**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-KSB**





(Mark
      One)


**x
      ANNUAL REPORT PURSUANT
      TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE**


**ACT
      OF 1934**





**For
      the Fiscal Year Ended August 31, 2008**





**o TRANSITION
      REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES**


**EXCHANGE
      ACT OF 1934**





**For
      the transition period from _________ to __________**





**Commission
      file number: 000-50298**





**ORAMED
      PHARMACEUTICALS, INC.**


(Exact
      name of registrant as specified in its charter)





**Nevada**
            **98-0376008**(State
                or other jurisdiction of
              incorporation
                or organization)
            (IRS
                Employer Identification
              No.)





**Hi-Tech
      Park 2/5**


**Givat-Ram**


**PO
      Box 39098**


**Jerusalem
      91390 Israel**


(Address
      of principal executive offices)





**972
      2 566 0001**


(Registrant's
      telephone number, including area code)





Securities
      registered pursuant to Section 12(b) of the Exchange Act: None




Securities
      registered pursuant to Section 12(g) of the Exchange Act: Common
      Stock, $0.001 par value








Check
      whether the issuer: (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Securities Exchange Act of 1934 during the past 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 xNo o





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. o





Indicate
      by check mark whether the registrant is
      a
      shell company (as defined in Rule 12b-2 of the Exchange
      Act ) Yes oNo x





State
      issuer’s revenues for its most recent fiscal year $0.00





State
      the
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed by reference to the price at which the common equity
      was
      sold, or the average bid and asked price of such common equity, as of a
      specified date within the past 60 days. As of November 24, 2008: $16,905,964
      (37,568,808  shares
      at
      $0.45 per share).





State
      the
      number of shares outstanding of each of the registrant's classes of common
      equity, as of the latest practicable date: 56,456,710 shares issued and
      outstanding as of November 24, 2008.







**ORAMED
      PHARMACEUTICALS, INC.**





**FORM
      10-KSB**





**TABLE
      OF CONTENTS**





PART I
            1ITEM 1 -
            BUSINESS
            1ITEM 1A –
            RISK
                FACTORS
            15ITEM 2 -
            PROPERTIES
            28ITEM 3 -
            LEGAL
                PROCEEDINGS
            28ITEM 4 -
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS.
            28PART II
            29ITEM 5 -
            MARKET
                FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
                ISSUER
                PURCHASES OF EQUITY SECURITIES
            29ITEM 6 -
            MANAGEMENT'S
                DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
            32ITEM 7 -
            FINANCIAL
                STATEMENTS AND SUPPLEMENTARY DATA
            40ITEM 8 -
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE
            68ITEM 8A –
            CONTROLS
                AND PROCEDURES
            68ITEM 8B –
            OTHER
                INFORMATION
            69PART III
            70ITEM 9 -
            DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE;
                COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
            70ITEM 10 -
            EXECUTIVE
                COMPENSATION
            73ITEM 11-
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                STOCKHOLDER MATTERS
            78ITEM 12 -
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
                INDEPENDENCE
            80ITEM 13 –
            EXHIBITS
            81ITEM 14 -
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            83







**PART
      I**





**ITEM
      1 - BUSINESS**





***This
      Annual Report on Form 10-KSB (including the section regarding Management's
      Discussion and Analysis of Financial Condition and Results of Operations)
      contains forward-looking statements regarding our business, financial condition,
      results of operations and prospects. Words such as “expects,” “anticipates,”
“intends,” “plans,” “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 Annual Report on Form 10-KSB.
      Additionally, statements concerning future matters are forward-looking
      statements.***





Although
      forward-looking statements in this Annual Report on Form 10-KSB 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 “ *Risks
      Related to Our Business* ”
below,
      as well as those discussed elsewhere in this Annual Report on Form 10-KSB.
      Readers are urged not to place undue reliance on these forward-looking
      statements, which speak only as of the date of this Annual Report on Form
      10-KSB. We file reports with the Securities and Exchange Commission (the
“ *Commission* ”).
      We
      make available on our website under "Investor Information/SEC Filings,” free of
      charge, our annual reports on Form 10-KSB, quarterly reports on Form 10-QSB,
      current reports on Form 8-K and amendments to those reports as soon as
      reasonably practicable after we electronically file such materials with or
      furnish them to the SEC. Our website address is www.oramed.com. You can also
      read and copy any materials we file with the SEC at the SEC's Public Reference
      Room at 100 F Street, NE, Washington, DC 20549. You can obtain additional
      information about the operation of the Public Reference Room by calling the
      SEC
      at 1-800-SEC-0330. In addition, the SEC maintains an internet site (www.sec.gov)
      that contains reports, proxy and information statements, and other information
      regarding issuers that file electronically with the SEC, including
      us.





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
      Annual Report on Form 10-KSB. Readers are urged to carefully review and consider
      the various disclosures made throughout the entirety of this Annual Report,
      which attempt to advise interested parties of the risks and factors that may
      affect our business, financial condition, results of operations and
      prospects.





As
      used
      in this Annual Report, the terms “ *we* ”,
      “ *us* ”,
      “ *our* ”,
      the
“ *Company”* ,
      and
“ *Oramed* ”
mean
      Oramed Pharmaceuticals Inc., unless otherwise indicated.


1


**DESCRIPTION
      OF BUSINESS**





**General**





We
      are a
      pharmaceutical company engaged in the research and development of innovative
      pharmaceutical solutions, including an orally ingestible insulin pill to be
      used
      for the treatment of individuals with diabetes, rectal application of insulin,
      use of oral ingestible pills for delivery other polypeptides and use of rectal
      application for delivery of other polypeptides.





***Oral
      Insulin*** **:** Oramed
      is
      seeking to revolutionize the treatment of diabetes through its proprietary
      flagship product, an orally ingestible insulin capsule (ORMD-0801) currently
      in
      phase 2 clinical trials. The Company’s technology allows insulin to travel from
      the gastrointestinal tract via the portal vein to the bloodstream,
      revolutionizing the manner in which insulin is delivered. It enables its passage
      in a more physiological manner than by current delivery methods of
      insulin.





Through
      our research and development efforts, we are developing an oral dosage form
      that
      will withstand the harsh chemical environment of the stomach or intestines
      and
      will be effective in delivering active insulin for the treatment of diabetes.
      The enzymes and vehicles that are added to the insulin in the formulation
      process must not modify chemically or biologically the insulin and the dosage
      form must be safe to ingest.





The
      Company’s research and development team has performed numerous animal studies to
      optimize the composition and functionality of their oral insulin (ORMD- 0801)
      modality and to demonstrate its safety and efficacy. The Company’s studies have
      confirmed the feasibility of lowering blood glucose levels within an orally
      administered form of insulin that is both safe and effective.





The
      Company's technology is a platform that has the potential to deliver medications
      and vaccines orally that today can only be delivered via injection.





***Diabetes*** **:** Diabetes
      is a disease in which the body does not produce or properly use insulin. Insulin
      is a hormone that is needed to convert sugar, starches and other food into
      energy needed for daily life. The cause of diabetes continues to be a mystery,
      although both genetics and environmental factors such as obesity and lack of
      exercise appear to play roles.





An
      estimated 177 million people are suffering from diabetes worldwide. According
      to
      the American Diabetes Association, there are 23.6 million children and adults
      in
      the United States, or 7.8% of the population, who have diabetes. While an
      estimated 17.9 million have been diagnosed with diabetes, unfortunately, 5.7
      million people (or nearly one quarter) are unaware that they have the
      disease.





***Intellectual
      Property*** :
      The
      Company owns a portfolio of patents and patent applications covering its
      technologies and is aggressively protecting these technology developments on
      a
      worldwide basis.





***Management*** *:* We are
      led by a highly-experienced management team knowledgeable in the treatment
      of
      diabetes. The Company’s Chief Medical and Technology Officer, Miriam Kidron,
      PhD, is a world-recognized pharmacologist and a biochemist and the innovator
      primarily responsible for our Oral Insulin technology development and
      know-how.




2





***Scientific
      Advisory Board:*** Our
      management team has access to our internationally recognized Scientific Advisory
      Board whose members are thought-leaders in their respective areas. The Advisory
      Board comprises of Professor Avram Hershko, Dr. Harold Jacob, Dr. Nir Barzilai,
      Prof. Ele Ferrannini, Dr. Derek LeRoith and Dr. John Ziemniak.





**Corporate
      History**





Oramed
      was incorporated on April 12, 2002, in the State of Nevada under the name
“Iguana Ventures Ltd”. Following the incorporation, the Company was an
      exploration stage company engaged in the acquisition and exploration of mineral
      properties. The Company was unsuccessful in implementing its business plan
      as a
      mineral exploration company. Accordingly, the Company decided to change the
      focus of its business by completing a share exchange with the shareholders
      of
      Integrated Security Technologies, Inc., a New Jersey private corporation
      (“ISTI”). On June 4, 2004, the Company changed its name to Integrated Security
      Technologies by filing a Certificate of Amendment with the Nevada Secretary
      of
      State. Effective June 14, 2004 the Company effected a 3.3:1 forward stock split,
      increasing the amount of authorized capital to 200,000,000 shares of common
      stock with the par value of $.001 per share. However, due to disappointing
      results, on May 31, 2005, effective as of May 27, 2004 the Company terminated
      the share exchange agreement with the shareholders of ISTI.





On
      March
      8, 2006, the Company executed an agreement with Hadasit Medical
      Services and Development Ltd. to
      acquire provisional patent application No. 60/718716 and
      related intellectual property. The provisional patent application No.
      60/718716 relates to a
      method
      of preparing insulin so that it may be taken orally to be used in the treatment
      for the treatment of individuals with diabetes. Effective
      April 10, 2006, the Company changed its name from “Integrated Security
      Technologies, Inc.” to “Oramed Pharmaceuticals Inc.”. Based on provisional
      patent application No. 60/718716, the Company filed a patent application under
      the Patent Cooperation Treaty at the Israel Patent Office for “Methods and
      Compositions for Oral Administration of Proteins” on August 31,
      2006.





**Strategy**





We
      plan
      to continue to conduct clinical trials to show the effectiveness of our
      technology. We intend to conduct the clinical trials necessary to file an
      Investigational New Drug Application (“IND”) with the U.S. Food and Drug
      Administration (“FDA”). Additional clinical trials are planned in other
      countries such as Israel, India and South Africa, in order to substantiate
      our
      results as well as for purposes of future filings for drug approval in these
      countries. We also plan to conduct further research and development by deploying
      our proprietary drug delivery technology for the delivery of other polypeptides
      in addition to insulin, and to develop other innovative pharmaceutical products,
      including an insulin suppository, flu vaccines, and use of rectal application
      for delivery of other polypeptides.





If
      our
      oral insulin capsule or other drug delivery solutions show significant promise
      in clinical trials, we plan to ultimately seek a strategic commercial partner,
      or partners, with extensive experience in the development, commercialization,
      and marketing of insulin applications and/or other orally digestible drugs.
      We
      anticipate such partner or partners would be responsible for, or substantially
      support, late stage clinical trials (Phase III) to ensure regulatory approvals
      and registrations in the appropriate markets in a timely manner. We further
      anticipate that such partner, or partners, would also be responsible for sales
      and marketing of our oral insulin capsule in these markets. Such planned
      strategic partnership, or partnerships, may provide a marketing and sales
      infrastructure for our products as well as financial and operational support
      for
      global clinical trials, post marketing studies, label expansions and other
      regulatory requirements concerning future clinical development in the United
      States and elsewhere. Any future strategic partner, or partners, may also
      provide capital and expertise that would enable the partnership to develop
      new
      oral dosage form for other polypeptides. Under certain circumstances, we may
      determine to develop one or more of our oral dosage form on our own, either
      world-wide or in select territories.




3





In
      addition to developing our own oral dosage form drug portfolio, we are, on
      an
      on-going basis, considering in-licensing and other means of obtaining additional
      technologies to complement and/or expand our current product portfolio. Our
      goal
      is to create a well-balanced product portfolio that will enhance and compliment
      our existing drug portfolio.





**Product
      Development**





***Orally
      Ingestible Insulin*** *:* During
      fiscal year 2007 we conducted several clinical studies of our orally ingestible
      insulin. The studies were intended to assess both the safety/tolerability and
      absorption properties of our proprietary oral insulin. Based on the
      pharmacokinetic and pharmacologic outcomes of these trials, we decided to
      continue the development of our oral insulin product.





On
      November 15, 2007, we successfully completed animal studies in preparation
      for
      the Phase 1B clinical trial of our oral insulin capsule (ORMD 0801). On January
      22, 2008 we commenced the non FDA approved Phase 1B clinical trials with our
      oral insulin capsule, in healthy human volunteers with the intent of dose
      optimization. On March 11, 2008, we successfully completed our Phase 1B clinical
      trials.





On
      April
      13, 2008, we commenced a non FDA approved Phase 2A study to evaluate the safety
      and efficacy of our oral insulin capsule (ORMD 0801) in Type II diabetic
      volunteers at Hadassah Medical Center in Jerusalem. On August 6, 2008, we
      announced the successful results of this trial.





On
      April
      21, 2008, we entered into a service agreement with Encorium Group, Inc.
      (“Encorium”) pursuant to which Encorium will provide services for the purpose of
      filing an IND for a Phase 2 study as required by the FDA. The FDA approval
      process and, if approved, registration for commercial use as an oral drug can
      take several years.





During
      July 2008 we were granted approval by the Institutional Review Board Committee
      of Hadassah Medical Center in Jerusalem to conduct a non FDA approved Phase
      2A
      study to evaluate the safety and efficacy of our oral insulin capsule (ORMD
      0801) on Type I diabetic volunteers. On September 24, 2008, we announced the
      beginning of this trail.





We
      plan
      on conducing two additional non FDA approved Phase 2B study to evaluate the
      safety and efficacy of our oral insulin capsule (ORMD 0801) on Type II diabetic
      volunteers, in South Africa and India. The trials are scheduled to commence
      by
      the end of 2008 or the beginning of 2009.





***Rectal
      Application of Insulin and Other Polypeptides*** *:* We
      filed
      two additional provisional patents for a suppository application to our
      technology portfolio. The first patent focuses on a rectal application for
      insulin. The second patent focuses on the usage of this rectal application
      to
      other polypeptides that at present are only available in injection.




4





On
      January 30, 2008, we entered into a master service agreement with OnQ
      Consulting; a clinical research organization located in Johannesburg, South
      Africa, to conduct non FDA approved clinical trials for the rectal application
      of insulin. The trials are expected to begin during the coming
      months.





On
      October 23, 2008 we commenced a non FDA approved Phase 1A study to evaluate the
      safety and efficacy of our insulin suppository (ORMD 0802) on healthy
      volunteers, in South Africa.





***GLP1
      Analog:*** On
      September 16, 2008 we announced the launch of pre-clinical trials of ORMD 0901,
      a GLP1-analog, the pre-clinical trials includes a animal studies which suggests
      that the GLP-1analog exenatide -4 when combined with Oramed’s absorption
      promoters is absorbed through the gastrointestinal tract and retains its
      biological activity.





Glucagon-like
      peptide-1 (GLP-1) is an incretin hormone - a type of gastrointestinal hormone
      that stimulates the secretion of insulin from the pancreas. The incretin concept
      was hypothesized when it was noted surprisingly that glucose ingested by mouth
      (oral) stimulated two to three times more insulin release than the same amount
      of glucose administered intravenously. GLP-1 was found in addition to stimulates
      insulin release, to suppress glucagon release (hormone involved in regulation
      of
      glucose) from the pancreas, it slows gastric emptying to reduce the rate of
      absorption of nutrients into the blood stream, and it increases satiety. Other
      important beneficial attributes of GLP-1 are its effects of increasing the
      number of beta cells (cells that manufacture and release insulin) in the
      pancreas and possibly to be hormone that protects the heart.





***Raw
      Materials:*** Our
      oral
      insulin capsule is currently manufactured by Swiss Caps SA, under a Clinical
      Trail Manufacturing Agreement. The raw materials required for the manufacturing
      of the capsule are being purchased from third parties, under separate
      agreements. We generally depend upon a limited number of suppliers for the
      raw
      materials. Although alternative sources of supply for these materials are
      generally available, we could incur significant costs and disruptions in
      changing suppliers. The termination of our relationship with our suppliers
      or
      the failure of these suppliers to meet our requirements for raw materials on
      a
      timely and cost-effective basis could materially adversely affect our business,
      prospects, financial condition and results of operations.




**Patents
      and Licenses**





The
      following patent applications and provisional patent application are
      pending:





·
            *PCT/IL2006/001019,
                “Methods and Compositions for Oral Administration of
                Proteins”*.
                The patent application was filed on August 31,
                2006.





·
            *11/513,343,
                “Methods and Compositions for Oral Administration of
                Proteins”*.
                The patent application was filed on August 31,
                2006.





·
            *60/064,779,*“*Methods
                and Compositions for Oral Administration of Proteins”*.
                The patent application was filed on March 26,
                2008.





·
            *PCT/IL2008/000546,*“*Methods
                and Compositions for Rectal Application for Insulin”*.
                The patent application was filed on April 27,
                2008.




5




·
            *PCT/IL2008/000547,*“Methods*and Compositions for Rectal Application for Insulin”*.
                The patent application was filed on April 27,
                2008.





·
            *61/071,538,*“*Methods
                and Compositions for Oral Administration of**Exenatide”*.
                The patent application was filed on May 5,
                2008.





·
            *61/089,812,*“*Methods
                and Compositions for Oral Administration of**Proteins”*.
                The patent application was filed on August 18,
                2008.





Consistent
      with a strategy to seek protection in key markets worldwide, we have been and
      will continue to prosecute the patent applications and corresponding foreign
      counterparts of such applications. . We believe that our success will depend
      on
      our ability to obtain patent protection for our intellectual
      property.





Our
      patent strategy is as follows:





·
            *Aggressively**protect*all current and future technological developments to assure strong
                and
                broad protection by filing patents and/or continuations in part as
                appropriate;





·
            *Protect**technological*developments at various levels, in a complementary*m*anner,
                including the base technology, as well as specific applications of
                the
                technology; and





·
            *Establish**comprehensive*coverage in the U.S. and in all relevant foreign markets in anticipation
                of future commercialization
                opportunities.





The
      validity, enforceability, written supports, and breadth of claims in our patent
      applications involve complex legal and factual questions and, therefore, may
      be
      highly uncertain. No assurance can be given that any patents based on pending
      patent applications or any future patent applications filed by us will be
      issued, that the scope of any patent protection will exclude competitors or
      provide competitive advantages to us, that any of the patents that have been
      or
      may be issued to us will be held valid or enforceable if subsequently
      challenged, or that others will not claim rights in or ownership of the patents
      and other proprietary rights held or licensed by us. Furthermore, there can
      be
      no assurance that others have not developed or will not develop similar
      products, duplicate any of our technology or design around any patents that
      have
      been or may be issued to us. Since patent applications in the United States
      are
      maintained in secrecy for the initial period of time following filing, we also
      cannot be certain that others did not first file applications for inventions
      covered by our pending patent applications, nor can we be certain that we will
      not infringe any patents that may be issued to others on such applications.





We
      also
      rely on trade secrets and unpatentable know-how that we seek to protect, in
      part, by confidentiality agreements. Our policy is to require our employees,
      consultants, contractors, manufacturers, outside scientific collaborators and
      sponsored researchers, board of directors, technical review board and other
      advisors to execute confidentiality agreements upon the commencement of
      employment or consulting relationships with us. These agreements provide that
      all confidential information developed or made known to the individual during
      the course of the individual's relationship with us is to be kept confidential
      and not disclosed to third parties except in specific limited circumstances.
      We
      also require signed confidentiality or material transfer agreements from any
      company that is to receive our confidential information. In the case of
      employees, consultants and contractors, the agreements provide that all
      inventions conceived by the individual while rendering services to us shall
      be
      assigned to us as the exclusive property of our company. There can be no
      assurance, however, that all persons who we desire to sign such agreements
      will
      sign, or if they do, that these agreements will not be breached, that we would
      have adequate remedies for any breach, or that our trade secrets or unpatentable
      know-how will not otherwise become known or be independently developed by
      competitors.




6





Our
      success will also depend in part on our ability to commercialize our technology
      without infringing the proprietary rights of others. No assurance can be given
      that patents do not exist or could not be filed which would have an adverse
      affect on our ability to market our technology or maintain our competitive
      position with respect to our technology. If our technology components, products,
      processes or other subject matter are claimed under other existing United States
      or foreign patents or are otherwise protected by third party proprietary rights,
      we may be subject to infringement actions. In such event, we may challenge
      the
      validity of such patents or other proprietary rights or we may be required
      to
      obtain licenses from such companies in order to develop, manufacture or market
      our technology. There can be no assurances that we would be able to obtain
      such
      licenses or that such licenses, if available, could be obtained on commercially
      reasonable terms. Furthermore, the failure to either develop a commercially
      viable alternative or obtain such licenses could result in delays in marketing
      our proposed technology or the inability to proceed with the development,
      manufacture or sale of products requiring such licenses, which could have a
      material adverse affect on our business, financial condition and results of
      operations. If we are required to defend ourselves against charges of patent
      infringement or to protect our proprietary rights against third parties,
      substantial costs will be incurred regardless of whether we are successful.
      Such
      proceedings are typically protracted with no certainty of success. An adverse
      outcome could subject us to significant liabilities to third parties and force
      us to curtail or cease our development and commercialization of our technology.





**Partnerships
      and Collaborative Arrangements**





We
      believe that working together with strategic partners will expedite product
      formulation, production and approval  .





On
      October 30, 2006, we entered into a Clinical Trial Manufacturing Agreement
      with
      Swiss Caps AG (“Swiss”), pursuant to which Swiss will manufacture and deliver
      the oral insulin capsule developed by the Company.





During
      January and April, 2008, we 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 our oral insulin capsules and
      suppository.





On
      April
      21, 2008, we entered into a five year service agreement with Encorium Group,
      Inc. (“Encorium”) pursuant to which Encorium will provide services for the
      purpose of filing an Investigational New Drug Application (IND) for a Phase
      2
      study as required by the US Food and Drug Administration (FDA).





During
      April 2008, we entered into a five year master services agreement with
      SAFC **,** an
      operating division of Sigma-Aldrich, Inc., pursuant to which SAFC will provide
      services for individual projects, which may include strategic planning, expert
      consultation, clinical trial services, statistical programming and analysis,
      data processing, data management, regulatory, clerical, project management,
      central laboratory services, pre-clinical services, pharmaceutical sciences
      services, and other research and development services.




7





On
      September 8, 2008, we entered into Clinical Research Agreement with ETI Karle
      Clinical Pvt. Ltd. (“ETI”), pursuant to which ETI will be conducting Phase 2A
      and 2B clinical trials of our oral insulin capsule in India.





We
      are
      also currently negotiating a clinical trial agreement with Hadasit to facilitate
      additional clinical trials to be performed at Hadassah Medical Center in
      Jerusalem.





**Government
      Regulation**





**The
      Drug Development Process**





Regulatory
      requirements for the approval of new drugs vary from one country to another.
      In
      order to obtain approval to market our drug portfolio, we need to go through
      a
      different regulatory process in each country in which we apply for such
      approval. In some cases information gathered during the approval process in
      one
      country can be used as supporting information for the approval process in
      another country. The U.S. FDA compliance requirements are considered to be
      one
      of the most stringent worldwide following is a description of the FDA’s
      requirements.





The
      FDA
      requires that pharmaceutical and certain other therapeutic products undergo
      significant clinical experimentation and clinical testing prior to their
      marketing or introduction to the general public. Clinical testing, known as *clinical
      trials* or *clinical
      studies* ,
      is
      either conducted internally by life science, pharmaceutical, or biotechnology
      companies or is conducted on behalf of these companies by contract research
      organizations.





The
      process of conducting clinical studies is highly regulated by the FDA, as well
      as by other governmental and professional bodies. Below we describe the
      principal framework in which clinical studies are conducted, as well as describe
      a number of the parties involved in these studies.





*Protocols.* Before
      commencing human clinical studies, the sponsor of a new drug or therapeutic
      product must submit an investigational new drug application, or IND, to the
      FDA.
      The application contains what is known in the industry as a *protocol* .
      A
      protocol is the blueprint for each drug study. The protocol sets forth, among
      other things, the following:





·
            who
                must be recruited as qualified
                participants;





·
            how
                often to administer the drug or
                product;





·
            what
                tests to perform on the participants;
                and





·
            what
                dosage of the drug or amount of the product to give to the
                participants.





*Institutional
      Review Board* .
      An
      institutional review board is an independent committee of professionals and
      lay
      persons which reviews clinical research studies involving human beings and
      is
      required to adhere to guidelines issued by the FDA. The institutional review
      board does not report to the FDA, but its records are audited by the FDA. Its
      members are not appointed by the FDA. All clinical studies must be approved
      by
      an institutional review board. The institutional review board’s role is to
      protect the rights of the participants in the clinical studies. It approves
      the
      protocols to be used, the advertisements which the company or contract research
      organization conducting the study proposes to use to recruit participants,
      and
      the form of consent which the participants will be required to sign prior to
      their participation in the clinical studies.




8





*Clinical
      Trials* .
      Human
      clinical studies or testing of a potential product are generally done in three
      stages known as Phase I through Phase III testing. The names of the phases
      are
      derived from the regulations of the FDA. Generally, there are multiple studies
      conducted in each phase.





·
            *Phase
                I*.
                Phase I studies involve testing a drug or product on a limited number
                of
                healthy participants, typically 24 to 100 people at a time. Phase
                I
                studies determine a product’s basic safety and how the product is absorbed
                by, and eliminated from, the body. This phase lasts an average of
                six
                months to a year.





·
            *Phase
                II*.
                Phase II trials involve testing up to 200 participants at a time
                who may
                suffer from the targeted disease or condition. Phase II testing typically
                lasts an average of one to two years. In Phase II, the drug is tested
                to
                determine its safety and effectiveness for treating a specific illness
                or
                condition. Phase II testing also involves determining acceptable
                dosage
                levels of the drug. If Phase II studies show that a new drug has
                an
                acceptable range of safety risks and probable effectiveness, a company
                will continue to review the substance in Phase III
                studies.





