 29, 2006
(incorporated by reference to our Current Report on Form 8-K filed on
April 10, 2006).
|
|
4.1
|
Specimen
Stock Certificate (incorporated by reference from our Registration
Statement on Form SB-2, filed on November 29, 2002).
|
|
4.2
|
Form
of Warrant Certificate (incorporated by reference from our current report
on Form 8-K filed July 15, 2008).
|
|
4.3**
|
Form
of Warrant.
|
|
5.1**
|
Opinion
of Snell & Wilmer L.L.P.
|
|
10.1
|
Form
of Securities Purchase Agreement for February 6, 2006 private placement
(incorporated by reference from our current report on Form 8-K filed
February 6, 2006).
|
|
10.2
|
Agreement
between our company and Hadasit Medical Services and Development Ltd.
dated February 17, 2006 concerning the acquisition of U.S. patent
application 60/718716 (incorporated by reference from our current report
on Form 8-K filed February 17, 2006).
|
|
10.3
|
Consulting
Agreement between our company and Dr. Miriam Kidron (incorporated by
reference from our current report on Form 8-K filed February 17,
2006).
|
|
10.4
|
Agreement
between our company and Swiss Caps Ag dated October 30, 2006 (incorporated
by reference from our current report on Form 8-K filed October 26,
2006).
|
|
10.5
|
Stock
Option Plan dated October 15, 2006 (incorporated by reference from our
current report on Form 8-K filed on November 28, 2006).
|
|
10.6
|
Stock
Option Agreement dated November 23, 2006 (incorporated by reference from
our current report on Form 8-K filed on November 28,
2006).
|
|
10.7
|
Form
of subscription agreement and warrant certificate (incorporated by
reference from our current report on Form 8-K filed on June 18,
2007).
|
|
10.8
|
Form
of Shares for Services agreement (incorporated by reference from our
current report on Form 8-K filed on August 3, 2007).
|
|
10.9
|
Master
Services Agreement dated January 29, 2008 between Oramed Pharmaceuticals
Inc. and OnQ Consulting (incorporated by reference from our current report
on Form 8-K filed on February 1, 2008).
|
|
10.10
|
Consulting
Agreement by and between Oramed Ltd. and KNRY, Ltd. entered into as of
July 1, 2008 for the services of Nadav Kidron (incorporated by reference
from our current report on Form 8-K filed on July 2,
2008).
|
|
10.11
|
Consulting
Agreement by and between Oramed Ltd. and KNRY, Ltd. entered into as of
July 1, 2008 for the services of Miriam Kidron (incorporated by reference
from our current report on Form 8-K filed on July 2,
2008).
|
10.12
|
Oramed
Pharmaceuticals Inc. 2008 Stock Incentive Plan (incorporated by reference
from our current report on Form 8-K filed on July 2,
2008).
|
|
10.13
|
Form
of Notice of Stock Option Award and Stock Option Award Agreement
(incorporated by reference from our current report on Form 8-K filed on
July 2, 2008).
|
|
10.14
|
Form
of Stock Purchase Agreement (incorporated by reference from our current
report on Form 8-K filed on July 15, 2008).
|
|
10.15
|
Employment
Agreement, dated as of April 19, 2009, by and between Oramed Ltd. and
Yifat Zommer (incorporated by reference from our current report on Form
8-K filed on April 22, 2009).
|
|
10.16
|
Indemnification
Agreement, dated as of April 19, 2009, by and between Oramed Ltd. and
Yifat Zommer (incorporated by reference from our current report on Form
8-K filed on April 22, 2009).
|
|
10.17
|
Agreement
dated April 22, 2009, between Oramed Ltd. and ADRES Advanced Regulatory
Services Ltd. (incorporated by reference from our current report on Form
8-K filed April 22, 2009).
|
|
10.18
|
Agreement
dated July 8, 2009, between our company and Hadasit Medical Services and
Development Ltd. (incorporated by reference from our current report on
Form 8-K filed July 9, 2009).
|
|
10.19
|
Agreement
dated January 7, 2009, between our company and Hadasit Medical Services
and Development Ltd. (incorporated by reference from our current report on
Form 8-K filed January 7, 2009).
|
|
10.20
|
Form
of Indemnification Agreements dated November 2, 2008, between our company
and each of our directors and officers (incorporated by reference from our
current report on Form 8-K filed November 6, 2009).
|
|
10.21**
|
Form
of Securities Purchase Agreement.
|
|
23.1*
|
Consent
of Kesselman & Kesselman, certified public accountants in Israel, a
member of PricewaterhouseCoopers International.
|
|
23.2*
|
Consent
of Malone & Bailey, PC –Certified Public
Accountants.
|
|
23.3**
|
Consent
of Snell & Wilmer L.L.P. (contained in Exhibit
5.1).
|
|
24.1**
|
Power
of Attorney (included in the signature pages
hereto).
|
*
|
Filed
herewith.
|
|
**
|
To
be filed by amendment.
|
Articles
of Incorporation
(PURSUANT
TO NRS 78)
|
Important:
Read attached instructions before completing form.
|
ABOVE
SPACE IS FOR OFFICE USE ONLY
|
Name of
Corporation:
|
ORAMED
PHARMACEUTICALS INC.
|
|||
President,
Agent
Name and
Street
Address:
(must
be a Nevada address)
|
||||
The
Corporation Trust Company of Nevada
|
||||
Name
|
||||
6100
Neil Road, Suite 500
|
Reno,
|
NEVADA
|
89511
|
|
Street
Address
|
City
|
Zip
Code
|
||
Optional
Mailing Address
|
City
|
State
|
Zip
Code
|
|
Shares:
|
||||
(number of
shares
corporation
is
|
Number
of Shares
|
Number
of Shares
|
||
authorized
to issue)
|
with
par value: 200,000,000 Common Par Value: $
0.001
|
Without
par value:
|
||
Names &
Addresses, of Board of
Directors/Trustees:
(Attach
additional
page
if more than two
directors/trustees)
|
1.Nadav
Kidron
|
|||
Name
|
||||
2
Elza Street
|
Jerusalem
|
Israel
|
93706
|
|
Street
Address
|
City
|
State
|
Zip
Code
|
|
2.
|
||||
Name
|
||||
Jerusalem
|
Israel
|
93706
|
||
Street
Address
|
City
|
State
|
Zip
Code
|
|
3.
|
||||
Name
|
||||
Street
Address
|
||||
Purposes:
(optional;
see
instructions)
Names, Address and
Signature of
Incorporator:
(attach
additional page
if
more than one
incorporator)
|
The
Purpose of this Corporation shall be:
Pharmaceutical
research and development
|
|||
Nadav
Kidron x
|
|
|||
Name Signature
|
|
|||
2
Elza Street
|
Jerusalem
|
Israel
|
93706
|
|
Address
|
City
|
State
|
Zip
Code
|
|
Certificate of
Acceptance of
Appointment of
Resident Agent:
|
I
hereby accept appointment as Resident Agent for the above named
corporation.
|
|||
/s/
Kathleen C.
Gariepy
|
03/22/06
|
|||
Authorized
Signature of R.A. or On Behalf of R.A. Company
|
Date
|
This form must be accompanied by
appropriate fees. See attached fee schedule.
|
Nevada
Secretary of State Forms 78
|
Kesselman & Kesselman
Certified
Public Accountants
Trade
Tower, 25 Hamered Street
Tel
Aviv 68125 Israel
P.O
Box 452 Tel Aviv 61003
Telephone
+972-3-7954555
Facsimile
+972-3-7954556
|