Tessera Defense & Homeland Security Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and our Interim Chief Financial Officer (our principal executive officer and principal financial officer, respectively), performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2023. Based on the aforementioned evaluation, our management has concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2023. Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting has been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America. Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States of America, and that receipts and expenditures are being made only in accordance with authorization of our management and directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 83 Management assessed the effectiveness of our internal control over financial reporting on December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework, in Internal Control—Integrated Framework . Based on that assessment under those criteria, management has determined that, as of December 31, 2023, our internal control over financial reporting was effective. We are exempt from this requirement to provide an attestation report of our independent registered public accounting firm regarding internal control over financial reporting due to our status under the Exchange Act as a non-accelerated filer as of the current time Changes in Internal Control over Financial Reporting There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of fiscal year 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION Trading Arrangements During the three months ended December 31, 2023, none of our directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement”, as each term is defined in Item 408(a) of Regulation S-K . Ratification of Stock Issuance On April 2, 2024, our Board of Directors adopted resolutions, or the Resolutions, approving the ratification of the issuance of one share of Common Stock issued in connection with the consummation of the Acquisition pursuant to Section 204 of the Delaware General Corporation Law, or the Ratification. A copy of the Resolutions adopted by our Board of Directors setting forth the information with respect to the Ratification required under Section 204 of the Delaware General Corporation Law is set forth in Exhibit 99.1 to this Annual Report. Any claim that any defective corporate act or putative stock ratified pursuant to the Ratification is void or voidable due to the failure of authorization specified in the Resolutions, or that the Delaware Court of Chancery should declare in its discretion that the Ratification in accordance with Section 204 of the Delaware General Corporation Law not be effective, or be effective only on certain conditions, must be brought within 120 days from the giving of this notice (which is deemed to be given on the date that this Annual Report is filed with the SEC). ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICITIONS THAT PREVENT INSPECTIONS Not applicable. 84 part III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Set forth below are the names, ages and positions of each of the individuals who serve as our executive officers and member of the Board of Directors, or Board, as of April 3, 2024. Name Age Position Executive Officers Jonathan Solomon 47 Chief Executive Officer and Director Assaf Oron 49 Chief Business Officer Marina Wolfson 39 Chief Financial Officer Avraham Gabay 39 Interim Chief Financial Officer Dr. Merav Bassan 58 Chief Development Officer Non-Employee Directors Dr. Russell Greig(1)(2)(3) 71 Director and Chairman of the Board of Directors Jonathan Leff(2) 55 Director Dr. Alan Moses(2) 74 Director Gregory Merril (3) 58 Director Edward Williams(1) 67 Director Dr. Jesse Goodman(3) 72 Director (1) Member of the audit committee (2) Member of the compensation committee (3) Member of the nominating and corporate governance committee Executive Officers Jonathan Solomon has served as the Chief Executive Officer and as a director of the Company since October 2019. Mr. Solomon served as Board member of BiomX Ltd., or BiomX Israel, from February 2016 and also as Chief Executive Officer from February 2017 to October 2019. From July 2007 to December 2015, Mr. Solomon was a co-founder, President, and Chief Executive Officer of ProClara Biosciences Inc. (formerly NeuroPhage Pharmaceuticals Inc.), a biotechnology company pioneering an approach to treating neurodegenerative diseases. Prior to joining ProClara, he served for ten years in a classified military unit of the Israeli Defense Forces. Mr. Solomon holds B.Sc. magna cum laude in Physics and Mathematics from the Hebrew University, an M.Sc. summa cum laude in Electrical Engineering from Tel Aviv University, and an MBA with honors from the Harvard Business School. We believe that Mr. Solomon’s qualifications to sit on our Board include his extensive board and management experience in the biotech industry. Assaf Oron has served as the Chief Business Officer of the Company since October 2019. Mr. Oron served as Chief Business Officer of BiomX Ltd. from January 2017 to October 2019. Prior to this position, he served in various roles at Evogene Ltd. (Nasdaq:EVGN), an agriculture biotechnology company, which utilizes a proprietary integrated technology infrastructure to enhance seed traits underlying crop productivity, from March 2006 to December 2016, including Executive Vice President of Strategy and Business Development and Executive Vice President of Corporate Development. Prior to joining Evogene, Mr. Oron served as Chief Executive Officer of ChondroSite Ltd., a biotechnology company that develops engineered tissue products in the field of orthopedics and as a senior project manager and strategic consultant at Israeli management consulting company POC Ltd. Mr. Oron holds an M.Sc. in Biology (bioinformatics) and a B.Sc. in Chemistry and Economics, both from Tel Aviv University. Marina Wolfson has served as the Chief Financial Officer of the Company since April 2022 and is currently on a maternity leave. Ms. Wolfson served in several finance and operations roles in the Company from December 2019 to March 2022. Ms. Wolfson’s experience includes working with large pharmaceutical and hi-tech companies, as well as venture capital funds. Prior to joining the Company, Ms. Wolfson worked as Vice President of Finance at BioView Ltd. (TASE:BIOV) from 2010 to 2019 and a senior auditor at Ernst & Young, from 2007 to 2010. Ms. Wolfson is a certified public accountant in Israel and holds a B.A in Economics and Accounting (with honors) and an MBA (with honors, specializing in finance) from Ben-Gurion University. 85 Avraham Gabay has served as the Company’s interim Chief Financial Officer, since the commencement of the maternity leave of Ms. Wolfson, the Company’s Chief Financial Officer, in November 2023, and will serve in that role for as long as Ms. Wolfson is on such leave. Prior to his appointment, from 2021 until 2023, Mr. Gabay served as the chief financial officer at Oravax Inc., a biotechnology company focusing on research and development of an oral vaccine. Prior to that, from 2019 until 2021, Mr. Gabay was the chief financial officer at Oramed Pharmaceuticals Inc. (Nasdaq: ORMP), which is developing an oral delivery platform for proteins and focusing on oral insulin. From 2015 to 2019, Mr. Gabay served as a corporate controller at Orcam Technologies Ltd., a company which develops, manufactures and sells a wearable assistive technology device for people who are blind, visually impaired or have reading or other disabilities. From 2014 to 2015, Mr. Gabay provided economic services in the advisory department of KPMG Israel, a certified public accounting firm, and from 2013 to 2014, he worked in the tax department of the law firm, Gornitzky & Co. In addition, Mr. Gabay serves as a director on the board of Nala Digital Ltd., a public company whose shares are listed for trading on the Tel Aviv Stock Exchange. Mr. Gabay holds a bachelor’s degree in law and accounting (magna cum-laude) from Tel-Aviv University and is a certified public accountant in Israel and a member of the Israeli Bar Association. Dr. Merav Bassan has served as the Chief Development Officer of the Company since October 2019. Prior to this position, she served in various development roles at Teva Pharmaceutical Industries Limited between 2005 and 2019, including Vice President, Head of Translational Sciences, Specialty Clinical Development R&D from 2017 to 2019, Vice President, Pain and Global Internal Medicine, Project Leadership, Innovative Product Development, Global IR&D from 2015 to 2017, and Project Champion, Senior Director, Innovative Product Development, Global IR&D from 2009 to 2015. Dr. Bassan holds a B.Sc. in Biology, a M.Sc. in Human Genetics and a Ph.D. in Neurobiology from Tel Aviv University, and she completed a Post-Doctoral Fellowship in Neuroscience at Harvard Medical School at Harvard University. Directors The biography of Mr. Solomon is set forth above under the header “Executive Officers.” The biographies of our non-employee directors are set forth below: Dr. Russell Greig has served as a director and chairman of the Board of the Company since October 2019. Dr. Greig has more than 44 years of experience in the pharmaceutical industry, with knowledge and expertise in research and development, business development and commercial operations. He spent the majority of his career at GlaxoSmithKline, or GSK, where he held a number of positions including GSK’s President of Pharmaceuticals International from 2003 to 2008 and Senior Vice President Worldwide Business Development. From 2008 to 2010, Dr. Greig was also President of SR One, GSK’s corporate venture group. He is currently Chairman of Cardior (Germany), Nucleome Therapeutics (UK) and BiomX (NYSE). In addition, Dr. Greig previously served on the boards of Sanifit (Spain) (acquired by Vifor Pharma AG (SWX: VIFN), Tigenix N.V. (acquired by Takeda Pharmaceutical Company Limited), Ablynx N.V. (acquired by Sanofi, France) and Merus N.V. (Nasdaq: MRUS). He was previously Chairman of Syntaxin Ltd (UK) (acquired by Ipsen), Novagali Pharma S.A. (France) (acquired by Santen Pharmaceutical Co., Ltd.), and Isconova AB (Sweden) (acquired by Novavax, Inc. (Nasdaq: NVAX). He served as acting Chief Executive Officer at Genocea Biosciences (Nasdaq: GNCA) and Isconova AB for an interim period. He was also a member of the Scottish Scientific Advisory Committee, reporting to the First Minister of Scotland. We believe that Dr. Greig’s qualifications to sit on our Board include his extensive board and leadership experience in business development and in drug research and development in the pharmaceutical industry. 