HLSQ 10-K & 10-Q changes, risk factors and insider trading

We are a clinical-stage company and have incurred losses since our inception. WeSubject to availability of sufficient financial and other resources, we anticipate that we will continue to incur significant expenses, and we will continue to incur significant losses for the foreseeable future.

We are a clinical-stage biopharmaceutical company with limited operating history compared to the long time it takes to develop phage based products. We have incurred losses in each year since BiomX Ltd.’s inception in 2015. As of December 31, 2024,2025, our accumulated deficit was $180.7$216.9 million, and we expect to incur increasingly significant losses for the foreseeable future. Preclinical development and clinical trials and activities are costly. We have devoted, and will continue to devote for the foreseeable future, substantially all of our resources to research and development and clinical trials for our product candidates.million. We do not expect to generate any revenue from the commercial sales of our product candidates in the near term. In addition, as a result of the Acquisition, our future business, prospects, financial position and operating results could be significantly different than those in historical periods or projected by our management.

For the years ended December 31, 20242025 and 2023,2024, we had losses from operations of $44.5$41.5 million and $25.3$44.5 million, respectively. WeSubject to availability of sufficient financial and other resources, we anticipate that the level of our expenses is expected to increase and will continue to be significant if and as we:

As of December 31, 2024,2025, we had cash, cash equivalents and restricted cash of $18$5.0 million, and we have had recurring losses from operations and negative operating cash flows since inception. We will need to raise additional capital in the future to support our operations and product development activities. In the near term, we expect to continue to fund our operations and other development activities relating to additional product candidates from the cash held by us, governmental and other grants and through future equity and debt financing. We have explored and raised funds in multiple manners since our inception. For instanceinstance, we filed in December 2023 a shelf registration statement on Form S-3 that was subsequently declared effective by the SEC and entered into an At the Market Offering Agreement, or the ATM Agreement, with H.C. Wainwright & Co., Co., LLC, or Wainwright, as manager, pursuant to which we may issue and sell shares of our Common Stock having an aggregate offering price price of up to $7.5 million$1,765,939 from time to time through Wainwright. We are not obligated to make any sales of Common Stock under the ATM Agreement. On February 24, 2025, we suspended the ATM Agreement. Furthermore, on March 15, 2024, concurrently with the consummation of the Acquisition, we consummated a private placement of $50 million in consideration of 216,417 shares of our Series X non-voting convertible preferred stock, par value $0.0001 per share, with each such convertible preferred stock being convertible into 100 shares of our shares of Common Stock and warrants, or Private Placement Warrants, to purchase up to an aggregate of 10,820,850 shares of the Company’s Common Stock. Most recently, onOn February 27, 2025, we completed a registered direct offering and a concurrent private placement. Additionally, certain warrant holders agreed to exercise their warrants following our agreement to reduce the exercise price. Through these transactions, we generated approximately $12 millionmillion. In addition, in proceeds.March We15, anticipate2024, conductingconcurrently additional capital raises inwith the future.consummation Ifof the acquisition of APT, we enterconsummated into a collaborationprivate placement of $50 million. Most recently, on January 13, 2026, we completed a private placement of preferred stock and warrants under a Securities Purchase Agreement, or the 2025 Second SPA, with an investor for onegross or moreproceeds of our$3.0 current or future product candidates at an earlier development stage, the terms of such a collaboration will likely be less favorable than if we were to enter the collaboration in later stages or if we commercialized the product independently. If we raise additional funds through equity offerings, the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights or cause significant dilution to our stockholders. If we raise additional capital through debt financing, it would be subject to fixed payment obligations and may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, declaring dividends or acquiring or licensing intellectual property rights.million.

Our financial statements contain contain an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. We have concluded that there is substantial doubt about our ability to continue as a going concern. We have accumulated a deficit of $180.7$216.9 million since our inception. inception. To date, we have not generated revenue from our operations and we do not expect to generate any significant revenues from sales of products in the next twelve months. Our cash needs may increase in the foreseeable future. As of December 31, 2024,2025, we had $18 $5.0 million in cash and cash equivalents.equivalents and restricted cash.

We believe our cash and cash equivalents on hand, including the cash raised in theJanuary February 2025 Financing,2026, as described under “Liquidity and Capital Resources” in Item 7 of this Annual Report, will be sufficient to meet our working capital and capital expenditure requirements intothrough the firstend of the second quarter of 2026. Our continuation as a going concern is dependent upon many factors, including our ability to raise additional funds, the success of our clinical trial for CF and DFI/DFO and our ability to repay our obligations when due. We cannot be sure that we will be able to obtain any future funding, and any such funding we may obtain may not be sufficient to finance our operations. If we are unable to obtain sufficient funds, we may be unable to continue as a going concern.

Preclinical studies of our product candidates, such as BX004 and BX211,BX011, including studies in animal disease models may not accurately predict the safety of the product candidate such that further human clinical trials would be allowed to proceed. In particular, promising preclinical testing suggesting the potential efficacy of prototype phage products may not predict the ability of these products to address conditions in the human clinical settings. For example, while we have studied phage activity in vitro and in vivo, these results may not be replicated when our phage cocktails are administered to human subjects. Despite promising data in any preclinical studies, our phage technology may be found not to be efficacious when studied in clinical trials.

Delays Delays, or clinical holds, in our clinical trials could result in us not achieving anticipated developmental milestones when expected, increased costs and delays in our ability to obtain regulatory approval for and commercialization of our product candidates.

Delays in our clinical trials could result in us not meeting anticipated clinical milestones and could materially impact our product development costs and delay regulatory approval of our product candidates. Planned clinical trials may not be commenced or completed on schedule, or at all. Furthermore, our clinical trials may become subject to a clinical hold based on the evaluation of data and information submitted to the governing regulatory authorities.