·
            *Phase
                III*.
                Phase III studies involve testing large numbers of participants,
                typically
                several hundred to several thousand persons. The purpose is to verify
                effectiveness and long-term safety on a large scale. These studies
                generally last two to three years. Phase III studies are conducted
                at
                multiple locations or sites. Like the other phases, Phase III requires
                the
                site to keep detailed records of data collected and procedures
                performed.




*New
      Drug Approval.* The
      results of the clinical trials are submitted to the FDA as part of a new drug
      application (“ *NDA* ”). ** Following
      the completion of Phase III studies, assuming the sponsor of a potential product
      in the United States believes it has sufficient information to support the
      safety and effectiveness of its product, it submits an NDA to the FDA requesting
      that the product be approved for marketing. The application is a comprehensive,
      multi-volume filing that includes the results of all clinical studies,
      information about the drug’s composition, and the sponsor’s plans for producing,
      packaging and labeling the product. The FDA’s review of an application can take
      a few months to many years, with the average review lasting 18 months. Once
      approved, drugs and other products may be marketed in the United States, subject
      to any conditions imposed by the FDA.





*Phase
      IV* .
      The FDA
      may require that the sponsor conduct additional clinical trials following new
      drug approval. The purpose of these trials, known as Phase IV studies, is to
      monitor long-term risks and benefits, study different dosage levels or evaluate
      safety and effectiveness. In recent years, the FDA has increased its reliance
      on
      these trials. Phase IV studies usually involve thousands of participants. Phase
      IV studies also may be initiated by the company sponsoring the new drug to
      gain
      broader market value for an approved drug. For example, large-scale trials
      may
      also be used to prove effectiveness and safety of new forms of drug delivery
      for
      approved drugs. Examples may be using an inhalation spray versus taking tablets
      or a sustained-release form of medication versus capsules taken multiple times
      per day.




The
      drug
      approval process is time-consuming, involves substantial expenditures of
      resources, and depends upon a number of factors, including the severity of
      the
      illness in question, the availability of alternative treatments, and the risks
      and benefits demonstrated in the clinical trials.




9





*Orphan
      Drug Act.* The
      Orphan Drug Act provides incentives to develop and market drugs (“ *Orphan
      Drugs* ”)
      for
      rare disease conditions in the United States. A drug that receives Orphan Drug
      designation and is the first product to receive FDA marketing approval for
      its
      product claim is entitled to a seven-year exclusive marketing period in the
      United States for that product claim. A drug which is considered by the FDA
      to
      be different than such FDA-approved Orphan Drug is not barred from sale in
      the
      United States during such exclusive marketing period even if it receives
      approval for the same claim. We can provide no assurance that the Orphan Drug
      Act’s provisions will be the same at the time of the approval, if any, of our
      products.





***Other
      Regulations***





Various
      Federal and state laws, regulations, and recommendations relating to safe
      working conditions, laboratory practices, the experimental use of animals,
      and
      the purchase, storage, movement, import, export, use, and disposal of hazardous
      or potentially hazardous substances, including radioactive compounds and
      infectious disease agents, used in connection with our research are applicable
      to our activities. They include, among others, the United States Atomic Energy
      Act, the Clean Air Act, the Clean Water Act, the Occupational Safety and Health
      Act, the National Environmental Policy Act, the Toxic Substances Control Act,
      and Resources Conservation and Recovery Act, national restrictions on technology
      transfer, import, export, and customs regulations, and other present and
      possible future local, state, or federal regulation. The extent of governmental
      regulation which might result from future legislation or administrative action
      cannot be accurately predicted.




**Competition**





***Competition
      in General***





Competition
      in the area of biomedical and pharmaceutical research and development is intense
      and significantly depends on scientific and technological factors. These factors
      include the availability of patent and other protection for technology and
      products, the ability to commercialize technological developments and the
      ability to obtain governmental approval for testing, manufacturing and
      marketing. Our competitors include major pharmaceutical, medical products,
      chemical and specialized biotechnology companies, many of which have financial,
      technical and marketing resources significantly greater than ours. In addition,
      many biotechnology companies have formed collaborations with large, established
      companies to support research, development and commercialization of products
      that may be competitive with ours. Academic institutions, governmental agencies
      and other public and private research organizations are also conducting research
      activities and seeking patent protection and may commercialize products on
      their
      own or through joint ventures. We are aware of certain other products
      manufactured or under development by competitors that are used for the treatment
      of the diseases and health conditions that we have targeted for product
      development. We can provide no assurance that developments by others will not
      render our technology obsolete or noncompetitive, that we will be able to keep
      pace with new technological developments or that our technology will be able
      to
      supplant established products and methodologies in the therapeutic areas that
      are targeted by us. The foregoing factors could have a material adverse affect
      on our business, prospects, financial condition and results of operations.
      These
      companies, as well as academic institutions, governmental agencies and private
      research organizations, also compete with us in recruiting and retaining highly
      qualified scientific personnel and consultants.




10





Competition
      within our sector is increasing, so we will encounter competition from existing
      firms that offer competitive solutions in diabetes treatment solutions. These
      competitive companies could develop products that are superior to, or have
      greater market acceptance, than the products being developed by us. We will
      have
      to compete against other biotechnology and pharmaceutical companies with greater
      market recognition and greater financial, marketing and other resources.





Our
      competition will be determined in part by the potential indications for which
      our technology is developed and ultimately approved by regulatory authorities.
      In addition, the first product to reach the market in a therapeutic or
      preventive area is often at a significant competitive advantage relative to
      later entrants to the market. Accordingly, the relative speed with which we,
      or
      our potential corporate partners, can develop products, complete the clinical
      trials and approval processes and supply commercial quantities of the products
      to the market are expected to be important competitive factors. Our competitive
      position will also depend on our ability to attract and retain qualified
      scientific and other personnel, develop effective proprietary products, develop
      and implement production and marketing plans, obtain and maintain patent
      protection and secure adequate capital resources. We expect our technology,
      if
      approved for sale, to compete primarily on the basis of product efficacy,
      safety, patient convenience, reliability, value and patent
      position.





***Competition
      for our Oral Insulin Capsule***





We
      anticipate the oral insulin capsule to be a competitive diabetes drug because
      of
      its anticipated efficacy and safety profile. Following are treatment options
      for
      type I and II diabetic patients:




·
            Insulin
                injections;





·
            Insulin
                pumps;





·
            Insulin
                inhalers;





·
            a
                combination of diet, exercise and oral medication which improve the
                body's
                response to insulin or cause the body to produce more insulin, and;





Several
      entities who are developing oral insulin capsule and other alternative oral
      insulin as well as the development stage are thought to be **:** Diabetology (UK, Phase 2), Emisphere Technologies (US, Phase 2), Biocon (India),
      Apollo Life Sciences (Australia, Phase 1), Generex (Canada, Phase 3) – Buccal
      delivery, Biodel (US, Phase 3) – Sublingual delivery and MannKind (US) -Inhaled
      delivery





**Scientific
      Advisory Board**





We
      maintain a scientific advisory board consisting of internationally recognized
      scientists who advise us on scientific and technical aspects of our business.
      The scientific advisory board meets periodically to review specific projects
      and
      to assess the value of new technologies and developments to us. In addition,
      individual members of the scientific advisory board meet with us periodically
      to
      provide advice in particular areas of expertise. The scientific advisory board
      consists of the following members, information with respect to whom is set
      forth
      below: Professor Avram Hershko, Dr. Harold Jacob, Dr. Nir Barzilai, Prof. Ele
      Ferrannini, Dr. Derek LeRoith and Dr. John Ziemniak.




11





*Professor
      Avram Hershko, MD PhD* joined
      the Oramed Scientific Advisory Board in July 2008. He gained his MD (1965)
      and
      PhD (1969) from the Hebrew University- Hadassah Medical School of Jerusalem,
      a
      period which included service as a physician in the Israel Defense Forces
      (1965-67). After a post-doctoral fellowship with Gordon Tomkins at the
      University of San Francisco (1969-72), he joined the faculty of the Haifa
      Technion becoming professor in 1980. He is now Distinguished Professor in the
      Unit of Biochemistry in the B. Rappaport Faculty of Medicine of the Technion.
      Prof. Hershko’s main research interests concern the mechanisms by which cellular
      proteins are degraded, a formerly neglected field of study. Hershko and his
      colleagues showed that cellular proteins are degraded by a highly selective
      proteolytic system. This system tags proteins for destruction by linkage a
      protein called ubiquitin, which had previously been identified in many tissues,
      as the name suggests, but whose function was previously unknown. Subsequent
      work
      in Hershko's and many other laboratories has shown that the ubiquitin system
      has
      a vital role in controlling a wide range of cellular processes, such as the
      regulation of cell division, signal transduction and DNA repair. Abnormalities
      in the ubiquitin system result in diseases such as certain types of cancer.
      The
      full range of functions of the ubiquitin system in health and disease has still
      to be elucidated. Prof. Hershko was awarded the Nobel Prize in Chemistry (2004)
      jointly with his former PhD student Aaron Ciechanover and their colleague Irwin
      Rose. His many honors include the Israel Prize for Biochemistry (1994), the
      Gardner Award (1999), the Lasker Prize for Basic Medical Research (2000), the
      Wolf Prize for Medicine (2001) and the Louisa Gross Horwitz Award (2001).
      Hershko is a member of the Israel Academy of Sciences (2000) and a Foreign
      Associate of the US Academy of Sciences (2003).





*Derek
      LeRoith MD PhD* is
      currently the Chief of the Division of Endocrinology, Diabetes and Bone Diseases
      at Mt. Sinai School of Medicine, NY. Dr. LeRoith has worked at the NIH since
      1979 in the field of Endocrinology and Diabetes and rose to be Diabetes Branch
      at the National Institutes of Health in Bethesda MD, a position he held until
      2005. His main interests have focused on the role of insulin and the
      insulin-like growth factors in normal physiology and disease states. In these
      areas he has published over 500 peer-reviewed articles and reviews in high
      profile journals. He is also the senior editor of a textbook on diabetes, now
      in
      its third edition and has edited books on the insulin-like growth factors.
      Dr.
      LeRoith has made major contributions in our understanding of the basic
      pathophysiology of type 2 diabetes and also the role of the IGFs in various
      disorders especially in cancer, and is considered a world expert on these
      topics. In recognition of his contributions he has received many lectureships
      worldwide and has been the plenary speaker at numerous national and
      international symposia. He is the editor of a number of diabetes- and growth
      factor-related journals, has been on the advisory boards of a number of
      companies and co-chairs two national committees that deal with the education
      of
      endocrinologist and primary care physicians.





*Dr.
      Nir Barzilai* is the
      Director of the Institute for Aging Research at the Albert Einstein College
      of
      Medicine. He is currently an Associate Professor in the Department of Medicine,
      Molecular genetics and the Diabetes Research Center and is a member of the
      Divisions of Endocrinology and Geriatrics. He is also the Director of the
      Montefiore Hospital Diabetes Clinic. He has spent over 20 years in assisting
      patients internationally and training in vast fields from Medicine, Geriatrics,
      Endocrinology and Molecular Genetics. Dr. Barzilai has had a strong career
      in
      diabetes studies between Israel, London and the United States. He has worked
      for
      such esteemed institutions as Hadassah Research Hospital, NIH (National
      Institute of Health), and many esteemed US based university hospitals including
      Cornell and Yale.




12





*Prof.
      Ele Ferrannini* has
      published over 350 original papers and 50 book chapters, and he is amongst
      the
      "highly cited scientists." (ISIhighlycited.com). One of many great honors
      achieved for Prof. Ferrannini includes being elected a past President to the
      EASD, European Association for the Study of Diabetes. The Association is based
      on individual membership and embraces scientists, physicians, laboratory
      workers, nurses and students from all over the world who are interested in
      diabetes and related subjects for Europe, such that the ADA, American Diabetes
      Association does in America. Prof. Ferrannini has worked with various
      institutions including the Department of Internal Medicine, University of Pisa
      School of Medicine, and CNR (National Research Council) Institute of Clinical
      Physiology, Pisa, Italy; Diabetes Division, Department of Medicine, University
      of Texas Health Science Center at San Antonio, Texas, USA. He has also had
      extensive training focused on microbiology, immunology, endocrinology, and
      specializing in diabetes studies. Prof. Ferrannini has received a Certificate
      of
      the Educational Council for Foreign Medical Graduates from the University of
      Bologna, and with cum laude honors completed a subspecialty in Diabetes and
      Metabolic Diseases from the University of Torino.




*Dr.
      Harold Jacob* has a
      strong background, both in medical sciences as well as biotechnology and medical
      devices. He practiced clinical gastroenterology in New York and served as Chief
      of Gastroenterology at St. Johns Episcopal Hospital and South Nassau Communities
      Hospital in the years 1986-1995, and was a Clinical Assistant Professor of
      Medicine at SUNY during the years 1983-1990. Dr. Jacob founded and served as
      Editor in Chief of Endoscopy Review and has authored numerous publications
      in
      the field of gastroenterology. Since 1998, Dr. Jacob is president of Medical
      Instrument, a company which provides a range of support and consulting services
      to start-up and early stage companies as well as patenting it's own proprietary
      medical devices. Dr. Jacob has advised a spectrum of companies in the past
      and
      he served as a consultant and then as the Director of Medical Affairs at Given
      Imaging Ltd., during the years 1997 to 2003, a company that developed the first
      swallowable wireless pill camera for inspection of the intestine. He has
      licensed patents to a number of companies including Kimberly Clark Ballard.
      Since 2003, Dr. Jacob is CEO of NanoVibronix, a medical device company using
      surface acoustics to prevent catheter acquired infection as well as other
      applications. Dr. Jacob is a member of the Board of Directors of the
      Company.




*Dr.
      John A, Ziemniak* is
      currently the director of drugs and biologics product development at Encorium
      Group Inc. and the co-founder/partner of Gwynedd Pharmaceuticals. Dr. Ziemniak
      has over 20 years experience in the pharmaceutical industry. He has worked
      extensively in drug development having been involved in the conception, filing,
      and approval of over 13 NDAs and greater then 20 INDs covering a wide variety
      of
      drugs and indications. Dr. Ziemniak is the co-founder and partner of Gwynedd
      Pharmaceutical Consultants, a contract organization providing consulting
      services to the pharmaceutical, medical and dental industries in the area of
      drug and product development. Dr Ziemniak’s areas of specialty include drug
      delivery, project management, pharmacokinetics, clinical pharmacology and drug
      development. Dr. Ziemniak has approximately 50 scientific publications and
      numerous patents on a variety of drug development topics and
      products.





13





**Employees**





We
      have
      been successful in retaining the experienced personnel involved in our research
      and development program. In addition, we believe we have successfully recruited
      clinical/regulatory, quality assurance and other personnel needed to advance
      through clinical studies or have engaged the services of experts in the field
      for these requirements. As of August 31, 2008, we contracted seven individuals
      through employment or consulting agreements. Of our staff, two are senior
      management, two are engaged in research and development work, and the remaining
      in administration work.




**Facilities**





Our
      principal executive offices are located in approximately 117 square meters
      of
      office space in Givat Ram, Jerusalem, Israel. The lease commenced on October
      1,
      2007 and is for a period of 51 months. The aggregate annual base rental for
      this
      space is $8,004. We believe that our existing facilities are suitable and
      adequate to meet our current business requirements. In the event that we should
      require additional or alternative facilities, we believe that such facilities
      can be obtained on short notice at competitive rates.


14


**ITEM
      1A – RISK FACTORS**





***An
      investment in our common stock involves a high degree of risk. You should
      consider carefully the following information about these risks, together with
      the other information contained in this annual report before buying shares
      of
      our common stock. Our business, prospects, financial condition, and results
      of
      operations may be materially and adversely affected as a result of any of the
      following risks. The trading of our common stock could decline as a result
      of
      any of these risks. You could lose all or part of your investment in our common
      stock. Some of the statements in “Risk Factors” are forward looking statements.
      See “Special Note Regarding Forward Looking Statements”.***





**Risks
      Related to Our Business**





**There
      is substantial doubt as to our ability to continue as a going
      concern.**




Our
      financial statements were prepared on the assumption that we will continue
      as a
      going concern. We estimate that our cash reserves will not be sufficient to
      permit us to continue at our anticipated level of operations for our fiscal
      year
      ended August 31, 2009 . During 2009, we plan to increase research and
      development, product development, and administrative expenses relating to our
      business, including expenses related to research and development related to
      our
      oral delivery platform. We intend to use our cash reserves, as well as other
      funds in the event that they shall become available on commercially reasonable
      terms, to finance these activities and other activities described herein,
      although we can provide no assurance that these additional funds will be
      available in the amounts or at the times we may require. If sufficient capital
      is not available, we would likely be required to scale back or terminate our
      research and development efforts. See “ *Risk
      Factors — We will need additional capital in order to satisfy our business
      objectives* ”.





**We
      will need substantial additional capital in order to satisfy our business
      objectives.**





To
      date,
      we have financed our operations principally through offerings of securities
      exempt from the registration requirements of the Securities Act. We believe
      that
      our available resources and cash flow will be sufficient to meet our anticipated
      working capital needs for a minimum of 7 months from the date of this Annual
      Report. We estimate that we will require substantial additional financing at
      various intervals in order to continue our research and development programs,
      including significant requirements for operating expenses including intellectual
      property protection and enforcement, for pursuit of regulatory approvals, and
      for commercialization of our products. We can provide no assurance that
      additional funding will be available on a timely basis, on terms acceptable
      to
      us, or at all. In the event that we are unable to obtain such financing, we
      will
      not be able to fully develop and commercialize our technology. Our future
      capital requirements will depend upon many factors, including:





·  continued
      scientific progress in our research and development programs;





·  costs
      and
      timing of conducting clinical trials and seeking regulatory approvals and patent
      prosecutions;





·  competing
      technological and market developments;





·  our
      ability to establish additional collaborative relationships; and




15





·  effects
      of commercialization activities and facility expansions if and as
      required.





If
      we
      cannot secure adequate financing when needed, we may be required to delay,
      scale
      back or eliminate one or more of our research and development programs or to
      enter into license or other arrangements with third parties to commercialize
      products or technologies that we would otherwise seek to develop ourselves
      and
      commercialize ourselves. In such event, our business, prospects, financial
      condition, and results of operations may be adversely affected as we may be
      required to scale-back, eliminate, or delay development efforts or product
      introductions or enter into royalty, sales or other agreements with third
      parties in order to commercialize our products.





**We
      are a development stage company with a history of losses and can provide no**  **assurance
      as to our future operating results.**





We
      are a
      development stage company with no revenues from our contemplated principal
      business activity. Consequently, we have incurred net losses and negative cash
      flows since inception. We currently have no product revenues, and may not
      succeed in developing or commercializing any products which will generate
      product or licensing revenues. We do not expect to have any products on the
      market for several years. In addition, development of our product candidates
      requires a process of pre-clinical and clinical testing, during which our
      products could fail. We may not be able to enter into agreements with one or
      more companies experienced in the manufacturing and marketing of therapeutic
      drugs and, to the extent that we are unable to do so, we will not be able to
      market our product candidates. Eventual profitability will depend on our success
      in developing, manufacturing, and marketing our product candidates. As of August
      31, 2008 and 2007, we had working capital of $4,483,940 and $505,951,
      respectively, and stockholders’ equity of $4,593,060 and $513,131, respectively.
      We generated no revenues to date. For the period from our inception on April
      12,
      2002 through August 31, 2008, the years ended August 31, 2008 and 2007, we
      incurred net losses of $(7,248,204), $(2,769,271), and $(3,236,009),
      respectively We may never achieve profitability and expect to incur net losses
      in the foreseeable future. See “ *Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations* ”.





**We
      rely upon patents to protect our technology. We may be unable to protect our**  **intellectual
      property rights and we may be liable for infringing the intellectual**  **property
      rights of others.**





Our
      ability to compete effectively will depend on our ability to maintain the
      proprietary nature of our technologies. We currently hold several pending patent
      applications in the United States and corresponding patent applications filed
      in
      certain other countries covering our technology. Further, we intend to rely
      on a
      combination of trade secrets and non-disclosure, and other contractual
      agreements and technical measures to protect our rights in our technology.
      We
      intend to depend upon confidentiality agreements with our officers, directors,
      employees, consultants, and subcontractors, as well as collaborative partners,
      to maintain the proprietary nature of our technology. These measures may not
      afford us sufficient or complete protection, and others may independently
      develop technology similar to ours, otherwise avoid our confidentiality
      agreements, or produce patents that would materially and adversely affect our
      business, prospects, financial condition, and results of operations. We believe
      that our technology is not subject to any infringement actions based upon the
      patents of any third parties; however, our technology may in the future be
      found
      to infringe upon the rights of others. Others may assert infringement claims
      against us, and if we should be found to infringe upon their patents, or
      otherwise impermissibly utilize their intellectual property, our ability to
      continue to use our technology or the licensed technology could be materially
      restricted or prohibited. If this event occurs, we may be required to obtain
      licenses from the holders of this intellectual property, enter into royalty
      agreements, or redesign our products so as not to utilize this intellectual
      property, each of which may prove to be uneconomical or otherwise impossible.
      Licenses or royalty agreements required in order for us to use this technology
      may not be available on terms acceptable to us, or at all. These claims could
      result in litigation, which could materially adversely affect our business,
      prospects, financial condition, and results of operations.




16





The
      patent position of biopharmaceutical and biotechnology firms is generally
      uncertain and involves complex legal and factual questions. We do not know
      whether any of our current or future patent applications will result in the
      issuance of any patents. Even issued patents may be challenged, invalidated
      or
      circumvented. Patents may not provide a competitive advantage or afford
      protection against competitors with similar technology. Competitors or potential
      competitors may have filed applications for, or may have received patents and
      may obtain additional and proprietary rights to compounds or processes used
      by
      or competitive with ours. In addition, laws of certain foreign countries do
      not
      protect intellectual property rights to the same extent as do the laws of the
      United States or Canada.





Patent
      litigation is becoming widespread in the biotechnology industry and we cannot
      predict how this will affect our efforts to form strategic alliances, conduct
      clinical testing or manufacture and market any products under development.
      If
      challenged, our patents may not be held valid. We could also become involved
      in
      interference proceedings in connection with one or more of our patents or patent
      applications to determine priority of invention. If we become involved in any
      litigation, interference or other administrative proceedings, we will likely
      incur substantial expenses and the efforts of our technical and management
      personnel will be significantly diverted. In addition, an adverse determination
      could subject us to significant liabilities or require us to seek licenses
      that
      may not be available on favorable terms, if at all. We may be restricted or
      prevented from manufacturing and selling our products in the event of an adverse
      determination in a judicial or administrative proceeding or if we fail to obtain
      necessary licenses.





Our
      commercial success will also depend significantly on our ability to operate
      without infringing the patents and other proprietary rights of third parties.
      Patent applications are, in many cases, maintained in secrecy until patents
      are
      issued. The publication of discoveries in the scientific or patent literature
      frequently occurs substantially later than the date on which the underlying
      discoveries were made and patent applications are filed. In the event of
      infringement or violation of another party's patent, we may be prevented from
      pursuing product development or commercialization. See “ *Business—Patents
      and Licenses* ”.





**At
      present, our success depends solely on the successful commercialization of
      the
      oral insulin capsule** **.**





The
      successful commercialization of oral insulin capsule is crucial for our success.
      Our proposed products and their potential applications are in an early stage
      of
      clinical and manufacturing/process development and face a variety of risks
      and
      uncertainties. Principally, these risks include the following:





·  future
      clinical trial results may show that the oral insulin capsule is not well
      tolerated by recipients at its effective doses or is not efficacious as compared
      to placebo;




17





·  future
      clinical trial results may be inconsistent with previous preliminary testing
      results and data from our earlier studies may be inconsistent with clinical
      data;





·  even
      if
      our oral insulin capsule is shown to be safe and effective for its intended
      purposes, we may face significant or unforeseen difficulties in obtaining or
      manufacturing sufficient quantities or at reasonable prices;





·  our
      ability to complete the development and commercialization of the oral insulin
      capsule for our intended use is significantly dependent upon our ability to
      obtain and maintain experienced and committed partners to assist us with
      obtaining clinical and regulatory approvals for, and the manufacturing,
      marketing and distribution of, the oral insulin capsule on a worldwide
      basis;





·  even
      if
      our oral insulin capsule is successfully developed, commercially produced and
      receive all necessary regulatory approvals, there is no guarantee that there
      will be market acceptance of the products; and





·  our
      competitors may develop therapeutics or other treatments which are superior
      or
      less costly than our own with the result that our products, even if they are
      successfully developed, manufactured and approved, may not generate significant
      revenues.





If
      we are
      unsuccessful in dealing with any of these risks, or if we are unable to
      successfully commercialize our oral insulin capsule for some other reason,
      it
      would likely seriously harm our business.





**We
      have no prior experience manufacturing our products.**





We
      currently lack the resources to manufacture any of our product candidates on
      a
      large scale. Our ability to conduct clinical trials and commercialize our
      product candidates will depend, in part, on our ability to manufacture our
      products, either directly or, as currently intended, through contract
      manufacturers, at a competitive cost and in accordance with current Good
      Manufacturing Practices (“ *cGMP* ”)
      and
      other regulatory requirements. We anticipate that we will be required to depend
      on contract manufacturers or collaborative partners for the manufacturing of
      our
      product candidates for preclinical studies and clinical trials and intend to
      use
      contract manufacturers to produce any products we may eventually commercialize.
      If we are not able to obtain contract manufacturing on commercially reasonable
      terms, we may not be able to conduct or complete clinical trials or
      commercialize our product candidates. We have identified multiple suppliers
      for
      most if not all of the components of our drug product candidates, although
      we
      can provide no assurance that these components will be available when needed
      on
      commercially reasonable terms.