86 Jonathan Leff has served as a director of the Company since March 2024. Mr. Leff is a Partner at Deerfield Management Company, L.P., or Deerfield and Chairman of the Deerfield Institute. He joined Deerfield in 2013 and focuses on venture capital and structured investments in biotechnology and pharmaceuticals. Prior thereto, Mr. Leff served as Managing Director at Warburg Pincus LLC from 2000 to 2012, where he led the firm’s investment efforts in biotechnology and pharmaceuticals. Mr. Leff also previously served as a member of the Executive Committee of the Board of the National Venture Capital Association, or NVCA, and led NVCA’s life sciences industry efforts as Chair of NVCA’s Medical Innovation and Competitiveness Coalition. He also served on the Emerging Companies Section Board of the Biotechnology Industry Organization. Mr. Leff is involved in the governance of several not-for-profit organizations, including serving as a member of the board of directors of the Spinal Muscular Atrophy Foundation and sitting on the Columbia University Medical Center Board of Advisors. He currently serves on the board of directors of Larimar Therapeutics, Inc., a publicly traded biotechnology company. Mr. Leff also previously served on the boards of several other publicly traded biotechnology and pharmaceutical companies, including ARS Pharmaceuticals, Inc., from 2022 to 2023, Proteon Therapeutics, Inc. from 2017 to 2019, AveXis, Inc. from 2014 to 2017 and Nivalis Therapeutics, Inc. from 2014 to 2016. He currently serves on the boards of several private biopharmaceutical companies and has previously served on the boards of other privately held biopharmaceutical companies. Mr. Leff received his A.B. from Harvard University, MBA from the Stanford University Graduate School of Business and M.S. in Biotechnology from Johns Hopkins University. We believe that Mr. Leff’s qualifications to sit on our Board include his extensive board and leadership experience in capital markets and the pharmaceutical and biotech industries. Dr. Alan Moses has served as a director of the Company since October 2020. Dr. Moses has been a Board member of Chemomab Therapeutics, Ltd. (Nasdaq: CMMB) since March 2021. Dr. Moses served as the Global Chief Medical Officer of Novo Nordisk A/S from 2013 until his retirement in 2018. Prior to that he served in various roles at Novo Nordisk A/S since 2004, beginning as Associate Vice President of Medical Affairs in the United States. Throughout his career, Dr. Moses has specialized in developing novel therapeutics and diagnostics for diabetes mellitus. He co-founded and directed the Clinical Investigator Training Program at Beth Israel Deaconess-Harvard Medical School-MIT. From 1998 to 2004, Dr. Moses served as Senior Vice President and Chief Medical Officer of the Joslin Diabetes Center with specific responsibility for the Joslin Clinic. He now serves as a member of the Board of Joslin Diabetes Center since December 2021. He also serves as Chairman of the Board of the nonprofit diaTribe Foundation and is a member of the Board of the Greater New England Chapter of the Juvenile Diabetes Research Foundation. Dr. Moses earned his MD from the Washington University School of Medicine in St. Louis, worked for three years at the National Institutes of Health, completed his clinical endocrine/diabetes training at Tufts New England Medical Center, and studied Health Care Strategy at Harvard Business School. We believe that Dr. Moses’s qualifications to sit on our Board include his extensive leadership experience in clinical development in the pharmaceutical industry. Gregory Merril has served as a director of the Company since March 2024. Mr. Merril founded APT in October 2016, and served as its Chief Executive Officer until October 2023 and served on its board of directors until March 2024. Currently, he lends his expertise to various startups, serving in capacities ranging from advisor to executive director. Mr. Merril served as Chief Executive Officer of Yost Labs, a developer of inertial motion sensors used in fields such as physical rehabilitation and drone navigation, from August 2015 to December 2017. Between 2011 and August 2015, he founded and led Brain Sentry, a company dedicated to developing wearable sensors to detect head impacts risking traumatic brain injury in sports including football, hockey, and lacrosse. From October 2009 to February 2011, he served as chief operating officer of Decision Technologies, which supported the U.S. Navy and the Missile Defense Agency with technology acquisitions and deployments. Earlier, as the founding chief executive officer and chair of Interaction Laboratories from March 2002 to October 2009, Merril worked on patents and products that enhanced physical activity in video games and military simulations. Before this, he was the founding Chief Executive Officer of HT Medical Systems, a company focusing on surgical training simulators, which merged with Immersion Corp (NASDAQ: IMMR) in July 2000. Mr. Merril is credited as inventor with 22 issued patents and holds a B.A. in psychobiology from McDaniel College. We believe that Mr. Merril’s qualifications to sit on our Board include his experience in drug research and development in the pharmaceutical industry. 87 Edward “Eddie” Williams has served as a director of the Company since October 2023. Mr. Williams has served as a member of the board of directors of BioAtla, Inc. (Nasdaq: BCAB), a publicly traded biotechnology company focusing on oncology, since December 2021. From January 2018 to December 2022, he served as a member of the board of directors of Catalyst Biosciences Inc. (Nasdaq: CBIO, now GYRE), a publicly traded biopharmaceutical company. He also currently serves as director on the non-profit healthcare boards of Boone Memorial Health, and Innovative Hematology, Inc. From March 2020 to September 2022, Mr. Williams held the positions of Special Advisor to the Chief Executive Officer and Interim Chief Commercial Officer of Ascendis Pharma, Inc. (Nasdaq: ASND). Prior to Ascendis, from 2006 to January 2017, Mr. Williams served as Senior Vice President and General Manager of US BioPharmaceuticals at Novo Nordisk, Inc. (NYSE: NVO), a multinational pharmaceutical and biotech company. Prior to Novo, from 2003 to 2006, Mr. Williams served as Vice President of Sales at the Respiratory and Dermatology Business Unit at Novartis Pharmaceuticals Corporation. Mr. Williams started his career in 1981 at The Upjohn Company (Pharmacia & Upjohn), where he later served as Vice President of Sales until July 2001 and then as Regional Vice President of Sales of Northeast Region post-merger with Searle, from July 2001 until May 2003. Mr. Williams holds a B.S. in Biology and Chemistry from the Marshall University, Huntington, WV, and the Grambling State University, Grambling, LA. We believe that Mr. Williams’s qualifications to sit on our Board include his extensive board and leadership experience, coupled with his successful experiences pre-launch and commercialization of novel compounds in the pharmaceutical industry. Dr. Jesse Goodman has served as a director of the Company since March 2024. Dr. Goodman has been the director of the Center on Medical Product Access, Safety and Stewardship, and professor of medicine and attending physician in infectious diseases, at Georgetown University since March 2014. Dr. Goodman also is an infectious disease physician at the Washington DC Veterans Affairs and Walter Reed Medical Centers. He serves on the board of directors of GlaxoSmithKline plc, a multinational pharmaceutical company, which he joined in 2016, and chaired that board’s science committee until early 2023, and he has served on the board of directors of Intellia Therapeutics, Inc., a publicly traded biotechnology company, since October 2018. Prior to the Merger Agreement, Dr. Goodman served on the board of directors of APT. He also has served as a president (2015 to 2020) and member (2015 to present) of the board of trustees of the United States Pharmacopeia Convention, Inc. From 2009 until February 2014, Dr. Goodman served as the chief scientist of the FDA. Dr. Goodman also served as deputy commissioner for science and public health at the FDA from 2009 through 2012. Prior to that, Dr. Goodman was the director of the FDA’s Center for Biologics Evaluation and Research from 2003 to 2009 and a senior advisor to the FDA commissioner from 1998 through 2000. Prior to his government service, Dr. Goodman was professor of medicine and chief of infectious diseases at the University of Minnesota. Dr. Goodman has served on numerous advisory boards and committees for national and international health care organizations, including the CDC, the National Institute of Health, the World Health Organization and the Coalition on Epidemic Preparedness Innovations. Dr. Goodman received a B.S. in biology from Harvard College, a master’s in public health from the University of Minnesota and an M.D. from the Albert Einstein College of Medicine, and did his residency and fellowship training in medicine, infectious diseases and oncology at the Hospital of the University of Pennsylvania and at the University of California in Los Angeles, where he was also chief medical resident. He has been elected to the Institute of Medicine of the National Academy of Sciences. We believe that Dr. Goodman’s qualifications to sit on our Board include his extensive board and leadership experience in clinical development in the pharmaceutical industry and regulation. Code of Business Conduct and Ethics We have adopted a Code of Business Conduct and Ethics that applies to all directors, officers and employees. The Code of Business Conduct and Ethics is available on our website at www.biomx.com. If we make any substantive amendments to the Code of Business Conduct and Ethics or grants any waiver from a provision of the Code to any director or executive officer, we will promptly disclose the nature of the amendment or waiver on our website. 