Clinical trials can be delayeddelayed, or be subject to a clinical hold, for a variety of reasons, including:

If we do not successfully commence or complete our clinical trials on schedule, the price of our securities may decline. Significant preclinical or clinical trial delays or suspensions could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do, potentially impairing our ability to successfully commercialize our product candidates and harming our business and results of operations.

Adverse effects could occur and cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of marketing approval by the FDA or equivalent foreign regulatory agencies. Results of our trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. For example, adverse events experienced by participants in our Study contributed to our decision to discontinue further development of BX004, followed by additional internal analysis and feedback from the DMC, which recommended consideration of adjusting dosing regimen.

If we submit marketing applications for any of our product candidates manufactured atby thisthird-party facility,manufacturers, thisthe manufacturing facilityfacilities used to produce such product candidates will be subjected to ongoing periodic inspection for compliance with European, FDA and cGMP regulations. Compliance with these regulations and and standards is complex and costly, and there can be no assurance that we will be able to comply. Any failure to comply with applicable regulations could result in sanctions being imposed (including fines, injunctions and civil penalties), failure of regulatory authorities to grant marketing approval of our product candidates, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions and criminal prosecution.

Our competitors may succeed in developing products that are more effective, have fewer side effects and are safer or more affordable than our product candidates, which would render our product candidates less competitive or noncompetitive and would prevent the granting or maintenance of an orphan designation.noncompetitive. These competitors also compete with us to recruit and retain qualified scientific and management personnel, establish clinical trial sites and patient registration for clinical trials, as well as to acquire technology and technology licenses complementary to our programs or advantageous to our business. Moreover, competitors that are able to achieve patent protection, obtain regulatory approvals and commence commercial sales of their products before we do, and competitors that have already done so may enjoy a significant competitive advantage.

Because we have limited financial and managerial resources, we intend to focus on developing product candidates for specific indications that we identify as most likely to succeed, in terms of both their potential for marketing approval and commercialization. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications that may prove to have greater commercial potential. For example, we spent significant time and resources developing BX005,BX005 and BX004, which we discontinued.

Since inception in 2015,2015 through its dissolution in February 2026, BiomX Ltd. has devoted substantially all of its resources to developing product candidates with phage technology through its preclinical programs, building its intellectual property portfolio, developing a supply chain, planning its business, raising capital and providing general and administrative support for these operations. Such development efforts take very long periods of time before they can be proved successful. We have not yet demonstrated our ability to successfully complete any clinical study or other pivotal clinical clinical trials, obtain regulatory approvals, manufacture a commercial-scale product, or arrange for a third-party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. Consequently, any predictions made about our future success or viability may not be as accurate as they could be if we had a longer operating history.

Our product candidates are subject to significant regulatory approval requirements, including the risk of clinical holds, which could delay, prevent or limit our ability to market or develop our product candidates.

Our research and development activities, preclinical studies, clinical trials and the anticipated manufacturing and marketing of our drug product candidates are subject to extensive regulation by the FDA and other regulatory agencies in the United States and by comparable authorities in Europe and elsewhere. To satisfy FDA or equivalent foreign regulatory approval standards, we must demonstrate in adequate and well controlled clinical trials that our drug product candidates are safe and effective for their intended use. The regulatory approval process is expensive and time-consuming, and the timing of receipt of regulatory approval is difficult to predict. Given the uncertainties around phage therapy, our product candidates could require a significantly longer time to gain regulatory approval than expected or may never gain approval. We cannot be certain that, even after expending substantial time and financial resources, we will obtain regulatory approval for any of our product candidates. A delay or denial of regulatory approval could delay or prevent our ability to generate product revenue and to achieve profitability. In addition, the FDA or comparable foreign regulatory authorities may impose a clinical hold at any time if they determine that we have not satisfied applicable requirements or conditions, which could delay or prevent the initiation or continuation of our clinical trials and materially adversely affect our development timelines and costs.

Disruptions at the FDA and other government agencies and entities, such as the U.S. Department of Defense, caused by funding shortagesshortages, government shutdowns, global health concerns or other causes could hinder their ability to hire, retain or deploy key leadership and other personnel, or otherwise prevent new or modified products from being developed, approved or commercialized in a timely manner or at all, which could negatively impact our business.

The ability of the FDA to review and or approve new products can be affected by a variety of factors, including government budget and funding levels, government shutdowns, statutory, regulatory, and policy changes, the FDA’s ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s ability to perform routine functions. Average review times at the FDA have fluctuated in recent years as a result. Any material reductions in the ability of FDA to perform these and other functions may delay the development and approval of our product candidates. Recent actions by the Trump administration have caused concern in the industry that this may occur. For example, beginning on February 13, 2025, the Department of Health and Human Services began firing a large number of its probationary employees, a category that includes new federal employees and employees recently promoted or transferred to new positions or agencies. Reports indicate that 5,000 out of 80,000 employees have been terminated. Although we cannot be certain at this early stage, these terminations and others, if they withstand legal challenges, may significantly delay and impede our interactions with FDA. Similar results may stem from the recent confirmed resignations of some senior FDA employees with responsibility for regulation of drugs and biologics, as well as possible future layoffs and resignations. There are also reports that the Trump administration intends to request Congress to reduce FDA funding in upcoming budgets. Such funding cuts may also delay the development and approval of our products.

In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. For instance, we have funded our research and development from grants, including grants from MTEC, a consortium working in partnership with the U.S. Department of Defense. In connection therewith, in 2019, APT entered into the Research Agreement, with the USAMRAA,USAMRAA and the USAMRDC, to advance personalized phage therapy from niche to broad use and have received awards under this agreement. Cost cutting of grants and other disruptions at the Department of Defense, the FDA and other regulatory authorities may also lengthen the time necessary for new drugs and biologics to be developed, reviewed and/or approved by necessary regulatory authorities, which would adversely affect our business, or require us to obtain alternative funding and other resources, if available.

