BiomX Inc.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the notes thereto contained elsewhere in this Quarterly Report. The analysis of the financial 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. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Our actual results may differ 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.

Current wording

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 included elsewhere in this Quarterly Report and with our audited consolidated financial statements and notes thereto included in the 2025 10-K. Certain information contained below includes forward-looking statements that involve risks and uncertainties. See “Cautionary Statement Regarding Forward-Looking Statements.”

Previous wording

The Company operates at the intersection of several rapidly growing sectors within the global defense, security, and critical infrastructure markets. The Company’s technology portfolio addresses the following key market segments:

Current wording

Through our subsidiaries, we operate at the intersection of several rapidly growing sectors within the global defense, security, and critical infrastructure markets. Our technology portfolio addresses the following key market segments:

Previous wording

The Company’s 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.

Current wording

Our 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.

Previous wording

The Company generates 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.

Current wording

The Company intends 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.

Previous wording

The Company’s 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:

Current wording

Our 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.

Previous wording

R&D expenses, net were $(0.3) million for the three months ended March 31, 2026, compared to $5.3 million for the three 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. 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.

Current wording

*Research and development expenses, net.*R&D expenses decreased from $5,014,000 and $10,264,000 in the three and six months ended June 30, 2025 to a net credit of $187,000 and expense of $128,000 in the corresponding 2026 periods. The decrease of approximately $5.2 million and $10.1 million in the three and six months 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 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.

Previous wording

General and administrative expenses were $1.6 million for the three months ended March 31, 2026, compared to $2.5 million for the three months ended March 31, 2025. The decrease of approximately $0.9 million was primarily attributable to the reversal of previously recognized stock-based compensation expense following the cancellation of unvested awards held by departing employees of BiomX Israel as described above, partially offset by increase in insurance and management compensation of former management which was paid out in the first quarter of 2026.

Current wording

*General and administrative expenses.*G&A expenses were $5,383,000 and $6,994,000 for the three and six months ended June 30, 2026, compared to $2,419,000 and $4,925,000 in the corresponding 2025 periods. The increase of approximately $3.0 and $2.1 million in the three and six months 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 and an increase in insurance expenses.

Previous wording

Day 1 loss upon entering transaction was $5.2 million for the three months ended March 31, 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 months ended March 31, 2025.

Current wording

Day 1 loss. Day 1 loss upon entering transaction was $5,226,000 for the three and six months ended June 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 June 30, 2025.

Previous wording

Loss from change in fair value of derivatives was $14.1 million for the three months ended March 31, 2026, compared to income from change in fair value of derivatives of $0.9 million for the three 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.

Current wording

Loss from change in fair value. Income from change in fair value of derivatives was $1,598,000 for the three months ended June 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 $1,498,000 and $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 partially offset by decrease in the fair value of liability classified warrant.

Previous wording

Finance expense, net, was $0.4 for the three months ended March 31, 2026, compared to $0.8 million for the three months ended March 31, 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.

Current wording

Finance expenses. Finance expenses, net, were $377,000 for the three and six months ended June 30, 2026, compared to $25,000 and $830,000 for the three and six months ended June 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.

Previous wording

Net gain from deconsolidation of subsidiary was $1.9 million for the three months ended March 31, 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 months ended March 31, 2025.

Current wording

Net gain from deconsolidation of subsidiary. Net gain from deconsolidation of subsidiary was $1,860,000 for the three and six months ended June 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 June 30, 2025.

Previous wording

Net loss was $19.1 million for the three months ended March 31, 2026, compared to $7.7 million for the three months ended March 31, 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 Day 1 loss upon issuance of the January 2026 warrants and embedded conversion derivative and the $14.1 million loss from change in fair value of the liability-classified warrants prior to their exercise in March 2026), partially offset by the $1.9 million net gain on the deconsolidation of BiomX Ltd. and the $6.5 million decrease in operating loss between the periods.

Current wording

Net losses. Net losses were $3,846,000 and $22,986,000 for the three and six months ended June 30, 2026, of which $74,000 was attributable to non-controlling interests in DFSL, compared to $6,035,000 and $13,693,000 for the three and six months ended June 30, 2025. The increase in net loss was primarily attributable to the non-cash warrant-related charges (consisting of the $5,226,000 Day 1 loss upon issuance of the January 2026 warrants and embedded conversion derivative and the $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 $1,860,000 net gain on the deconsolidation of BiomX Ltd. and the decrease in operating loss between the periods.

Previous wording

Basic and diluted loss per share of Common Stock was $(7.38) for the three months ended March 31, 2026, compared to $(6.27) for the three months ended March 31, 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 1,215,953 shares for the three months ended March 31, 2025 to 2,603,807 shares for the three months ended March 31, 2026, more than offsetting the increase in net loss between the periods.

Current wording

Basic and diluted loss per share. Basic and diluted loss per share of Common Stock was $0.36 and $3.55 for the three and six months ended June 30, 2026, compared to $3.66 and $9.55 for the three and six months ended June 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 1,647,810 and 1,434,212 shares for the three and six months ended March 31, 2025 to 10,556,585 and 6,479,738 shares for the three and months ended June 30, 2026, more than offsetting the increase in net loss between the periods

Previous wording

As of December 31, 2025, we had cash, cash equivalents and restricted cash of approximately $5.0 million, and a stockholders’ capital deficiency of approximately $1.3 million. As of March 31, 2026, we had cash, cash equivalents and restricted cash of approximately $1.2 million.