In
      order
      to succeed, we ultimately will be required to either develop such manufacturing
      capabilities or to outsource manufacturing on a long-term basis to third
      parties. We can provide no assurance that third parties will be interested
      in
      manufacturing our products on a timely basis, on commercially reasonable terms,
      or at all. If we are unable to establish manufacturing capabilities either
      by
      developing our own organization or by entering into agreements with others,
      we
      may be unable to commercialize our products, which would have a material adverse
      effect upon our business, prospects, financial condition, and results of
      operations. Further, in the event that we are required to outsource these
      functions on disadvantageous terms, we may be required to pay a relatively
      large
      portion or our net revenue to these organizations, which would have a material
      adverse effect upon our business, prospects, financial condition, and results
      of
      operations.




18





**We
      are dependent upon third party suppliers of our raw materials.**





We
      are
      dependent on outside vendors for our entire supply of the oral insulin capsule.
      While we believe that there are numerous sources of supply available, if the
      third party suppliers were to cease production or otherwise fail to supply
      us
      with quality raw materials in sufficient quantities on a timely basis and we
      were unable to contract on acceptable terms for these services with alternative
      suppliers, our ability to produce our products and to conduct testing and
      clinical trials would be materially adversely affected





**We
      can provide no assurance of the successful and timely development of our new**  **products.**





Our
      product candidates are at various stages of research and development. Further
      development and extensive testing will be required to determine their technical
      feasibility and commercial viability. Our success will depend on our ability
      to
      achieve scientific and technological advances and to translate such advances
      into reliable, commercially competitive products on a timely basis. Products
      that we have developed and may in the future develop are not likely to be
      commercially available for some time, if at all. The proposed development
      schedules for our products may be affected by a variety of factors, including
      technological difficulties, proprietary technology of others, and changes in
      governmental regulation, many of which will not be within our control. Any
      delay
      in the development, introduction, or marketing of our products could result
      either in such products being marketed at a time when their cost and performance
      characteristics would not be competitive in the marketplace or in the shortening
      of their commercial lives. In light of the long-term nature of our projects,
      the
      nature of technology involved, and the other factors, described elsewhere in
      “Risk Factors”, there can be no assurance that we will be able to complete
      successfully the development or marketing of any new products.




**We
      have limited experience in conducting clinical trials.**





Clinical
      trials must meet FDA and foreign regulatory requirements. We have limited
      experience in designing, conducting and managing the preclinical studies and
      clinical trials necessary to obtain regulatory approval for our product
      candidates in any country. We may encounter problems in clinical trials that
      may
      cause us or the FDA or foreign regulatory agencies to delay, suspend or
      terminate our clinical trials at any phase. These problems could include the
      possibility that we may not be able to conduct clinical trials at our preferred
      sites, enroll a sufficient number of patients for our clinical trials at one
      or
      more sites or begin or successfully complete clinical trials in a timely
      fashion, if at all. Furthermore, we, the FDA or foreign regulatory agencies
      may
      suspend clinical trials at any time if we or they believe the subjects
      participating in the trials are being exposed to unacceptable health risks
      or if
      we or they find deficiencies in the clinical trial process or conduct of the
      investigation. If clinical trials of any of the product candidates fail, we
      will
      not be able to market the product candidate which is the subject of the failed
      clinical trials. The FDA and foreign regulatory agencies could also require
      additional clinical trials, which would result in increased costs and
      significant development delays. Our failure to adequately demonstrate the safety
      and effectiveness of a pharmaceutical product candidate under development could
      delay or prevent regulatory approval of the product candidate and could have
      a
      material adverse effect on our business, prospects, financial condition, and
      results of operations.




19




**We
      can provide no assurance that our products will obtain regulatory approval
      or
      that the results of clinical studies will be favorable.**




The
      testing, marketing and manufacturing of any of our products will require the
      approval of the FDA and/or regulatory agencies of other countries. We cannot
      predict with any certainty the amount of time necessary to obtain such
      regulatory approvals and whether any such approvals will ultimately be granted.
      In any event, review and approval by the regulatory bodies is anticipated to
      take a number of years. Preclinical and clinical trials may reveal that one
      or
      more of our products are ineffective or unsafe, in which event further
      development of such products could be seriously delayed or terminated. Moreover,
      obtaining approval for certain products may require the testing on human
      subjects of substances whose effects on humans are not fully understood or
      documented. Delays in obtaining necessary regulatory approvals of any proposed
      product and failure to receive such approvals would have an adverse effect
      on
      the product’s potential commercial success and on our business, prospects,
      financial condition, and results of operations. In addition, it is possible
      that
      a product may be found to be ineffective or unsafe due to conditions or facts
      which arise after development has been completed and regulatory approvals have
      been obtained. In this event we may be required to withdraw such product from
      the market. See “ *Business
      – Governmental Regulation* ”.





**If
      our products are commercialized, we may be subject to product liability
      claims.**




The
      testing, marketing, and sale of pharmaceutical products entail inherent risks.
      If we succeed in developing new pharmaceutical products, the sale of such
      products may expose us to potential liability resulting from the use of such
      products. Such liability might result from claims made directly by consumers
      or
      by pharmaceutical companies or others selling such products. While we may seek
      to obtain product liability insurance, there can be no assurance that we will
      be
      able to obtain such insurance or, if obtained, that such insurance can be
      acquired in amounts sufficient to protect us against such potential liability
      or
      at a reasonable cost. We do not currently maintain product liability
      insurance.





**As
      we have no sales, marketing, and distribution capabilities, we will be required
      to either develop such capabilities or to outsource these activities to third
      parties.**





We
      currently have no sales, marketing or distribution capabilities. In order to
      succeed, we ultimately will be required to either develop such capabilities
      or
      to outsource these activities to third parties. We can provide no assurance
      that
      third parties will be interested in acting as our outsourced sales, marketing,
      and distribution arms on a timely basis, on commercially reasonable terms,
      or at
      all. If we are unable to establish sales, marketing, or distribution
      capabilities either by developing our own organization or by entering into
      agreements with others, we may be unable to successfully sell any products
      that
      we are able to begin to commercialize, which would have a material adverse
      effect upon our business, prospects, financial condition, and results of
      operations. Further, in the event that we are required to outsource these
      functions on disadvantageous terms, we may be required to pay a relatively
      large
      portion or our net revenue to these organizations, which would have a material
      adverse effect upon our business, prospects, financial condition, and results
      of
      operations.





**In
      the future, we may rely upon our collaborative agreements with large**  **pharmaceutical
      companies.**


In
      the
      future, we may rely heavily on collaborative agreements with large
      pharmaceutical companies, governments, or other parties for our revenues. Our
      inability to obtain any one or more of these agreements, on commercially
      reasonable terms, or at all, or to circumvent the need for any such agreement,
      could cause significant delays and cost increases and materially affect our
      ability to develop and commercialize our product candidates. Some of our
      programs may require the use of multiple proprietary technologies, especially
      patented drugs. Obtaining licenses for these technologies may require us to
      make
      cumulative royalty payments or other payments to several third parties,
      potentially reducing amounts paid to us or making the cost of our products
      commercially prohibitive. Manufacturing of drug products may also require
      licensing technologies and intellectual property from third
      parties.




20





We
      have
      recently engaged in preliminary discussions with companies outside of the United
      States to carry out clinical trials of our products. Such agreements could
      involve us granting exclusive commercialization rights and profit interests
      in
      our products derived from certain geographic areas in exchange for payment
      of
      the costs of running such clinical trials now. This could have an adverse effect
      on our ability to market such products to large pharmaceutical companies in
      the
      future. There is no guarantee that we will be able to enter into any such
      agreements or that, if entered into, such agreements would be
      profitable.





**We
      have limited senior management resources and may be required to obtain more
      resources to manage our growth.**





We
      expect
      the expansion of our business to place a significant strain on our limited
      managerial, operational, and financial resources. We will be required to expand
      our operational and financial systems significantly and to expand, train, and
      manage our work force in order to manage the expansion of our operations. Our
      failure to fully integrate our new employees into our operations could have
      a
      material adverse effect on our business, prospects, financial condition, and
      results of operations. Our ability to attract and retain highly skilled
      personnel is critical to our operations and expansion. We face competition
      for
      these types of personnel from other technology companies and more established
      organizations, many of which have significantly larger operations and greater
      financial, technical, human, and other resources than we have. We may not be
      successful in attracting and retaining qualified personnel on a timely basis,
      on
      competitive terms, or at all. If we are not successful in attracting and
      retaining these personnel, our business, prospects, financial condition, and
      results of operations will be materially adversely affected. See “ *Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations* ”,
      “ *Business
      – Strategy* ”,
      and
“ *Business—Employees* ”.




**We
      depend upon our senior management and skilled personnel and their loss or**  **unavailability
      could put us at a competitive disadvantage.**





We
      currently depend upon the efforts and abilities of our senior executives, as
      well as the services of several key consultants and other key personnel. The
      loss or unavailability of the services of any of these individuals for any
      significant period of time could have a material adverse effect on our business,
      prospects, financial condition, and results of operations. In addition,
      recruiting and retaining qualified scientific personnel to perform future
      research and development work will be critical to our success. There is
      currently a shortage of employees with expertise in our areas of research and
      clinical and regulatory affairs, and this shortage is likely to continue.
      Competition for skilled personnel is intense and turnover rates are high. Our
      ability to attract and retain qualified personnel may be limited. Our inability
      to attract and retain qualified skilled personnel would have a material adverse
      effect on our business, prospects, financial condition, and results of
      operations.




21





**Fulfilling
      our obligations incident to being a public company will be expensive and time
      consuming.**


As
      a
      public company, the Sarbanes-Oxley Act of 2002 and the related rules and
      regulations of the SEC, requires us to implement additional corporate governance
      practices and adhere to a variety of reporting requirements and complex
      accounting rules. Compliance with these public company obligations increases
      our
      legal and financial compliance costs and place significant additional demands
      on
      our finance and accounting staff and on our financial, accounting and
      information systems.





Our
      management is required to conduct an annual evaluation of our internal controls
      over financial reporting and include a report of management on our internal
      controls in this and future annual reports. In addition, we will be required
      to
      have our independent public accounting firm attest to and report on management’s
      assessment of the effectiveness of our internal controls over financial
      reporting. Under current rules, we will be subject to this requirement beginning
      with our annual report on Form 10-K for our fiscal year ending August 31,
      2009. If we are unable to conclude that we have effective internal controls
      over
      financial reporting or, if our independent auditors are unable to provide us
      with an attestation and an unqualified report as to the effectiveness of our
      internal controls over financial reporting, investors could lose confidence
      in
      the reliability of our financial statements, which could result in a decrease
      in
      the value of our common stock.




**We
      became a publicly traded company through the acquisition of a public shell
      company, and we could be liable for unanticipated claims or liabilities as
      a
      result thereof.**





The
      Company was originally incorporated on April 12, 2002 as an exploration stage
      company engaged in the acquisition and exploration of mineral properties. The
      Company was unsuccessful in implementing its business plan as a mineral
      exploration company and became a public shell company. On May 27, 2004, the
      Company executed a share exchange with the shareholders of Integrated Security
      Technologies, Inc., a New Jersey private corporation (“ISTI”). However, due to
      disappointing results, on May 31, 2005, effective as of May 27, 2004 the Company
      terminated the share exchange agreement with the shareholders of ISTI, and
      the
      Company again became a public shell company. The Company remained a public
      shell
      company until March 8, 2006, when we became a pharmaceutical company engaged
      in
      the development of innovative pharmacological solutions.





We
      face
      substantial risks associated with being a former public shell company, including
      absence of accurate or adequate public information concerning the public shell
      company; undisclosed liabilities; improper accounting; claims or litigation
      from
      former officers, directors, employees or stockholders; contractual obligations;
      and regulatory requirements. Although management performed due diligence on
      the
      Company, there can be no assurance that such risks do not occur. The occurrence
      of any such risk could materially adversely affect the Company's financial
      condition.




22




**Risks
      Related to our Industry**





**The
      biotechnology and biopharmaceutical industries are characterized by rapid**  **technological
      developments and a high degree of competition. We may be unable to**  **compete
      with more substantial enterprises.**





The
      biotechnology and biopharmaceutical industries are characterized by rapid
      technological developments and a high degree of competition. **** As
      a
      result, our actual or proposed products could become obsolete before we recoup
      any portion of our related research and development and commercialization
      expenses. These industries are highly competitive, and this competition comes
      both from biotechnology firms and from major pharmaceutical and chemical
      companies. Many of these companies have substantially greater financial,
      marketing, and human resources than we do (including, in some cases,
      substantially greater experience in clinical testing, manufacturing, and
      marketing of pharmaceutical products). We also experience competition in the
      development of our products from universities and other research institutions
      and compete with others in acquiring technology from such universities and
      institutions. In addition, certain of our products may be subject to competition
      from products developed using other technologies. See “ *Business
      – Competition* ”.





**The
      industry in which we operate is highly competitive.**





Numerous
      well-known companies, which have substantially greater capital, research and
      development capabilities and experience than we have, are presently engaged
      in
      the research and development efforts with respect to our target indications.
      By
      virtue of having or introducing competitive products on the market before us,
      these entities may gain a competitive advantage. Further future technological
      developments may render some or all of our current or future products
      noncompetitive or obsolete, and we may not be able to make the enhancements
      to
      our products necessary to compete successfully with newly emerging technologies.
      If we are unable to successfully compete in our chosen markets, our business
      prospects, financial condition, and results of operations would be materially
      adversely affected. See “ *Business
      — Competition* ”.





**The
      government regulatory approval process is time consuming and
      expensive.**





To
      date,
      we have not submitted a marketing application for any product candidate to
      the
      FDA or any foreign regulatory agency, and none of our product candidates have
      been approved for commercialization in any country. Prior to commercialization,
      each product candidate will be subject to an extensive and lengthy governmental
      regulatory approval process in the United States and in other countries. We
      may
      not be able to obtain regulatory approval for any product candidate we develop
      or, even if approval is obtained, the labeling for such products may place
      restrictions on their use that could materially impact the marketability and
      profitability of the product subject to such restrictions. We have limited
      experience in designing, conducting and managing the clinical testing necessary
      to obtain such regulatory approval. Satisfaction of these regulatory
      requirements, which includes satisfying the FDA and foreign regulatory
      authorities that the product is both safe and effective for its intended
      therapeutic uses, typically takes several years depending upon the type,
      complexity and novelty of the product and requires the expenditure of
      substantial resources.





**Any
      manufacturer to produce our products will be required to comply with**  **extensive
      government regulation.**





Before
      we
      can begin to commercially manufacture any of our product candidates, we must
      either secure manufacturing in an approved manufacturing facility or obtain
      regulatory approval of our own manufacturing facility and processes. In
      addition, the manufacturing of our product candidates must comply with cGMP
      and/or other requirements of the FDA and requirements by regulatory agencies
      in
      other countries. These requirements govern, among other things, quality control
      and documentation procedures. We or any third-party manufacturer of our product
      candidates, may not be able to comply with these requirements, which would
      prevent us from selling such products. Material changes to the manufacturing
      processes of our products after approvals have been granted are also subject
      to
      review and approval by the FDA or other regulatory agencies.


23





**The
      commercial success of any newly-introduced pharmaceutical product depends**  **in
      part upon the ability of patients to obtain adequate reimbursement.**





If
      we
      succeed in bringing our product candidates to market, they may not be considered
      cost-effective, and coverage and adequate payments may not be available or
      may
      not be sufficient to allow us to sell our products on a competitive basis.
      In
      both the United States and elsewhere, sales of medical products, diagnostics,
      and therapeutics are dependent, in part, on the availability of reimbursement
      from third party payors, such as health maintenance organizations and other
      private insurance plans and governmental programs such as Medicare. Third party
      payors are increasingly challenging the prices charged for pharmaceutical
      products and services. We anticipate that our business will be affected by
      the
      efforts of government and third party payors to contain or reduce the cost
      of
      health care through various means. In the United States, there have been and
      will continue to be a number of federal and state proposals to implement
      government controls on pricing. Similar government pricing controls exist in
      varying degrees in other countries. In addition, the emphasis on managed care
      in
      the United States has increased and will continue to increase the pressure
      on
      the pricing of pharmaceutical products. We cannot predict whether any
      legislative or regulatory proposals will be adopted or the effect these
      proposals or managed care efforts may have on our business.





**Risks
      Related to our Common Stock**





**As
      the market price of our common stock may fluctuate significantly, this may
      make
      it difficult for you to sell your shares of common stock when you want or at
      prices you find attractive.** **





The
      price
      of our common stock is quoted on the OTCBB and constantly changes. In recent
      years, the stock market in general has experienced extreme price and volume
      fluctuations. We expect that the market price of our common stock will continue
      to fluctuate. These fluctuations may result from a variety of factors, many
      of
      which are beyond our control. These factors include:





·  quarterly
      variations in our operating results;





·  operating
      results that vary from the expectations of management, securities analysts
      and
      investors;





·  changes
      in expectations as to our business, prospects, financial condition, and results
      of operations;





·  announcements
      by us, our partners or our competitors regarding material
      developments;





·  the
      operating and securities price performance of other companies that investors
      believe are comparable to us;





·  future
      sales of our equity or equity-related securities;


24





·  changes
      in general conditions in our industry and in the economy, the financial markets
      and the domestic or international political situation;





·  departures
      of key personnel; and





·  regulatory
      considerations.





As
      a
      result of these fluctuations, you may experience difficulty selling shares
      of
      our common stock when desired or at acceptable prices.





**Future
      sales of common stock or the issuance of securities senior to our common stock
      or convertible into, or exchangeable or exercisable for, our common stock could
      materially adversely affect the trading price of our common stock, and our
      ability to raise funds in new equity offerings.**





Future
      sales of substantial amounts of our common stock or other equity-related
      securities in the public market or privately, or the perception that such sales
      could occur, could adversely affect prevailing trading prices of our common
      stock and could impair our ability to raise capital through future offerings
      of
      equity or other equity-related securities. We can make no prediction as to
      the
      effect, if any, that future sales of shares of our common stock or
      equity-related securities, or the availability of shares of common stock for
      future sale, will have on the trading price of our common stock.





**Our
      common stock is deemed to be a "penny stock," which may make it more difficult
      for investors to sell their shares due to suitability
      requirements.**




The
      SEC
      has adopted regulations that generally define “penny stock” to be an equity
      security that has a market price of less than $5.00 per share, subject to
      specific exemptions. The market price of our common stock is currently less
      than $5.00 per share and therefore is a “penny stock” according to SEC rules.
      This designation requires any broker or dealer selling these securities to
      disclose certain information concerning the transaction, obtain a written
      agreement from the purchaser, furnish the customer a document describing the
      risks of investing in penny stocks and send monthly account statements showing
      the market value of each penny stock held in the customer’s account. These rules
      may restrict the ability of brokers or dealers to sell our common stock and
      may
      affect the ability of investors hereunder to sell their shares.




You
      should be aware that, according to the SEC, the market for penny stocks has
      suffered in recent years from patterns of fraud and abuse. Such patterns
      include:




·  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


25





·  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.





We
      are
      aware of the abuses that have occurred in the penny stock market. Although
      we do
      not expect to be in a position to dictate the behavior of the market or of
      broker-dealers who participate in the market, we will strive within the confines
      of practical limitations to prevent such abuses with respect to our common
      stock.





**Future
      sales of our common stock by our existing stockholders could adversely**  **affect
      our stock price.**





The
      market price of our common stock could decline as a result of sales of a large
      number of shares of our common stock in the market, or the perception that
      these
      sales could occur. These sales also might make it more difficult for us to
      sell
      equity securities in the future at a time and at a price that we deem
      appropriate. Currently, we have outstanding 56,456,710 shares of common stock.
      Of these shares, 21,132,995 shares, are freely tradable. Giving effect to the
      exercise in full of all of our outstanding warrants and options, we would have
      outstanding 73,952,407 shares of common stock.





**Our
      issuance of warrants and options to investors, employees and consultants and**  **the
      registration rights for the underlying shares of common stock may have a**  **negative
      effect on the trading prices of our common stock as well as a dilutive effect.**





We
      have
      issued and may continue to issue warrants, options and convertible
      notes at, above or below the current market price. As of August 31, 2008,
      we had outstanding 16,611,697 warrants and options (12,033,677 for the year
      ended August 31, 2007). In addition to the dilutive effect of a large number
      of
      shares and a low exercise price for the warrants and options, there is a
      potential that a large number of underlying shares may be sold in the open
      market at any given time, which could place downward pressure on the trading
      of
      our common stock.





**Because
      we will not pay cash dividends, investors may have to sell shares in order
      to**  **realize
      their investment.**





We
      have
      not paid any cash dividends on our common stock and do not intend to pay cash
      dividends in the foreseeable future. We intend to retain future earnings, if
      any, for reinvestment in the development and expansion of our business. Any
      credit agreements which we may enter into with institutional lenders or
      otherwise may restrict our ability to pay dividends. Whether we pay cash
      dividends in the future will be at the discretion of our board of directors
      and
      will be dependent upon our financial condition, results of operations, capital
      requirements, and any other factors that the board of directors decides is
      relevant. See “ *Dividend
      Policy* ”
and
      “ *Description
      of Securities — Common Stock* ”.





**As
      we have a limited operating history, investors may not have a sufficient history**  **on
      which to base an investment decision.**





Although
      we were incorporated in 2002, we commenced our research activities during
      2006 **** and
      are
      still in the development stage. Accordingly, we have a limited operating history
      upon which investors may evaluate our prospects for success. Investors must
      consider the risks and difficulties frequently encountered by early stage
      companies, particularly in rapidly evolving markets such as the life science
      industry. Such risks include, without limitation, the following:


26





·
            competition;





·
            need
                for acceptance of products;





·
            ability
                to anticipate and adapt to a competitive market and rapid technological
                developments;





·
            amount
                and timing of operating costs and capital expenditures relating to
                expansion of our business, operations, and infrastructure;
                and





·
            dependence
                upon key personnel.





We
      cannot
      be certain our strategy will be successful or that we will successfully address
      these risks. In the event that we do not successfully address these risks,
      our
      business, prospects, financial condition, and results of operations could be
      materially and adversely affected. Information regarding all of our past
      operations can be found in our reports and registration statements that have
      been previously filed with the Securities and Exchange Commission.





**Risks
      Related to conducting Business in Israel**





**We
      are affected by the political, economic, and military risks of locating our**  **principal
      operations in Israel.**





Our
      operations are located in the State of Israel, and we are directly affected
      by
      political, economic, and military conditions in that country. Since December
      1987, the State of Israel has experienced severe civil unrest primarily in
      the
      areas that have been under its control since 1967. No prediction can be made
      as
      to whether these problems will be resolved. Our business, prospects, financial
      condition, and results of operations could be materially adversely affected
      if
      major hostilities involving Israel should occur or if trade between Israel
      and
      its current trading partners is interrupted or curtailed.





All
      adult
      male permanent residents of Israel under the age of 51, unless exempt, may
      be
      required to perform between 14 and 40 days of military reserve duty annually.
      Additionally, all such residents are subject to being called to active duty
      at
      any time under emergency circumstances. Some of our officers, directors, and
      employees currently are obligated to perform annual military reserve duty.
      We
      can provide no assurance that such requirements will not have a material adverse
      effect on our business, prospects, financial condition, and results of
      operations in the future, particularly if emergency circumstances
      occur.





**Because
      all of our officers and directors are located in non-U.S. jurisdictions, you
      may
      have no effective recourse against the management for misconduct and may not
      be
      able to enforce judgment and civil liabilities against our officers, directors,
      experts and agents.**





All
      of
      our directors and officers are nationals and/or residents of countries other
      than the United States, and all or a substantial portion of their assets are
      located outside the United States. As a result, it may be difficult for
      investors to enforce within the United States any judgments obtained against
      any
      of our officers or directors, including judgments predicated upon the civil
      liability provisions of the securities laws of the United States or any U.S.
      state.


27


**ITEM
      2 - PROPERTIES**




Our
      principal executive offices are located in approximately 117 square meters
      of
      office space in Givat Ram, Jerusalem, Israel. The lease commenced on October
      1,
      2007 and is for a period of 51 months. The aggregate annual base rental for
      this
      space is $8,004. We believe that our existing facilities are suitable and
      adequate to meet our current business requirements. In the event that we should
      require additional or alternative facilities, we believe that such facilities
      can be obtained on short notice at competitive rates.




**ITEM
      3 - LEGAL PROCEEDINGS**




From
      time
      to time we may become subject to litigation incidental to our business. We
      are
      not currently a party to any material legal proceedings.





**ITEM
      4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.**





None


28


**PART
      II**





**ITEM
      5 - MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
      ISSUER PURCHASES OF EQUITY SECURITIES**




**Market
      Price for our Common Stock**





Our
      common stock is quoted on the OTC Bulletin Board (the “ *OTCBB* ”)
      under
      the symbol “ORMP.OB”. The quarterly high and low reported bid prices for our
      common stock as quoted on the OTCBB for the periods indicated are as follows:





**High**
            
            **Low****Year
                Ended August 31, 2007**Three
                Months Ended November 30, 2006
            
            $
            1.12
            
            $
            0.60Three
                Months Ended February 28, 2007
            
            $
            1.16
            
            $
            0.55Three
                Months Ended May 31, 2007
            
            $
            0.91
            
            $
            0.56Three
                Months Ended August 31, 2007
            
            $
            0.70
            
            $
            0.39**Year
                Ended August 31, 2008**Three
                Months Ended November, 2007
            
            $
            0.48
            
            $
            0.23Three
                Months Ended February, 2008
            
            $
            0.67
            
            $
            0.21Three
                Months Ended May 31, 2008
            
            $
            0.66
            
            $
            0.45Three
                Months Ended August 31, 2008
            
            $
            1.00
            
            $
            0.60





The
      foregoing quotations were provided by Yahoo finance and the quotations reflect
      inter-dealer prices, without retail mark-up, mark-down or commission and may
      not
      represent actual transactions.





The
      last
      reported bid price per share of common stock as quoted on the OTCBB was $0.45
      on
      November 24, 2008. As of such date, we had 56,456,710 shares of common stock
      outstanding. Based on information available from our registrar and transfer
      agent, we estimate that we had approximately 61 stockholders of record on
      November 24, 2008.