We currently rely on licenses from third-party collaborators for certain aspects of our technology and for certain of our existing programs. In particular, we received exclusive, royalty-bearing licenses to certain patents held by third parties, including Yeda. The Yeda 2015 License Agreement provide license to certain know-how and research information related to the development, testing, manufacture, production and sale of phage-based therapeutic product candidates that are used in our phage discovery platform, as well as patents, research and other rights to phage product candidates resulting from the work of the consultants identified in the agreement and further research that we funded.parties.

If we fail to comply with our obligations under our license agreements, including payment terms, our licensors may have the right to terminate our license agreements, in which event we may not be able to develop, manufacture, market or sell the products covered by those license agreements. We may also face other penalties under our license agreements if we do not meet our contractual obligations. Such an occurrence could materially adversely affect the value of our products being developed under any such license agreements. Termination of one or more of our license agreements, or reduction or elimination of our rights under these license agreements, may result in us having to negotiate new or reinstated license agreements, which may not be available to us on equally favorable terms, or at all, which may mean we are unable to commercialize the affected product candidates. candidates.In addition, termination of our license agreements could cause significant delays in our product and commercialization efforts that could prevent us from commercializing our product candidates, including our phage-based therapeutic product candidates, without first expanding our internal capabilities or entering into other agreements with third parties. Any alternative collaboration or license could also be on less favorable terms to us.

We are a clinical stage product discovery company developing products using both natural and engineered phage technologies designed to target and kill specific harmful bacteria associated with chronic diseases, such as CF and DFO.DFI. Bacteriophage or phage are bacterial, species-specific, strain-limited viruses that infect, amplify and kill the target bacteria and are considered inert to mammalian cells. By utilizing proprietary combinations of naturally occurring phage and by creating novel phage using synthetic biology, we develop phage-based therapies intended to address both large-market and orphan diseases.

Since BiomX Ltd.’s inception in 2015, we have devoted substantially all our resources to organizing and staffing our company, raising capital, acquiring rights to or discovering product candidates, developing our technology platforms, securing related intellectual property rights, and conducting discovery, research and development and clinical activities for our product candidates. We do not have any products approved for sale, and we have not generated any revenue from product sales. AsIf we continue to advance our product candidates, we expect our expenses to remain significant. To date, we have funded our operations with proceeds from sales of our Common Stock, preferred shares and warrants, governmental grants, collaboration agreements and debt. As of December 31, 2024,2025, we received gross proceeds of approximately $204$217.3 million from sales of our securities. In In addition, as of December 31, 2024,2025, we received $13.7$14.7 million from our collaboration agreements and grants from the IIA and MTEC.

In addition, we have incurred significant operating losses. Our ability to generate revenue from product sales sufficient to achieve profitability will depend on the successful development of, the receipt of regulatory approval for, and eventual commercialization of one or more of our product candidates. Our net losses were approximately $17.7$36.2 million and $26.2$17.7 million for the years ended December 31, 20242025 and 2023, 2024, respectively. As of December 31, 2024,2025, we had an accumulated deficit of $180.7$216.9 million and expect that for the foreseeable future we will continue to incur significant expenses as we advance our product candidates from discovery through preclinical development and clinical trials and seek regulatory approval of our product candidates. In addition, if we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product manufacturing, marketing, sales and distribution. We may also incur expenses in connection with in-licensing or acquiring additional product candidates.million.

As of December 31, 2024,2025, we had cash, cash equivalents and restricted cash of $18$5.0 million. Our financial statements contain an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern, as we believe our cash and cash equivalents on hand will be sufficient to meet our working capital and capital expenditure requirements only intothrough the firstend of the second quarter of 2026 as discussed further below under “Liquidity and Capital Resources”.

On July 9, 2024, the Company’s stockholders approved a reverse stock split at a ratio within a range of 1-for-5 and 1-for-10 at such time as the Board shall determine, in its sole discretion, at any time before July 9, 2025. On August 8, 2024, the Board approved a 1-for-10 Reverse Stock Split of the Company’s shares of Common Stock, or the Reverse Stock Split. On August 20, 2024, the Company filed the Certificate of Amendment with the Delaware Secretary of State to effect the Reverse Split, which became effective on August 26, 2024, orwe theeffected Effectivea Date.1-for-10 Thereverse stock Company’s Commonsplit, Stock began tradingand on November 25, 2025, we effected a Reverse1-for-19 Stockreverse Split-adjustedstock basissplit. on the NYSE American at the open of the markets on the Effective Date. Unless otherwise indicated, all issuedshare and outstandingper shares share amounts in this Annual Report have been retroactively adjusted to reflect thethese Reverse Stockreverse Splitstock forsplits, allincluding periods presented. Proportionalproportional adjustments also were made to shares underlying outstanding equity awards, warrants and Redeemable Convertible Preferred Shares, and to the number of shares issued and issuable under the Company’s stock incentive plans and certain existing agreements.

Research and development activities are central to our business. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. Our research and development expenses reflect, among other things, programs that were discontinued or put on hold as well as new development programs. As a result, we expect that our research and development expenses will increase substantially over the next several years, particularly as we increase personnel costs, including stock-based compensation, contractor costs and facilities costs, as we continue to advance the development of our product candidates. We also may incur additional expenses related to milestone and royalty payments payable to third parties with whom we have entered into license agreements to acquire the rights to our product candidates.

General and administrative expenses consist primarily of salaries, related benefits and stock-based compensation expenses for personnel in executive, finance, corporate, business development and administrative functions. General and administrative expenses also include legal fees relating to corporate and securities matters; professional fees for accounting, tax and audit services; insurance costs; travel expenses; and facility-related expenses, including rent, depreciation, as well as operating related costs.

