Business Context and Reporting Period
This Form 10-Q covers the quarter ended March 31, 2026 for BiomX Inc. (NYSE American: PHGE). The Company has executed a strategic pivot from a clinical-stage biopharmaceutical developer to a defense, security, and critical infrastructure technology firm. This transition followed the discontinuation of its lead phage therapy program (BX004) in December 2025 and the subsequent insolvency proceedings of its former Israeli operating subsidiary, BiomX Ltd. Effective February 4, 2026, BiomX Ltd. was deconsolidated from the financial statements following the appointment of a court-appointed trustee.
Subsequent to the reporting period (April 2026), the Company acquired 60% of Dr. Frucht Systems Ltd. (DFSL) and 100% of Zorro Net Ltd. (ZorroNet), and formed a new subsidiary, X Security & Defense LTD, to house its new operations.
Key Financial Metrics
| Metric (USD in thousands) | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating Loss | $(1,296) | $(7,756) |
| Net Loss | $(19,140) | $(7,659) |
| Loss Per Share (Basic & Diluted) | $(7.38) | $(6.27) |
| Cash and Cash Equivalents (End of Period) | $1,168 | $20,116 |
| Total Assets | $3,251 | $5,783 |
| Total Liabilities | $4,132 | $7,085 |
| Capital Deficiency | $(881) | $(1,302) |
Note: Q1 2025 share data has been retroactively adjusted for a 1-for-19 reverse stock split.
Material Changes vs. Prior Period
- Net Loss Increase: Net loss increased to $19.1 million from $7.7 million. This was driven primarily by non-cash charges related to financial instruments: a $5.2 million "Day 1 loss" upon entering a private placement transaction and a $14.1 million loss from the change in fair value of liability-classified warrants.
- Operating Loss Decrease: Operating loss improved significantly to $1.3 million from $7.8 million. This reduction was due to the deconsolidation of BiomX Ltd., the discontinuation of the BX004 clinical trial, and a reversal of $1.9 million in stock-based compensation expenses following the forfeiture of unvested awards by departing employees.
- Deconsolidation Gain: The Company recognized a $1.9 million gain from the deconsolidation of BiomX Ltd., reflecting the removal of its liabilities from the balance sheet.
- Liquidity: Cash and cash equivalents decreased from $4.4 million (Dec 31, 2025) to $1.2 million (March 31, 2026), primarily due to operating cash outflows of $5.4 million.
Guidance, Outlook, Risks, and Unusual Items
Outlook and Guidance
Management expects revenues to begin in the second quarter of 2026 from the newly acquired subsidiaries (DFSL and ZorroNet). However, the Company has not provided specific quantitative revenue guidance. Management believes current funds, combined with expected revenues from new subsidiaries, will be sufficient to fund operations for only the "next several months."
Going Concern
The filing explicitly states there is substantial doubt about the Company's ability to continue as a going concern. This is due to significant accumulated deficits ($236 million), negative cash flows, and the need for additional financing to support the new business model.
Unusual Items
- Derivative Valuation: Significant volatility in the fair value of warrants and embedded conversion derivatives resulted in large non-cash losses.
- Capital Structure Changes: In Q1 2026, the Company issued Series Y Convertible Preferred Stock and subsequently converted it to common stock. Warrants were exercised for $3.3 million in gross proceeds (received post-period end).
Risks and Contingencies
- NYSE American Compliance: The Company received a deficiency notice on March 25, 2026, regarding stockholders' equity requirements. A compliance plan was submitted on April 24, 2026, but delisting remains a risk if compliance is not achieved by September 25, 2027.
- Geopolitical Instability: Ongoing conflicts in the Middle East (Israel, Iran, Hezbollah) pose risks to operations, personnel (military reserve duty), and supply chains.
- Insolvency Proceedings: The Company has a $1.3 million receivable due from BiomX Ltd. (the insolvent subsidiary), which may be subject to claims by the trustee.
Investor Verification Checklist
- Capital Sufficiency: Verify the timeline and certainty of the "next several months" runway given the $1.2 million cash balance and upcoming debt maturities (e.g., $1.25 million note to Water IO due July 2026).
- Listing Status: Monitor the acceptance of the compliance plan by NYSE American and the Company's progress toward regaining equity compliance.
- Acquisition Integration: Confirm the closing and financial consolidation of DFSL and ZorroNet, and the realization of the projected revenue streams from these entities.
- Dilution Impact: Assess the dilutive effect of outstanding warrants, convertible notes (including the $3 million Mandragola note), and potential future equity raises required to fund operations.
- Receivable Recovery: Evaluate the likelihood of recovering the $1.3 million balance due from the insolvent BiomX Ltd. subsidiary.