88 Board Committees and Corporate Governance Board Composition and Leadership Structure As of April 3, 2024, the Board is comprised of seven members. The Board has a flexible policy with respect to the combination or separation of the offices of Chairman of the Board and Chief Executive Officer. Currently, Dr. Russell Greig serves as our independent Chairman, and Mr. Jonathan Solomon serves as our Chief Executive Officer. The Board believes that by having separate roles, the Chief Executive Officer is able to focus on the day-to-day business and affairs of the Company and the Chairman is able to focus on key strategic issues, board leadership and communication. While the Board believes this leadership structure is currently in the best interests of the Company and its stockholders, the Board also recognizes that future circumstances could lead it to combine these roles. Board Committees The Board has established three standing committees: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee, each of which is composed solely of independent directors, and is described more fully below. Each of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee operates pursuant to a written charter and each committee reviews and assesses the adequacy of its charter and submits its charter to the Board for approval. The charters for the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are all available on our website, www.biomx.com. Audit Committee Our Audit Committee engages the Company’s independent accountants: reviews their independence and performance; reviews the Company’s accounting and financial reporting processes and the integrity of its financial statements; reviews the audits of the Company’s financial statements and the appointment, compensation, qualifications, independence and performance of the Company’s independent auditors; reviews the Company’s compliance with legal and reviews regulatory requirements; and reviews the performance of the Company’s internal audit function and internal control over financial reporting. The members of the Audit Committee are Dr. Russell Greig and Edward Williams, each of whom is an independent director under NYSE American’s listing standards and satisfies the additional independence requirements of Rule 10A-3 of the Exchange Act. Dr. Russell Greig is the Chairperson of the Audit Committee. The Audit Committee does not currently have as a member an “audit committee financial expert,” as defined under the rules and regulations of the SEC. Compensation Committee Our Compensation Committee reviews annually the Company’s corporate performance goals and objectives relevant to the Chief Executive Officer’s compensation, evaluates the Chief Executive Officer’s performance in light of such goals and objectives, determines and approves the Chief Executive Office’s compensation level based on this evaluation; makes recommendations to the Board regarding approval, disapproval, modification, or termination of existing or proposed employee benefit plans; makes recommendations to the Board with respect to the compensation of our executive officers, other than the Chief Executive Officer, and directors; and administers the Company’s incentive-compensation plans and equity-based plans, as well as the Company’s clawback policy. The Compensation Committee has the authority to delegate any of its responsibilities to subcommittees as it may deem appropriate in its sole discretion. The Chief Executive Officer of the Company may not be present during voting or deliberations of the Compensation Committee with respect to his compensation. The Company’s executive officers do not play a role in suggesting their own salaries. The members of the Compensation Committee are Dr. Alan Moses, Mr. Jonathan Leff and Dr. Russell Greig, each of whom is an independent director under NYSE American’s listing standards. Dr. Alan Moses is the Chairperson of the Compensation Committee. 89 The Compensation Committee retained Aon Solutions UK Limited or Aon, an independent compensation consultant, to provide advice with respect to option exchange and repricing of options under the Chardan Healthcare Acquisition Corp. 2019 Equity Incentive Plan, or the 2019 Plan, and the Company’s 2015 Employee Stock Option Plan , or the 2015 Plan, respectively. Aon’s primary responsibilities for the fiscal year ended December 31, 2023 included identifying the methodology of the repricing and option exchange and providing recommendations to the Compensation Committee, which the Compensation Committee considered among the factors it reviewed when determining such repricing and exchange of options. Nominating and Governance Committee Our Nominating and Corporate Governance Committee is responsible for overseeing the selection of persons to be nominated to serve on the Board. Specifically, the Nominating and Corporate Governance Committee makes recommendations to the Board regarding the size and composition of the Board, establishes procedures for the director nomination process and screens and recommends candidates for election to the Board. On an annual basis, the Nominating and Corporate Governance Committee recommends for approval by the Board certain desired qualifications and characteristics for Board membership. Additionally, the Nominating and Corporate Governance Committee establishes and oversees the annual assessment of the performance of the Board as a whole and its individual members. The Nominating and Corporate Governance Committee will consider a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person’s candidacy for membership on the Board. Although the Nominating and Corporate Governance Committee does not have a formal policy with regard to the consideration of diversity identifying nominees, the Nominating and Corporate Governance Committee may require certain skills or attributes, such as financial or accounting experience, to meet specific needs of the Board that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of Board members. The Nominating and Corporate Governance Committee does not distinguish among nominees recommended by stockholders and other persons. The members of the Nominating and Corporate Governance Committee are Dr. Russell Greig, Dr. Jesse Goodman and Mr. Gregory Merril, each of whom is an independent director under NYSE American’s listing standards. Dr. Russell Greig is the Chairperson of the Nominating and Corporate Governance Committee. ITEM 11. EXECUTIVE COMPENSATION Summary Compensation Table The following table sets forth the total compensation paid or accrued during the last two fiscal years with respect to (i) our Chief Executive Officer, (ii) our two other most highly compensated executive officers, who each earned more than $100,000 during the fiscal year ended December 31, 2023, and were serving as executive officers as of such date. Name and Principal Position Year Salary ($) (1) Bonus ($) (1) Option Awards (2) ($) (2) All Other Compensation ($) (1)(3) Total ($) (1) Jonathan Solomon 2023 412,135 201,234 404,174 100,998 1,118,541 Chief Executive Officer 2022 424,581 - 512,974 103,987 1,041,542 Marina Wolfson 2023 214,727 76,209 90,742 46,578 428,256 Chief Financial Officer 2022 231,414 - 116,827 48,002 396,243 Dr. Merav Bassan 2023 264,105 101,145 153,218 72,463 590,931 Chief Development Officer 2022 280,213 - 206,332 76,373 562,948 (1) All payments were originally made in NIS and were translated into USD using the annual average USD/NIS exchange rate for each fiscal year. (2) Amounts in this column represent the grant date fair value of the option awards as computed in accordance with ASC 718, not including any estimates of forfeitures related to service-based vesting conditions. See note 12.B. to our Consolidated Financial Statements for the year ended December 31, 2023 for a discussion of assumptions made by the Company in determining the grant date fair value of our option awards for the fiscal years ended December 31, 2023 and 2022. Note that the amounts reported in this column reflect the accounting cost for these stock options and do not reflect the actual economic value that may be realized by the non-employee directors upon the vesting of the stock options, the exercise of the stock options, or the sale of the Common Stock underlying such stock options. (3) Amounts in this column represent additional payments for welfare benefits, disability insurance and other customary or mandatory social benefits to employees in Israel. 90 Narrative Disclosure to the Summary Compensation Table Option Awards Prior to the Business Combination, option awards were granted to our named executive officers under the 2015 Plan. Option awards granted to our named executive officers after the closing of the Business Combination are granted pursuant to the 2019 Plan. In each case, one fourth of the options vest and become exercisable on the first anniversary of the grant date, and the remainder of the options vest and become exercisable in 12 equal quarterly instalments, subject to the named executive officer’s continued employment; provided that the options will vest and become exercisable in the event the named executive officer is terminated within the twelve (12) month period following the occurrence of a Change in Control (as defined in the applicable grant agreement) as a result of an involuntary termination without Cause (as defined in the applicable grant agreement) or a voluntary termination with Good Reason (as defined in the applicable grant agreement). Subject to the terms of any employment agreement, the unexercised portion of these awards is generally forfeited by a participant on the date his or her employment is terminated other than due to death or disability. In the event of death or disability, the options become fully exercisable and remain exercisable for a period specified in the applicable award agreement. Bonus Awards We have an annual corporate and individual goal-setting and review process for our named executive officers that is the basis for the determination of potential annual bonuses. Each of our named executive officers is eligible for annual performance-based bonuses of up to a specific percentage of their salary, ranging from 40% to 50% subject to approval by the Board or the Compensation Committee. The performance-based bonus is tied to a set of specified corporate and/or individual goals and objectives reviewed and approved by the Board, such as clinical and development milestones, meeting budget and strategic goals, and we conduct an annual performance review to determine the attainment of such goals and objectives. Our management may propose bonus awards to the Board primarily based on such review process. The Compensation Committee makes the final determination of the achievement of both the specified corporate and strategic objectives and the eligibility requirements for and the amount of such bonus awards and recommends a bonus award payout to the Board for approval. For fiscal year 2023, bonuses were accrued based on advancing or development plans, the satisfaction of certain product candidate development milestones and strategic objectives. Employment Agreements Below are descriptions of our employment agreements with our named executive officers. Jonathan Solomon Pursuant to an employment agreement dated February 1, 2016, by and between BiomX Israel and Mr. Solomon, as the Chief Executive Officer of BiomX Israel, Mr. Solomon is entitled to a base salary of NIS 64,000, or approximately $19,500, per month, and an additional gross payment of NIS 16,000, or approximately $4,900, per month for up to 40 hours per month worked outside of normal business hours and normal business days (together with the base salary, Mr. Solomon’s Salary). Starting April 1, 2023, Mr. Solomon is entitled to a base salary of NIS 100,000, or approximately $27,778, per month, and overtime payment of NIS 25,000 or approximately $6,944, per month. BiomX Israel also makes customary contributions on Mr. Solomon’s behalf to a pension fund or a managers insurance company, at Mr. Solomon’s election, in an amount equal to 8.33% of his Salary, allocated to a fund for severance pay, and an additional amount equal to 5.00% of the Salary in case Mr. Solomon is insured through a managers insurance policy, or 6.50% of Mr. Solomon’s Salary in case Mr. Solomon is insured through a pension fund, which shall be allocated to a provident fund or pension plan. In case Mr. Solomon chooses to allocate his pension payments to a managers insurance policy (and not a pension fund), the Company shall also insure him under a work disability insurance policy at the rate required to insure 100% of Mr. Solomon’s Salary and for this purpose will contribute an amount of up to 2.50% of Mr. Solomon’s Salary insured in such insurance policy for disability insurance in a policy and/or insurance company. These payments are intended to be in lieu of statutory severance pay that Mr. Solomon would otherwise be entitled to receive from BiomX Israel in accordance with Severance Pay Law 5723-1963, or the Severance Pay Law. BiomX Israel also contributes 7.50% of Mr. Solomon’s monthly salary to a recognized educational fund. BiomX Israel also reimburses Mr. Solomon for automobile maintenance and transportation expenses of NIS 2,000, or $556 per month. Mr. Solomon is also entitled to non-statutory 12 months severance (including social benefits), upon either (i) resignation with a good reason, or (ii) termination without cause (as the terms good reason and cause would be defined by the parties, consistent with our past practice), provided that Mr. Solomon waives all claims and continues to comply with the other terms of his employment agreement. 