NOTE 4 - INVESTMENTS, AT FAIR VALUE:

Background

The Company holds the following instruments issued by Scilex, acquired in the 2023 Scilex Transaction and the 2024 Refinancing. For a full description of the terms of these instruments, see Note 4 to the Company’s consolidated financial statements included in the 2025 Form 10-K.

All Scilex securities held by the Company are subject to a beneficial ownership limitation that restricts the Company’s holdings to a maximum of 9.99% of Scilex’s outstanding shares at any time.

Developments during the six months ended June 30, 2026

During the period, the maturity date of the Tranche A Note was extended to April 20, 2026 and subsequently to June 15, 2026. Under the amended terms, Scilex agreed, among other things, to pay $1,000 (the “First Penalty”) in addition to the amounts due under the Tranche A Note. For the movements in the balances during the period, see the fair value cycle table below.

On June 25, 2026, the Company and Scilex agreed to a further extension (the “Extension Agreement”) of the outstanding payment obligations, including the outstanding principal amount, any accrued interest thereon and any other fees (the “Note Obligations”), owed by Scilex to the Company pursuant to (i) the Tranche A Note with outstanding Note Obligations equal to an aggregate of $29,486 as of June 30, 2026, (ii) Tranche B Note, with outstanding Note Obligations equal to an aggregate of $6,753 (representing the amortization payments due April 1, 2026 and July 1, 2026), and (iii) the prior agreement to extend the maturity date of the Notes to June 15, 2026, in consideration of Scilex agreeing to pay to the Company $1,000 in cash (the “Extension Obligation” and, collectively with the Note Obligations, the “Obligations”).

Pursuant to the Extension Agreement, Scilex agreed to pay the Obligations to the Company in cash as follows: (i) $500, which the Company received on June 25, 2026; (ii) $5,000 on or before July 31, 2026; and (iii) the entire remaining balance of the Obligations on or before September 30, 2026. Amounts received are to be applied first to the Extension Obligation (until the first $1,000 has been so applied), thereafter to the Tranche B Note (covering the amortization payments due April 1, 2026 and July 1, 2026), and thereafter to the Tranche A Note.

As of August 10, 2026, the Company had not yet received the $5,000 payment due on July 31, 2026.

If Scilex fails to satisfy the Obligations in full by September 30, 2026 (such date, the “Due Date”), then, notwithstanding the foregoing order of application, the first $1,500 received by the Company shall not be credited against the Obligations and will be deemed, retroactively and for all purposes, an extension fee fully earned by and retained by the Company, and the Obligations will remain outstanding in full as if such amount had not been applied. In addition, if Scilex fails to satisfy the Obligations by the Due Date, Scilex has agreed to satisfy the remaining Obligations through the delivery of shares of common stock, par value $0.0001 per share, of Scilex (or of an affiliate of Scilex) which such shares will covered by an effective registration statement and will be issued free of restrictive legends and transfer restrictions, on such terms to be mutually agreed to by Oramed and Scilex.

The Company selected the fair value option for the Tranche A Note, changes in value are recorded under financial income (loss).

The discount rate of the Tranche A Note was based on the B- rating zero curve in addition to a risk premium which takes into account the credit risk of Scilex and ranged between 111.70 % to 112.16%.

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

The valuation of the Tranche B Note was performed based on the binomial model, using a discount rate of 112.14%.

The following table summarizes the assumptions and estimates used to value the Tranche B Note as of June 30, 2026:

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

The following table summarizes the assumptions and estimates used to value the Tranche B Warrants as of June 30, 2026:

The value of the Royalty Purchase Agreement was calculated according to the royalty payment schedule and the aggregation of discounted cash flows derived from the royalty payments, using a discount rate of between 104.77% to 111.96%.

As of June 30, 2026, and December 31, 2025, the fair value of the Tranche B Note was less than the aggregate unpaid principal balance (which includes interest payable on maturity) by $1,684 and $4,488, respectively.