**Dividend
      Policy**





We
      have
      never paid any cash dividends on our capital stock and do not anticipate paying
      any cash dividends on our common stock in the foreseeable future. We intend
      to
      retain future earnings to fund ongoing operations and future capital
      requirements of our business. Any future determination to pay cash dividends
      will be at the discretion of our board and will be dependent upon our financial
      condition, results of operations, capital requirements and such other factors
      as
      our board deems relevant.





**Recent
      Sales of Unregistered Securities**





On
      October 17, 2008, the Company issued 203,904 shares of its common stock to
      Swiss
      Cap AG as remuneration for the services provided in the amount of $152,928.


29




**Purchases
      of Equity Securities by the Issuer and Affiliated Purchasers**




We
      did
      not purchase any of our shares of common stock or other securities during the
      year  ended
      August 31, 2008.




**Securities
      Authorized for Issuance under Equity Compensation Plans**





***2006
      Stock Option Plan***





On
      October 15, 2006, the Company’s board of directors adopted the 2006 Stock Option
      Plan (the “2006 Plan”) in order to attract and retain quality personnel. Under
      the 2006 Plan, 3,000,000 shares have been reserved for the grant of options
      by
      the board. As of August 31, 2008, options with respect to 2,950,000 shares
      have
      been granted under the 2006 Stock Option Plan.





***2008
      Stock Incentive Plan***





On
      May 5,
      2008, the Company’s board of directors adopted the 2008 Stock Incentive Plan
      (the “2008 Plan”) in order to attract and retain quality personnel. Under the
      2008 Stock Option Plan, 8,000,000 shares have been reserved for the grant of
      options, which may be issued at the discretion of our board of directors from
      time to time. As of August 31, 2008, options exercisable for an aggregate of
      1,878,000 shares have been granted.





On
      August
      14, 2007 the Company granted options to purchase up to 3,361,360 shares at
      an
      exercise price of $0.001 for five years to Miriam Kidron. These options are
      not
      governed by any of the plans detailed above.





The
      following table sets forth information with respect to the 2006 Plan and the
      2008 Plan as of August 31, 2008:


30


PLAN CATEGORY
              
              NUMBER OF
                SECURITIES TO BE
                ISSUED UPON
                EXERCISE OF
                OUTSTANDING
                OPTIONS, WARRANTS
                AND RIGHTS
              
              WEIGHT-AVERAGE
                EXERCISE PRICE OF
                OUTSTANDING
                OPTIONS, WARRANTS
                AND RIGHTS
              
              NUMBER OF SECURITIES
                REMAINING AVAILABLE FOR
                FUTURE ISSUANCE UNDER
                EQUITY COMPENSATION PLANS
                (EXCLUDING SECURITIES
                REFLECTED IN COLUMN (A))(A)
              
              (B)
              
              (C)EQUITY
                  COMPENSATION PLANS APPROVED BY SECURITY HOLDERS
              
              
              —
              
              
              —
              
              
              —EQUITY
                  COMPENSATION PLANS NOT APPROVED BY SECURITY HOLDERS
              
              
              8,189,360
              
              $
              0.33
              
              
              2,810,640TOTAL
              
              
              8,189,360
              
              $
              0.33
              
              
              2,810,640


31


**ITEM
      6 - MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF
      OPERATION**





**Overview**





We
      are a
      pharmaceutical company engaged in the research and development of innovative
      pharmaceutical solutions, including an orally ingestible insulin pill to be
      used
      for the treatment of individuals with diabetes, rectal application of insulin,
      flu vaccines, use of oral ingestible pills for delivery other polypeptides
      and
      use of rectal application for delivery of other polypeptides.





Oramed
      was incorporated on April 12, 2002, in the State of Nevada under the name
“Iguana Ventures Ltd” as an exploration stage company engaged in the acquisition
      and exploration of mineral properties. The Company was unsuccessful in
      implementing its business plan as a mineral exploration company. Accordingly,
      the Company decided to change the focus of its business by completing a share
      exchange with the shareholders of Integrated Security Technologies, Inc., a
      New
      Jersey private corporation (“ISTI”) and changed its name to Integrated Security
      Technologies. Effective June 14, 2004 the Company effected a 3.3:1 forward
      stock
      split, increasing the amount of authorized capital to 200,000,000 shares of
      common stock with the par value of $.001 per share. However, due to
      disappointing results, on May 31, 2005, effective as of May 27, 2004 the Company
      terminated the share exchange agreement with the shareholders of
      ISTI.





On
      March
      8, 2006, the Company executed an agreement with Hadasit Medical
      Services and Development Ltd. to
      acquire provisional patent application No. 60/718716 and
      related intellectual property. The provisional patent application No.
      60/718716 relates to a
      method
      of preparing insulin so that it may be taken orally to be used in the treatment
      for the treatment of individuals with diabetes. Effective
      April 10, 2006, the Company changed its name from “Integrated Security
      Technologies, Inc.” to “Oramed Pharmaceuticals Inc.”. Based on provisional
      patent application No. 60/718716, the Company filed a patent application under
      the Patent Cooperation Treaty at the Israel Patent Office for “Methods and
      Compositions for Oral Administration of Proteins” on August 31, 2006.





**Plan
      of Operation**





***Short
      Term Business Strategy***





We
      plan
      to conduct further research and development on the technology covered by the
      patent application "Methods and Composition for Oral Administration of
      Proteins", which we acquired from Hadasit Medical Services and Development
      Ltd.,
      as well as the other patents we have filed since. Through our research and
      development efforts, we are seeking to develop an oral dosage form that will
      withstand the harsh chemical environment of the stomach or intestines and will
      be effective in delivering active insulin for the treatment of diabetes. The
      enzymes and vehicles that are added to the insulin in the formulation process
      must not modify chemically or biologically the insulin and the dosage form
      must
      be safe to ingest. We plan to continue to conduct clinical trials to show the
      effectiveness of our technology. We intend to conduct the clinical trials
      necessary to file an Investigational New Drug Application (“IND”) with the U.S.
      Food and Drug Administration (“FDA”). Additional clinical trials are planned in
      other countries such as Israel, India and South Africa, in order to substantiate
      our results as well as for purposes of making future filings for drug approval
      in these countries. We also plan to conduct further research and development
      by
      deploying our proprietary drug delivery technology for the delivery of other
      polypeptides in addition to insulin, and to develop other innovative
      pharmaceutical products, including an insulin suppository and use of rectal
      application for delivery of other polypeptides.


32





***Orally
      Ingestible Insulin*** *:* During
      fiscal year 2007 we conducted several clinical studies of our orally ingestible
      insulin. The studies were intended to assess both the safety/tolerability and
      absorption properties of our proprietary oral insulin. Based on the
      pharmacokinetic and pharmacologic outcomes of these trials, we decided to
      continue the development of our oral insulin product.





On
      November 15, 2007, we successfully completed animal studies in preparation
      for
      the Phase 1B clinical trial of our oral insulin capsule (ORMD 0801). On January
      22, 2008 we commenced the non FDA approved Phase 1B clinical trials with our
      oral insulin capsule, in healthy human volunteers with the intent of dose
      optimization. On March 11, 2008, we successfully completed our Phase 1B clinical
      trials.





On
      April
      13, 2008, we commenced a non FDA approved Phase 2A study to evaluate the safety
      and efficacy of our oral insulin capsule (ORMD 0801) in Type II diabetic
      volunteers at Hadassah Medical Center in Jerusalem. On August 6, 2008, we
      announced the successful results of this trial.





On
      April
      21, 2008, we entered into a service agreement with Encorium Group, Inc.
      (“Encorium”) pursuant to which Encorium will provide services for the purpose of
      filing an IND for a Phase 2 study as required by the FDA. The FDA approval
      process and, if approved, registration for commercial use as an oral drug can
      take several years.





During
      July 2008 we were granted approval by the Institutional Review Board Committee
      of Hadassah Medical Center in Jerusalem to conduct a non FDA approved Phase
      2A
      study to evaluate the safety and efficacy of our oral insulin capsule (ORMD
      0801) on Type I diabetic volunteers. On September 24, 2008, we announced the
      beginning of this trail.





We
      plan
      on conducing two additional non FDA approved Phase 2B study to evaluate the
      safety and efficacy of our oral insulin capsule (ORMD 0801) on Type II diabetic
      volunteers, in South Africa and India. The trials are scheduled to commence
      by
      the end of 2008 or the beginning of 2009.





***Rectal
      Application of Insulin and Other Polypeptides*** *:* We
      filed
      two additional provisional patents for a suppository application to our
      technology portfolio. The first patent focuses on a rectal application for
      insulin. The second patent focuses on the usage of this rectal application
      to
      other polypeptides that at present are only available in injection.





On
      January 30, 2008, we entered into a master service agreement with OnQ
      Consulting; a clinical research organization located in Johannesburg, South
      Africa, to conduct non FDA approved clinical trials for the rectal application
      of insulin. The trials are expected to begin during the coming
      months.





On
      October 23, 2008 we commenced a non FDA approved Phase 1A study to evaluate
      the
      safety and efficacy of our insulin suppository (ORMD 0802) on healthy
      volunteers, in South Africa.


33





***GLP1
      Analog:*** On
      September 16, 2008 we announced the launch of pre-clinical trials of ORMD 0901,
      a GLP1-analog, the pre-clinical trials includes a dog trial which suggests
      that the GLP-1analog exenatide -4 when combined with Oramed’s absorption
      promoters is absorbed through the gastrointestinal tract and retains its
      biological activity.





Glucagon-like
      peptide-1 (GLP-1) is an incretin hormone - a type of gastrointestinal hormone
      that stimulates the secretion of insulin from the pancreas. The incretin concept
      was hypothesized when it was noted surprisingly that glucose ingested by mouth
      (oral) stimulated two to three times more insulin release than the same amount
      of glucose administered intravenously. GLP-1 was found in addition to stimulates
      insulin release, to suppress glucagon release (hormone involved in regulation
      of
      glucose) from the pancreas, it slows gastric emptying to reduce the rate of
      absorption of nutrients into the blood stream, and it increases satiety. Other
      important beneficial attributes of GLP-1 are its effects of increasing the
      number of beta cells (cells that manufacture and release insulin) in the
      pancreas and possibly to be hormone that protects the heart.





We
      have
      recently engaged in preliminary discussions with potential partners outside
      of
      the United States regarding their management of clinical trials of our oral
      insulin capsules. Such agreements could involve us granting exclusive
      commercialization rights and profit interests in our products derived from
      certain geographic areas outside the United States in exchange for payment
      of
      the costs of running such clinical trials now. These discussions are in a very
      early stage, however, and may not result in our being able to enter into any
      such partnerships.





***Long
      Term Business Strategy***





If
      our
      oral insulin capsule or other drug delivery solutions show significant promise
      in clinical trials, we plan to ultimately seek a strategic commercial partner,
      or partners, with extensive experience in the development, commercialization,
      and marketing of insulin applications and/or other orally digestible drugs.
      We
      anticipate such partner or partners would be responsible for, or substantially
      support, late stage clinical trials (Phase III) to ensure regulatory approvals
      and registrations in the appropriate markets in a timely manner. We further
      anticipate that such partner, or partners, would also be responsible for sales
      and marketing of our oral insulin capsule in these markets. Such planned
      strategic partnership, or partnerships, may provide a marketing and sales
      infrastructure for our products as well as financial and operational support
      for
      global clinical trials, post marketing studies, label expansions and other
      regulatory requirements concerning future clinical development in the United
      States and elsewhere. Any future strategic partner, or partners, may also
      provide capital and expertise that would enable the partnership to develop
      new
      oral dosage form for other polypeptides. Under certain circumstances, we may
      determine to develop one or more of our oral dosage form on our own, either
      world-wide or in select territories.





***Other
      Planned Strategic Activities***





In
      addition to developing our own oral dosage form drug portfolio, we are, on
      an
      on-going basis, considering in-licensing and other means of obtaining additional
      technologies to complement and/or expand our current product portfolio. Our
      goal
      is to create a well-balanced product portfolio that will enhance and compliment
      our existing drug portfolio.




34


**Results
      of Operations**





***Going
      concern assumption***





The
      accompanying financial statements have been prepared assuming that we will
      continue as a going concern. We have net losses for the period from inception
      (April 12, 2002) through August 31, 2008 of $7,248,204, as well as negative
      cash
      flow from operating activities. Based upon our existing spending commitments,
      estimated at $5,000,000 for the twelve months following September 1, 2008,
      and
      our cash availability, we do not have sufficient cash resources to meet our
      liquidity requirements through August 31, 2009. Accordingly, these factors
      raise
      substantial doubt about our ability to continue as a going concern. Management
      is in the process of evaluating various financing alternatives as we will need
      to finance future research and development activities and general and
      administrative expenses through fund raising 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 ongoing financing discussions with third
      party investors and existing shareholders.





The
      financial statements do not include any adjustments that may be necessary should
      we be unable to continue as a going concern. Our continuation as a going concern
      is dependent on our ability to obtain additional financing as may be required
      and ultimately to attain profitability.




***Critical
      accounting policies***


**Valuation
        of options and warrants:** We
        granted options to purchase shares of our common stock to employees and
        consultants and issued warrants in connection with fund raising.
 
 Effective
        March 1, 2006, the Company adopted Statement of Financial Accounting Standards
        No. 123 (revised 2004), “ *Share-based
        Payment* ”
        (“ *FAS
        123(R)* ”).
        FAS
        123(R) requires awards classified as equity awards be accounted for using
        the
        grant-date fair value method. The fair value of share-based payment transactions
        is recognized as expense over the requisite service period, net of estimated
        forfeitures. The Company estimated forfeitures based on historical experience
        and anticipated future conditions.
 
 In
        March
        2005, the Securities and Exchange Commission issued Staff Accounting Bulletin
        No. 107 (“ *SAB
        107* ”).
        SAB
        107 provides supplemental implementation guidance on FAS 123(R), including
        guidance on valuation methods, inventory capitalization of share-based
        compensation cost, income statement effects, disclosures and other issues.
        SAB
        107 requires share-based payment to be classified in the same expense line
        items
        as cash compensation. The
        Company has applied the provisions of SAB 107 in its adoption of FAS
        123(R).
 
 The
        Company elected to recognize compensation cost for an award with only service
        conditions that has a graded vesting schedule using the accelerated method
        based
        on multiple option award approach **.**
 
 The
        Company elected to adopt the modified prospective application transition
        method,
        as permitted by FAS 123(R). Under such transition method, upon the adoption
        of
        FAS 123(R), the Company’s financial statements for periods prior to the
        effective date of the Statement are not restated.
 
 In
        December 2007, the Securities and Exchange Commission issued Staff Accounting
        Bulletin No. 110 (“SAB 110”) relating to the use of a “simplified” method
        in developing an estimate of the expected term of “plain vanilla” share options.
        SAB 107 previously allowed the use of the simplified method until
        December 31, 2007. SAB 110 allows, under certain circumstances, to continue
        to accept the use of the simplified method beyond December 31, 2007. The
        Company has applied the provisions of SAB 110 in its financial
        statement.
 
 The
        Company accounts for equity instruments issued to third party service providers
        (non-employees) in accordance with the fair value based on an option-pricing
        model or when more reliability is based on the fair value of the services
        received, pursuant to the guidance in EITF 96-18 “ *Accounting
        for Equity Instruments That Are Issued to Other Than Employees for Acquiring,
        or
        in Conjunction with Selling Goods or Services* ”.
        The
        fair value of the options granted is revalued over the related service periods
        and recognized using the accelerated method.
 
 ***Taxes
        on income*** :
        Deferred taxes are determined utilizing the asset and liability method based
        on
        the estimated future tax effects of differences between the financial accounting
        and tax bases of assets and liabilities under the applicable tax laws. Deferred
        tax balances are computed using the tax rates expected to be in effect when
        those differences reverse. A valuation allowance in respect of deferred tax
        assets is provided if, based upon the weight of available evidence, it is
        more
        likely than not that some or all of the deferred tax assets will not be
        realized. The Company has provided a full valuation allowance with respect
        to
        its deferred tax assets.
 
 Regarding
        the Subsidiary, paragraph 9(f) of FAS 109, “ *Accounting
        for Income Taxes* ”,
        prohibits the recognition of deferred tax liabilities or assets that arise
        from
        differences between the financial reporting and tax bases of assets and
        liabilities that are measured from the local currency into dollars using
        historical exchange rates, and that result from changes in exchange rates
        or
        indexing for tax purposes. Consequently, the abovementioned differences were
        not
        reflected in the computation of deferred tax assets and
        liabilities.
 
 As
        of
        September 1, 2007, the Company adopted FASB Interpretation No. 48, ‘‘Accounting
        for Uncertainty in Income Taxes - an Interpretation of FASB Statement No.
        109’’
(‘‘FIN 48’’). FIN 48 specifies how tax benefits for uncertain tax positions are
        to be recognized, measured and derecognized in financial statements; requires
        certain disclosures of uncertain tax positions; specifies how reserves for
        uncertain tax positions should be classified on the balance sheet; and provides
        transition and interim-period guidance, among other provisions. On May 2,
        2007,
        the FASB issued FASB Staff Position No. FIN 48-1, ‘‘Definition of Settlement in
        FASB Interpretation No. 48-1’’ (‘‘FSP FIN 48-1’’). FSP FIN 48-1 provides
        guidance regarding how an entity should determine whether a tax position
        is
        effectively settled for the purpose of recognizing previously unrecognized
        tax
        benefits.
 
 ***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 registered patents materials,
        supplies, the cost of services provided by outside contractors, including
        services related to the Company’s clinical trials, clinical trial expenses, the
        full cost of manufacturing drug for use in research, preclinical development.
        All costs associated with research and development are expensed as
        incurred.  35


Clinical
            trial costs are a significant component of research and development expenses
            and
            include costs associated with third-party contractors. The Company out
            sources a
            substantial portion of its clinical trial activities, utilizing external
            entities such as contract research organizations, independent clinical
            investigators, and other third-party service providers to assist the
            Company
            with the execution of its clinical studies. For each clinical trial that
            the
            Company conducts, certain clinical trial costs are expensed immediately,
            while
            others are expensed over time based on the expected total number of patients
            in
            the trial, the rate at which patients enter the trial, and the period
            over which
            clinical investigators or contract research organizations are expected
            to
            provide services.
 Clinical
          activities which relate principally to clinical sites and other administrative
          functions to manage the Company’s clinical trials are performed primarily by
          contract research organizations (“CROs”). CROs typically perform most of the
          start-up activities for the Company’s trials, including document preparation,
          site identification, screening and preparation, pre-study visits, training,
          and
          program management.
 The
        following table summarizes certain statements of operations data for the
        Company
        for the nine months period ended May 31, 2008 and 2007:
 
 Year endedOperating Data:
              
              August 31, 2008
              
              August 31, 2007Research
                  and development costs
              
              $
              1,175,657
              
              $
              2,214,429General
                  and administrative expenses
              
              
              1,504,354
              
              
              918,477Financial
                  (income) expense, net
              
              
              (72,904
              )
              
              103,103Loss
                  before taxes on income
              
              
              (2,607,107
              )
              
              (3,236,009
              )Taxes
                  on income
              
              
              162,164Net
                  loss for the period
              
              
              (2,769,271
              )
              
              (3,236,009
              )Loss
                  per common share – basic and diluted
              
              $
              (0.06
              )
              $
              (0.08
              )Weighted
                  average common shares outstanding
              
              
              48,604,889
              
              
              42,298,080
 
 ***Research
        and development costs***
 
 Research
        and development expenses are the costs incurred in the process of our
        pre-clinical and our clinical trials. Clinical trial and pre-clinical expenses
        include regulatory and scientific consultants compensation and fees, research
        expenses, purchase of materials, cost of manufacturing of the oral insulin
        capsules, payments for patient recruitment and treatment, costs related to
        the
        maintenance of our registered patents, costs related to the filings of patent
        applications as well as salaries and related expenses of research and
        development staff.
 
 During
        the year ended August 31, 2008 research and development expenses totaled
        $1,175,657, compared to $2,214,429 for the year ended August 31, 2007. The
        increase is mainly attributable to increased clinical trials activities,
        materials and patent related costs. The research and development costs include
        stock based compensation costs, which during the year ended August 31, 2008
        totaled $285,336 as compared to $1,666,466 during the year ended August 31,
        2007.




***General
      and administrative expenses***





General
      and administrative expense includes the salaries and related expenses of our
      management, consulting costs, legal and professional fees, traveling, business
      development costs, insurance expenses and other general costs.





For
      the
      year ended August 31, 2008, general and administrative expenses totaled
      $1,504,354 compared to $918,477 for the year ended August 31, 2007. Costs
      incurred related to general and administrative activities during the year ended
      August 31, 2008 reflect an increase of professional, legal and consulting
      expenses and an increase in general expenses such as office and maintenance
      expenses. During the year ended August 31, 2008, as part of our general and
      administrative expenses, we incurred $378,113 related to stock options granted
      to employees and consultants, as compared to $479,863 during the year ended
      August 31, 2007.





***Financial
      income/expense, net***





During
      the year ended August 31, 2008 we generated interest income on available cash
      and cash equivalents balance which were offset by bank charges. During the
      year
      ended August 31, 2007, we incurred imputed interest expenses on convertible
      notes issued as well as bank charges.





***Liquidity
      and Capital Resources***





Through
      August 31, 2008, we incurred losses in an aggregate amount of $7,248,204. We
      have financed our operations through the private placements of equity and debt
      financing. Since inception through August 31, 2008, we raised a total of
      $8,308,785, net of transaction costs, through private placements of equity
      and
      debt financing. We anticipate that we will obtain additional financing through
      similar sources. As of August 31, 2008 we had $2,267,320 o f
      available cash as well as $2,728,000 in short term interest bearing investments.
      The Company anticipates it will require approximately $5.0 million to finance
      its activities during the twelve months following September 1, 2008.





Management
      is in the process of evaluating various financing alternatives as we will need
      to finance future research and development activities and general and
      administrative expenses through fund raising 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 ongoing financing discussions with third party
      investors and existing shareholders.




36


Our
        recent financing activities include the following:
 
 ·
              On
                  August 3, 2007, we completed a private placement for the sale of
                  510,000
                  units at a purchase price of $0.50 per unit for a total consideration
                  of
                  $255,000.Each
                  unit consisted of oneshareof
                  common stock and one share purchase warrant. Each share purchase
                  warrant
                  entitles the holder to purchase one additional share of common stock for a
                  period of 3 years at an exercise price of
                  $0.75.




·
            On
                September 7, 2007, we issued 283,025 shares of common stock valued
                at
                $113,210 to a third party, for services rendered in the prior
                year.




·
            On
                November 8, 2007, we issued 10,000 shares as a finder’s fee to a placement
                agent valued at $2,900.




·
            On
                July 14, 2008we
                completed a private placement to twenty-nine accreditedinvestorspursuant to which we sold to the investors anaggregateof8,524,669shares
                of common stockat
                a purchase price of $0.60 pershare.
                The investors also received three year warrants to purchase an aggregate
                of4,262,337shares
                of common stock at an exercise price of $0.90 per share. The Company
                paid
                $85,000 to a director as a finders fee and issued an aggregate of
                143,333
                shares of common stock to four other individuals as finders fees
                in
                connection with the private
                placement.




·
            On
                October 17, 2008, Oramed issued 203,904 shares of common stock valued
                at
                $152,928 to a third party, for services rendered in the prior
                year.





**Employee's
      and Consultant’s Stock Options and Warrants**





Employee
      and consultant stock options grants and warrant issuance activities for the
      year
      ending August 31, 2008 include the following:





·
            On
                September 4, 2007, we granted options to purchase up to 300,000 shares
                of
                our common stock at an exercise price of $0.45 to two
                consultants.




·
            On
                October 30, 2007, we granted options to purchase up to 100,000 shares
                of
                our common stock at anexerciseprice of $0.76 to Dr. John Ziemniak, a new member of our Scientific
                Advisory Board.




·
            On
                April 27, 2008, the Board of Directors of the Company adopted the
                Oramed
                Pharmaceuticals Inc. 2008 Stock Incentive Plan (the “2008 Plan”). The
                Board has reserved 8,000,000 shares of the Company’s common stock for
                issuance, in the aggregate, under the
                Plan.




·
            On
                May 7, 2008, we granted options under the 2008 Plan to purchase up
                to
                864,000 shares of ourcommonstock at an exercise price of $0.54 to each of Nadav Kidron and Miriam
                Kidron.




·
            On
                July 17, 2008, we granted options under the 2008 Plan to purchase
                up to
                100,000 shares of our common stock at an exercise price of $0.62
                to
                Professor Avram Hershko a new member of our Scientific Advisory
                Board.




·
            On
                August 4, 2008, we granted options under the 2008 Plan to purchase
                up to
                50,000 shares of our common stock at an exercise price of $0.9 to
                an
                outside consultant.




·
            On
                October 12, 2008 we granted options under the 2008 Plan to purchase
                up to
                828,000 shares of our common stock at an exercise price of $0.47
                to Chaime
                Orlev our Chief Financial Officer.




·
            On
                October 12, 2008 we granted options under the 2008 Plan to purchase
                up to
                56,000 shares of our common stock at an exercise price of $0.47 to
                an
                employee of our subsidiary.





**Off-Balance
      Sheet Arrangements**





We
      have
      no off-balance sheet arrangements.




37





**Planned
      Expenditures**





The
      estimated expenses referenced herein are in accordance with our business plan.
      Since our technology is still in the development stage, it can be expected
      that
      there will be changes in some budgetary items. Our planned expenditures for
      the
      twelve months beginning September 1, 2008 are as follows:


**Category**
              
              **Amount**Research
                  & Development
              
              $
              3,562,000General
                  & Administrative Expenses
              
              
              1,424,000Finance
                  income, net
              
              
              (55,000
              )Taxes
                  on income
              
              
              30,000Total
              
              $
              4,961,000
  As
        previously indicated we are planning to conduct further clinical studies
        as well
        as file an IND with the FDA for our orally ingested insulin. Our ability
        to
        proceed with these activities is dependent on several major factors including
        the ability to attract sufficient financing on terms acceptable to
        us.