91 Marina Wolfson Pursuant to an employment agreement dated December 1, 2019, by and between BiomX Israel and Ms. Wolfson, she serves as our Chief Financial Officer. Ms. Wolfson is entitled to a base salary of NIS 39,600, or approximately $11,400, per month, and an additional gross payment of NIS 7,400, or approximately $2,130, per month for up to 40 hours per month worked outside of normal business hours and normal business days (together with the base salary, Ms. Wolfson’s Salary. Starting May 1, 2020, Ms. Wolfson’s base salary was NIS 40,000 or approximately $11,458, per month, and an additional gross payment of NIS 10,000 or approximately $2,865, per month. Starting April 1, 2023, Ms. Wolfson’s base salary is NIS 54,080 or approximately $15,022, per month, and an additional gross payment of NIS 13,520 or approximately $3,756, per month. BiomX Israel also makes customary contributions on Ms. Wolfson’s behalf to a pension fund or a managers insurance company, at Ms. Wolfson’s election, in an amount equal to 8.33% of Ms. Wolfson’s Salary, allocated to a fund for severance pay, and an additional amount equal to 5.00% of Ms. Wolfson’s Salary in case Ms. Wolfson is insured through a managers insurance policy, or 6.50% of Ms. Wolfson’s Salary in case Ms. Wolfson is insured through a pension fund, which shall be allocated to a provident fund or pension plan. In case Ms. Wolfson chooses to allocate her pension payments to a managers insurance policy (and not a pension fund), the Company shall also insure her under a work disability insurance policy at the rate required to insure 75% of Ms. Wolfson’s Salary and for this purpose will contribute an amount of up to 2.50% of Ms. Wolfson’s Salary insured in such insurance policy for disability insurance in a policy and/or insurance company. These payments are in lieu of statutory severance pay that Ms. Wolfson would otherwise be entitled to receive from BiomX Israel in accordance with the Severance Law. BiomX Israel also contributes 7.50% of Ms. Wolfson’s monthly Salary (not to exceed NIS 15,712, or approximately $4,364) to a recognized educational fund. The Company reimburses Ms. Wolfson for automobile maintenance and transportation expenses of NIS 2,500, or approximately $694, per month. Ms. Wolfson is also entitled to non-statutory 9 months severance (including social benefits), upon either (i) resignation with a good reason, or (ii) termination without cause (as the terms good reason and cause would be defined by the parties, consistent with our past practice), provided that Ms. Wolfson waives all claims and continues to comply with the other terms of his employment agreement. Dr. Merav Bassan Pursuant to an employment agreement dated August 26, 2019, by and between BiomX Israel and Dr. Bassan, as the Chief Development Officer of BiomX Israel, Dr. Bassan is entitled to a base salary of NIS 56,000, or approximately $17,230, per month, and an additional gross payment of NIS 14,000, or approximately $4,307, per month for up to 40 hours per month worked outside of normal business hours and normal business days (together with the base salary, Dr. Bassan’s Salary. Starting April 1, 2023, Dr. Bassan is entitled to a base salary of NIS 62,800, or approximately $17,444, per month, and an additional gross payment of NIS 15,700 or approximately $4,361, per month. BiomX Israel also makes customary contributions on Dr. Bassan’s behalf to a pension fund or a managers insurance company, at Dr. Bassan’s election, in an amount equal to 8.33% of Dr. Bassan’s Salary, allocated to a fund for severance pay, and an additional amount equal to 7.30% of Dr. Bassan’s Salary in case Dr. Bassan is insured through a managers insurance policy, or 6.50% of Dr. Bassan’s Salary in case Dr. Bassan is insured through a pension fund, which shall be allocated to a provident fund or pension plan. In case Dr. Bassan chooses to allocate her pension payments to a managers insurance policy (and not a pension fund), the Company shall also insure her under a work disability insurance policy at the rate required to insure 75% of Dr. Bassan’s Salary and for this purpose will contribute an amount of up to 2.50% of the Salary insured in such insurance policy for disability insurance in a policy and/or insurance company. These payments are in lieu of statutory severance pay that Dr. Bassan would otherwise be entitled to receive from BiomX Israel in accordance with the Severance Law. BiomX Israel also contributes 7.50% of Dr. Bassan’s monthly Salary to a recognized educational fund. The Company reimburses Dr. Bassan for automobile maintenance and transportation expenses of NIS 2,500, or approximately $694, per month. Dr. Bassan is also entitled to non-statutory 9 months severance (including social benefits), upon either (i) resignation with a good reason, or (ii) termination without cause (as the terms good reason and cause would be defined by the parties, consistent with our past practice), provided that Dr. Bassan waives all claims and continues to comply with the other terms of her employment agreement. 92 Outstanding Equity Awards at 2023 Fiscal Year-End The following table provides information regarding equity awards held by the named executive officers that were outstanding as of December 31, 2023: Option Awards Name Grant Date Number of Securities Underlying Unexercised Options Exercisable (1) (#) Number of Securities Underlying Unexercised Options Unexercisable (1) (#) Option Exercise Price ($) Option Expiration Date Jonathan Solomon 11/13/2016 167,434 - 0.54 01/07/2027 03/26/2017 (2) 182,133 - 0.275 03/26/2027 05/22/2018 (2) 201,718 - 0.275 05/21/2028 03/29/2019 (2) 284,701 - 0.275 03/29/2029 03/25/2020 (3) 35,527 2,368 0.275 03/25/2030 03/30/2021 (3) 27,500 12,500 0.275 03/30/2031 03/29/2022 (3) 64,063 82,366 0.275 03/29/2032 08/22/2022 31,250 68,750 0.66 08/22/2032 03/01/2023 410,000 0.4 03/01/2033 Dr. Merav Bassan 10/10/2019 (2) 189,997 - 0.275 10/10/2029 03/30/2021 (3) 8,593 3,907 0.275 03/30/2031 03/29/2022 (3) 31,250 40,179 0.275 03/29/2032 08/22/2022 23,438 51,562 0.66 08/22/2032 03/01/2023 - 100,000 0.4 03/01/2033 Marina Wolfson 03/25/2020 (3) 8,882 592 0.275 03/25/230 03/30/2021 (3) 6,017 2,733 0.275 03/30/2031 03/29/2022 (3) 15,625 20,090 0.275 03/29/2032 08/22/2022 23,438 51,562 0.66 08/22/2032 03/01/2023 - 100,000 0.4 03/01/2033 29/10/2023 - 59,800 0.275 10/29/2033 (1) Unless otherwise indicated, options vest and become exercisable as follows: 25% of the options on the first anniversary of the “vesting commencement date” (as defined in the applicable notice of option grant) and, thereafter, in 12 equal quarterly installments of 6.25% each. (2) On October 29, 2023, the Board of Directors approved a reduction in the exercise price of each outstanding option to purchase shares of the Company’s Common Stock currently held by employees of the Company with an original exercise price above $0.69 per share granted under the 2015 Plan to $0.275 per share. Other than the exercise price, no other terms of grant of the repriced options were changed; however, the options may not be exercised until one year after the repricing date. (3) On November 9, 2023, the Company filed with the SEC a Tender Offer Statement defining the terms and conditions of a one-time voluntary stock option exchange of certain eligible options for its employees, or the Option Exchange granted under the 2019 Plan. The Company offered to exchange certain out-of-the-money stock options for new stock options at an exchange ratio of between 1.4 and 3.8 surrendered options for one new option exercisable for shares of common stock with a lower exercise price. On December 11, 2023, the completion date of the Option Exchange, the stock options were tendered by eligible employees, and the Company granted new options at an exercise price of $0.275. Compensation of Directors We maintain a non-employee director compensation policy, pursuant to which each non-employee director receives an annual retainer of $35,000. In addition, our non-employee directors receive the following cash compensation for board services, as applicable: ● the chairman of the Board receives an annual retainer of $100,000 (inclusive of annual committee chairmanship and membership); 93 ● each member of our Audit, Compensation and Nominating and Corporate Governance Committees, other than the chairperson, receives an additional annual retainer of $7,500, $5,000 and $4,000, respectively; and ● each chairperson of our Audit, Compensation and Nominating and Corporate Governance Committees receives an additional annual retainer of $15,000, $10,000 and $8,000, respectively. We pay all amounts in quarterly installments. We also reimburse each of our directors for their reasonable travel, lodging and other out-of-pocket expenses incurred relating to their attendance at Board and committee meetings. Each non-employee director also receives an annual award of options to purchase our Common Stock. One-fourth of each Annual Option Award vests on the first anniversary of the date of grant, and the remainder of the annual option award vests in 12 equal quarterly installments, subject to such director’s continued service on the Board. The Company’s policy is to grant options based, among other things, on the recommendations of a compensation consultant. In 2023, the Company granted 41,000 options to each non-employee director and 82,000 to the Chairman of the Board. The following table sets forth information concerning compensation accrued or paid to our independent, non-employee directors during the year ended December 31, 2023 for their service on our Board. Mr. Jonathan Solomon, a director who is also our employee, received no additional compensation for his service as a director and is not set forth in the table below: Name Fees earned or