Impairment of Goodwill, Intangible Asset and Other long-lived assetsasset

In connection with our acquisition of APT, we allocated a portion of the purchase price to goodwill and in-process research and development (“IPR&D”) intangible asset. During the third and fourth quarters of 2024, we experienced a decline in our stock price resulting in market capitalization being less than our stockholders’ equity, which we concluded as an impairment indicator. As a result, we performed a quantitative assessment for goodwill and IPR&D impairment and recognized an impairment charge of $0.8 million and $3.2 million, respectively.respectively, for the year ended December 31, 2024.

Long-lived assetsOther long-lived asset impairment

Other expenses (income)

Other expenses (income) consistsprimarily consist of a capital reversionloss from the sale of fixed assets, a reversal of the contract liability associatedrelated withto the AD program whichthat has beenwas paused in 2024, and proceeds from sub-leasingthe subleasing of a portion of our office space in Ness Ziona, Israel, which sub-leasesublease ended in September 2024.

Interest expense consistsmainly ofrelated to interest on the existing loan to APT from the U.S. Small Business Administration and interest incurred under a Loan and Security Agreement with Hercules Capital, Inc., or the Hercules Loan Agreement. Under the Hercules Loan Agreement, Hercules Capital, Inc., or Hercules, provided the Company with access to a term loan with an aggregate principal amount of up to $30 million, or the Term Loan Facility. On March 19, 2024, we prepaid all of the remaining loan balance under the TermHercules Loan Facility Agreement in a total amount of $10.4 million. The prepayment included an end of term charge of $983 thousand and accrued interest of $69 thousand.

Income from change in fair value of Private Placement Warrantswarrants

Income from change in fair value of Private Placement Warrantswarrants reflects the revaluation that resulted from the accounting of the Private Placement Warrantswarrants issued under the March 2024 PIPE.PIPE and the warrants issued under the February 2025 Financing.

Financial expenses, net consist primarily of income or expenses related to revaluation of foreign currencies and interest income on our bank deposits and money market funds.funds and transaction costs incurred in connection with the February 2025 Financing and the March 2024 PIPE.

R&D expenses, net (net of grants received from the IIA and MTEC, and consideration from research collaborations) were $24.7 million for the year ended December 31, 2024, compared to $16.7$21.3 million for the year ended December 31, 2023.2025, compared to $24.7 million for the year ended December 31, 2024. The increasedecrease of $8.0$3.4 million, or 48%,14%, in the year ended December 31, 20242025 compared to the prior year, is primarily due to the following:

General and administrative expenses were $9.6 million for the year ended December 31, 2025, compared to $11.8 million for the year ended December 31, 2024,2024. comparedThe to $8.7$2.2 million for the year ended December 31, 2023. The $3.1 million increase,decrease, or 36%, 19%, is primarily driven by Acquisition-related expenses,expenses includingof $0.9 million in issuance costs and $0.4 million inof legal fees associated with both the Acquisition and the March 2024 PIPE. Additionally, the increase reflects higher salary and share-based compensation expenses of $0.9 million related to the combined workforce,PIPE, as well as $0.3a decrease of $0.2 in other professional service fees. Additionally, we had a decrease of $0.5 million in salaries and related expenses due to workforce reduction and a $0.2 million decrease in rent expensespremium followingfor the Acquisition.Company’s directors’ and officers’ insurance policy.

Goodwill impairment in the 2024 period was $0.8 million for the year ended December 31, 2024, million, following an impairment of the Company’s goodwill that resulted from the Acquisition. WeThe hadCompany’s nomarket capitalization as of September 30, 2024, was lower in comparison to its stockholders’ equity and triggered an impairment assessment that concluded that the entire goodwill impairmentshould inbe the year ended December 31, 2023.impaired.

IPR&D impairment was $11.8 million for the year ended December 31, 2025, compared to $3.2 million for the year ended December 31, 2024, following our quantitative assessment for IPR&D impairment. We had no IPR&D impairment in the year ended December 31, 2023.

Other incomeexpense was $2.1$0.1 million for the year ended December 31, 2024,2025, compared to $0.4other income of $2.1 million for the year ended December 31, 2023.2024. The increasedecrease of $1.7$2.2 million, or 425%, 105%, is primarily due to the reversion of the contract liability associated with the Company’s AD program which has been suspended.suspended in 2024.

Interest expenses were $0.9 million$20,000 for the year ended ended December 31, 2024,2025, compared to $2.4 million$873,000 for the year ended December 31, 2023.2024. The decrease of $1.5 million,$853,000, or 63%,98%, is due to the full repayment of the loan under the Hercules Loan Agreement.Agreement in March 2024. Interest in the 2025 period was related to an existing loan to APT from the U.S. Small Business Administration.

On August 16, 2021 we entered into the Hercules Loan Agreement with Hercules, with respect to a venture debt facility. Under the Hercules Loan Agreement, Hercules provided us with access to a term loan with an aggregate principal amount of up to $30 million, available in three tranches, subject to certain terms and conditions. The first tranche of $15 million was advanced to us on the date the Hercules Loan Agreement was executed. The milestones for the second and third tranches were not reached and have expired and accordingly we never received additional amounts under the Hercules Loan Agreement. We were required to make interest-only payments through March 1, 2023, and we were required to repay the principal balance and interest in monthly installments through September 1, 2025. On March 19, 2024, we voluntarily prepaid the outstanding amount under the Hercules Loan Agreement and such agreement expired.