**Employment
      and Consulting Agreements**





On
      May 1,
      2008 we entered into an employment agreement with Chaime Orlev (the “Employment
      Agreement”), pursuant to which Mr. Orlev was appointed as Chief Financial
      Officer (“CFO”), Treasurer and Secretary of Oramed. Mr. Orlev’s responsibilities
      include oversight of Oramed’s financial reporting and controls. The Employment
      Agreement provides that for the period through July 31, 2008 (the “First Term”),
      Mr. Orlev will be employed to work on a part-time basis and will be compensated
      a gross monthly amount of NIS 20,000. Beginning on September 1, 2008 and
      continuing until the Employment Agreement is terminated by either party pursuant
      to the Employment Agreement (the “Second Term”), Mr. Orlev will serve Oramed in
      a full-time capacity and will be compensated a gross monthly amount of NIS
      30,000. Mr. Orlev has also agreed that during the term of his employment with
      Oramed and for a 12 month period thereafter, he will not compete with Oramed
      nor
      solicit employees of Oramed.





On
      May 1,
      2008 we entered into a consulting agreement with a Dr. Ehud Arbit (“Dr. Arbit”)
      which agreement was amended and restated, effective May 1, 2008. The consulting
      agreement provides for a consultancy period of twelve months, pursuant to which
      Dr. Arbit will assist our efforts to complete the FDA approval process for
      its
      oral insulin capsule. Dr. Arbit is entitled to a fixed monthly fee of $8,333
      effective from May 1, 2008, and reimbursement of pre-approved out of pocket
      expenses. On October 3, 2008, we amended the consulting agreement with Dr.
      Arbit. Pursuant to the amendment, Dr. Arbit will perform his work under the
      contract on a full time basis and his compensation will be $16,666 per month,
      effective as of July 1, 2008.





On
      July
      1, 2008, we entered into a consulting agreement with KNRY Ltd. (“KNRY”), an
      Israeli company owned by Nadav Kidron, whereby Nadav Kidron, through KNRY,
      will
      provide services as President and Chief Executive Officer of the Company (the
      “Nadav Kidron Consulting Agreement”). Additionally, on July 1, 2008, we entered
      into a consulting agreement with KNRY whereby Dr. Miriam Kidron, through KNRY,
      will provide services as Chief Medical and Technology Officer of both the
      Company (the “Miriam Kidron Consulting Agreement” and together with the Nadav
      Kidron Consulting Agreement, the “Consulting Agreements”).


38





The
      Consulting Agreements are both terminable by either party upon 60 days prior
      written notice. The Consulting Agreements provide that KNRY (i) will be paid,
      under each of the Consulting Agreements, in New Israeli Shekels (“NIS”) a gross
      amount of NIS50,400 + Value-Added-Tax per month and (ii) will be reimbursed
      for
      reasonable expenses incurred in connection with performance of the Consulting
      Agreements.




39





**ITEM
      7 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**





TABLE
      OF
      CONTENTS


**Page**REPORT
                  OF INDEPENDENT REGISTERED PUBLICACCOUNTING
                  FIRM - Report of Kesselman & Kesselman
              
              F-41REPORT
                  OF INDEPENDENT REGISTERED PUBLICACCOUNTING
                  FIRM - Report of Malone & Bailey, PC
              
              F-42**CONSOLIDATED
                  FINANCIAL STATEMENTS:**Balance
                  sheets
              
              F-43Statements
                  of operations
              
              F-44Statements
                  of changes in stockholders’ equity
              
              F-45Statements
                  of cash flows
              
              F-46Notes
                  to financial statements
              
              F-47-F-67


F-40




**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**




To
      the
      Shareholders of


Oramed
      Pharmaceuticals Inc.


(A
      Development Stage Company)





We
      have
      audited the accompanying consolidated balance sheets of Oramed Pharmaceuticals
      Inc. (A Development Stage Company) and its subsidiary (the “ *Company* ”)
      as of
      August 31, 2008, and the related consolidated statements of operations, changes
      in stockholders’ equity and cash flows for the year then ended and cumulatively,
      for the period from September 1, 2007 to August 31, 2008 (not separately
      presented herein) . These financial statements are the responsibility of the
      Company's management. Our responsibility is to express an opinion on these
      financial statements based on our audits. We did not audit the cumulative totals
      of the Company for the period from April 12, 2002 (date of incorporation) to
      August 31, 2007, which totals reflect a deficit of $4,478,933 accumulated during
      the development stage. Those cumulative totals were audited by other independent
      auditors, whose report, dated December 10, 2007, expressed an unqualified
      opinion on the cumulative amounts but included an emphasis of a matter. Our
      opinion, insofar as it relates to amounts included for that period is based
      on
      the report of the other independent auditors.




We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audits provide a
      reasonable basis for our opinion.




In
      our
      opinion, based upon our audits and the report of the other independent auditors,
      the consolidated financial statements referred to above present fairly, in
      all
      material respects, the consolidated financial position of the Company as of
      August 31, 2008, and the consolidated results of their operations and their
      cash
      flows for the year then ended and cumulatively, for the period from September
      1,
      2007 to August 31, 2008 (not separately presented herein), in conformity with
      accounting principles generally accepted in the United States of
      America.




The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 1a to the financial
      statements, the Company has recurring losses for the period from inception
      (April 12, 2002) through August 31, 2008 and presently the Company does not
      have
      sufficient cash resources to meet its requirements in the following twelve
      months. These reasons raise substantial doubt about the Company's ability to
      continue as a going concern. Management's plans in regard to these matters
      are
      also described in Note 1a. The financial statements do not include any
      adjustments that might result from the outcome of this uncertainty.





Kesselman
                & KesselmanTel
                Aviv, IsraelNovember
                26, 2008




F-41





REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To
      the
      Board of Directors


Oramed
      Pharmaceuticals, Inc.


(a
      development stage company)


Jerusalem,
      Israel




We
      have
      audited the accompanying consolidated balance sheet of Oramed Pharmaceuticals,
      Inc. as of August 31, 2007, and the related consolidated statements of expenses,
      changes in stockholders’ deficit, and cash flows for the year then ended and the
      period from April 12, 2002 (Inception) through August 31, 2007. These financial
      statements are the responsibility of Oramed’s management. Our responsibility is
      to express an opinion on these financial statements based on our
      audit.




We
      conducted our audits in accordance with standards of the Public Accounting
      Oversight Board (United States). Those standards require that we plan and
      perform the audits to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. The Company is not required to
      have, nor were we engaged to perform, an audit of its internal control over
      financial reporting. Our audit included consideration of internal control over
      financial reporting as a basis for designing audit procedures that are
      appropriate in the circumstances, but not for the purpose of expressing an
      opinion on the effectiveness of the Company’s internal control over financial
      reporting.  Accordingly, we express no such opinion. An audit includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements. An audit also includes assessing the accounting
      principles used and significant estimates made by management, as well as
      evaluating the overall financial statement presentation. We believe that our
      audit provides a reasonable basis for our opinion.




In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the consolidated financial position of Oramed, as
      of
      August 31, 2007, and the results of its consolidated operations and its cash
      flows for the periods described in conformity with accounting principles
      generally accepted in the United States of America.




The
      accompanying financial statements have been prepared assuming that Oramed will
      continue as a going concern. As discussed in Note 1 to the financial statements,
      Oramed suffered recurring losses from operations which raises substantial doubt
      about its ability to continue as a going concern. Management’s plans regarding
      those matters are described in Note 1. The consolidated financial statements
      do
      not include any adjustments that might result from the outcome of this
      uncertainty.




MALONE
      & BAILEY, PC


www.malone-bailey.com


Houston,
      Texas




December
      10, 2007




F-42




**ORAMED
      PHARMACEUTICALS, INC.**


(A
      Development Stage Company)




CONSOLIDATED
      BALANCE SHEETS


U.S.
      dollars





**August 31****2008**
            
            **2007****Assets****CURRENT
                ASSETS:**Cash
                and cash
                equivalents
            
            $
            2,267,320
            
            $
            1,918,229Short
                term investments (note
                2)
            
            
            2,728,000Prepaid
                expenses
            
            
            402,574
            
            
            11,906Total
                current assets
            
            
            5,397,894
            
            
            1,930,135**LONG
                TERM DEPOSITS**(Note 7b)
            
            
            10,824
            
            
            5,444**PROPERTY
                AND EQUIPMENT, NET**(Note 4)
            
            
            98,296
            
            
            1,736Total
                assets
            
            $
            5,507,014
            
            $
            1,937,315**Liabilities
                and stockholders' equity****CURRENT
                LIABILITIES:**Accounts
                payable and accrued expenses (note 10)
            
            $
            866,702
            
            $
            340,872Account
                payable with former shareholder
            
            
            47,252
            
            
            47,252Convertible
                notes payable (Note 5)
            
            
            
            
            
            275,000Receipts
                on account of shares issuance (Note 6)
            
            
            
            
            
            761,060Total
                current liabilities
            
            
            913,954
            
            
            1,424,184**COMMITMENTS**(Note 7)**STOCKHOLDERS’
                EQUITY:**Common
                stock, $ 0.001 par value (200,000,000 authorized shares; 56,252,806
                and
                45,231,779 shares issued and outstanding as of August 31, 2008 and
                2007,
                respectively
            
            
            56,252
            
            
            45,231Additional
                paid-in capital
            
            
            11,785,012
            
            
            4,946,833Deficit
                accumulated during the development stage
            
            
            (7,248,204
            )
            
            (4,478,933
            )Total
                stockholders'
                equity
            
            
            4,593,060
            
            
            513,131Total
                liabilities and stockholders’
                equity
            
            $
            5,507,014
            
            $
            1,937,315





**The
      accompanying notes are an integral part of the financial
      statements.**




F-43


**ORAMED
      PHARMACEUTICALS, INC.**


(A
      Development Stage Company)




CONSOLIDATED
      STATEMENTS OF OPERATIONS


U.S.
      dollars





**Period****from April****12, 2002****(inception)****Year ended**
            
            **through****August 31**
            
            **August 31,****2008**
            
            **2007**
            
            **2008****RESEARCH
                AND DEVELOPMENT EXPENSES**(Note 11)
            
            $
            1,175,657
            
            $
            2,214,429
            
            $
            3,587,834**IMPAIRMENT
                OF INVESTMENT**
            
            
            
            
            
            
            
            
            434,876**GENERAL
                AND ADMINISTRATIVE****EXPENSES**(note 12)
            
            
            1,504,354
            
            
            918,477
            
            
            3,030,458**OPERATING
                LOSS**
            
            
            2,680,011
            
            
            3,132,906
            
            
            7,053,168**INTEREST
                INCOME**
            
            
            (83,185
            )
            
            (12,321
            )
            
            (97,506
            )**INTEREST
                EXPENSE**
            
            
            10,281
            
            
            115,424
            
            
            130,378**LOSS
                BEFORE TAXES ON INCOME**
            
            
            2,607,107
            
            
            3,236,009
            
            
            7,086,040**TAXES
                ON INCOME**(note 13)
            
            
            162,164
            
            
            
            
            
            162,164**NET
                LOSS FOR THE PERIOD**
            
            $
            2,769,271
            
            $
            3,236,009
            
            $
            7,248,204**BASIC
                AND DILUTED LOSS PER****COMMON
                SHARE**
            
            $
            (0.06
            )
            $
            (0.08
            )**WEIGHTED
                AVERAGE NUMBER OF COMMON****STOCK
                USED IN COMPUTING BASIC AND****DILUTED
                LOSS PER COMMON STOCK**
            
            
            48,604,889
            
            
            42,298,080





**The
      accompanying notes are an integral part of the financial
      statements.**





F-44


**ORAMED
      PHARMACEUTICALS INC.**


(A
      development stage company)




CONSOLIDTAED
      STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)


U.S.
      dollars




**Deficit****accumulated**
            
            **Total****Additional**
            
            **during the**
            
            **stockholders'****Common Stock**
            
            **paid-in**
            
            **development**
            
            **equity****Shares**
            
            **$**
            ****
            **capital**
            
            **stage**
            
            **(deficit)****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, 2006
                (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**
            
            
            2,3531,228
            
            
            23,531
            
            
            274,450
            
            
            
            
            
            297,981**CONTRIBUTIONS
                TO PAID IN CAPITAL**
            
            
            
            
            
            
            
            
            18,991
            
            
            
            
            
            18,991**COMPREHENSIVE
                LOSS**
            
            
            
            
            
            
            
            
            
            
            
            (16
            )
            
            (16
            )**IMPUTED
                INTEREST**
            
            
            
            
            
            
            
            
            4,657
            
            
            
            
            
            4,657**NET
                LOSS**
            
            
            
            
            
            
            
            
            
            
            
            (1,242,908
            )
            
            (1,242,908
            )**BALANCE
                AS OF AUGUST 31, 2006**
            
            
            41,456,779
            
            
            41,456
            
            
            768,749
            
            
            (1,242,924
            )
            
            (432,719
            )**SHARES
                AND WARRANTS ISSUED FOR CASH**
            
            
            3,650,000
            
            
            3,650
            
            
            1,821,350
            
            
            
            
            
            1,825,000**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**IMPUTED
                INTEREST**
            
            
            
            
            
            
            
            
            3,780
            
            
            
            
            
            3,780**NET
                LOSS**
            
            
            
            
            
            
            
            
            
            
            
            (3,236,009
            )
            
            (3,236,009
            )**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




**The
      accompanying notes are an integral part of the consolidated financial
      statements.**




F-45




**ORAMED
      PHARMACEUTICALS, INC.**


(A
      Development Stage Company)




CONSOLIDATED
      STATEMENTS OF CASH FLOWS





**Period from April**
              **12, 2002**
              **(inception date)**
              **through****Year ended August 31**
            
            **August 31,****2008**
            
            **2007**
            
            **2008****CASH
                FLOWS FROM OPERATING ACTIVITIES:**Net
                loss
            
            $
            (2,769,271
            )
            $
            (3,236,009
            )
            $
            (7,248,204
            )Adjustments
                required to reconcile net loss to net cash used in operating
                activities:Depreciation
            
            
            15,454
            
            
            
            
            
            15,454Amortization
                of debt discount
            
            
            
            
            
            108,000
            
            
            108,000Exchange
                differences on long term deposits
            
            
            (1,642
            )
            
            
            
            
            (1,642
            )Stock
                based compensation
            
            
            663,449
            
            
            2,146,329
            
            
            2,809,778Common
                stock issued for services
            
            
            116,110
            
            
            98,750
            
            
            214,860Impairment
                of investment
            
            
            
            
            
            
            
            
            434,876Imputed
                interest
            
            
            3,780
            
            
            3,780
            
            
            12,217Changes
                in operating assets and
                liabilities:Prepaid
                expenses and other current assets
            
            
            (390,668
            )
            
            *(11,906
            )
            
            (402,574
            )Accounts
                payable and accrued expenses
            
            
            525,830
            
            
            287,220
            
            
            866,702Total
                net cash used in operating
                activities
            
            
            (1,836,958
            )
            
            (603,836
            )
            
            (3,190,533
            )**CASH
                FLOWS FROM INVESTING ACTIVITIES:**Purchase
                of property and equipment
            
            
            (112,014
            )
            
            (1,736
            )
            
            (113,750
            )Short
                term investments
            
            
            (2,728,000
            )
            
            
            
            
            (2,728,000
            )Lease
                deposits
            
            
            (3,738
            )
            
            *(5,444
            )
            
            (9,182
            )Total
                net cash used in investing
                activities
            
            
            (2,843,752
            )
            
            (7,180
            )
            
            (2,850,932
            )**CASH
                FLOWS FROM FINANCING****ACTIVITIES:**Proceeds
                from sales of common stocks and warrants - net of issuance
                expenses
            
            
            5,029,801
            
            
            1,823,056
            
            
            7,961,481Receipts
                on account of shares issuances
            
            
            
            
            
            255,000
            
            
            6,061Proceeds
                from convertible notes
            
            
            
            
            
            275,000
            
            
            275,000Proceeds
                from short term note payable
            
            
            
            
            
            20,000
            
            
            120,000Payments
                of short term note payable
            
            
            
            
            
            (20,000
            )
            
            (120,000
            )Shareholder
                advances
            
            
            
            
            
            
            
            
            66,243Net
                cash provided by financing
                activities
            
            
            5,029,801
            
            
            2,353,056
            
            
            8,308,785**INCREASE
                IN CASH AND CASH EQUIVALENTS**
            
            
            349,091
            
            
            1,742,040
            
            
            2,267,320**CASH
                AND CASH EQUIVALENTS AT BEGINNING OF PERIOD**
            
            
            1,918,229
            
            
            176,189**CASH
                AND CASH EQUIVALENTS AT END OF****PERIOD**
            
            $
            2,267,320
            
            $
            1,918,229
            
            $
            2,267,320Non
                cash investing and financing activities:Receipts
                on account of shares issuance - reclassified from liability to
                shareholder's equity
            
            
            6,061Stock
                issued for receipts on account of shares issuance and convertible
                notes
            
            $
            1,030,000
            
            $
            1,944Discount
              on convertible note related to beneficial conversion
              feature
            
            
            
            
            $
            108,000
            
            $
            108,000Shares
              issued for offering costs
            
            
            
            
            
            
            
            $
            1,753Contribution
              to paid in capital
            
            
            
            
            
            
            
            $
            18,991





*
      Reclassified





**The
      accompanying notes are an integral part of the financial
      statements.**




F-46




**ORAMED
      PHARMACEUTICALS INC.**


(A
      Development Stage Company)




NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS





**NOTE
      1 - SIGNIFICANT ACCOUNTING POLICIES:**




**a.**
            **General:**




Oramed
      Pharmaceuticals, Inc. (a development stage company) (the “Company”) 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. to acquire the provisional patent related to orally
      ingestible insulin pill to be used for the treatment of individuals with
      diabetes. The Company has been in the development stage since its formation
      and
      has not yet realized any revenues from its planned operations.




On
      May
      14, 2007, the Company incorporated a wholly-owned subsidiary in Israel, Oramed
      Ltd., which is engaged in research and development. Unless the context indicates
      otherwise, the term “Group” refers to Oramed Pharmaceuticals Inc. and its
      Israeli subsidiary, Oramed Ltd (the “ *Subsidiary* ”).




The
      Company is engaged in research and development in the biotechnology field and
      is
      considered a development stage company in accordance with Statement of financial
      Accounting Standard (“ *SFAS* ”)
      No. 7
“ *Accounting
      and Reporting by Development Stage Enterprises* ”.




The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. The Company has net losses for
      the
      period from inception (April 12, 2002) through August 31, 2008 of
      $7,248,204, as well as negative cash flow from operating activities. Presently,
      the Company does not have sufficient cash resources to meet its requirements
      in
      the twelve months following September 1, 2008. These factors raise substantial
      doubt about the Company's ability to continue as a going concern. Management
      is
      in the process of evaluating various financing alternatives as the Company
      will
      need to finance future research and development activities and general and
      administrative expenses through fund raising ****** in
      the
      public or private equity markets. Although there is no assurance that the
      Company will be successful with those initiatives, management believes that
      it
      will be able to secure the necessary financing as a result of ongoing financing
      discussions with third party investors and existing shareholders.




These
      consolidated financial statements do not include any adjustments that may be
      necessary should the Company be unable to continue as a going concern. The
      Company's continuation as a going concern is dependent on its ability to obtain
      additional financing as may be required and ultimately to attain
      profitability.





F-47




**ORAMED
      PHARMACEUTICALS INC.**


(A
      Development Stage Company)




NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (continued)





**NOTE
      1 - SIGNIFICANT ACCOUNTING POLICIES** (continued):





**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**




The
      preparation of the consolidated financial statements in conformity with U.S.
      GAAP requires management to make estimates and assumptions that affect the
      reported amounts of assets and liabilities and disclosure of contingent assets
      and liabilities at the financial statement date and the reported expenses during
      the reporting periods. Actual results could differ from those
      estimates.





**d.**
            **Functional
                currency**




The
      currency of the primary economic environment in which the operations of the
      Company are conducted is the US dollar (“ *$* ”
or
      “ *dollar* ”).





Most
      of
      the Company’s research and development costs are incurred in dollars. A
      significant part of the Company’s capital expenditures and most of their
      financing is in dollars. Thus, the functional currency of the Company is the
      dollar.




Transactions
      and balances originally denominated in dollars are presented at their original
      amounts. Balances in foreign currencies are translated into dollars using
      historical and current exchange rates for non-monetary and monetary balances,
      respectively. For foreign transactions and other items reflected in the
      statements of operations, the following exchange rates are used: (1) for
      transactions – exchange rates at transaction dates or average rates and (2) for
      other items (derived from non-monetary balance sheet items such as depreciation)
      – historical exchange rates. The resulting transaction gains or losses are
      carried to financial income or expenses, as appropriate.




**e.**
            **Principles
                of consolidation**




The
      consolidated financial statements include the accounts of Oramed Pharmaceuticals
      Inc. and its Israeli subsidiary Oramed Ltd. All material inter-company
      transactions and balances have been eliminated in consolidation.





**f.**
            **Property
                and equipment**




Property
      and equipment are recorded at cost and depreciated by the straight-line method
      over the estimated useful lives of the assets.




Annual
      rates of depreciation are as follows:




**%**Computers
                and peripheral equipment
            
            
            33Office
                furniture and equipment
            
            
            15-33




Leasehold
      improvements are amortized over the term of the lease which is shorter than
      the
      estimated useful life of the improvements




F-48




**ORAMED
      PHARMACEUTICALS INC.**


(A
      Development Stage Company)




NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (continued)





**NOTE
      1 - SIGNIFICANT ACCOUNTING POLICIES** (continued) **:**





**g.**
            **Deferred
                taxes**





Deferred
      taxes are determined utilizing the asset and liability method based on the
      estimated future tax effects of differences between the financial accounting
      and
      tax bases of assets and liabilities under the applicable tax laws. Deferred
      tax
      balances are computed using the tax rates expected to be in effect when those
      differences reverse. A valuation allowance in respect of deferred tax assets
      is
      provided if, based upon the weight of available evidence, it is more likely
      than
      not that some or all of the deferred tax assets will not be realized. The
      Company has provided a full valuation allowance with respect to its deferred
      tax
      assets.





Regarding
      the Subsidiary, paragraph 9(f) of FAS 109, “ *Accounting
      for Income Taxes* ”,
      prohibits the recognition of deferred tax liabilities or assets that arise
      from
      differences between the financial reporting and tax bases of assets and
      liabilities that are measured from the local currency into dollars using
      historical exchange rates, and that result from changes in exchange rates or
      indexing for tax purposes. Consequently, the abovementioned differences were
      not
      reflected in the computation of deferred tax assets and liabilities





**h.**
            **Research
                and development**





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 registered patents materials, supplies,
      the
      cost of services provided by outside contractors, including services related
      to
      the Company’s clinical trials, clinical trial expenses, the full cost of
      manufacturing drug for use in research, preclinical development. All costs
      associated with research and development are expensed as incurred.





Clinical
      trial costs are a significant component of research and development expenses
      and
      include costs associated with third-party contractors. The Company out sources
      a
      substantial portion of its clinical trial activities, utilizing external
      entities such as contract research organizations, independent clinical
      investigators, and other third-party service providers to assist the Company
      with the execution of its clinical studies. For each clinical trial that the
      Company conducts, certain clinical trial costs are expensed immediately, while
      others are expensed over time based on the expected total number of patients
      in
      the trial, the rate at which patients enter the trial, and the period over
      which
      clinical investigators or contract research organizations are expected to
      provide services.





Clinical
      activities which relate principally to clinical sites and other administrative
      functions to manage the Company’s clinical trials are performed primarily by
      contract research organizations (“CROs”). CROs typically perform most of the
      start-up activities for the Company’s trials, including document preparation,
      site identification, screening and preparation, pre-study visits, training,
      and
      program management.





**i.**
            **Cash
                equivalents**





The
      Company considers all short term, highly liquid investments, which include
      short-term deposits with original maturities of three months or less from the
      date of purchase that are not restricted as to withdrawal or use and are readily
      convertible to known amounts of cash, to be cash equivalents.





F-49




**ORAMED
      PHARMACEUTICALS INC.**


(A
      Development Stage Company)




NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (continued)





**NOTE
      1 - SIGNIFICANT ACCOUNTING POLICIES** (continued) **:**





**j.**
            **Comprehensive
                loss**





The
      Company has no other comprehensive loss components other than net loss for
      the
      fiscal years of 2007 and 2008.





**k.**
            **Loss
                per share**




Basic
      and
      diluted net losses per share of common stock are computed by dividing the net
      loss for the period by the weighted average number of shares of common stock
      outstanding and receipts on account of shares in equity during the period.
      Outstanding stock options, warrants and convertible notes 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 convertible notes excluded from the
      calculation of diluted net loss was 16,611,697 for the year ended August 31,
      2008 (12,033,677 for the year ended August 31, 2007).




**l.**
            **Impairment
                in value of long-lived
                assets**




The
      Company reviews long-lived assets, to be held and used, for impairment whenever
      events or changes in circumstances indicate that the carrying amount of the
      assets may not be recoverable. In the event the sum of the expected future
      cash
      flows (undiscounted and without interest charges) of the long-lived assets
      is
      less than the carrying amount of such assets, an impairment loss would be
      recognized, and the assets are written down to their estimated fair
      values.




**m.**
            **Stock
                based compensation**





Effective
      March 1, 2006, the Company adopted Statement of Financial Accounting Standards
      No. 123 (revised 2004), “ *Share-based
      Payment* ”
      (“ *FAS
      123(R)* ”).
      FAS
      123(R) requires awards classified as equity awards be accounted for using the
      grant-date fair value method. The fair value of share-based payment transactions
      is recognized as expense over the requisite service period, net of estimated
      forfeitures. The Company estimated forfeitures based on historical experience
      and anticipated future conditions.





In
      March
      2005, the Securities and Exchange Commission issued Staff Accounting Bulletin
      No. 107 (“ *SAB
      107* ”).
      SAB
      107 provides supplemental implementation guidance on FAS 123(R), including
      guidance on valuation methods, inventory capitalization of share-based
      compensation cost, income statement effects, disclosures and other issues.
      SAB
      107 requires share-based payment to be classified in the same expense line
      items
      as cash compensation. The
      Company has applied the provisions of SAB 107 in its adoption of FAS
      123(R).