paid in cash ($) Option Awards (2)(3) All other compensation Total ($) Dr. Russell Greig 100,500 61,077 - 161,577 Michael Dambach (1) 27,205 2,449 - 29,654 Jason Marks (1) 25,605 2,449 - 28,054 Dr. Alan Moses 47,560 33,873 - 81,433 Edward L. Williams 7,704 1,085 - 8,789 Lynne Sullivan (1) 54,000 30,538 - 84,538 262,574 131,471 - 394,045 (1) Effective as of March 15, 2024, the director resigned and no longer serves on the Board (2) Amounts in this column represent the grant date fair value of the option awards as computed in accordance with ASC 718, not including any estimates of forfeitures related to service-based vesting conditions. See note 12.B. of the notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of assumptions made by the Company in determining the grant date fair value of our option awards for the fiscal years ended December 31, 2022 and 2023. Note that the amounts reported in this column reflect the accounting cost for these stock options and do not reflect the actual economic value that may be realized by the non-employee directors upon the vesting of the stock options, the exercise of the stock options, or the sale of the Common Stock underlying such stock options. (3) As of December 31, 2023, we had outstanding grants to our non-executive directors aggregating 493,800 options of which 134,675 were exercisable or vested, as the case may be, as follows: Name Total of options granted Total of options exercisable and vested Russell Greig 185,400 68,839 Michael Dambach 41,000 - Jason Marks 41,000 - Dr. Alan Moses 92,700 31,418 Edward L. Williams 41,000 - Lynne Sullivan 92,700 34,418 Total 493,800 134,675 94 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Securities Authorized for Issuance Under Equity Compensation Plans We have two equity incentive plans, the 2015 Plan, and the 2019 Plan. Although no shares of our Common Stock are available for future issuance under the 2015 Plan, the 2015 Plan will continue to govern outstanding awards granted thereunder. As of December 31, 2023, options to purchase 2,055,836 shares of our Common Stock remained outstanding under the 2015 Plan. The 2019 Plan was adopted by the Board of Directors and approved by our stockholders in connection with the Business Combination. As of December 31, 2023, there were 1,011,104 shares of our Common Stock available for issuance under the 2019 Plan. The aggregate number of shares of our Common Stock available for issuance pursuant to the 2019 Plan automatically increases on January 1 of each year, for a period of not more than ten years, commencing on January 1, 2020 and ending on (and including) January 1, 2029, in an amount equal to 4% of the total number of shares of Common Stock outstanding on December 31 of the preceding calendar year. Accordingly, on January 1, 2024, 1,839,197 additional shares of our Common Stock were made available for issuance pursuant to the 2019 Plan. For additional information regarding the 2015 Plan and the 2019 Plan, as of December 31, 2023, please see Part II – Item 8 – Financial Statements and Supplemental Data – Notes to consolidated financial statements – note 12B – Stock-Based Compensation. Equity Compensation Plan Information December 31, 2023 Plan category Number of securities to be issued upon exercise of outstanding options and restricted stock (a) Weighted- average exercise price of outstanding options and restricted stock (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) Equity compensation plans approved by security holders 3,224,871 0.68 1,011,104 Equity compensation plans not approved by security holders 2,055,840 0.32 - Total 5,280,711 0.54 1,011,104 Security Ownership of Certain Beneficial Owners and Management The following table sets forth information regarding the beneficial ownership of our Common Stock as of March 28, 2024 (except as otherwise indicated) based on information obtained from the persons named below, with respect to the beneficial ownership of our Common Stock, by (i) each person known by us to be the beneficial owner of more than 5% of our outstanding Common Stock; (ii) each of our named executive officers and directors; and (iii) all our executive officers and directors as a group. Information with respect to beneficial ownership is based on information furnished to us by each director, executive officer or stockholder who holds more than 5% of our outstanding Common Stock, and Schedules 13G or 13D filed with the SEC, as the case may be, and includes shares of our Common Stock which each beneficial owner has the right to acquire within 60 days of March 28, 2024. Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all Common Stock beneficially owned by them. We have based our calculation of beneficial ownership on 55,220,077 shares of our Common Stock outstanding as of March 28, 2024. 95 Name and Address of Beneficial Owner (1) Amount and Nature of Beneficial Ownership Percent of Class OrbiMed Israel GP Ltd. (2) 89 Medinat Hayehudim St. Building E Herzliya 4614001 Israel 12,577,821 19.9 % Cystic Fibrosis Foundation (3) 4550 Montgomery Ave. Suite 1100N Bethesda, MD 20814 9,330,580 15.6 % Nimble Ventures, LLC (4) 1 Letterman Drive, Building A, Suite 4900, San Francisco, CA 94129 (2) 4,598,189 8.3 % Deerfield Healthcare Innovations Fund II, L.P. (5) 345 Park Avenue South, 12th Floor, New York, New York 10010 3,055,049 5.5 % Deerfield Private Design Fund V, L.P. (6) 345 Park Avenue South, 12th Floor, New York, New York 10010 3,055,049 5.5 % AMR Action Fund, L.P. (7) 225 Franklin Street, Suite 1750, Boston, MA 02110 3,054,870 5.5 % Telmina Limited (8) 34 Rue de l’athenee, PO Box 393, 1211 Geneva 12, Switzerland 2,839,714 5.1 % Directors and Named Executive Officers Jonathan Solomon (9) 1,167,096 2.1 % Marina Wolfson (10) 98,272 * Dr. Merav Bassan (11) 292,900 * Dr. Russell Greig (12) 102,365 * Dr. Jesse Goodman - - Jonathan Leff - - Gregory Merril - - Dr. Alan Moses (13) 54,650 * Edward L. Williams - - All directors and executive officers as a group (11 persons) 2,027,633 3.7 % * Less than 1%. (1) Unless otherwise indicated, the business address of each of the individuals is c/o BiomX Inc., 22 Einstein St., 4 th Floor, Ness Ziona 7414003, Israel. (2) This stockholder, together with its affiliates and any other persons acting as a group together with the holder or any of the holder’s affiliated, including OrbiMed Israel BioFund GP Limited Partnership, Carl L. Gordon and Erez Chimovits beneficially own 4,517,589 shares of Common Stock and pre-funded warrants to acquire up to 8,060,232 shares of Common Stock. Excludes (x) 4,327 Series X Non-Voting Convertible Preferred Stock, (y) 290,781 Warrants and (y) 1,220,176 Pre-Funded Warrants, and (z) 2,538,500 warrants to purchase Shares. The Warrants and Pre-Funded Warrants each contain an issuance limitation that prohibits the holder from exercising such Warrants or Pre-Funded Warrants to the extent that after giving effect to such issuance after exercise, the holder (together with the holder’s affiliates and any other persons acting as a group together with the holder or any of the holder’s affiliated, including OrbiMed Israel BioFund GP Limited Partnership, Carl L. Gordon and Erez Chimovits) would beneficially own in excess of 19.9% of the Shares outstanding immediately after giving effect to the issuance of the Shares upon exercise of the warrants, or the Beneficial Ownership Limitation . Each share of Series X Preferred Stock is automatically convertible into 1,000 Shares following approval by the Issuer’s stockholders of such conversion, subject to the Beneficial Ownership Limitation. Based on information contained in the Schedule 13D/A filed with the SEC on March 19, 2024 and on the Company’s records. (3) Consists of (i) 4,552,315 shares of Common Stock and (ii) 4,778,265 shares of Common Stock issuable upon exercise of a warrant exercisable within 60 days. Excludes (i) 21,635 shares of Series X Non-Voting Convertible Preferred Stock, and (ii) 10,817,500 shares of common stock issuable upon exercise of a warrant, as the Series X Preferred Stock and such warrant will only become convertible or exercisable, as applicable, following approval by the Company’s stockholders. Each share of Series X Preferred Stock is convertible into 1,000 shares of common stock following approval by the Company’s stockholders of such conversion, subject to a beneficial ownership limitation. Based solely on information contained in a Schedule 13G filed with the SEC on March 26, 2024 and on the Company’s records. (4) Consists of (i) 4,550,000 shares of Common Stock and (ii) warrants to acquire up to 552,041 shares of Common Stock, which contain an issuance limitation that prohibits the holder from exercising the Pre-Funded Warrants to the extent that after giving effect to such issuance after exercise, the holder (together with the holder’s affiliates and any other persons acting as a group together with the holder or any of the holder’s affiliated) would beneficially own in excess of 9.99% of the shares of common stock outstanding immediately after giving effect to the issuance of the shares of common stock issuance upon exercise of the warrants. John H. Burbank III is the control person of Nimble Ventures and, in such capacity, may be deemed to indirectly beneficially own the Shares that Nimble Ventures directly beneficially owns. Based on information contained in the Schedule 13G filed with the SEC on June 23, 2023 and on the Company’s records. (5) Does not include (i) an aggregate of 53,840,000 shares of Common Stock underlying 53,840 shares of Series X Preferred Stock, which will become convertible into Common Stock (subject to a beneficial ownership limitation), if at all, upon the occurrence of certain conditions, or (ii) an aggregate of 20,897,175 shares of Common Stock underlying warrants that will become exercisable for Common Stock (subject to a beneficial ownership limitation), if at all, upon the occurrence of certain conditions. Based solely on information contained in a Schedule 13D filed with the SEC on March 22, 2024 and on the Company’s records. (6) Does not include (i) an aggregate of 53,840,000 shares of Common Stock underlying 53,840 shares of Series X Preferred Stock, which will become convertible into Common Stock (subject to a beneficial ownership limitation), if at all, upon the occurrence of certain conditions, or (ii) an aggregate of 20,897,175 shares of Common Stock underlying warrants that will become exercisable for Common Stock (subject to a beneficial ownership limitation), if at all, upon the occurrence of certain conditions. Based solely on information contained in a Schedule 13D filed with the SEC on March 22, 2024 and on the Company’s records. 