In On December 7, 2023, pursuantwe tofiled a shelf registration statement on Form S-3, S-3which was declared effective by the SEC on January 2, 2024,2024. orIn theaddition, Effective S-3,on December 7, 2023, we entered into an At the Market Offering Agreement, or the 2023 ATM Agreement, with H.C. Wainwright & Co., LLC, or Wainwright, with Wainwright as manager, pursuant to which we may issue and sell shares of our Common Stock having an aggregate offering price of up to $7.5 million from time to time through Wainwright. We are not obligated to make any sales of Common Stock under the 2023 ATM Agreement. On February 24, 2025, we suspended the ATM Agreement and the related continuous offering by us under thean Effectiveeffective registration Statement on Form S-3. WeOn August 13, 2025, we filed a prospectus supplement to amend our prior prospectus dated January 2, 2024, and as previously supplemented on February 24, 2025. The prospectus supplement updated the maximum aggregate amount of securities we may resumeoffer useand sell under the 2023 ATM Agreement. Under the prospectus supplement, we may issue and sell shares of theCommon ATMStock having an aggregate offering price of up to $1.7 million from time to time through Wainwright. Agreement inDuring the future.year ended December 31, 2025, we sold 121,773 shares of Common Stock under the 2023 ATM Agreement, at an average price of $11.13 per share, raising aggregate net proceeds of approximately $1.3 million, after deducting an aggregate commission of $51.

In February and May, 2023, subsequent to the approval of the Company’s stockholders, we completed the closing of the February 2023 PIPE, as defined below, with $7.5 million in gross proceeds. Additionally, onOn March 15, 2024, concurrently with the consummation of the Acquisition, we consummated a private placement, or the March 2024 PIPE, pursuant to an exemption from registration requirements requirements under the Securities Act, with certain investors pursuant to which such investors purchased an aggregate of 216,417 shares of our Series X non-voting convertible preferred stock, par value $0.0001 per share, or the Convertible Preferred Stock, par value $0.0019 per share, with each Series X Convertible Preferred Stock being convertible into 1006 shares of our shares of Common Stock, after giving effect to the Reverse Split, and warrants, or Private Placement Warrants, to purchase up to an aggregate of 10,820,850569,519 shares of the Company’s Common Stock, for aggregate gross proceeds of approximately $50 million.

Our financial statements contain an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern as we believe that our current funds, including the funds received from the 2025 Second SPA, will be sufficient to meet our working capital and capital expenditure requirements only into through the first end of the second quarter of 2026. In the future, we will likely require or desire additional funds to support our operating expenses and capital requirements or for other purposes, such as acquisitions, and may seek to raise such additional funds through public or private equity or debt financings or collaborative agreements or from other sources, as we did with the ATM Agreement and the Hercules Loan Agreement. IfOur certainability disruptionsto secure such additional funds is contingent upon obtaining the stockholder approval required pursuant dueto to,the for2025 instance,Second Israel’sSPA. WarFailure withto Hamasobtain such approval would severely constrain our financing options, potentially forcing us to cease our operations, and Hezbollah,would orincrease Israelithe politicalsubstantial instabilitydoubt persistsabout andour deepens, we could experience an inabilityability to access additional capital, which could in the future negatively affect our capacity to support our operating expenses and capital requirements or to make investments for other purposes, suchcontinue as acquisitions.a going concern.

We have invested, and plan to continue to invest, our existing cash in short-term investments in accordance with our investment policy. These investments may include money market funds and investment securities consisting of U.S. Treasury notes, and high quality, marketable debt instruments of corporations and government sponsored enterprises. We use foreign exchange contracts (mainly option and forward contracts) to hedge balance sheet items from currency exposure. These foreign exchange contracts are not designated as hedging instruments for accounting purposes. In connection with these foreign exchange contracts, we recognize gains or losses that offset the revaluation of the balance sheet items also recorded under financial expenses (income), expenses, net. As of December 31, 2025, we had no outstanding foreign exchange contracts. As of December 31, 2024, we had outstanding foreign exchange contracts in the amount of approximately $2.4 million with a fair value asset of $19 thousand. As of December 31, 2023, we had outstanding foreign exchange contracts in the amount of approximately $4.1 million with a fair value asset of $0.3 million.

Our contractual contractual obligations and commitments relate primarily to our operating leases and non-cancelable purchase obligations under agreements with various research and development organizations and suppliers in the ordinary course of business. In August 2019, we entered into a lease agreement for office and lab spaces in Gaithersburg, MarylandMaryland. andThis inlease agreement was terminated effective December 31, 2025. In September 2020, we entered into a lease agreement for office and laboratory space in Ness Ziona, Israel. In November 2025, the latter lease agreement for office and laboratory space in Ness Ziona, Israel, was terminated.

In addition to the other information set forth in this Quarterly Report, including in the section captioned “Cautionary Statement Regarding Forward-Looking InformationStatements,” above, you should carefully consider the risk factors discussed in Part I, Item 1A “Risk Factors” of the 2025 10-K, as updated and supplemented by the risk factors relating to the Company’sour strategic transition and new business focus set forth in the May 5 8-K. These Those risks could materially affect the Company’sour business, financial condition, results of operations, cash flows,flows and the trading price of theour Common Stock. The risk factors set forth below update and supplement those risk factors. Other than as set forth below and as supplemented by the disclosures contained elsewhere in this Quarterly Report, there have been no material changes to the risk factors set forth in the 2025 10-K and the May 5 8-K.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated interim financial statements and the notes thereto containedincluded elsewhere in this Quarterly Report.Report Theand analysiswith ofour audited consolidated financial statements and notes thereto included in the financial2025 condition and results of operations includes Adaptive Phage Therapeutics LLC, a Delaware limited liability company (formerly Adaptive Phage Therapeutics Inc., a Delaware corporation), or APT, from the date that we acquired it on March 15, 2024.10-K. Certain information contained inbelow the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. OurSee actual“Cautionary resultsStatement mayRegarding differForward-Looking materially from those discussed in any forward-looking statement because of various factors discussed in this Quarterly Report and in our other filings with the U.S. Securities and Exchange Commission, or the SEC.Statements.”