The
      Company elected to recognize compensation cost for an award with only service
      conditions that has a graded vesting schedule using the accelerated method
      based
      on multiple option award approach **.**





FAS
      123(R) applies to all awards granted or modified after the Statement’s effective
      date. In addition, compensation cost for the unvested portion of previously
      granted awards that remain outstanding on the Statement’s effective date shall
      be recognized on or after the effective date, as the related services are
      rendered, based on the awards’ grant-date fair value as previously calculated
      for the pro-forma disclosure under FAS 123.





F-50








**ORAMED
      PHARMACEUTICALS INC.**


(A
      Development Stage Company)




NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (continued)




**NOTE
      1 - SIGNIFICANT ACCOUNTING POLICIES** (continued) **:**




The
      Company elected to adopt the modified prospective application transition method,
      as permitted by FAS 123(R). Under such transition method, upon the adoption
      of
      FAS 123(R), the Company’s financial statements for periods prior to the
      effective date of the Statement are not restated.




In
      December 2007, the Securities and Exchange Commission issued Staff Accounting
      Bulletin No. 110 (“SAB 110”) relating to the use of a “simplified” method
      in developing an estimate of the expected term of “plain vanilla” share options.
      SAB 107 previously allowed the use of the simplified method until
      December 31, 2007. SAB 110 allows, under certain circumstances, to continue
      to accept the use of the simplified method beyond December 31, 2007. The
      Company has applied the provisions of SAB 110 in its financial
      statement.




The
      Company accounts for equity instruments issued to third party service providers
      (non-employees) in accordance with the fair value based on an option-pricing
      model or when more reliability is based on the fair value of the services
      received, pursuant to the guidance in EITF 96-18 “ *Accounting
      for Equity Instruments That Are Issued to Other Than Employees for Acquiring,
      or
      in Conjunction with Selling Goods or Services* ”.
      The
      fair value of the options granted is revalued over the related service periods
      and recognized using the accelerated method.





**n.**
            **Uncertainty
                in income tax**




As
      of
      September 1, 2007, the Company adopted FASB Interpretation No. 48, ‘‘Accounting
      for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109’’
(‘‘FIN 48’’). FIN 48 specifies how tax benefits for uncertain tax positions are
      to be recognized, measured and derecognized in financial statements; requires
      certain disclosures of uncertain tax positions; specifies how reserves for
      uncertain tax positions should be classified on the balance sheet; and provides
      transition and interim-period guidance, among other provisions. On May 2, 2007,
      the FASB issued FASB Staff Position No. FIN 48-1, ‘‘Definition of Settlement in
      FASB Interpretation No. 48-1’’ (‘‘FSP FIN 48-1’’). FSP FIN 48-1 provides
      guidance regarding how an entity should determine whether a tax position is
      effectively settled for the purpose of recognizing previously unrecognized
      tax
      benefits.




**o.**
            **Concentration
                of credit risks**




Financial
      instruments that subject the Company to credit risk consist primarily of cash
      and cash equivalents and deposit, which are deposited in major financial
      institutions. The company is of the opinion the credit risk in respect of these
      balances is remote.





**p.**
                **Newly
                    issued and recently adopted accounting
                    pronouncements:**




1)
            In
                September 2006, the FASB issued Statement of Financial Accounting
                Standards No. 157, “*Fair
                Value Measurements” (“SFAS 157”).*SFAS 157 defines fair value, establishes a framework and gives guidance
                regarding the methods used for measuring fair value, and expands
                disclosures about fair value measurements. SFAS 157 is effective
                for
                financial statements issued for fiscal years beginning after November
                15,
                2007, and interim periods within those fiscal years (September 1,
                2009,
                for the Company). The Company is currently assessing the impact that
                SFAS
                157 may have on its results of operations and financial
                position.




F-51




**ORAMED
      PHARMACEUTICALS INC.**


(A
      Development Stage Company)




NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (continued)





**NOTE
      1 - SIGNIFICANT ACCOUNTING POLICIES** (continued) **:**




2)
            In
                February 2007, the FASB issued Statement of Financial Accounting
                Standards
                No. 159,*“The
                Fair Value Option for Financial Assets and Financial Liabilities—Including
                an amendment of FASB Statement No. 115” (“SFAS 159”)*.
                SFAS 159 is expected to expand the use of fair value accounting but
                does
                not affect existing standards which require certain assets or liabilities
                to be carried at fair value. The objective of SFAS 159 is to improve
                financial reporting by providing companies with the opportunity to
                mitigate volatility in reported earnings caused by measuring related
                assets and liabilities differently without having to apply complex
                hedge
                accounting provisions. Under SFAS 159, a company may choose, at its
                initial application or at other specified election dates, to measure
                eligible items at fair value and report unrealized gains and losses
                on
                items for which the fair value option has been elected in earnings
                at each
                subsequent reporting date. SFAS 159 is effective for financial statements
                issued for fiscal years beginning after November 15, 2007, and interim
                periods within those fiscal years (September 1, 2009, for the Company).
                If
                the company is to elect the fair value option for its existing assets
                and
                liabilities, the effect as of the adoption date, shall be reported
                as a
                cumulative-effect adjustment to the opening balance of retained earnings.
                The Company is currently assessing the impact that SFAS 159 may have
                on
                its financial position.




3)
            In
                June 2007, the Emerging Issues Task Force (EITF) reached Issue No.
                07-03,*"Accounting
                for Nonrefundable Advance Payments for Goods or Services Received
                to Be
                Used in Future Research and Development Activities" (EITF No.
                07-03)*.
                EITF No. 07-03 requires that nonrefundable advance payments for goods
                or
                services that will be used or rendered for future research and development
                activities be deferred and amortized over the period that the goods
                are
                delivered or the related services are performed, subject to an assessment
                of recoverability. The provisions of EITF 07-03 will be effective
                for
                financial statements issued for fiscal years beginning after December
                15,
                2007, and interim periods within those fiscal years (September 1,
                2009,
                for the Company). The provisions of this EITF are applicable for
                new
                contracts entered into on or after the effective date. Earlier application
                is not permitted.




4)
            In
                December 2007, the FASB ratified EITF Issue No. 07-01, "Accounting
                for
                Collaborative Arrangements" ("EITF 07-01"). EITF 07-01 defines
                collaborative arrangements and establishes reporting requirements
                for
                transactions between participants in a collaborative arrangement
                and
                between participants in the arrangement and third parties. EITF 07-01
                also
                establishes the appropriate income statement presentation and
                classification for joint operating activities and payments between
                participants, as well as the sufficiency of the disclosures related
                to
                these arrangements. EITF 07-01 is effective for fiscal years beginning
                after December 15, 2008 (September 1, 2009, for the Company). EITF
                07-01
                shall be applied using modified version of retrospective transition
                for
                those arrangements in place at the effective date. An entity should
                report
                the effects of applying this Issue as a change in accounting principle
                through retrospective application to all prior periods presented
                for all
                arrangements existing as of the effective date, unless it is impracticable
                to apply the effects the change retrospectively. The Company is currently
                assessing the impact that EITF 07-01 may have on its results of operations
                and financial position.




F-52




**ORAMED
      PHARMACEUTICALS INC.**


(A
      Development Stage Company)




NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (continued)




**NOTE
      1 - SIGNIFICANT ACCOUNTING POLICIES** (continued):




5)
            In
                May 2008, the FASB issued SFAS No. 162,*"The
                Hierarchy of Generally Accepted Accounting Principles" ("FAS
                162")*.
                FAS 162 is intended to improve financial reporting by identifying
                a
                consistent framework, or hierarchy, for selecting accounting principles
                to
                be used in preparing financial statements that are presented in conformity
                with GAAP for nongovernmental entities. FAS 162 is effective 60 days
                following the SEC's approval of the Public Company Accounting Oversight
                Board amendments to AU Section 411, "The Meaning of Present Fairly
                in
                Conformity with Generally Accepted Accounting Principles." We do
                not
                expect the adoption of this statement to have a material impact on
                our
                results of operations, financial position or cash
                flows.




6)
            In
                June 2007, the Emerging Issues Task Force (EITF) reached Issue No.
                07-03,
                "Accounting for Nonrefundable Advance Payments for Goods or Services
                Received to Be Used in Future Research and Development Activities"
                (EITF
                No. 07-03). EITF No. 07-03 requires that nonrefundable advance payments
                for goods or services that will be used or rendered for future research
                and development activities be deferred and amortized over the period
                that
                the goods are delivered or the related services are performed, subject
                to
                an assessment of recoverability. The provisions of EITF 07-03 will
                be
                effective for financial statements issued for fiscal years beginning
                after
                December 15, 2007, and interim periods within those fiscal years
                (September 1, 2008, for the Company). The provisions of this EITF
                are
                applicable for new contracts entered into on or after the effective
                date.
                Earlier application is not
                permitted.




**q.**
            **Reclassifications**




Certain
      figures in respect of prior years have been reclassified to conform to the
      current year presentation.





**NOTE
      2 – SHORT TERM INVESTMENTS:**




Amount
      represents bank deposits with an original maturity of more than three months
      but
      less than one year. The bank deposits are in US Dollars and bear interest at
      2.56% – 2.66% per annum.




**NOTE
      3 – FAIR VALUE OF FINANCIAL INSTRUMENTS:**




The
      financial instruments of the Group consist mainly of cash and cash equivalents,
      current receivables, accounts payable and accruals, convertible debentures.




The
      fair
      value of the financial instruments included in the working capital of the Group
      is identical or close to their carrying value (refer to note 1o).





**NOTE
      4 - PROPERTY AND EQUIPMENT, Net:**




**a.**
            Composition
                of property and equipment, grouped by major classifications, is as
                follows:




**August 31****2008**
            
            **2007**Cost:Leasehold
                improvements
            
            $
            76,029Office
                furniture and equipment
            
            
            17,684Computers
                and peripheral equipment
            
            
            20,037
            
            $
            1,736113,750
            
            
            1,736Less
                - accumulated depreciation
            
            
            15,454
            
            
            -$
            98,296
            
            $
            1,736




**b.**
            Depreciation
                expense totaled $15,454 and $0 in the years ended August 31, 2008
                and
                2007, respectively.




F-53




**ORAMED
      PHARMACEUTICALS INC.**


(A
      Development Stage Company)




NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (continued)





**NOTE
      5 - CONVERTIBLE NOTES**




In
      February 2007, the Company borrowed $125,000 on a convertible note without
      interest, due on demand and unsecured. The note is convertible at $0.50 per
      share. The Company analyzed the note under EITF 98-5 and EITF 00-27 to determine
      if it contained a beneficial conversion feature. It was determined the note
      did
      contain a beneficial conversion feature with an intrinsic value of $60,000.
      Because the note is due on demand, the entire amount of the beneficial
      conversion feature was amortized immediately to interest expense.




In
      May
      2007, the Company borrowed $150,000 on a convertible note without interest,
      due
      on demand and unsecured. The note is convertible at $0.50 per share. The Company
      analyzed the note under EITF 98-5 and EITF 00-27 to determine if it contained
      a
      beneficial conversion feature. It was determined the note did contain a
      beneficial conversion feature with an intrinsic value of $48,000. Because the
      note is due on demand, the entire amount of the beneficial conversion feature
      was amortized immediately to interest expense.





The
      Company analyzed the conversion option of both notes and determined it did
      not
      require derivative treatment under FAS 133 and EITF 00 - 19.




During
      the year ended August 31, 2008, the Company received conversion notices
      regarding the above mentioned convertible notes. The common stock underlying
      the
      convertible notes were issued on July 1, 2008.





**NOTE
      6 - RECEIPTS ON ACCOUNT OF SHARES ISSUANCE**





The
      balance of the Receipts on account of shares issuance as of August 31, 2007
      represent 1,012,317 shares of common stock sold during fiscal year 2006, for
      $506,061, of which 1,000,000 were issued on July 1, 2008, and 510,000 shares
      of
      common stock sold during fiscal year 2007, for $255,000, which were issued
      on
      November 8, 2007. As of August 31, 2008 the balance of unissued shares is
      12,317. The Company has included the shares as outstanding for the calculation
      of the annual loss per share.





**NOTE
      7 - COMMITMENTS:**




**a.**
            On
                March 8, 2006, the Company entered into an agreement with Hadasit
                Medical
                Services and Development Ltd (“ Hadasit”) to acquire provisional patent
                application No. 60/718716, including related intellectual property.
                The
                provisional patent application No. 60/718716 related to a method
                of
                preparing insulin so that it may be taken orally for the use in the
                treatment of individuals with
                diabetes.




Under
      the
      terms of the agreement, the Company agreed to contract Hadasit to provide
      consulting services relating to the completion of clinical trials on provisional
      patent application No. 60/718716. As remuneration for the services provided
      under the agreement Hadasit is entitled to $200,000, of which $163,000 was
      expensed through August 31, 2008.




Hadasit
      is a 7% shareholder of the Company. The primary researcher for Hadasit is Dr.
      Miriam Kidron, a director of the Company. As part of the above agreement, the
      Company entered into an employment agreement with Dr. Kidron that included
      the
      grant of 3,361,360 options exercisable at $0.001 per share for a period of
      five
      years (See note 8g). On July 1, 2008, the employment agreement was replaced
      by a
      consulting agreement (See note 14c).





F-54




**ORAMED
      PHARMACEUTICALS INC.**


(A
      Development Stage Company)




NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (continued)





**NOTE
      7 - COMMITMENTS** (continued):





**b.**
            The
                Subsidiary has entered into operating lease agreements for vehicles
                used
                by its employees for a period of 3
                years.




The
      lease
      expenses for the year ended August 31, 2008 were $20,325. The future lease
      payments under the lease agreement are $30,748, $30,748 and $9,851 for the
      years
      ending August 31, 2009, 2010 and 2011 respectively.




As
      security for its obligation under the lease agreements the Subsidiary paid
      $10,824, which are classified as long term deposits.





**c.**
            On
                September 19, 2007 the Subsidiary entered into a new lease agreement
                for
                its new office facilities, in Israel. The new lease agreement is
                for a
                period of 51 months. The monthly lease payment is 2,396 NIS and is
                linked
                to the increase in the Israeli consumer price index (As of August
                31, 2008
                the monthly payment in the Company's functional currency is $667),
                the
                future lease payments under the lease are $8,004 for the years ending
                August 31, 2009, 2010 and 2011 and $2,668 for the year ending August
                31,
                2012.




As
      security for its obligation under this lease agreement the Company provided
      a
      bank guarantee in an amount equal to three monthly lease payments.





**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
                $262,595 of which $15,325 was expensed through August 31,
                2008.





**e.**
            On
                April 21, 2008, the Company entered into a five year service agreement
                with Encorium Group, Inc. (“Encorium”) pursuant to which Encorium will
                provide services for the purpose of filing an Investigational New
                Drug
                Application (IND) for a phase 2 study as required by the US Food
                and Drug
                Administration (FDA). The total cost under the agreement is estimated
                at
                $1,455,143 of which $171,000 was paid through August 31, 2008, and
                included in prepaid expenses.





**f.**
            During
                April 2008, the Company entered into a five years master services
                agreement with SAFC**,**an
                operating division of Sigma-Aldrich, Inc. (“SAFC”), pursuant to which SAFC
                will provide services for individual projects, which may include
                strategic
                planning, expert consultation, clinical trial services, statistical
                programming and analysis, data processing, data management, regulatory,
                clerical, project management, central laboratory services, pre-clinical
                services, pharmaceutical sciences services, and other research and
                development services, in accordance with mutually agreed upon work
                orders.
                The total cost under the agreement is estimated at $605,159 of which
                $266,403 was paid through August 31, 2008, of which $82,431 was expensed
                and the remaining was included in prepaid
                expenses.





**g.**
            On
                May 1, 2008, the Company entered into a consulting agreement with
                a third
                party (“the Consultant”) for a period of twelve months, pursuant to which
                the Consultant will assist Oramed’s efforts to complete the FDA approval
                process for its oral insulin capsule. On October 3, 2008 the Company
                and
                the Consultant agreed to amend the agreement effective July 1, 2008.
                The
                Consultant is entitled to a fixed monthly fee of $16,666 (for the
                period
                from May 1, 2008 through June 30, 2008 the monthly fee was $8,333)
                and
                reimbursement of pre-approved out of pocket expenses.





**h.**
            As
                to a Clinical Trail Manufacturing Agreement with Swiss Caps AG, see
                note
                9a.





F-55




**ORAMED
      PHARMACEUTICALS INC.**


(A
      Development Stage Company)




NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (continued)





**NOTE
      8 - STOCK HOLDERS’ EQUITY:**




The
      Company’s shares are traded on the Over-The-Counter Bulletin Board.




The
      following are capital stock transactions that took place during the years ended
      August 31, 2008 and 2007:




**a.**
            On
                January 3, 2007, the Company entered into a subscription agreement
                for the
                sale of 50,000 units at a purchase price of $0.50 per unit for total
                consideration of $25,000. 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 one share of common stock exercisable
                for
                two years at an exercise price of at $0.75 per share.




The
      consideration was allocated to the shares and warrants issued based on relative
      fair value. The value allocated to the warrants estimated by using the Black
      Scholes option-pricing model is $8,630 and was based on the following
      assumptions: dividend yield of 0%; expected volatility of 135.2%; risk-free
      interest rates of 4.76%; and expected lives of 2 years.




**b.**
            On
                June 15, 2007, the Company entered into a subscription agreement
                for the
                sale of 3,600,000 units at a purchase price of $0.50 per unit for
                total
                consideration of $1,800,000. 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 one share of common stock exercisable
                for
                three years at an exercise price of $0.75 per share.




The
      consideration was allocated to the shares and warrants issued based on relative
      fair value. The value allocated to all warrants estimated by using the Black
      Scholes option-pricing model is $620,569 and was based on the following
      assumptions: dividend yield of 0%; expected volatility of 121.5%; risk-free
      interest rates of 5.07%; and expected lives of 3 years.




**c.**
            On
                August 2, 2007, the Company entered into a subscription agreement
                for the
                sale of 510,000 units at a purchase price of $0.50 per unit for total
                consideration of $255,000. 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 one share of common stock exercisable
                for
                three years at an exercise price of $0.75 per
                share.




The
      consideration was allocated to the shares and warrants issued based on relative
      fair value. The value allocated to all warrants estimated by using the Black
      Scholes option-pricing model is $93,847 and was based on the following
      assumptions: dividend yield of 0%; expected volatility of 121.9%; risk-free
      interest rates of 4.57%; and expected lives of 3 years.




In
      connection with the subscription agreement the Company issued, to third parties
      who assisted in securing the agreement, 10,000 shares of the Company's common
      stock.




F-56




**ORAMED
      PHARMACEUTICALS INC.**


(A
      Development Stage Company)




NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (continued)





**NOTE
      8 - STOCK HOLDERS’ EQUITY** (continued):




**d.**
            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.





The
      consideration was allocated to the shares and warrants issued based on relative
      fair value. The value allocated to the warrants was estimated by using the
      Black
      Scholes option-pricing model at $1,124,564 and was based on the following
      assumptions: dividend yield of 0%; expected volatility of 117.9%; risk-free
      interest rates of 2.8%; and expected lives of 3 years.





As
      finders fee, in connection with the securities purchase agreement, the Company
      paid $85,000 cash fee to a director (see note 13b), as well as issued 143,333
      shares of the Company's common stock for other individuals.




**e.**
              As
                  to shares issued as part of stock based compensation plan see Note
                  8.





**NOTE
      9 - STOCK BASED COMPENSATION:**




On
      October 15, 2006, the Company’s board of directors adopted the 2006 Stock Option
      Plan (the “2006 Stock Option Plan”).




On
      May 5,
      2008, the Company’s board of directors adopted the 2008 Stock Option Plan (the
“2008 Stock Option Plan”).




Under
      both plans 11,000,000 shares have been reserved for the grant of options, which
      may be issued at the discretion of the Company’s Board of Directors from time to
      time. Under these plans, each option is exercisable into one share of common
      stock of the Company.




The
      options may be exercised after vesting and in accordance with vesting schedules
      which will be determined by the board of directors for each grant. The maximum
      term of the options is 10 years .




The
      fair
      value of each stock option grant is estimated at the date of grant using a
      Black
      Scholes option pricing model. The volatility is based on a historical
      volatility, by statistical analysis of the daily share price for past periods.
      The expected term is the length of time until the expected dates of exercising
      the options, based on estimated data regarding employees’ exercise
      behavior.




F-57




**ORAMED
      PHARMACEUTICALS INC.**


(A
      Development Stage Company)




NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (continued)




**NOTE
      9 - STOCK BASED COMPENSATION** (continued) **:**





The
      following are stock options and warrants transactions made during the years
      ended August 31, 2008 and 2007, (See Note 15 as to grants of stock options
      subsequent to August 31, 2008):




**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*".




On
      December 27, 2006 and September 10, 2007, respectively, the Company issued
      125,000 and 283,025, shares of its common stock to Swiss as remuneration for
      the
      services provided. The shares of common stock issued for service rendered at
      $98,750 and $113,210, respectively. As for shares issued following August 31,
      2008 see note 15c.




**b.**
            On
                November 23, 2006, 500,000 options were granted to an employee under
                the
                2006 Stock Option Plan at an exercise price of $0.76 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 expire
                on
                November 23, 2009. The fair value of these options on the date of
                grant
                was $214,431 using the Black Scholes option-pricing model and was
                based on
                the following assumptions: dividend yield of 0%; expected volatility
                of
                115%; risk-free interest rates of 4.7%; and expected lives of 1.77
                years.




**c.**
            On
                November 23, 2006, 250,000 options were granted to an outside consultant
                under the 2006 Stock Option Plan at an exercise price of $0.76 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
                expire
                on November 23, 2009. The fair value of these options on November
                30, 2007
                (the date when the option were fully vested) was $33,075 using the
                Black
                Scholes option-pricing model and was based on the following assumptions:
                dividend yield of 0%; expected volatility of 119%; risk-free interest
                rates of 3.0%; and the remaining contractual life of 1.98
                years.




**d.**
            On
                December 31, 2006, 400,000 options were granted to four then new
                member of
                the Scientific Advisory Board, an outside parties, under the 2006
                Stock
                Option Plan. at an exercise price of $0.76 per share (less then the
                traded
                market price on the date of grant), the options vest in twelve equal
                monthly installments over the first year and expired on June 30,
                2008. The
                fair value of these options on December 31, 2007 (the date when the
                option
                were fully vested) was $7,262 using the Black Scholes option-pricing
                model
                and was based on the following assumptions: dividend yield of 0%;
                expected
                volatility of 120%; risk-free interest rates of 3.5%; and the remaining
                contractual life of 0.5 years. These options expired on June 30,
                2008.




**e.**
            On
                March 18, 2007, 100,000 options were granted to a then new member
                of the
                Scientific Advisory Board, an outside party under the 2006 Stock
                Option
                Plan at an exercise price of $0.76 per share (over the traded market
                price
                on the date of grant), the options vest in twelve equal monthly
                installments over the first year and expire on March 18, 2010. The
                fair
                value of these options on March 17, 2008 (the date when the option
                were
                fully vested) was $27,939 using the Black Scholes option-pricing
                model and
                was based on the following assumptions: dividend yield of 0%; expected
                volatility of 122%; risk-free interest rates of 3.5%; and the remaining
                contractual life of 2.00 years.




F-58




**ORAMED
      PHARMACEUTICALS INC.**


(A
      Development Stage Company)




NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (continued)





**NOTE
      9 - STOCK BASED COMPENSATION** (continued):




**f.**
            On
                August 2, 2007, 1,700,000 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, under the 2006 Stock Option Plan at an
                exercise
                price of $0.45 per share (over the traded market price on the date
                of
                grant), the options vested immediately and expire on August 2, 2012.
                The
                fair value of these options on the date of grant was $450,449 using
                the
                Black Scholes option-pricing model and was based on the following
                assumptions: dividend yield of 0%; expected volatility of 105%; risk-free
                interest rates of 4.6%; and expected lives of 3.0
                years.




**g.**
            On
                August 14, 2007, 3,361,630 stock options were granted to Miriam Kidron,
                the Company’s Chief Medical and Technology Officer and director, at an
                exercise price of $0.001 per share, the options vested immediately
                and
                expire on August 14, 2012. The fair value of these options on the
                date of
                grant was $1,348,340 using the Black Scholes option-pricing model
                and was
                based on the following assumptions: dividend yield of 0%; expected
                volatility of 105%; risk-free interest rates of 4.6%; and expected
                lives
                of 3.0 years.




**h.**
            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 expire on September
                4,
                2009. The fair value of these options as of August 31, 2008 was $125,440,
                using the Black Scholes option-pricing model and was based on the
                following assumptions: dividend yield of 0% for all years; expected
                volatility of 118%; risk-free interest rates of 2.17%; and the remaining
                contractual life of 1.01 years.




**i.**
            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.
                The
                fair value of these options as of August 31, 2008 was $39,615, using
                the
                Black Scholes option-pricing model and was based on the following
                assumptions: dividend yield of 0% for all years; expected volatility
                of
                118%; risk-free interest rates of 2.17%; and the remaining contractual
                life of 1.66 years.




**j.**
            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, 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. The fair value of these options on the date
                of
                grant was $784,430, using the Black Scholes option-pricing model
                and was
                based on the following assumptions: dividend yield of 0% for all
                years;
                expected volatility of 116%; risk-free interest rates of 3.41%; and
                expected lives of 5.44 years.




**k.**
            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.
                The fair value of these options as of August 31, 2008 was $51,624,
                using
                the Black Scholes option-pricing model and was based on the following
                assumptions: dividend yield of 0% for all years; expected volatility
                of
                118%; risk-free interest rates of 2.36%; and the remaining contractual
                life of 2.88 years.




F-59




**ORAMED
      PHARMACEUTICALS INC.**


(A
      Development Stage Company)




NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (continued)




**NOTE
      9 - STOCK BASED COMPENSATION** (continued) **:**




**l.**
            On
                August 4, 2008, 50,000 options were granted to an outside consultant,
                at
                an exercise price of $0.90 per share (equivalent to the traded market
                price on the date of grant), the options vest in four equal quarterly
                installments commencing on October 1, 2008 and expire on August 4,
                2011.
                The fair value of these options as of August 31, 2008 was $23,873,
                using
                the Black Scholes option-pricing model and was based on the following
                assumptions: dividend yield of 0% for all years; expected volatility
                of
                118%; risk-free interest rates of 2.36%; and the remaining contractual
                life of 2.93 years.