96 (7) Does not include (i) an aggregate of 42,337,000 shares of Common Stock underlying 42,337 shares of Series X Preferred Stock, which will become convertible into Common Stock (subject to a beneficial ownership limitation), if at all, upon the occurrence of certain conditions, or (ii) an aggregate of 15,145,647 shares of Common Stock underlying warrants that will become exercisable for Common Stock (subject to a beneficial ownership limitation), if at all, upon the occurrence of certain conditions. Based solely on information contained in a Schedule 13G filed with the SEC on March 25, 2024 and on the Company’s records. (8) Consists of 2,839,714 shares of Common Stock. Based solely on information contained in a Schedule 13G filed with the SEC on September 29, 2023 and on the Company’s records. (9) Consists of 25,000 shares of Common Stock, 25,000 warrants (entitling the holder to acquire up to 18,750 shares of Common Stock), 1,105,444 options that are exercisable and 17,902 additional options that will become exercisable within 60 days of March 28, 2024. (10) Consists of 3,750 shares of Common Stock, 3,750 warrants (entitling the holder to acquire up to 2,813 shares of Common Stock), 84,242 options that are exercisable and 7,467 additional options that will become exercisable within 60 days of March 28, 2024. (11) Consists of 282,966 options that are exercisable and 9,934 additional options that will become exercisable within 60 days of March 28, 2024. (12) Consists of 3,750 shares of Common Stock, 3,750 warrants (entitling the holder to acquire up to 2,813 shares of Common Stock), 91,339 options that are exercisable and 4,463 additional options that will become exercisable within 60 days of March 28, 2024. (13) Consists of 5,000 shares of Common Stock, 5,000 warrants (entitling the holder to acquire up to 3,750 shares of Common Stock), 42,668 options that are exercisable and 3,232 additional options that will become exercisable within 60 days of March 28, 2024. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Director Independence The NYSE American requires that a majority of the Board be composed of “independent directors,” which is defined generally as a person other than an officer or employee of the Company or its subsidiaries or any other individual having a relationship that, as determined by the Board, would interfere with the exercise of his or her objective judgment and will meet the required standards for independence, as established by the applicable rules and regulations of the NYSE American and the SEC. Dr. Russell Greig, Dr. Alan Moses, Mr. Edward L. Williams, Mr. Jonathan Leff, Dr. Jesse Goodman and Mr. Gregory Merril are our independent directors. At least annually, the Board evaluates all relationships between us and each director considering relevant facts and circumstances for the purposes of determining whether a material relationship exists that might signal a potential conflict of interest or otherwise interfere with such director’s ability to satisfy his or her responsibilities as an independent director. Based on this evaluation, our Board will make an annual determination of whether each director is independent within the meaning of NYSE American and the SEC independence standards. Policies and Procedures Regarding Transactions with Related Parties Our Related-Person Transactions Policy requires us to avoid, wherever possible, all related party transactions that could result in actual or potential conflicts of interests, except under guidelines approved by the Board (or the Audit Committee). For as long as the Company qualifies as a “smaller reporting company” as defined under Rule 12b-2 under the Exchange Act, a related-person transaction is defined under our Related-Person Transactions Policy as a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we and any Related Person (as defined in the policy) are, were or will be participants in which the amount involved exceeds the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years, and in which any Related Person had or will have a direct or indirect material interest. If the Company ceases to be a smaller reporting company, a related-person transaction will be defined as a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which the Company and any Related Person are, were or will be participants in which the amount involved exceeds $120,000, and in which any Related Person had or will have a direct or indirect material interest. Transactions involving compensation for services provided to us as an employee, consultant or director are not considered related-person transactions under this policy. 97 In the event that the Company proposes to enter into, or materially amend, a related-person transaction, management of the Company shall present such related-person transaction to the Audit Committee for review, consideration and approval or ratification. The presentation must include, to the extent reasonably available, a description of (a) all of the parties thereto, (b) the interests, direct or indirect, of any Related Person(s) in the transaction in sufficient detail so as to enable the Audit Committee to fully assess such interests, (c) the purpose of the transaction, (d) all of the material facts of the proposed related-person transaction, including the proposed aggregate value of such transaction, or, in the case of indebtedness, the amount of principal that would be involved, (e) the benefits to the Company of the proposed related-person transaction, (f) if applicable, the availability of other sources of comparable products or services, (g) an assessment of whether the proposed related-person transaction is on terms that are comparable to the terms available to or from, as the case may be, unrelated third parties that would have been negotiated at arm’s length, and (h) management’s recommendation with respect to the proposed related-person transaction knowing that there is a potential or actual conflict that will arise of the matter proceeds to fruition. In the event the Audit Committee is asked to consider whether to ratify an ongoing related-person transaction, in addition to the information identified above, the presentation must include (i) a description of the extent of work performed and remaining to be performed in connection with the transaction, (ii) an assessment of the potential risks and costs of termination of the transaction, and (iii) where appropriate, the possibility of modification of the transaction. The Committee, in approving or rejecting the proposed related-person transaction, will consider all the relevant facts and circumstances deemed relevant by and available to the Committee, including but not limited to (a) the risks, costs and benefits to the Company, (b) the impact on a director’s independence in the event the Related Person is a director, immediate family member of a director or an entity with which a director is affiliated, (c) the terms and timing of the transaction, (d) the availability of other sources of comparable services or products, (e) the terms available to or from, as the case may be, unrelated third parties, and (f) how the related-person transaction was realized and communicated to the Audit Committee as required under the Related-Person Transactions Policy. The Audit Committee will approve only those related-person transactions that, in light of known circumstances, are in, or are not inconsistent with, the best interests of the Company and its stockholders, as the Audit Committee determines in the good faith exercise of its discretion. Other th an compensation, termination, change in control and other arrangements, which are described in Item 11 – Executive Compensation and Item 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, our only related-person transactions since January 1, 2023 consisted of (i) a Securities Purchase Agreement we entered into on February 22, 2023 with accredited and non-U.S. investors, including the Cystic Fibrosis Foundation, or CFF, OrbiMed Israel GP Ltd., or Orbimed, and Nimble Ventures LLC our stockholders, each of which holding more than 5% of our outstanding Common Stock, relating to a private placement of an aggregate of 15,997,448 shares of our Common Stock and 14,610,714 pre-funded warrants, at a purchase price of $0.245 per Share and $0.244 per pre-funded warrant. The gross proceeds from this offering are approximately $7.4 million, before deducting issuance costs. The pre-funded warrants became exercisable on May 4, 2023, at an exercise price of $0.001 per share of Common Stock and have no expiration date. Of these proceeds, an aggregate of 3,385,000 shares of Common Stock and 4,778,265 pre-funded warrants were sold to CF for gross proceeds of $2 million, an aggregate of 1,740,000 shares of Common Stock and 9,280,408 pre-funded warrants were sold to Orbimed for gross proceeds of $2.7 million and an aggregate of 4,550,000 shares of Common Stock and 552,041 pre-funded warrants were sold to Nimble Venture LLC for gross proceeds of $1.25 million and (ii) a Securities Purchase Agreement we entered into on March 6, 2024 with certain investors, including CFF, Orbimed and Telmina Limited, or Telmina, our stockholders, each of which hold more than 5% of our outstanding Common Stock, pursuant to which we sold an aggregate of 216,417 shares of Convertible Preferred Stock and Private Placement Warrants to purchase up to an aggregate of 108,208,500 shares of Common Stock, at a combined purchase price of $231.10 per share of Series X Preferred Stock and accompanying Private Placement Warrant. The aggregate gross proceeds from this offering were approximately $50 million. The Private Placement Warrants may be exercised at any time following stockholder approval of the conversion of all issued and outstanding Series X Preferred Stock and the exercise of all Private Placement Warrants in accordance with the listing rules of NYSE American, which we are obligated to bring to the stockholders vote by no later than August 12, 2024, will have an exercise price of $0.2311 and expire on the 24-month anniversary of the date on which they are first exercisable. The exercise price of the Private Placement Warrants is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like. Of these proceeds, an aggregate of 21,635 shares of Convertible Preferred Stock and 10,817,500 Private Placement Warrants were sold to CFF for gross proceeds of $5 million, an aggregate of 4,327 shares of Convertible Preferred Stock and 2,163,500 Private Placement Warrants were sold to Orbimed for gross proceeds of $1 million and an aggregate of 2,596 shares of Convertible Preferred Stock and 1,298,000 Private Placement Warrants were sold to Telmina for gross proceeds of $0.6 million. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The following is a summary and description of fees billed by us to Kesselman & Kesselman, Certified Public Accountants (Isr.) for the fiscal years ended December 31, 2023 and December 31, 2022. Fiscal year ended December 31, 2023 Fiscal year ended December 31, 2022 Audit fees (1) $ 126,000 $ 126,000 Audit-related fees (2) $ 97,000 $ 24,969 Tax fees (3) $ 3,393 $ - All other fees $ - $ - Total fees $ 226,393 $ 150,969 (1) Audit Fees include fees for professional services rendered for the quarterly reviews of the interim consolidated financial statements and the annual audit of our consolidated financial statements included in our Annual Report on Form 10-K. (2) Audit-Related Fees include fees for services that were reasonably related to the performance of the audit of the annual consolidated financial statements for the fiscal year, other than Audit Fees, such as for services in connection with the Sale Agreement, our February 2023 PIPE and a registration statement filed for the re-sale of certain shares of Common Stock by selling stockholders. (3) Tax Fees include fees for tax compliance and tax advice. 