TheThrough Companyour operatessubsidiaries, we operate at the intersection of several rapidly growing sectors within the global defense, security, and critical infrastructure markets. TheOur Company’s technology portfolio addresses the following key market segments:

The Company’sOur products and technologies are marketed and sold through a combination of direct sales to government and military customers, co-development arrangements with prime defense contractors, distribution agreements with strategic partners, and project-based engagements.

The Company generatesintends to generate revenues through a combination of (i) project-based engagements and product sales, including the sale and deployment of DFSL’s LADAR detection systems and Zorronet’s discrete project deliveries to defense prime contractors and end users; (ii) recurring software-as-a-service revenues from Zorronet’s deployed AI software platform, scaling with active customer deployments; (iii) co-development engagements with Israeli defense prime contractors, including Elbit Systems Ltd. and Rafael Advanced Defense Systems Ltd.; and (iv) cost-reimbursement government research and development contracts at APT, including the legacy contract with the Medical Technology Enterprise Consortium with respect to the BX011 program. X Security & Defense LTD. has not yet commenced commercial operations.

The Company’sOur customer base includes military and defense agencies, defense prime contractors, homeland security authorities, transportation operators, municipalities, energy companies, educational institutions, and commercial security providers. Key customer relationships include:relationships.

ConsolidatedResults Results of Operations

ComparisonThree ofand the ThreeSix Months Ended March 31,June 30, 2026 Compared to Three and MarchSix 31,Months Ended June 30, 2025

Research and development expenses, net. R&D expenses,expenses netdecreased were $(0.3)from million$5,014,000 forand $10,264,000 in the three and six months ended MarchJune 31,30, 2026, compared2025 to $5.3a net credit of $187,000 and expense of $128,000 in the corresponding 2026 periods. The decrease of approximately $5.2 million forand $10.1 million in the three and six months ended March 31, 2025. The decrease of approximately $5.6 million was primarily attributable to (i) the reversal of previously recognized stock-based compensation expense following the cancellation of unvested awards held by departing employees of BiomX Israel, (ii) the discontinuation of the Phase 2b clinical trial of BX004 in December 2025 and the associated wind-down of program activities, and (iii) the deconsolidation of BiomX Ltd. effective February 4, 2026.2026 partially offset by development activities of acquired defense business . Following the discontinuation of the BX004 program and the deconsolidation of BiomX Ltd., the Company does not anticipate further grant-funded R&D under the MTEC Base Agreement and is evaluating strategic alternatives with respect to the MTEC-funded technology.

General and administrative expenses. G&A expenses were $1.6$5,383,000 millionand $6,994,000 for the three and six months ended MarchJune 31,30, 2026, compared to $2.5$2,419,000 and $4,925,000 in the corresponding 2025 periods. The increase of approximately $3.0 and $2.1 million forin the three and six months ended March 31, 2025. The decrease of approximately $0.9 million was primarily attributable to stock-based compensation expense related to issuance of shares to employees, directors and consultants during the second quarter of 2026 partially offset by the reversal in the first quarter of previously recognized stock-based compensation expense following the cancellation of unvested awards held by departing employees of BiomX Israel as described above,above partiallyand offset byan increase in insurance and management compensation of former management which was paid out in the first quarter of 2026.expenses.

Day 1 loss. Day 1 loss upon entering transaction was $5.2 million$5,226,000 for the three and six months ended MarchJune 31,30, 2026, attributable to the issuance date fair value of the warrants and embedded conversion derivative issued in connection with the January 2026 private placement of Series Y Convertible Preferred Stock and accompanying warrants. There was no comparable amount in the three and six months ended MarchJune 31,30, 2025.

Loss from change in fair value. Income from change in fair value of derivatives was $14.1 million$1,598,000 for the three months ended MarchJune 31,30, 2026 and loss from change in fair value of derivatives of $12,458,000 for the six months ended June 30, 2026, compared to income from change in fair value of derivatives of $0.9$1,498,000 millionand $2,412,000 for the three and six months ended March 31, 2025. The change was primarily attributable to the warrants and embedded conversion derivative issued in connection with the January 2026 private placement of Series Y Convertible Preferred Stock and the increase in the trading price of the Common Stock between the issuance date of the warrants issued in the January 2026 private placement and the exercise date in March 2026, which increased the fair value of the liability-classified warrants prior to their exercise.exercise partially offset by decrease in the fair value of liability classified warrant.

Finance expense,expenses. Finance expenses, net, waswere $0.4$377,000 for the three and six months ended MarchJune 31, 30, 2026, compared to $0.8$25,000 millionand $830,000 for the three and six months ended MarchJune 31,30, 2025. The decrease was primarily attributable reduction in transaction costs in the quarter ended March 31, 2025 which consisted of transaction costs incurred in connection with the February 2025 compared to transaction costs incurred in connection with the January 2026 private placement of Series Y Convertible Preferred Stock.

Net gain from deconsolidation of subsidiary. Net gain from deconsolidation of subsidiary was $1.9 million$1,860,000 for the three and six months ended MarchJune 31,30, 2026, attributable to the deconsolidation of BiomX Ltd. following the commencement of insolvency proceedings in December 2025 and the appointment of a Trustee to BiomX Ltd. by the District Court of the Central District in Lod, Israel on January 25, 2026. As of February 4, 2026, following the deconsolidation, the assets and liabilities of BiomX Ltd. were no longer included in the Company’s consolidated balance sheet. There was no comparable amount in the three and six months ended MarchJune 31,30, 2025.