Current wording

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

Previous wording

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. In connection with the DFSL acquisition, Mandragola agreed to provide a credit line on mutually agreed terms to support DFSL’s development and debt payments. We have also committed to fund X Security’s 2026 operations with over $3.0 million from internal funds.

Current wording

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 , 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. As of June 30, 2026, our obligations under the note have been 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.

Previous wording

Several outstanding instruments may dilute existing stockholders and affect our future liquidity and capital structure. As of March 31, 2026, the Company had 147,512 shares of Series X Redeemable Convertible Preferred Stock outstanding, which are convertible into shares of our Common Stock at a conversion ratio of approximately 5.265 shares of Common Stock per share of Series X (or approximately 776,648 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.

Current wording

Several outstanding instruments may dilute existing stockholders and affect our future liquidity and capital structure. As of June 30, 2026, the Company had 51,598 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 5.26 shares of Common Stock per share of Series X (or approximately 271,568 shares of Common Stock in the aggregate).

Previous wording

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'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. The issuance of shares of Common Stock upon exercise of the warrant is subject to obtaining stockholder approval as required by the applicable rules and regulations of the NYSE American LLC. The Company intends to use commercially reasonable efforts to obtain 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% of the Company's outstanding Common Stock following the closing of the DFSL Acquisition

Current wording

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’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. Until such time as stockholder approval as required by the applicable rules and regulations of the NYSE American LLC is obtained, these warrants are not deemed to be legally in effect. An extraordinary meeting of the stockholders has been scheduled to be held on August 25, 2026 to, among other things, approve the issuance of common stock upon conversion / exercise by Mandragola of these securities.

Previous wording

Our principal sources 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), the 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.

Current wording

Our principal sources of liquidity for the foreseeable future are expected to include sales under our ATM program, operating revenues from our operating subsidiaries, proceeds from any future capital raises (including under any future at-the-market offering program) andthe Mandragola credit line and cost-discipline measures at the parent-company level.

Previous wording

The following table summarizes our sources and uses of cash for the three months ended March 31, 2026 and 2025:

Current wording

The following table summarizes our sources and uses of cash for the six months ended June 30, 2026 and 2025:

Previous wording

Net cash used in operating activities for the three months ended March 31, 2026 was $5.4 million, primarily driven by the net loss for the period of $19.1 million, adjusted for non-cash items including the $14.1 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 million reversal of previously recognized stock-based compensation expense and the $1.9 million gain on deconsolidation of BiomX Ltd. Operating cash flows were further affected by an increase in other current assets of $1.4 million and a decrease in other accounts payable of $1.2 million, partially offset by an increase in trade accounts payable of $0.3 million.

Current wording

Net cash used in operating activities for the six months ended June 31, 2026 was $6.6 million, primarily driven by the net loss for the period of $23.0 million, adjusted for non-cash items including the $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, $2.1 million reversal of previously recognized stock-based compensation expense partially offset by the $1.9 million gain on deconsolidation of BiomX Ltd. Operating cash flows were further affected by an decrease in other current assets of $1.4 million and a decrease in other accounts payable of $1.6 million, partially offset by an increase in trade accounts payable of $0.4 million and in trade receivables of $0.5 million.

Previous wording

Net cash used in operating activities for the three months ended March 31, 2025 was $8.7 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 three months ended March 31, 2025 consisted primarily of income from change in fair value of warrants of $0.9 million, stock-based compensation expenses of 0.7 million and depreciation expenses of $0.2 million. Net changes in our operating assets and liabilities consisted primarily of a decrease in trade accounts payable of $0.2 million, as well as a decrease in other accounts payable of $1.1 million and a decrease in other current assets of $0.2 million.

Current wording

Net cash used in operating activities for the six months ended June 30, 2025 was $14.8 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 six months ended June 30, 2025 consisted primarily of income from change in fair value of warrants of $2.4 million, stock-based compensation expenses of $1.4 million and depreciation expenses of $0.5 million. Net changes in our operating assets and liabilities consisted primarily of an increase in trade accounts payable of $0.3 million, a decrease in other accounts payable of $2.4 million and a decrease in other current assets of $1.1 million.

Previous wording

During the three months ended March 31, 2026, net cash used in investing activities was $1.0 million, consisting of the cash and cash equivalents derecognized upon the loss of control of BiomX Ltd. on February 4, 2026.

Current wording

During the six months ended June 30, 2026, net cash used in investing activities was $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.

Previous wording

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

Current wording

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

Previous wording

During the three months ended March 31, 2026, net cash provided by financing activities was $2.6 million, consisting of net proceeds from the January 2026 private placement of Series Y Convertible Preferred Stock and accompanying warrants. 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 March 31, 2026, those proceeds were recorded as a receivable on account of shares in the Company’s condensed consolidated balance sheets and were collected after the period end.

Current wording

During the six months ended June 30, 2026, net cash provided by financing activities was $3.3 million, consisting of net proceeds from the January 2026 private placement of Series Y Convertible Preferred Stock and accompanying 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 June 30, 2026, $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.

Previous wording

The Company has incurred significant losses and negative cash flows from operations since inception and has an accumulated deficit of approximately $236.0 million as of March 31, 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 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.

Current wording

The Company has incurred significant losses and negative cash flows from operations since inception and has an accumulated deficit of approximately $239.8 million as of June 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.

Previous wording

We have incurred an accumulated deficit of approximately $236.0 million as of March 31, 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. Our 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. 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.

Current wording

We have incurred an accumulated deficit of approximately $239.8 million as of June 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.. 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. 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.

Previous wording

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. 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.

Current wording

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. 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.