NOTE 2 - COMMITMENTS:

On September 11, 2011, the Subsidiary entered into an agreement with Hadasit, the Company's Medical and Chief Technology Officer (the “CTO”) and Dr. Daniel Schurr (the “Hadasit Agreement”) to retain consulting and clinical trial services. According to the Hadasit Agreement, Hadasit will be entitled to a consideration of $200 to be paid by the Company in accordance with the actual progress of the studies, $95 of which were recognized through November 30, 2014. See also note 1a(1).

On February 15, 2011, the Subsidiary entered into a consulting agreement with a third party (the “Consultant”) for a period of five years, pursuant to which the Consultant will provide consultation on scientific and clinical matters. The Consultant is entitled to a fixed monthly fee of $8, royalties of 8% of the net royalties actually received by the Subsidiary in respect of the patent that was sold to Entera Bio Ltd. (“Entera”) on March 31, 2011 and an option to purchase up to 20,834 shares of the Company at an exercise price of $6.00 per share. The option vests in five annual installments commencing February 16, 2012 and expires on February 16, 2021. The fair value of the option as of November 30, 2014 was $107, using the following assumptions: dividend yield of 0% and expected term of 6.21 years; expected volatility of 80.45%; and risk-free interest rate of 1.89%. The fair value of the unvested options is remeasured at each balance sheet reporting date and is recognized over the related service period using the straight-line method.

c.On April 28, 2013, the Subsidiary entered into a new lease agreement for its office facilities in Israel, which replaced the lease agreement from 2012. The new lease agreement is for a period of 36 months commencing November 4, 2013. The annual lease payment is NIS 89,000 from 2014 through 2016, and will be linked to the increase in the Israeli consumer price index (“CPI”) (as of November 30, 2014, the future annual lease payments under the new agreement will be $22, based on the exchange rate as of November 30, 2014).

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

On May 13, 2014, the Company entered into a consulting agreement with a third party advisor for a period of twelve months, pursuant to which the advisor will provide investor relations services and will be entitled to receive a monthly cash fee and 15,000 shares of the Company's common stock that will be issued in four equal installments, on each of August 1, 2014, November 1, 2014, February 1, 2015 and May 1, 2015. As of November 30, 2014, the Company issued to such advisor 7,500 shares. The aggregate fair value of the shares at the dates of the grant was $64.

On February 6, 2014, the Subsidiary entered into a second agreement with a clinical research organization (“CRO”), for its Phase IIa clinical trial for an oral insulin capsule for type 1 diabetes patients, which was completed in October 2014. As consideration for its services, the Subsidiary paid the CRO a total amount of approximately $280 during the term of the engagement and based on achievement of certain milestones, all of which were recognized through November 30, 2014.

On July 22, 2014, the Subsidiary entered into a third agreement with the same CRO, for its Phase IIb clinical trial for an oral insulin capsule for type 2 diabetes patients, which is expected to begin in the first quarter of calendar year 2015. As consideration for its services, the Subsidiary will pay the CRO a total amount of approximately $3,290 that will be paid during the term of the engagement and based on achievement of certain milestones, $595 of which were recognized through November 30, 2014.

On March 3, 2014, the Subsidiary entered into an additional agreement with a vendor, for the process development and production of one of its oral capsule ingredients in the amount of $311, $40 of which were recognized through November 30, 2014, and bonus payments of up to $600 that will be paid upon achieving certain milestones, as described in the agreement, none of which were recognized through November 30, 2014.

On May 15, 2014, the Subsidiary entered into an additional agreement with the same vendor, for the process development and production of the same capsule ingredients in the amount of $217, $174 of which was recognized through November 30, 2014.

On May 26, 2014, the Subsidiary entered into a supply agreement with another vendor, according to which the vendor will manufacture insulin capsules for total consideration of $214, $134 of which were recognized through November 30, 2014.

Grants from Bio-Jerusalem

The Subsidiary is committed to pay royalties to the Bio-Jerusalem fund on proceeds from future sales at a rate of 4% and up to 100% of the amount of the grant received by the Company (Israeli CPI linked) at the total amount of $65. As of November 30, 2014, the Subsidiary had not yet realized any revenues and did not incur any royalty liability.

During the three month period ended November 30, 2014, the Company received no grants from the Bio-Jerusalem fund.

Grants from the Office of the Chief Scientist of the Ministry of Economy (formerly the Ministry of Industry, Trade and Labor) of Israel ("OCS").

Under the terms of the Company's funding from the OCS, royalties of 3%-3.5% are payable on sales of products developed from a project so funded, up to 100% of the amount of the grant received by the Company (dollar linked) with the addition of annual interest at a rate based on LIBOR.

At the time the grants were received, successful development of the related projects was not assured. In case of failure of a project that was partly financed as above, the Company is not obligated to pay any such royalties.

As of November 30, 2014, the Subsidiary had not yet realized any revenues from said projects and did not incur any royalty liability. The total amount that was actually received through November 30, 2014 was $2,134.

For the three month periods ended November 30, 2014 and 2013, the research and development expenses are presented net of OCS and Bio-Jerusalem fund grants, in the total amount of $16 and $67, respectively.