The
      fair
      value of each option grant is estimated on the date of grant using the Black
      Scholes option-pricing model with the following assumptions:





**For options granted in****year ended August 31****2008**
            
            **2007**Expected
                option life (years)
            
            
            1.0-5.4
            
            
            1.5-3.0Expected
                stock price volatility (%)
            
            
            116.3-118.0
            
            
            105.4-117.4Risk
                free interest rate (%)
            
            
            2.2-3.4
            
            
            4.4-4.7Expected
                dividend yield (%)
            
            
            0.0
            
            
            0.0




A
      summary
      of the status of the stock options granted to employees and directors as of
      August 31, 2008 and 2007, and changes during the year ended on this date, is
      presented below:




**Year ended August 31,****2008**
            
            **2007****Weighted**
            
            
            
            **Weighted****Number**
            
            **average**
            
            **Number**
            
            **average****of**
            
            **exercise**
            
            **of**
            
            **exercise****options**
            
            **price**
            
            **options**
            
            **price****$**
            ****
            ****
            ****
            **$**Options
                outstanding atbeginning
                of year
            
            
            5,561,360
            
            
            0.21
            
            
            -Changes
                during the year:Granted
                – at market price
            
            
            1,728,000
            
            
            0.54Granted
                – at an exerciseprice
                above marketPrice
            
            
            
            
            
            
            
            
            2,200,000
            
            
            0.52Granted
                – at an exerciseprice
                below marketprice
            
            
            
            
            
            
            
            
            3,361,360
            
            
            0.001Options
                outstanding at endof
                year
            
            
            7,289,360
            
            
            0.29
            
            
            5,561,360
            
            
            0.21Options
                exercisable at endof
                year
            
            
            6,137,360
            
            
            
            
            
            5,436,360Weighted
                average fairvalue
                of options grantedduring
                the year
            
            $
            0.45
            
            
            
            
            $
            0.35





F-60






**ORAMED
      PHARMACEUTICALS INC.**


(A
      Development Stage Company)




NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (continued)





**NOTE 9
      - STOCK BASED COMPENSATION** (continued) **:**





Costs
      incurred in respect of stock based compensation for employees and directors,
      for
      year ended August 31, 2008, 2007 were $459,467 and $1,968,547,
      respectively.





The
      following table presents summary information concerning the options outstanding
      as of August 31, 2008:





**Weighted****Average**
            
            **Weighted****Range of**
            
            
            
            **Remaining**
            
            **average****exercise**
            
            **Number**
            
            **Contractual**
            
            **exercise**
            
            **Aggregate****prices**
            
            **outstanding**
            
            **Life**
            
            **price**
            
            **intrinsic value****$**
            ****
            ****
            ****
            **Years**
            ****
            **$**
            ****
            **$**0.001
            
            
            3,361,360
            
            
            3.95
            
            
            0.001
            
            
            2,416,8180.45
                to 0.62
            
            
            3,428,000
            
            
            6.83
            
            
            0.50
            
            
            770,0400.76
                to 0.90
            
            
            500,000
            
            
            1.23
            
            
            0.76
            
            
            -7,289,360
            
            
            5.12
            
            
            0.29
            
            
            3,186,858





The
      following table presents summary information concerning the options exercisable
      as of August 31, 2008:





**Weighted****Average**
            
            **Weighted****Range of**
            
            
            
            **Remaining**
            
            **average****exercise**
            
            **Number**
            
            **Contractual**
            
            **exercise**
            
            **Aggregate****prices**
            
            **exercisable**
            
            **Life**
            
            **price**
            
            **intrinsic value****$**
            ****
            ****
            ****
            **Years**
            ****
            **$**
            ****
            **$**0.001
            
            
            3,361,360
            
            
            3.95
            
            
            0.001
            
            
            2,416,8180.45
                to 0.62
            
            
            2,276,000
            
            
            5.38
            
            
            0.47
            
            
            562,6800.76
                to 0.90
            
            
            500,000
            
            
            1.23
            
            
            0.76
            
            
            -6,137,360
            
            
            4.26
            
            
            0.24
            
            
            2,979,498




F-61




**ORAMED
      PHARMACEUTICALS INC.**


(A
      Development Stage Company)




NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (continued)





**NOTE 9
      - STOCK BASED COMPENSATION** (continued) **:**




A
      summary
      of the status of the stock options granted to non-employees as of August 31,
      2008, and changes during the year ended on this date, is presented
      below:




**Year ended August 31****2008**
            
            **2007****Weighted**
            
            
            
            **Weighted****Number**
            
            **average**
            
            **Number**
            
            **average****of**
            
            **exercise**
            
            **of**
            
            **exercise****options**
            
            **price**
            
            **options**
            
            **price****$**
            ****
            ****
            ****
            **$**Options
                outstanding atbeginning
                of year
            
            
            750,000
            
            
            0.76
            
            
            -Changes
                during the year:Granted
                – at market price
            
            
            150,000
            
            
            0.71Granted
                – at an exerciseprice
                above marketPrice
            
            
            400,000
            
            
            0.53
            
            
            350,000
            
            
            0.76Granted
                – at an exerciseprice
                below marketprice
            
            
            
            
            
            
            
            
            400,000
            
            
            0.76Expired
            
            
            400,000
            
            
            0.76Options
                outstanding at endof
                year
            
            
            900,000
            
            
            0.65
            
            
            750,000
            
            
            0.76Options
                exercisable at endof
                year
            
            
            733,333
            
            
            
            
            
            495,833





The
      Company recorded stock compensation of $203,982 and $177,782 during the year
      ended August 31, 2008 and 2007 respectively, related to consulting
      services.





The
      following table presents summary information concerning the options outstanding
      as of August 31, 2008:





**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
            
            
            1.48
            
            
            0.49
            
            
            91,0000.76
                to 0.90
            
            
            500,000
            
            
            1.55
            
            
            0.77
            
            
            -900,000
            
            
            1.52
            
            
            0.65
            
            
            91,000




F-62




**ORAMED
      PHARMACEUTICALS INC.**


(A
      Development Stage Company)




NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS (continued)





**NOTE 9
      - STOCK BASED COMPENSATION** (continued) **:**




The
      following table presents summary information concerning the options exercisable
      as of August 31, 2008:




**Weighted****Average**
            
            **Weighted****Range of**
            
            
            
            **Remaining**
            
            **average****exercise**
            
            **Number**
            
            **Contractual**
            
            **exercise**
            
            **Aggregate****prices**
            
            **exercisable**
            
            **Life**
            
            **price**
            
            **intrinsic value****$**
            ****
            ****
            ****
            **Years**
            ****
            **$**
            ****
            **$**0.45
                to 0.62
            
            
            300,000
            
            
            1.01
            
            
            0.45
            
            
            81,0000.76
                to 0.90
            
            
            433,333
            
            
            1.38
            
            
            0.76
            
            
            -733,333
            
            
            1.23
            
            
            0.63
            
            
            81,000





Unrecognized
      compensation as determined under FAS 123R as of August 31, 2008 totaled
      $670,698, to be recorded over the next 17 months.





**NOTE 10
      – ACCOUNTS PAYABLE AND ACCRUED EXPENSES:**





**Year ended****August 31,****2008**
            
            **2007**Service
                providers
            
            $
            635,762
            
            $
            275,465Tax
                provisions
            
            
            162,164Related
                parties
            
            
            28,062
            
            
            65,407Payroll
                and related expenses
            
            
            40,714$
            866,702
            
            $
            340,872





**NOTE
      11 - RESEARCH AND DEVELOPMENT EXPENSES:**





**Period**
              **from April****12, 2002****(inception)****Year ended**
            
            **through****August 31,**
            
            **August 31,****2008**
            
            **2007**
            
            **2008**Clinical
                trials
            
            $
            538,056
            
            $
            417,045
            
            $
            1,063,326Consulting
                fees
            
            
            205,372
            
            
            93,731
            
            
            388,625Costs
                for registration of patents
            
            
            89,645
            
            
            11,045
            
            
            100,690Compensation
                costs in respect of warrantsgranted
                to employees, directors and consultants
            
            
            285,336
            
            
            1,664,666
            
            
            1,951,802Other
            
            
            57,248
            
            
            26,142
            
            
            83,391$
            1,175,657
            
            $
            2,214,429
            
            $
            3,587,834




F-63




**NOTE
      12 - GENERAL AND ADMINISTRATIVE EXPENSES**





**Period**
              **from
                April****12,
                2002****(inception)****Year
                ended**
            
            **through****August
                31**
            
            **August
                31,****2008**
            
            **2007**
            
            **2008**Compensation
                costs in respect of warrants
              granted
                to employees, directors
                and
              consultants
            
            $
            378,113
            
            $
            479,863
            
            $
            857,976Professional
                services
            
            
            391,309
            
            
            120,018
            
            
            771,279Consulting
                fees
            
            
            151,037
            
            
            146,756
            
            
            325,319Travel
                costs
            
            
            141,862
            
            
            122,412
            
            
            278,173Write
                off of debt
            
            
            
            
            
            
            
            
            275,000Business
                development
            
            
            154,357
            
            
            
            
            
            154,357Payroll
                and related expenses
            
            
            130,081
            
            
            
            
            
            130,081Insurance
            
            
            23,630
            
            
            
            
            
            23,630Other
            
            
            133,965
            
            
            49,428
            
            
            214,643$
            1,504,354
            
            $
            918,477
            
            $
            3,030,458





**NOTE
      13 - TAXES ON INCOME:**





**a.**
            **Corporate
                taxation in the U.S.**





Taxes
      on
      income included in the consolidated statements of operations represent current
      taxes due to taxable income of the US Company.





The
      applicable corporate tax rate for the Company is 35%.





As
      of
      August 31, 2008, the Company has an accumulated tax loss carryforward of
      approximately $3,425,168 (August 31, 2007 approximately - $1,317,244). Under
      USA
      tax laws, carryforward tax losses expire 20 years after the year in which it
      incurred, in the case of the Company the net loss carryforward will expire
      in
      the years 2025 through 2027.




**b.**
            **Corporate
                taxation in Israel:**





The
      Subsidiary is taxed in accordance with Israeli tax laws. The regular corporate
      tax rate in Israel for 2008 is 27%. The corporate tax rates for 2009 and
      thereafter are as follows: 2009 - 26% and for 2010 and thereafter -
      25%.




F-64




**NOTE
      13 - TAXES ON INCOME** (continued) **:**





**c.**
            **Deferred
                income taxes:**






**August
                31****2008**
            
            **2007**In
                respect of:Net
                operating loss carryforward
            
            $
            1,194,401
            
            $
            480,353Less
                - Valuation allowance
            
            
            (1,194,401
            )
            
            (480,353
            )Net
                deferred tax assets
            
            
            -,-
            
            
            -,-




Realization
      of deferred tax assets is dependent upon sufficient future taxable income during
      the period that deductible temporary differences and carryforwards are expected
      to be available to reduce taxable income. As the achievement of required future
      taxable income is uncertain, the Company recorded a full valuation
      allowance.





**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,****2008**
            
            **2007**
            
            **2008**Loss
                before taxes on income:U.S.
            
            $
            2,315,686
            
            $
            3,164,462
            
            $
            6,885,236Outside
                U.S.
            
            
            291,421
            
            
            71,547
            
            
            362,9682,607,107
            
            
            3,236,009
            
            
            7,248,204Taxes
                on income:Current:U.S.
            
            
            39,799
            
            
            
            
            
            39,799Outside
                U.S.
            
            
            122,365
            
            
            
            
            
            122,365$
            162,164
            
            
            
            
            $
            162,164




F-65





**NOTE
      13 - TAXES ON INCOME** (continued) **:**





**e.**
            **Reconciliation
                of the theoretical tax expense to actual tax
                expense**





Following
      is a reconciliation of the theoretical tax expense, assuming all income is
      taxed
      at the regular tax rates applicable to companies in U.S., and the actual tax
      expense:





**Period from**
              **April****12, 2002****(inception)****Year ended**
            
            **through****August 31**
            
            **August 31,****2008**
            
            **2007**
            
            **2008**Loss
                before income taxes as reported in the consolidated statement of
                operations
            
            $
            (2,607,107
            )
            $
            (3,236,009
            )
            $
            (7,086,040
            )Computed
                “expected” tax benefit
            
            
            (912,487
            )
            
            (1,132,603
            )
            
            (2,480,114
            )Increase
                (decrease) in income taxes resulting from:Change
                in the balance of the valuation allowance for deferred tax
                losses
            
            
            714,048
            
            
            336,541
            
            
            1,194,401Disallowable
                deductions
            
            
            200,916
            
            
            790,338
            
            
            1,282,466Increase
                in taxes resulting from different tax rates applicable to
                nonU.S.
                subsidiary
            
            
            29,037
            
            
            5,724
            
            
            34,761Uncertain
                tax position
            
            
            130,650
            
            
            
            
            
            130,650Taxes
                on income for the reported year
            
            $
            162,164
            
            
            -;-
            
            $
            162,164





**f.**
            **Uncertainty
                in Income Taxes**




The
      Company adopted FIN 48 effective September 1, 2007. FIN 48 requires significant
      judgment in determining what constitutes an individual tax position as well
      as
      assessing the outcome of each tax position. Changes in judgment as to
      recognition or measurement of tax positions can materially affect the estimate
      of the effective tax rate and consequently, affect the operating results of
      the
      Company. The Company had no unrecognized tax benefits as of September 1, 2007.
      As a result of the implementation of FIN 48 the Company recoded an additional
      provision for income taxes in the amount of $130,650 do to uncertainty in its
      tax position. The Company recognizes interest and penalties related to its
      tax
      contingencies as income tax expense. As of August 31, 2008 the Company recorded
      $37,469 of penalties related to tax contingencies.





**Year ended**
              **December 31, 2008**Balance
                at September 1, 2007
            
            
            -Increase
                in tax positions for current year
            
            
            130,650Net
                deferred tax assets
            
            $
            130,650




The
      Company do not expect unrecognized tax expenses to change significantly over
      the
      next 12 months.




F-66




**NOTE
      13 - TAXES ON INCOME**(continued)**:**




As
      of
      September 1, 2007, the Company is subject to Israeli income tax examinations
      and
      to U.S. Federal income tax examinations for the tax years of 2002 through 2007.
      As of August 31, 2008, the Company did not record any change to its unrecognized
      tax benefits.





**NOTE
      14 - RELATED PARTIES - TRANSACTIONS:**





**a.**
            On
                March 8, 2006, the Company entered into a research and license agreement
                with Hadasit, a 9% shareholder of the Company. The primary researcher
                for
                Hadasit is Miriam Kidron the Company’s Chief Medical and Technology
                Officer and director.


**b.**
            On
                January 18, 2008, Oramed entered into an agreement with a director
                that
                will provide managerial services, pursuant to which the director
                will be
                entitled to an annual payment of $15,000, as a reimbursement of expenses.
                . In connection with the Company’s private placement on July 14, 2008, the
                director received $85,000 as a finders fee.


**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 replace the existing
                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.




The
      Consulting Agreements are both terminable by either party upon 60 days prior
      written notice. The Consulting Agreements provide that KNRY (i) will be paid,
      under each of the Consulting Agreements, in New Israeli Shekels (“NIS”) a gross
      amount of NIS50,400 + Value-Added-Tax per month (as of August 31, 2008 the
      monthly payment in the Company's functional currency is $14,030+VAT) and (ii)
      will be reimbursed for reasonable expenses incurred in connection with
      performance of the Consulting Agreements.





**NOTE
      15 – SUBSEQUENT EVENTS:**





**a.**
            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 an estimated cash compensation of $227,604.





**b.**
            On
                October 12, 2008, an aggregate of 884,000 options were granted to
                two
                employees of the subsidiary at an exercise price of $0.47 per share.
                The
                options vest in three equal annual installments commencing on May
                1, 2009
                and will expire on October 12,
                2018.





**c.**
            On
                October 17, 2008, the Company issued 203,904 shares of its common
                stock to
                Swiss as remuneration for the services provided, in the amount of
                $152,928.




F-67




**ITEM
      8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE**





None





**ITEM
      8A – CONTROLS AND PROCEDURES**




(a)      
      Our management, including our chief executive officer and chief financial
      officer, has evaluated the effectiveness of our disclosure controls and
      procedures as of August 31, 2008. Based on such review, our chief executive
      officer and chief financial officer have determined that in light of their
      conclusion with respect to the effectiveness of our internal control over our
      financial reporting as of such date, that the company did not have in place
      effective controls and procedures designed to ensure that information required
      to be disclosed by us in the reports that we file or submit under the Securities
      Exchange Act of 1934, as amended, is accumulated and communicated to our
      management, including our principal executive and principal financial officers,
      or persons performing similar functions, as appropriate to allow timely
      decisions regarding required disclosure, and is recorded, processed, summarized
      and reported, within the time periods specified in the Commission’s rules and
      forms.




(b)      
      Our management, under the supervision of our chief executive officer and chief
      financial officer, is responsible for establishing and maintaining adequate
      internal control over our financial reporting, as defined in Rules 13a-15(f)
      and
      15d-15(f) of the Securities Exchange Act of 1934, as amended. The Company’s
      internal control over financial reporting is defined as a process designed
      to
      provide reasonable assurance regarding the reliability of financial reporting
      and the preparation of financial statements for external purposes in accordance
      with generally accepted accounting principles. Internal control over financial
      reporting includes policies and procedures that:




·
            pertain
                to the maintenance of records that in reasonable detail accurately
                and
                fairly reflect our transactions and asset dispositions;




·
            provide
                reasonable assurance that transactions are recorded as necessary
                to permit
                the preparation of our financial statements in accordance with generally
                accepted accounting principles, and that our receipts and expenditures
                are
                being made only in accordance with authorizations of our management
                and
                directors; and




·
            provide
                reasonable assurance regarding the prevention or timely detection
                of
                unauthorized acquisition, use or disposition of assets that could
                have a
                material effect on our financial statements.




Under
      the
      supervision and with the participation of our management, including our
      principal executive officer and principal financial officer, we evaluated the
      effectiveness of our internal control over financial reporting as of August
      31,
      2008 based on the framework for Internal Control-Integrated Framework set forth
      by The Committee of Sponsoring Organizations of the Treadway Commission. Due
      to
      the inherent limitations of our company, derived from our small size and the
      limited number of employees, management evaluation concluded that there is
      a
      material weakness with respect to segregation of duties that may not provide
      reasonable assurance regarding the reliability of internal control over
      financial reporting and may not prevent or detect misstatements. Specifically,
      our CFO serves as our only qualified internal accounting and financial reporting
      personnel and as such performs all accounting and financial reporting functions
      without the benefit of independent checks, confirmations or backup other than
      bookkeeping functions performed by an outside accounting firm. In addition,
      projections of any evaluation of effectiveness to future periods are subject
      to
      the risk that controls may become inadequate because of changes in conditions,
      or that the degree of compliance with the policies or procedures may
      deteriorate.




68




Based
      on this evaluation, our management concluded that there is no reasonable
      assurance regarding the reliability of financial reporting and the preparation
      of financial statements for external purposes in accordance with generally
      accepted accounting principles and that the Company’s internal controls over
      financial reporting were not effective as of August 31, 2008.




Subsequent
      to August 31, 2008, management, including our principal executive officer and
      principal financial officer, has started an extensive process, of documenting
      all process related to the financial reporting, in order to strengthen our
      internal controls over financial reporting in order to reasonably ensure that
      reliability of financial reporting and the preparation of financial statements.





This
      management report on internal control over financial reporting shall not be
      deemed to be filed for purposes of Section 18 of the Securities Exchange Act
      of
      1934, as amended or otherwise subject to the liabilities of that Section.





This
      annual report does not include an attestation report of our registered public
      accounting firm regarding internal control over financial reporting.
      Management’s report was not subject to attestation by our registered public
      accounting firm pursuant to temporary rules of the Commission that permit us
      to
      provide only management’s report in this Annual report.





To
      improve our internal control over financial reporting, subsequent to year-end,
      we have launched a comprehensive program designed to strengthen our internal
      controls over financial reporting. Among other things, the program provides
      for
      the engagement of an outside consulting accounting firm (separate from our
      independent auditing firm) to review the Company’s financial reports on a
      quarterly basis and the implementation of an improved documentation system
      underlying financial reports





(c)      
      There were no changes in our internal controls over financial reporting
      identified with the evaluation thereof that occurred during the quarter ended
      August 31, 2008 that have materially affected, or are reasonable likely to
      materially affect our internal control over financial reporting.





**ITEM
      8B – OTHER INFORMATION**





None




69




**PART
      III**





**ITEM
      9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
      GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
      ACT**





Set
      forth
      below is certain information with respect to the individuals who are our
      directors, executive officers and significant employees.





**Name**
            
            **Age**
            
            **Position**Nadav
                Kidron
            
            34
            
            President,
                Chief Executive Officer and DirectorMiriam
                Kidron
            
            67
            
            Chief
                Medical and Technology Officer and DirectorLeonard
                Sank
            
            43
            
            DirectorHarold
                Jacob
            
            54
            
            Director
                and member of the Scientific Advisory BoardChaime
                Orlev
            
            38
            
            Chief
                Financial Officer and Treasurer





**Business
      Experience**





The
      following is a brief account of the education and business experience during
      at
      least the past five years of each director, executive officer and significant
      employee, indicating the principal occupation during that period, and the name
      and principal business of the organization in which such occupation and
      employment were carried out.




***Mr.
      Nadav Kidron*** was
      appointed as President Chief Executive Officer and Director in March
      2006. Mr. Kidron is an entrepreneur whose expertise includes senior executive
      roles in a wide range of industries. From 2003 – 2006 he was the managing
      director at the Institute of Advanced Jewish Studies – Bar Ilan University.
      From 2001 - 2003, he was a lawyer intern at with Wine Mishaiker and Erenstof
      Law
      Offices in Jerusalem, Israel. Mr. Kidron obtained his LLB from the Bar –
Ilan University and is currently enrolled in the International MBA program
      at
      the Bar - Ilan University.




***Dr. 
        Miriam Kidron*** ** was
        appointed as Chief Medical and Technology Officer and Director on March 2006,
        Dr. Kidron is a pharmacologist and a biochemist with a PhD in biochemistry.
        From
        1990 to 2007, Dr. Kidron has been a senior researcher in the Diabetes Unit
        at
        Hadassah University Hospital in Jerusalem, Israel.  During
        2003 and 2004 Dr. Kidron served as a consultant to Emisphere Technologies
        Inc. a
        company specializes in the developed broad-based proprietary drug delivery
        platforms. Dr Kidron was formerly a visiting professor at the Medical School
        at
        the University of Toronto (Canada), and is a member of the American, European
        and Israeli Diabetes Associations. Dr. Kidron is a recipient of the Bern
        Schlanger Award.
  ***Mr.
        Leonard Sank*** was
        appointed as a Director during October 2007. Mr. Sank is a South African
        entrepreneur and business man who is devoted to entrepreneurial endeavors
        and
        initiatives. He has over 20 years of experience where he has played an
        important leadership role in developing businesses. During the past two
        years Mr. Sank has disposed of his holdings in Eastvaal Motor Group a
        diversified retail motor business and resigned as a director in 2007 He also
        sold his investment in Vecto Finance a credit lending business and resigned
        his
        directorship in 2007. Mr. Sank has since acquired property and various other
        investments as well as his stake in Oramed. Mr. Sank maintains a directorship
        on
        the board of South Africa’s biggest private company Macsteel Service Centers SA
        Pty Ltd as well as serves on the board of local non profit charity organizations
        in Cape Town where he resides.




70




***Mr.
      Chaime Orlev*** joined
      our Company in May 2008, he has many years of experience of financial management
      experience in publicly traded companies, specializing in the high technology
      sector. Mr, Orlev served as Chief Financial Officer of Gammacan International
      Inc., a life science company focused on the development of immunotherapy and
      related approaches to treat cancer, from October 2005 through February 2008.
      From September 2004 to September 2005, Mr. Orlev acted as Chief Financial
      Officer for Solel Solar Systems, an Israeli-based company specializing in the
      development, manufacturing and marketing of solar energy systems and related
      equipment, as well as coatings for different substrates. From April 2001 to
      August 2004 Mr. Orlev was the Vice President, Finance and Chief Financial
      Officer of Huntleigh, a provider of airport services to carriers. Mr. Orlev
      holds an MBA from the Leon Recanati Graduate School of Business Administration
      at the Tel Aviv University and a BA in Business Administration from the College
      of Business in Israel. Mr. Orlev is a certified public accountant in
      Israel.




***Dr.
      Harold Jacob*** has a
      strong background, both in medical sciences as well as biotechnology and medical
      devices. He practiced clinical gastroenterology in New York and served as Chief
      of Gastroenterology at St. Johns Episcopal Hospital and South Nassau Communities
      Hospital in the years 1986-1995, and was a Clinical Assistant Professor of
      Medicine at SUNY during the years 1983-1990. Dr. Jacob founded and served as
      Editor in Chief of Endoscopy Review and has authored numerous publications
      in
      the field of gastroenterology. Since 1998, Dr. Jacob is president of Medical
      Instrument, a company which provides a range of support and consulting services
      to start-up and early stage companies as well as patenting it's own proprietary
      medical devices. Dr. Jacob has advised a spectrum of companies in the past
      and
      he served as a consultant and then as the Director of Medical Affairs at Given
      Imaging Ltd., during the years 1997 to 2003, a company that developed the first
      swallowable wireless pill camera for inspection of the intestine. He has
      licensed patents to a number of companies including Kimberly Clark Ballard.
      Since 2003, Dr. Jacob is CEO of NanoVibronix, a medical device company using
      surface acoustics to prevent catheter acquired infection as well as other
      applications.




**Board
      of Directors and Officers**





There
      are
      no agreements with respect to the election of directors. Each director is
      elected for a period of one year at our annual meeting of stockholders and
      serves until the next such meeting and until his or her successor is duly
      elected. The board of directors may also appoint additional directors up to
      a
      maximum of fifteen directors. A director so chosen or appointed will hold office
      until the next annual meeting of stockholders.