98 Pre-Approval Policies and Procedures The Audit Committee approves all audit and pre-approves all non-audit services provided by our independent registered public accounting firm before it is engaged by us to render non-audit services. These services may include audit-related services, tax services and other services. The pre-approval requirement set forth above does not apply with respect to non-audit services if: ● all such services do not, in the aggregate, amount to more than 5% of the total fees paid by us to our independent registered public accounting firm during the fiscal year in which the services are provided; ● such services were not recognized as non-audit services at the time of the relevant engagement; and ● such services are promptly brought to the attention of and approved by the Audit Committee (or its delegate) prior to the completion of the annual audit. Pre-Approval Policies and Procedures The Audit Committee approves all audit and pre-approves all non-audit services provided by our independent registered public accounting firm before it is engaged by us to render non-audit services. These services may include audit-related services, tax services and other services. The pre-approval requirement set forth above does not apply with respect to non-audit services if: ● all such services do not, in the aggregate, amount to more than 5% of the total fees paid by us to our independent registered public accounting firm during the fiscal year in which the services are provided; ● such services were not recognized as non-audit services at the time of the relevant engagement; and ● such services are promptly brought to the attention of and approved by the Audit Committee (or its delegate) prior to the completion of the annual audit. 99 part IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) The following are filed with this Annual Report: (1) The financial statements listed on the Financial Statements’ Table of Contents (2) Not applicable (b) Exhibits The following exhibits are filed as part of this Annual Report or are incorporated by reference. EXHIBIT INDEX Exhibit Description 2.1* Agreement and Plan of Merger, dated March 6, 2024, by and among BiomX Inc., BTX Merger Sub I, Inc., BTX Merger Sub II, LLC and Adaptive Phage Therapeutics, Inc. (Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed by the Company on March 6, 2024) 3.1 Composite Copy of Amended and Restated Certificate of Incorporation of the Company, effective on December 11, 2018, as amended to date. (Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed by the Company on November 9, 2022) 3.2 Amended and Restated Bylaws of the Company, effective as of October 28, 2019 (Incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed by the Company on November 1, 2019) 3.3 Form of Certificate of Designation of Series X Preferred Stock (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed by the Company on March 6, 2024) 4.1*** Description of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended 4.2 Specimen Unit Certificate (Incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1 filed by the Company on December 4, 2018) 4.3 Specimen Common Stock Certificate (Incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-1 filed by the Company on December 4, 2018) 4.4 Specimen Warrant Certificate (Incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-1 filed by the Company on December 4, 2018) 4.5 Warrant Agreement, dated December 13, 2018 between Continental Stock Transfer & Trust Company and the Company (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed by the Company on December 18, 2018) 4.6 Form of Warrant. (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed by the Company on July 26, 2021) 4.7 Form of Pre-Funded Warrant. (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed by the Company on February 27, 2023) 4.8 Form of Merger Warrant (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed by the Company on March 6, 2024) 4.9 Form of Private Placement Warrant (Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed by the Company on March 6, 2024) 4.10 Form of Placement Agent Warrant (Incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed by the Company on March 6, 2024) 4.11 Form of Warrant (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed by the Company on March 18, 2024) 10.1** Chardan Healthcare Acquisition Corp. 2019 Omnibus Long-Term Incentive Plan, as amended (Incorporated by reference to Annex A to the Company’s Definitive Proxy Statement on Schedule 14A filed by the Company on July 28, 2023) 10.2 Registration Rights Agreement dated October 28, 2019 (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed by the Company on November 1, 2019) 10.3**, *** Form of Indemnification Agreement 10.4* Research and License Agreement, dated June 22, 2015, between BiomX Ltd. and Yeda Research and Development Company Limited, as amended (Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed by the Company on November 1, 2019) 10.8** 2015 Employee Stock Option Plan, as amended (Incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8 filed by the Company on January 2, 2020) 10.9 Registration Rights Agreement, dated December 13, 2018, among the Company and the initial stockholders and Chardan Capital Markets, LLC. (Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed by the Company on December 18, 2018) 10.10** Form of Non-Qualified Stock Option Agreement (U.S. Awards to Non-Executives) (Incorporated by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K filed by the Company on March 26, 2020) 10.11** Form of Non-Qualified Stock Option Agreement (U.S. Awards to Executive Officers) (Incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K filed by the Company on March 26, 2020) 10.12** Form of Option Agreement (Israeli Awards) (Incorporated by reference to Exhibit 10.21 to the Company’s Annual Report on Form 10-K filed by the Company on March 26, 2020) 10.13* An addendum to a lease agreement dated from May 25, 2017, dated September 7, 2020 by and among AFI Assets Ltd., AF – SHAR Ltd., WIS and BiomX Ltd. (translated from Hebrew) (Incorporated by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K filed by the Company on March 31, 2021) 100 10.14* Lease agreement dated September 7, 2020 by and among AFI Assets Ltd., AF – SHAR Ltd., WIS, Nova Measuring Systems Ltd. and BiomX Ltd. (translated from Hebrew) (Incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K filed by the Company on March 31, 2021) 10.15 Open Market Sale Agreement SM , dated December 4, 2020, between the Company and Jefferies LLC (incorporated by reference to Exhibit 1.2 of the Company’s Registration Statement on Form S-3 filed by the Company on December 4, 2020). 10.17** Employment Agreement, dated February 1, 2016, between BiomX Ltd. (formerly MBcure Ltd.) and Jonathan Solomon (Incorporated by reference to Exhibit 10.1 to the Company’s Amended Annual Report on Form 10-K/A filed by the Company on May 2, 2022) 10.18** Employment Agreement, dated August 26, 2019, between BiomX Ltd. and Merav Bassan (Incorporated by reference to Exhibit 10.2 to the Company’s Amended Annual Report on Form 10-K/A filed by the Company on May 2, 2022) 10.19** Employment Agreement, dated January 1, 2017, between BiomX Ltd. (formerly MBcure Ltd.) and Assaf Oron. (Incorporated by reference to Exhibit 10.3 to the Company’s Amended Annual Report on Form 10-K/A filed by the Company on May 2, 2022) 10.20 Form of Securities Purchase Agreement dated February 22, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed by the Company on February 22, 2023) 10.21 Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed by the Company on February 22, 2023) 10.22*,*** Exclusive License between Adaptive Phage Therapeutics, Inc. and United States of America, as represented by the Secretary of the Navy, dated March 16, 2017 10.23* ,*** First Amendment, dated January 10, 2019, to Exclusive License between Adaptive Phage Therapeutics, Inc. and United States of America, as represented by the Secretary of the Navy 10.24* ,*** Non-Exclusive License Agreement by and between Adaptive Phage Therapeutics, Inc. and Walter Reed Army Institute of Research, dated August 24, 2021 10.25 *** License Modification 1, dated August 31, 2022, to Non-Exclusive License Agreement by and between Adaptive Phage Therapeutics, Inc. and Walter Reed Army Institute of Research 10.26 Securities Purchase Agreement, dated as of March 6, 2024, by and among BiomX Inc. and each purchaser identified on Annex A thereto (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed by the Company on March 6, 2024) 10.27 Form of Registration Rights Agreement, dated as of March 6, 2024, by and among the Company and certain purchasers (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed by the Company on March 6, 2024) 10.28*,*** Lease Agreement, dated as of August 9, 2019, by and between ARE-708 Quince Orchard, LLC and Adaptive Phage Therapeutics, Inc. 10.29*,*** Amendment No. 1, dated as of October 28, 2020, to Lease Agreement by and between ARE-708 Quince Orchard, LLC and Adaptive Phage Therapeutics, Inc. 10.30*,*** Amendment No. 2, dated as of July 8, 2021, to Lease Agreement by and between ARE-708 Quince Orchard, LLC and Adaptive Phage Therapeutics, Inc. 10.31*,*** Amendment No. 3, dated as of July 15, 2021, to Lease Agreement by and between ARE-708 Quince Orchard, LLC and Adaptive Phage Therapeutics, Inc. 10.32*,*** Amendment No. 4, dated as of September 27, 2022, to Lease Agreement by and between ARE-708 Quince Orchard, LLC and Adaptive Phage Therapeutics, Inc. 10.33*,*** Amendment No. 5, dated as of February 2, 2023, to Lease Agreement by and between ARE-708 Quince Orchard, LLC and Adaptive Phage Therapeutics, Inc. 10.34*,*** Amendment No. 6, dated as of March 5, 2024, to Lease Agreement by and between ARE-708 Quince Orchard, LLC and Adaptive Phage Therapeutics, Inc. 21.1*** Subsidiaries of Company 23.1*** Consent of Kesselman & Kesselman, Certified Public Accountants (Isr.), a member firm of PricewaterhouseCoopers International Limited 31.1*** Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a). 31.2*** Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a). 32.1**** Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350. 