Net losslosses. wasNet $19.1losses millionwere $3,846,000 and $22,986,000 for the three and six months ended MarchJune 31,30, 2026, of which $74,000 was attributable to non-controlling interests in DFSL, compared to $7.7$6,035,000 millionand $13,693,000 for the three and six months ended MarchJune 31,30, 2025. The increase in net loss was primarily attributable to the non-cash warrant-related charges recognized in the three months ended March 31, 2026 (consisting of the $5.2 million$5,226,000 Day 1 loss upon issuance of the January 2026 warrants and embedded conversion derivative and the $14.1 million$12,458,000 loss from change in fair value of the liability-classified warrants prior to their exercise in March 2026), share based compensation expenses of $2,246,000, partially offset by the $1.9 million$1,860,000 net gain on the deconsolidation of BiomX Ltd. and the $6.5 million decrease in operating loss between the periods.

Basic and diluted loss per share. Basic and diluted loss per share of Common Stock was $(7.38)$0.36 and $3.55 for the three and six months ended MarchJune 31,30, 2026, compared to $(6.27)$3.66 and $9.55 for the three and six months ended MarchJune 31,30, 2025 (as retroactively adjusted to reflect the 1-for-19 reverse stock split effected on November 25, 2025). The decrease in loss per share was primarily attributable to the increase in the weighted average number of shares of Common Stock outstanding from 1,215,9531,647,810 and 1,434,212 shares for the three and six months ended March 31, 2025 to 2,603,807 10,556,585 and 6,479,738 shares for the three and months ended MarchJune 31,30, 2026, more than offsetting the increase in net loss between the periods.periods

As of December 31, 2025, we had cash, cash equivalents and restricted cash of approximately $5.0 million,$4,955,000, and a stockholders’ capital deficiency of approximately $1.3 million.$1,302,000. As of MarchJune 31,30, 2026, we had cash, cash equivalents and restricted cash of approximately $1.2 million.$347,000.

On April 10, 2026, we completed the acquisition of Zorronet in exchange for 1,300,000 shares of our Common Stock and a non-convertible promissory note in the principal amount of $1,250,000 maturing July 7, 2026, plus the assumption of an earnout payment obligation payable not later than March 31, 2027 and certain key-employee retention commitments. On April 13, 2026, we exercised our option and acquired a 60% interest in DFSL in consideration for $750,000 in cash (of which $450,000 had been previously advanced), which cash consideration was funded in part with proceeds received in April 2026 from the warrant exercises described above, an unsecured convertible promissory note in the principal amount of $3,000,000, pre-funded warrants and five-year warrants exercisable for shares of our Common Stock, and a revenue-based bonus right, in each case subject in part to stockholder approval under NYSE American rules. InAs connectionof withJune 30, 2026, our obligations under the DFSLnote acquisition,have Mandragolabeen agreed to provide a credit line on mutually agreed terms to support DFSL’s development and debt payments.satisfied. We have also committed to fund X Security’s 2026 operations with over $3.0 million from internal funds. On July 7, 2026, the $1.25 million non-convertible promissory note issued to Water IO Ltd. in connection with the ZorroNet Acquisition described in Note 7 was scheduled to mature.

Several outstanding instruments may dilute existing stockholders and affect our future liquidity and capital structure. As of MarchJune 31,30, 2026, the Company had 147,51251,598 shares shares of Series X Redeemable Convertible Preferred Stock outstanding, which are convertible into shares of our Common Stock at a conversion ratio of approximately 5.2655.26 shares of Common Stock per share of Series X (or approximately 776,648271,568 shares of Common Stock in the aggregate). Following the April 13, 2026 acquisition of DFSL, the Company is obligated, subject to stockholder approval under NYSE American rules and within 120 days of closing, to seek the stockholder approvals required to issue Common Stock above the 19.99% threshold in connection with the Mandragola convertible note (principal amount of $3,000,000), the Mandragola pre-funded warrants and the Mandragola five-year warrant. There can be no assurance that such stockholder approvals will be obtained, and a failure to obtain such approvals could affect the availability of the Mandragola credit line and the Company’s ability to satisfy its obligations to Mandragola.

On May 13, 2026, the Company and Mandragola entered into a Line of Credit Agreement establishing a revolving line of credit of up to $2,000,000 (the "“Credit Line"”) available to the Company or any operating subsidiary, including DFSL and ZorroNet. Each advance is evidenced by a convertible promissory note bearing simple annual interest at 12% and convertible into shares of the Company'sCompany’s Common Stock at the closing price of the Common Stock on the trading day immediately preceding delivery of the notice of conversion. The maturity date of each Credit Line Note is May 13, 2029. The parties agreed that prior advances made by Mandragola in respect of the DFSL Acquisition are deemed to be advances within the Credit Limit. As additional consideration for making the Credit Line available, the Company also issued to Mandragola a five-year warrant to purchase up to 2,000,000 shares of Common Stock at an exercise price of $12.00 per share, which warrant includes a cashless exercise feature. TheUntil issuancesuch oftime shares of Common Stock upon exercise of the warrant is subject to obtainingas stockholder approval as required by the applicable rules and regulations of the NYSE American LLC.LLC Theis Companyobtained, intendsthese warrants are not deemed to usebe commerciallylegally reasonablein effortseffect. toAn obtainextraordinary such stockholder approval as promptly as practicable. The Audit Committee approved the Credit Line as a related party transaction on the basis that Mandragola is a holder of more than 5%meeting of the Company'sstockholders outstandinghas Commonbeen Stockscheduled followingto be held on August 25, 2026 to, among other things, approve the closingissuance of thecommon DFSLstock Acquisitionupon Ourconversion principal/ sourcesexercise of liquidity for the foreseeable future are expected to include operating revenues from our new operating subsidiaries, proceeds from any future capital raises (including under any future at-the-market offering program), theby Mandragola credit line entered into on May 13, 2026, non-dilutive government grants associated with retained legacy assets, and cost-discipline measures at the parent-company level. Because our new operating subsidiaries Zorronet and DFSL only became consolidated subsidiaries in April 2026, the financial statements included in this Quarterly Report do not yet reflect their performance. The Company expects that the operating results and cash flows of these businesses, and we expect those results to begin appearing in the Company’s consolidated financial statements beginning in the second quarter of 2026.securities.