There
      have been no events under any bankruptcy act, no criminal proceedings and no
      judgments, injunctions, orders or decrees material to the evaluation of the
      ability and integrity of any director, executive officer, or control person
      of
      the Company during the past five years.





**Board
      Meeting Attendance**





During
      the year ended August 31, 2008, our board held 3 meetings and took actions
      by
      written consent on 16 occasions. No incumbent director of the meeting attended
      fewer than 75% of the aggregate of: (i) the total number of meetings of the
      board (during the period for which such director served as a director); and
      (ii) the total number of meetings held by all committees of the board on
      which such director served (during the period for which such director served
      on
      such committees). Board members are encouraged to attend our annual meetings
      of
      stockholders.




71




**Committees**





As
      of
      August 31, 2008 the Board has not established any committees. The Board is
      intending to establish and Audit and Compensation committee during the year
      ending August 31, 2009.





**Section
      16(a) Beneficial Ownership Reporting Compliance**




Based
      solely upon a review of Forms 3, 4 and 5, and amendments thereto, furnished
      to
      us during fiscal year 2008, we believe that during fiscal year 2008, other
      than as set forth below, our
      executive officers, directors and all persons who own more than ten percent
      of a
      registered class of our equity securities complied with all Section 16(a) filing
      requirements. The Form 3 of one of our directors, Harold Jacob, was not timely
      filed.





**Code
      of Ethics**





We
      have
      adopted a Code of Ethics for our officers, directors and employees. A copy
      of
      the Code of Ethics is located at our website at www.oramed.com.




72




**ITEM
      10 - EXECUTIVE COMPENSATION**





**Summary
      Compensation Table**





The
      following table sets forth the compensation earned during the years ended August
      31 2007 and 2008 by our President and Chief Executive Officer, our Chief Medical
      and Technology Officer, our Chief Financial Officer and former Chief Financial
      Officer (the “ *Named
      Executive Officers* ”) **:**





**Name and**
              **Principal**
              **Position**
            
            **Year**
              **(1)**
            
            **Salary**
              **($)**
            
            **Bonus**
              **($)**
              **(2)**
            
            **Stock**
              **Awards**
              **($)**
              **(3)**
            
            **Option**
              **Awards**
              **($)**
              **(4)**
            
            **Non-Equity**
              **Incentive**
              **Plan**
              **C****ompensatio****n**
              **($)**
              **(5)**
            
            **Nonqualified**
              **Deferred**
              **Compensatio****n**
              **($)**
              **(6)**
            
            **All Other**
              **Compensatio****n**
              **($)**
              **(7)**
            
            **Total**
              **($)**Nadav
              Kidron
              President
                and
            
            
            2008
            
            
            151,037
            
            
            Nil
            
            
            Nil
            
            
            216,504
            
            
            Nil
            
            
            Nil
            
            
            14,511
            
            
            382,053CEO
                and
              director
                (8)
            
            
            2007
            
            
            84,900
            
            
            Nil
            
            
            Nil
            
            
            225,225
            
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            310,125Miriam
              Kidron
              Chief
              Medical
                and
            
            
            2008
            
            
            145,405
            
            
            Nil
            
            
            Nil
            
            
            216,504
            
            
            Nil
            
            
            Nil
            
            
            10,774
            
            
            372,683Technology
              Officer
                and
              director
                (9)
            
            
            2007
            
            
            62,500
            
            
            Nil
            
            
            Nil
            
            
            1,573,564
            
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            1,636,064Chaime
              Orlev
            
            
            2008
            
            
            23,484
            
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            7,981
            
            
            31,466CFO
                and
              Secretary(10)
            
            
            2007
            
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            NilAlex
                Werber
              CFO
                and
            
            
            2008
            
            
            36,129
            
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            36,129Secretary(11)
            
            
            2007
            
            
            4,000
            
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            4,000





1
              
              The
                  information is provided for each fiscal year which begins on September
                  1
                  and ends on August 31.2
              
              No
                  bonus awards were made to the Named Executive Officers in the fiscal
                  years
                  ended August 31, 2008 and 2007.3
              
              No
                  stock awards were granted to the Named Executive Officers in the
                  fiscal
                  years ended August 31, 2008 and 2007.4
              
              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, 2008 and 2007
                  are set
                  forth in the notes to of our audited consolidated financial statements
                  included in our Form 10-KSB for fiscal year ended August 31, 2008.
                  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.5
              
              We
                  do not have a non-equity incentive compensation plan.6
              
              We
                  do not have a deferred non-qualified compensation plan.7
              
              See
                  All Other Compensation Table below.8
              
              Mr.
                  Kidron was appointed as our President, CEO and Director on March
                  8,
                  2006.9
              
              Ms.
                  Kidron was appointed as our Chief Medical and Technology Officer
                  and
                  Director on March 8, 2006.10
              
              Mr.
                  Orlev was appointed as our CFO and Secretary on May 1,
                  2008.11
              
              Mr.
                  Werber served as our CFO and Secretary from August 1, 2007 thorough
                  April
                  30, 2008.




73




**All
      Other Compensation Table**





All
      Other
      Compensation amounts in the Summary Compensation Table consist of the
      following:





**Name**
            
            **Year**
            
            **Automobile**
              **Related
                Expenses**
              **($)**
            
            **Manager’s**
              **Insurance
                ***
              **($)**
            
            **Education**
              **Fund***
              **($)**
            
            **Total**
              **($)**Nadav
                Kidron
            
            
            2008
            
            
            14,511
            
            
            Nil
            
            
            Nil
            
            
            14,511Miriam
                Kidron
            
            
            2008
            
            
            10,774
            
            
            Nil
            
            
            Nil
            
            
            10,774Chaime
                Orlev
            
            
            2008
            
            
            3,218
            
            
            3,379
            
            
            1,384
            
            
            7,981


_______________





*
            Manager’s
                insurance and education funds are customary benefits provided to
                employees
                based in Israel. Manager’s insurance is a combination of severance savings
                (in accordance with Israeli law), defined contribution tax-qualified
                pension savings and disability insurance premiums. An Education fund
                is a
                savings fund of pre-tax contributions to be used after a specified
                period
                of time for educational or other permitted
                purposes.




74




**Outstanding
      Equity Awards at Fiscal Year-End**




The
      following table sets forth information concerning stock options and stock awards
      held by the Named Executive Officers as of August 31, 2008.


**Option
                  Awards**
              
              **Stock
                  Awards****Name**
              
              **Number
                  of**
                **Securities**
                **Underlying**
                **Unexercised**
                **Options**
                **(#)**
                **Exercisable**
              
              **Number
                  of**
                **Securities**
                **Underlying**
                **Unexercised**
                **Options**
                **(#)**
                **Unexercisable**
              
              **Equity**
                **Incentive**
                **Plan**
                **Awards**
                **Number
                  of**
                **Securities**
                **Underlying**
                **Unexercised**
                **Unearned**
                **Options**
                (#)
              
              **Option**
                **Exercise**
                **Price**
                ($)
              
              **Option**
                **Expiration**
                **Date**
              
              **Number
                  of**
                **Shares
                  or**
                **Units
                  of**
                **Stock
                  Held**
                **That
                  Have**
                **Not Vested**
                (#)
              
              **Market**
                **Value**
                **of
                  Shares**
                **or**
                **Units
                  of**
                **Stock Held**
                **That
                  Have**
                **Not
                  Vested**
                **($)**
              
              **Equity**
                **Incentive**
                **Plan**
                **Awards:**
                **Number
                  of**
                **Unearned**
                **Shares,**
                **Units**
                **or
                  Other**
                **Rights**
                **That**
                **Have
                  Not**
                **Vested**
                **(#)**
              
              **Equity**
                **Incentive**
                **Plan**
                **Awards:**
                **Market or**
                **Payout**
                **Value
                  of**
                **Unearned**
                **Shares,**
                **Units
                  or**
                **Other
                  Rights**
                **That
                  Have**
                **Not**
                **Vested**
                **($)**Nadav
                  Kidron
              
              
              850,000
              (1)
              
              -
              
              
              -
              
              
              0.45
              
              
              08/01/12
              
              
              -
              
              
              -
              
              
              -
              
              
              -288,000
              (2)
              
              576,000
              (2)
              
              -
              
              
              0.54
              
              
              05/06/18
              
              
              -
              
              
              -
              
              
              -
              
              
              -Miriam
              
              
              3,361,360
              (3)
              
              -
              
              
              -
              
              
              0.001
              
              
              08/13/12
              
              
              -
              
              
              -
              
              
              -
              
              
              -Kidron
              
              
              850,000
              (1)
              
              -
              
              
              -
              
              
              0.45
              
              
              08/01/12
              
              
              -
              
              
              -
              
              
              -
              
              
              -288,000
              (2)
              
              576,000
              (2)
              
              -
              
              
              0.54
              
              
              05/06/18
              
              
              -
              
              
              -
              
              
              -
              
              
              -





(1)
            On
                August 2, 2007, 1,700,000 options were granted to 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, 1,728,000 options were granted to Nadav Kidron and Miriam
                Kidron under the 2008 Stock Option Plan at an exercise price of $0.54
                per
                share, 288,000 of the 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.





**Stock
      Option Plans**





**2006
      Stock Option Plan**





On
      October 15, 2006, the Company’s board of directors adopted the 2006 Stock Option
      Plan (the “2006 Plan”) in order to attract and retain quality personnel. Under
      the 2006 Plan, 3,000,000 shares have been reserved for the grant of options
      by
      the board. As of August 31, 2008, options with respect to 2,950,000 shares
      have
      been granted under the 2006 Plan.




75




**2008
      Stock Incentive Plan**





On
      May 5,
      2008, the Company’s board of directors adopted the 2008 Stock Incentive Plan
      (the “2008 Plan”) in order to attract and retain quality personnel. The 2008
      Plan provides for the grant of stock options, restricted stock, restricted
      stock
      units and stock appreciation rights, collectively referred to as “awards.” Stock
      options granted under the Plan may be either incentive stock options under
      the
      provisions of Section 422 of the Internal Revenue Code, or non-qualified stock
      options. Incentive stock options may be granted only to employees of the Company
      or a parent or subsidiary of the Company. Awards other than incentive stock
      options may be granted to employees, directors and consultants. Under the 2008
      Plan, 8,000,000 shares have been reserved for the grant of options, which may
      be
      issued at the discretion of our board of directors from time to time. As of
      August 31, 2008, options exercisable for an aggregate of 1,878,000 shares have
      been granted.





On
      August
      14, 2007 the Company granted to Miriam Kidron options to purchase up to
      3,361,360 shares at an exercise price of $0.001; the options vested immediately
      and have an expiration date of August 14, 2012. These options are not governed
      by any of the plans detailed above.





**Employment
      and Consulting Agreements**





Effective
      August 1, 2007 we entered into employment agreements with KNRY Ltd. (“KRNY”),
      pursuant to which Nadav Kidron and Dr. Miriam Kidron provided employment
      services to our company. Based on the agreements, Nadav Kidron served as the
      President and Chief Executive officer and Miriam Kidron served as the Chief
      Medical and Technology Officer of the Company. As remuneration for such
      services, KNRY was paid $20,000 per month, commencing on August 1,
      2007.





On
      July
      1, 2008, Oramed Ltd., our Israeli subsidiary, entered into a consulting
      agreement with KNRY, whereby Mr. Nadav Kidron, through KNRY, provides services
      as President and Chief Executive Officer of both the Company and Oramed Ltd.
      (the “Nadav Kidron Consulting Agreement”). Additionally, on July 1, 2008, Oramed
      Ltd. entered into a consulting agreement with KNRY whereby Dr. Miriam Kidron,
      through KNRY, provides services as Chief Medical and Technology Officer of
      both
      the Company and Oramed Ltd. (the “Miriam Kidron Consulting Agreement” and
      together with the Nadav Kidron Consulting Agreement, the “Consulting
      Agreements”). The Consulting Agreements replace the employment agreements
      entered into between the Company and KNRY, dated as of August 1, 2007 referenced
      above.





The
      Consulting Agreements are both terminable by either party upon 60 days prior
      written notice. The Consulting Agreements provide that KNRY (i) will be paid,
      under each of the Consulting Agreements, in New Israeli Shekels (“NIS”) a gross
      amount of NIS50,400 + Value-Added-Tax per month and (ii) will be reimbursed
      for
      reasonable expenses incurred in connection with performance of the Consulting
      Agreements.





Pursuant
      to the Consulting Agreements, KNRY, Nadav Kidron and Miriam Kidron each agree
      that during the term of the Consulting Agreements and for a 12 month period
      thereafter, none of them will compete with Oramed Ltd. nor solicit employees
      of
      Oramed Ltd.





The
      Company, through its Israeli subsidiary, Oramed Ltd., has entered into an
      employment agreement with Chaime Orlev (the “Orlev Employment Agreement”) as of
      May 1, 2008, pursuant to which Mr. Orlev was appointed as Chief Financial
      Officer (“CFO”), Treasurer and Secretary of Oramed. Mr. Orlev’s responsibilities
      include oversight of Oramed’s financial reporting and controls.




76




The
      Orlev
      Employment Agreement provides that for the period through July 31, 2008 (the
      “First Term”), Mr. Orlev was employed to work on a part-time basis and was
      compensated a gross monthly amount of NIS 20,000. Beginning on September 1,
      2008
      and continuing until the Orlev Employment Agreement is terminated by either
      party pursuant to the Orlev Employment Agreement (the “Second Term”), Mr. Orlev
      will serve Oramed in a full-time capacity and will be compensated a gross
      monthly amount of NIS 30,000. Mr. Orlev has also agreed that during the term
      of
      his employment with Oramed and for a 12 month period thereafter, he will not
      compete with Oramed nor solicit employees of Oramed.





On
      May 1,
      2008 Oramed entered into a consulting agreement with a Dr. Ehud Arbit (“Dr.
      Arbit”) for a period of twelve months, pursuant to which the Consultant will
      assist our efforts to complete the FDA approval process for its oral insulin
      capsule. Dr. Arbit is entitled to a fixed monthly fee of $8,333 effective from
      May 1, 2008, and reimbursement of pre-approved out of pocket expenses. On
      October 3, 2008, the Company amended a consulting agreement with Dr. Arbit,
      pursuant to the amendment the Consultant will perform his work under the
      contract on a full time basis and his compensation will be $16,666 per month
      commencing on July 1, 2008.





On
      November 2, 2008, we entered into indemnification agreements with our directors
      and officers pursuant to which we agreed to indemnify each director and
      executive officer for any liability he or she may incur by reason of the fact
      that he or she serves as our director or executive officer, to the maximum
      extent permitted by law.





**Director
      Compensation**





Directors
      are entitled to reimbursement for reasonable travel and other out-of-pocket
      expenses incurred in connection with attendance at meetings of our board of
      directors. Effective September 1, 2008, each independent director is entitled
      to
      receive as remuneration for his or her service as a member of the board a sum
      equal to US$8,000 per annum, to be paid quarterly and shortly after the close
      of
      each quarter. Leonard Sank and Harold Jacob are the only independent members
      of
      the board of directors. The board of directors may award special remuneration
      to
      any director undertaking any special services on behalf of us other than
      services ordinarily required of a director.





Other
      than indicated in this Annual Report, no director received and/or accrued any
      compensation for his or her services as a director, including committee
      participation and/or special assignments.





The
      following table sets forth director compensation for the year ended August
      31,
      2008.





**Name of Director**
            
            **Fees**
              **Earned**
              **or Paid**
              **in Cash**
              **($)**
            
            **Stock**
              **Awards**
              **($)**
            
            **Option**
              **Awards(1)**
              **($)**
            
            **Non-**
              **Equity**
              **Incentive**
              **Plan**
              **C****ompensatio****n**
              **($)**
            
            **Nonqualified**
              **Deferred**
              **Compensatio****n**
            
            **All Other**
              **Compensatio****n**
              **($)**
            
            **Total**
              **($)**Nadav
                Kidron(2)Miriam
                Kidron(2)Leonard
                Sank
            
            
            100,000
            (3)
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            100,000Harold
                Jacob
            
            
            Nil
            
            
            Nil
            
            
            7,567
            
            
            Nil
            
            
            Nil
            
            
            Nil
            
            
            7,567







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 Form 10-KSB. 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.3
              The
                  Compensation includes $85,000 received as finders fee in connection
                  with
                  the July 2008 private placement as well as $15,000 as reimbursement
                  of
                  expense pursuant to an agreement dated January 18,
                  2008.




77




**ITEM
      11- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS**





The
      following table sets forth certain information regarding beneficial ownership
      of
      our common stock as of August 31, 2008 by (i) by each person who is known
      by us to own beneficially more than 5% of the Common Stock, (ii) by each of
      the Named Executive Officers and (iv) by all our directors and executive
      officers as a group. On such date, we had 56,456,710 shares of Common Stock
      outstanding.





As
      used
      in the table below and elsewhere in this form, the term “ *beneficial
      ownership* ”
with
      respect to a security consists of sole or shared voting power, including the
      power to vote or direct the vote and/or sole or shared investment power,
      including the power to dispose or direct the disposition, with respect to the
      security through any contract, arrangement, understanding, relationship, or
      otherwise, including a right to acquire such power(s) during the next 60 days
      following August 31, 2008.





**Name an address of Beneficial**
              **Owner**
            
            **Number of Shares**
            
            **Percentage of Shares**
              **Beneficially Owned**Nadav
                Kidron †‡
              10
                Itamar Ben Avi St.
              Jerusalem,
                Israel
            
            
            11,581,735
            (1)
            
            20.08
            %Zeev
                Bronfeld
              6
                Uri St.
              Tel-Aviv,
                Israel
            
            
            6,158,517
            
            
            10.91
            %Miriam
                Kidron †‡
              2
                Elza St.
              Jerusalem,
                Israel
            
            
            4,571,360
            (2)
            
            7.49
            %Apollo
                Nominees Inc
              One
                Financial Place Suite 100
              Lower
                Collymore Rock
              St.
                Michael, Barbados
            
            
            4,517,501
            (3)
            
            7.78
            %Hadassit
                Medical Research
              Services
                & Development Ltd
              P.O.
                Box 12000
              Jerusalem,
                Israel
            
            
            4,141,532
            
            
            7.34
            %Leonard
                Sank †
              3
                Blair Rd Camps Bay
              Cape
                Town, South Africa
            
            
            3,982,650
            (4)
            
            6.88
            %Harold
                Jacob †
              Haadmur
                Mebuyon 26
              Jerusalem,
                Israel
            
            
            100,000
            (5)
            
            *Chaime
                Orlev ‡
              10
                Hameyasdim St.
              Kiryat
                Ono, Israel
            
            
            Nil
            
            
            NilAll
                current Executive Officers and Directors as a group (five
                persons)
            
            
            12,729,385
            (6)
            
            26.37
            %









78




*
            
            Less
                than 1%†
            
            Indicates
                Director‡
            
            Indicates
                Officer(1)
            
            Includes
                1,210,000 shares of common stock issuable upon the exercise of outstanding
                stock options.(2)
            
            Includes
                4,571,360 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
                1,625,000 shares of common stock issuable upon the exercise of warrants
                beneficially owned by such individual.(5)
            
            Consists
                of 100,000 shares of common stock issuable upon the exercise of
                outstanding stock options.(6)
            
            Includes
                2,935,000 shares of common stock issuable upon the exercise of outstanding
                stock options.




79




**ITEM
      12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE**





Except
      as
      otherwise indicated below, we have not been a party to any transaction, proposed
      transaction, or series of transactions in which the amount involved exceeds
      $60,000, and in which, to its knowledge, any of its directors, officers, five
      percent beneficial security holder, or any member of the immediate family of
      the
      foregoing persons has had or will have a direct or indirect material interest.




Our
      policy is to enter into transactions with related parties on terms that, on
      the
      whole, are no less favorable than those available from unaffiliated third
      parties. Based on our experience in the business sectors in which we operate
      and
      the terms of our transactions with unaffiliated third parties, we believe that
      all of the transactions described below met this policy standard at the time
      they occurred.





Leonard
      Sank, one of our directors, was paid a finders fee of $85,000 in connection
      with
      our private placement of shares of our common stock and warrants on July 14,
      2008.





Dr.
      Miriam Kidron is Mr. Nadav Kidron’s mother. There are no other directors or
      officers of our company who are related by blood or marriage.





The
      Board
      has determined that Leonard Sank and Harold Jacob are independent as defined
      under the rules promulgated by the NASDAQ Stock Market.





See
      “Employment and Consulting Agreements” above for information as to the
      agreements with our employees and consultants.




80




***ITEM
      13 – EXHIBITS***





***Exhibits:***




3.1  Articles
      of Incorporation (incorporated by reference from our Registration Statement
      on
      Form SB-2, filed on November 29, 2002).




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  Convertible
      Debenture issued by the Registrant to Epsom Investment Services, dated February
      12, 2007 (incorporated by reference from our Quarterly Report on Form 10-QSB
      filed on April 14, 2008)




4.4  Convertible
      Debenture issued by the Registrant to Epsom Investment Services, dated May
      31,
      2007 (incorporated by reference from our Quarterly Report on Form 10-QSB filed
      on April 14, 2008)




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  Service
      Agreement, dated April 21, 2008, between Oramed Pharmaceuticals Inc. and
      Encorium Group, Inc.




10.9  Employment
      Agreement dated August 1, 2007 between Oramed Pharmaceuticals Inc. and Alex
      Werber (incorporated by reference from our current report on Form 8-K filed
      on
      August 3, 2007)




10.10  Form
      of
      Shares for Services agreement (incorporated by reference from our current report
      on Form 8-K filed on August 3, 2007)




10.11  Employment
      Agreement dated August 1, 2007 between Oramed Pharmaceuticals Inc. and Nadav
      Kidron (incorporated by reference from our current report on Form 8-K filed
      on
      August 28, 2007)




81




10.12  Employment
      Agreement dated August 1, 2007 between Oramed Pharmaceuticals Inc. and Dr.
      Miriam Kidron (incorporated by reference from our current report on Form 8-K
      filed on August 28, 2007)




10.13  Investor
      Relations Agreement dated August 27, 2007 between Oramed Pharmaceuticals Inc.
      and The Investor Relations Group Inc. (incorporated by reference from our
      current report on Form 8-K filed on September 10, 2007)




10.14  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)




10.15  Expense
      Agreement dated January 18, 2008 between Oramed Pharmaceuticals Inc. and Leonard
      Sank (incorporated by reference from our current report on Form 8-K filed on
      February 1, 2008)




10.16  Employment
      Agreement by and between Oramed Ltd. and Chaime Orlev entered into as of May
      1,
      2008 (incorporated by reference from our current report on Form 8-K filed on
      May
      7, 2008)




10.17  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)





10.18  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)





10.19  Oramed
      Pharmaceuticals Inc. 2008 Stock Incentive Plan (incorporated by reference from
      our current report on Form 8-K filed on July 2, 2008)





10.20  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).





10.21  Form
      of
      Stock Purchase Agreement (incorporated by reference from our current report
      on
      Form 8-K filed on July 15, 2008)





10.22*  Consulting
      Agreement, dated May 1, 2008, between Oramed Pharmaceuticals Inc. and Dr. Ehud
      Arbit




10.23*
      Amended and Restated Consulting Agreement, dated as of May 1, 2008, between
      Oramed Pharmaceuticals Inc. and Dr. Ehud Arbit


10.24*
      Amended to Consulting Agreement, dated as of October 3,
      2008, between Oramed Pharmaceuticals Inc. and Dr. Ehud Arbit




14.1  Code
      of
      Ethics (incorporated by reference from our current report on Form 8-K filed
      on
      November 29, 2007)




31.1*  Certification
      Statement of the Chief Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002




31.2*  Certification
      Statement of the Principal Accounting Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002




32.1*  Certification
      Statement of the Principal Executive and Accounting Officers pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
      Act Of 2002





*  Filed
      herewith




82




**ITEM
      14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES**





We
      incurred the following fees to Kesselman & Kesselman, certified public
      accountants (Isr.), a member of PricewaterhouseCoopers International Limited,
      for services rendered during the fiscal year ended August 31, 2008. For the
      year
      ending August 31, 2007 the fees are in connection with services provided by
      Malone & Bailey, PC, certified public accountants (US):





**Summary:**
            
            **2008**
            
            **2007**Audit
                fees(1)
            
            $
            105,965
            
            $
            31,500Audit
                related fees(2)
            
            
            —
            
            
            —Tax
                fees(3)
            
            $
            32,630
            
            
            —Other
                fees
            
            
            —
            
            
            —





(1)
            Amount
                represents fees paid for professional services for the audit of our
                consolidated annual financial statements and review of our interim
                consolidated financial statements included in quarterly reports and
                services that are normally provided by our accountants in connection
                with
                statutory and regulatory filings or
                engagements.





(2)
            Amount
                represents fees paid for professional services for assurance and
                related
                services by our accountants that are reasonably related to the performance
                of the audit or review of our financial statements and are not reported
                under item (1).





(3)
            Amount
                represents fees paid for professional services for tax compliance
                and tax
                advice.




83




**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15 (d) of the Securities Exchange Act
      of
      1934, the Registrant has duly caused this Report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized.




**ORAMED
              PHARMACEUTICLAS INC.**/s/
                NADAV KIDRONNadav
                Kidron,President
                and Chief Executive Officer(principal
                executive officer)/s/
                CHAIME ORLEVChaime
                Orlev,Chief
                Financial Officer(principal
                accounting officer)Date:
                November 26, 2008




Pursuant
      to the requirements of the Securities and Exchange Act of 1934, this report
      has
      been signed below by the following persons on behalf of the registrant in the
      capacities as on November 26, 2008.





/s/
                NADAV KIDRONNadav
                Kidron,President
                and Chief Executive Officer and Director/s/
                MIRIAM KIDRONMiriam
                Kidron,Chief
                Medical and Technology Officer and Director/s/
                LEONARD SANKLeonard
                Sank,Director/s/
                HAROLD JACOBHarold
                Jacob,Director




84