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

Scilex Transaction Summary

The table below represents the fair value cycle of 2023 Scilex Transaction and 2024 Refinancing throughout December 31, 2025 and June 30, 2026:

Financial income recognized in respect of the 2023 Scilex Transaction and the 2024 Refinancing for the six and three months ended June 30, 2026 and 2025 was income of $2,467 and loss of $1,149, and income of $5,283 and $8,900, respectively.

The table below presents the fair value breakdown as of June 30, 2026:

On September 4, 2024, the Company entered into a loan agreement (the “Profit Sharing Loan Agreement”) with Rabi Binyamin 4 Tama 38 Ltd. (the “Borrower”) to finance a real estate project (the “Project”). According to the terms of the Profit Sharing Loan Agreement, Oramed agreed to loan NIS 5,500 thousands ($1,523) (the “Loan Principal”) to the Borrower. NIS 4,700 thousands ($1,307) was loaned upon signing the Profit Sharing Loan Agreement and an additional NIS 800 thousands ($237) will be loaned upon achievement of certain milestones (“Additional Payment”). On October 28, 2025, the Borrower met the milestones and became entitled to the additional payment. The Additional Payment was funded by the Company on June 10, 2026.

Upon completion of the Project, the Company is entitled to receive the Loan Principal and the greater of: (i) 20% annual interest of the Loan Principal and (ii) 40% of the Project profits.

See Note 18 for further details.

The Company decided to designate the Profit Sharing Loan Agreement as a whole under the Fair-Value option in accordance with Accounting Standards Codification (“ASC”) Topic 825 “Financial Instruments”. The valuation of the Profit Sharing Loan Agreement was based on various project profit scenarios. The Company used the Wang Transform model, a risk-neutral probabilities method, with an expected term of 2.51 years, a curve rate of 16.61% and a risk spread of 0.43%.

As of June 30, 2026 and December 31, 2025, the fair value of the Profit Sharing Loan Agreement and the Additional Loans was $2,123 and $1,890, respectively.

Financial income (loss) recognized in respect of the Profit Sharing Loan Agreement was a loss of $3 and $46 for the six and three months ended June 30, 2026, respectively. In the corresponding 2025 periods, the Company recognized income of $97 and $55, respectively.

On December 29, 2025, the Company entered into an agreement and committed to invest NIS 7,000 thousands ($2,185) as a limited partner in Ruby Capital Investment Fund Sapphire II, Limited Partnership (“Ruby Sapphire II”), an Israeli private investment fund. The Company’s commitment may be drawn down over time in accordance with the fund’s partnership agreement, and the investment is subject to the risks inherent in private investment funds, including illiquidity and the potential loss of invested capital. On February 5, 2026, the Company had funded NIS 1,556 thousands ($499) under this commitment.

The Company has elected the fair value option, in accordance with ASC Topic 825, Financial Instruments, to measure its investment in Ruby Sapphire II. The fair value is determined based on the Company’s pro-rata share of the fund’s net asset value as reported by the fund on a quarterly basis (with a one-quarter lag). As of June 30, 2026, the fair value of the investment in Ruby Sapphire II was $464. Financial loss recognized in respect of the Ruby Sapphire II for both the six and three months ended June 30, 2026 was loss of $35 and $28, respectively.

On April 15, 2026, the Company invested $2,500 in a junior participation interest in a senior secured construction loan to 83 Wythe LLC, pursuant to a Junior Participation Agreement with 83 Wythe Senior Investors, L.P (“83 Wythe Loan”). The Company is entitled to a 9% preferred annual return on its invested capital. The loan matures on October 15, 2028, with extension options through October 15, 2029.

The Company has elected the fair value option, in accordance with ASC Topic 825, Financial Instruments, to measure its investment in 83 Wythe Loan. The fair value of the investment is determined using a discounted cash flow methodology, based on estimated contractual cash flows and a market-based discount rate. As of June 30, 2026, the fair value of the investment in the 83 Wythe Loan was $2,382. Financial loss recognized in respect of the 83 Wythe Loan for both the six and three months ended June 30, 2026 was $118.