The following table summarizes our sources and uses of cash for the threesix months ended MarchJune 31,30, 2026 and 2025:

Net cash used in operating activities for the threesix months ended March June 31, 2026 was $5.4$6.6 million, primarily driven by the net loss for the period of $19.1$23.0 million, adjusted for non-cash items including the $14.1 $12.5 million loss from change in fair value of liability-classified warrants, the $5.2 million Day 1 loss recognized upon issuance of the January 2026 warrants, and $0.2 million of value attributable to warrants issued in connection with the private placement, partially offset by the $1.9$2.1 million reversal of previously recognized stock-based compensation expense andpartially offset by the $1.9 million gain on deconsolidation of BiomX Ltd. Operating cash flows were further affected by an increasedecrease in other current assets of $1.4 million and a decrease in other accounts payable of $1.2$1.6 million, partially offset by an increase in trade accounts payable of $0.3$0.4 million and in trade receivables of $0.5 million.

Net cash used in operating activities for the threesix months ended MarchJune 31,30, 2025 was $8.7$14.8 million ,million, primarily driven by our R&D, general and administrative expenses, as well as changes in our operating assets and liabilities of $1.0 million. Non-cash charges for the threesix months ended MarchJune 31, 30, 2025 consisted primarily of income from change in fair value of warrants of $0.9$2.4 million, stock-based compensation expenses of 0.7$1.4 million and depreciation expenses of $0.2$0.5 million. Net changes in our operating assets and liabilities consisted primarily of aan decreaseincrease in trade accounts payable of $0.2$0.3 million, as well as a decrease in other accounts payable of $1.1$2.4 million and a decrease in other current assets of $0.2$1.1 million.

During the threesix months ended March 31,June 30, 2026, net cash used in investing activities was $1.0$1.6 million, consisting of the cash and cash equivalents derecognized upon the loss of control of BiomX Ltd. on February 4, 2026 and cash used in purchase of our subsidiaries during April 2026.

During the threesix months ended March 31,June 30, 2025, net cash provided by investing activities was approximately $51 thousand, consisting of proceeds from the sale of property and equipment.

During the threesix months ended March 31,June 30, 2026, net cash provided by financing activities was $2.6$3.3 million, consisting of net proceeds from the January 2026 private placement of Series Y Convertible Preferred Stock and accompanying warrants.warrants of $2.6 million, $0.3 million from net proceeds from the Issuance of Common Stock under At the Market Sales Agreement and $656 million received from Mandargola under our line of credit. The Company also received $3.3 million of gross proceeds from the exercise of warrants by the holder of the Series Y Convertible Preferred Stock on March 19, 2026; as of MarchJune 31,30, 2026, those proceeds$3.0 million were offset against the principal balance promissory note issued to Mandragola in connection with the DFSL acquisition and the balance of $0.3 were recorded as a receivable on account of shares in the Company’s condensed consolidated balance sheets and were collected after the period end.

The Company has incurred significant losses and negative cash flows from operations since inception and has an accumulated deficit of approximately $236.0$239.8 million as of MarchJune 31,30, 2026. The Company expects to continue to incur losses for the foreseeable future. Management believes that the Company’s current funds, including the $3.0 million in gross proceeds raised in January 2026 from the issuance of Series Y Convertible Preferred Stock and the $3.3 million in gross proceeds raised in March 2026 from the cash exercise of the warrants issued in connection with the Series Y Convertible Preferred Stock, together with sales receipts under our Atm Progran and revenue and cash flows expected to be generated by the Company’s recently acquired operating subsidiaries DFSL and ZorroNet will be sufficient to fund operations only for the next several months from the date of issuance of the condensed consolidated interim financial statements. The Company’s ability to continue as a going concern depends on its ability to obtain additional financing or to generate sufficient operating cash flows from its newly acquired subsidiaries, neither of which can be assured. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated interim financial statements have been prepared on a going concern basis and do not include any adjustments that may result from the outcome of these uncertainties.

We have incurred an accumulated deficit of approximately $236.0$239.8 million as of MarchJune 31,30, 2026, compared with approximately $216.9 million as of December 31, 2025, substantially all of which is attributable to our legacy phage therapy operations and pre-restructuring corporate expenses. To date, we have not generated material revenue from operations. Ouroperations.. cash needs are expected to increase as we integrate our recently acquired operating subsidiaries and fund the launch of X Security. We expect to generate revenues from the sale and deployment of DFSL’s LADAR-based detection systems, from project-based and recurring software-as-a-service engagements at Zorronet, and from X Security’s contemplated distribution arrangements, beginning in the second quarter of 2026.arrangements. We also expect to receive non-dilutive grant funding associated with APT’s legacy BX011 program. There can be no assurance, however, that revenue generated during 2026 will exceed our cost of operations.

Consistent with our anticipated near-term operating losses, we expect to continue to incur losses in the foreseeable future. To the extent we require funds above our existing liquidity resources in the medium and long term, we plan to fund our operations, the integration of the new operating subsidiaries, and the build-out of X Security through future issuances of public or private equity, issuance of debt securities, the pending Mandragola credit line, and possibly additional grants from the Israel Innovation Authority, the Medical Technology Enterprise Consortium (“MTEC”), or other government or non-profit institutions.Authority. Our ability to raise additional capital in the equity and debt markets is dependent on a number of factors including, but not limited to, market demand for our securities, the trading price and trading volume of our Common Stock, our compliance with the continued listing standards of the NYSE American, the dilutive impact of any contemplated offering on existing stockholders, and the timing and outcome of any NYSE Regulation review of our compliance posture under Sections 1003(a) and 1003(c) of the NYSE American Company Guide.