97.1*** Clawback Policy 99.1*** Resolutions of Board of Directors Ratifying Stock Issuance 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) * Portions of this exhibit have been omitted pursuant to Rule 601(b)(10) of Regulation S-K. The omitted information is not material and would likely cause competitive harm to the Company if publicly disclosed. ** Indicates a management contract or a compensatory plan or agreement. *** Filed herewith. **** Furnished herewith. Item 16. Form 10-K Summary None. 101 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized. BIOMX INC. Dated: April 3, 2024 By: /s/ Jonathan Solomon Name: Jonathan Solomon Title: Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated. Signature Title Date /s/ Jonathan Solomon Chief Executive Officer April 3, 2024 Jonathan Solomon (Principal Executive Officer) and Director /s/ Avraham Gabay Interim Chief Financial Officer April 3, 2024 Avraham Gabay (Principal Financial Officer and Principal Accounting Officer) /s/ Russell Greig Chairman of the Board of Directors April 3, 2024 Dr. Russell Greig /s/ Jesse Goodman Director April 3, 2024 Dr. Jesse Goodman /s/ Jonathan Leff Director April 3, 2024 Jonathan Leff /s/ Gregory Merril Director April 3, 2024 Gregory Merril /s/ Alan Moses Director April 3, 2024 Dr. Alan Moses /s/ Eddie Williams Director April 3, 2024 Eddie Williams 102 BIOMX INC. CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2023 CONTENTS Page REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB name: Kesselman & Kesselman C.P.A.s , PCAOB ID: 1309 ) F-2 CONSOLIDATED FINANCIAL STATEMENTS: Consolidated Balance Sheets F-3 - F-4 Consolidated Statements of Operations F-5 Consolidated Statements of Changes in Stockholders’ Equity F-6 Consolidated Statements of Cash Flows F-7 - F-8 Notes to the Consolidated Financial Statements F-9 - F-34 F- 1 Report of Independent Registered Public Accounting Firm To the Board of Directors and stockholders of BiomX Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of BiomX Inc. and its subsidiaries (the “Company”) as of December 31, 2023 and 2022 and the related consolidated statements of operations, changes in stockholders' equity and cash flows for each of the two years in the period ended December 31, 2023, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022 and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United States of America. Substantial Doubt about the Company’s Ability to Continue as a Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1C to the consolidated financial statements, the Company has incurred significant losses and negative cash flows from operations, incurred an accumulated deficit, and has stated that these events or conditions raise substantial doubt on the Company’s ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1C. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. We determined there are no critical audit matters. /s/ Kesselman & Kesselman Certified Public Accountants (Isr.) A member of PricewaterhouseCoopers International Limited Tel-Aviv, Israel April 3, 2024 We have served as the Company's auditor since 2021. F- 2 BIOMX INC. CONSOLIDATED BALANCE SHEETS (USD in thousands, except share and per share data) As of December 31, 2023 2022 ASSETS Current assets Cash and cash equivalents 14,907 31,332 Restricted cash 957 962 Short-term deposits - 2,000 Other current assets 1,768 2,587 Total current assets 17,632 36,881 Non-current assets Operating lease right-of-use assets 3,495 3,860 Property and equipment, net 3,902 4,790 Total non-current assets 7,397 8,650 25,029 45,531 The accompanying notes are an integral part of the consolidated financial statements. F- 3 BIOMX INC. CONSOLIDATED BALANCE SHEETS (USD in thousands, except share and per share data) As of December 31, 2023 2022 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Trade account payables 1,381 820 Current portion of lease liabilities 666 687 Other account payables 3,344 2,150 Current portion of long-term debt 5,785 4,282 Total current liabilities 11,176 7,939 Non-current liabilities Contract liability 1,976 1,976 Long-term debt, net of current portion 5,402 10,591 Operating lease liabilities, net of current portion 3,239 3,798 Other liabilities 155 188 Total non-current liabilities 10,772 16,553 Commitments and Contingencies (Note 10) Stockholders’ equity Preferred Stock, $ 0.0001 par value; Authorized - 1,000,000 shares as of December 31, 2023 and December 31, 2022. No shares issued and outstanding as of December 31, 2023 and December 31, 2022. - - Common stock, $ 0.0001 par value (“Common Stock”); Authorized - 120,000,000 shares as of December 31, 2023 and December 31, 2022. Issued – 45,979,930 and 29,982,282 as of December 31, 2023 and 2022, respectively. Outstanding – 45,979,930 and 29,976,582 as of December 31, 2023 and 2022, respectively. 3 2 Additional paid in capital 166,048 157,838 Accumulated deficit ( 162,970 ) ( 136,801 ) Total Stockholders’ equity 3,081 21,039 25,029 45,531 The accompanying notes are an integral part of the consolidated financial statements. F- 4 BIOMX INC. CONSOLIDATED STATEMENTS OF OPERATIONS (USD in thousands, except share and per share data) Year ended December 31, 2023 2022 Research and development (“R&D”) expenses, net 16,698 16,244 Amortization of intangible assets - 1,519 General and administrative expenses 8,650 9,456 Operating loss 25,348 27,219 Other income ( 357 ) ( 134 ) Interest expenses 2,404 2,069 Finance income, net ( 1,249 ) ( 902 ) Loss before tax 26,146 28,252 Tax expenses 23 65 Net Loss 26,169 28,317 Basic and diluted loss per share of Common Stock 0.51 0.95 Weighted average number of shares of Common Stock outstanding, basic and diluted 51,330,324 29,854,003 The accompanying notes are an integral part of the consolidated financial statements. F- 5 BIOMX INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (USD in thousands, except share and per share data) Common stock Additional paid in Accumulated Total Stockholder’ Shares Amount capital deficit equity Balance as of December 31, 2021 29,747,538 2 156,017 ( 108,484 ) 47,535 Issuance of Common Stock under Open Market Sales Agreement net of $ 8 issuance costs (**) 229,044 * 273 - 273 Stock-based compensation expenses - - 1,529 - 1,529 Proceeds on account of shares (***) - - 19 - 19 Net loss - - - ( 28,317 ) ( 28,317 ) Balance as of December 31, 2022 29,976,582 2 157,838 ( 136,801 ) 21,039 Issuance of Common Stock and warrants under Private Investment in Public Equity (“PIPE”), net of $ 333 issuance costs (**) 15,997,448 1 7,151 - 7,152 Reissuance of treasury stock (***) 5,700 - - - - Stock-based compensation expenses - - 1,059 - 1,059 Issuance of Common Stock under Open Market Sales Agreement (**) 200 * * - * Net loss - - - ( 26,169 ) ( 26,169 ) Balance as of December 31, 2023 45,979,930 3 166,048 ( 162,970 ) 3,081 (*) Less than $1. (**) See note 12A. (***) See note 9A. The accompanying notes are an integral part of the consolidated financial statements. F- 6 BIOMX INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (USD in thousands, except share and per share data) Year ended December 31, 2023 2022 CASH FLOWS – OPERATING ACTIVITIES Net loss ( 26,169 ) ( 28,317 ) Adjustments required to reconcile net loss to cash flows used in operating activities Depreciation and amortization 871 2,520 Stock-based compensation 1,059 1,529 Amortization of debt issuance costs 567 463 Finance income, net ( 128 ) ( 842 ) Changes in other liabilities ( 33 ) ( 27 ) Capital loss, net 71 10 Changes in operating assets and liabilities: Other current assets 819 956 Trade account payables 556 ( 1,975 ) Other account payables 1,194 ( 3,303 ) Net change in operating leases ( 93 ) ( 106 ) Net cash used in operating activities ( 21,286 ) ( 29,092 ) CASH FLOWS – INVESTING ACTIVITIES Investment in short-term deposits - ( 13,500 ) Proceeds from short -term deposits 2,000 11,500 Purchase of property and equipment ( 50 ) ( 112 ) Proceeds from sale of property and equipment 1 5 Net cash provided by (used in) investing activities 1,951 ( 2,107 ) CASH FLOWS – FINANCING ACTIVITIES Issuance of Common Stock under Open Market Sales Agreement, net of issuance costs - 273 Issuance of Common Stock and warrants under PIPE 7,485 - Issuance costs from PIPE ( 333 ) - Repayment of long-term debt ( 4,253 ) - Proceeds on account of shares - 19 Net cash provided by financing activities 2,899 292 Decrease in cash and cash equivalents and restricted cash ( 16,436 ) ( 30,907 ) Effect of exchange rate changes on cash and cash equivalents and restricted cash 6 106 Cash and cash equivalents and restricted cash at the beginning of the year 32,294 63,095 Cash and cash equivalents and restricted cash at the end of the year 15,864 32,294 The accompanying notes are an integral part of the consolidated financial statements. F- 7 BIOMX INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (USD in thousands, except share and per share data) Year ended December 31, 2023 2022 RECONCILIATION OF AMOUNTS ON CONSOLIDATED BALANCE SHEETS: Cash and cash equivalents 14,907 31,332 Restricted cash 957 962 Total cash and cash equivalents and restricted cash 15,864 32,294 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest 1,873 1,554 Taxes paid 54 65 SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES: Property and equipment purchases included in accounts payable 5 - The accompanying notes are an integral part of the consolidated financial statements. F- 8 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 1 - GENERAL A. General information: BiomX Inc., (individually, and together with its subsidiaries, BiomX Ltd. and RondinX Ltd., the “Company” or “BiomX”) was incorporated as a blank check company on November 1, 2017 , under the laws of the state of Delaware, for the purpose of entering into a merger, stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities. On October 29, 2019, the Company merged with BiomX Israel, who survived the merger as a wholly owned subsidiary of BiomX Inc. The Company acquired all outstanding shares of BiomX Israel. In exchange, shareholders of BiomX Israel received 15,069,058 shares of the Company’s Common Stock, representing 65 % of the total shares issued and outstanding after the acquisition (“Recapitalization Transaction”). BiomX Israel was deemed the “accounting acquirer” due to the largest ownership interest in the Company. The Company’s shares of Common Stock, units, and warrants are traded on the NYSE American under the symbols PHGE, PHGE.U, and PHGE.WS, respectively. On February 6, 2020, the Company’s Common Stock also began trading on the Tel-Aviv Stock Exchange. On July 6, 2022, the Company announced a voluntary delisting of its shares of Common Stock from the Tel-Aviv Stock Exchange which became effective on October 6, 2022. BiomX is developing both natural and engineered phage cocktails designed to target and destroy harmful bacteria in chronic diseases, focusing its efforts at this point on cystic fibrosis and to a lesser degree on atopic dermatitis. BiomX discovers and validates proprietary bacterial targets and customizes phage compositions against these targets. The Company’s headquarters are located in Ness Ziona, Israel. On March 6, 2024, the Company entered into an agreement and plan of merger (the “Merger Agreement”) with Adaptive Phage Therapeutics Inc., a Delaware corporation (“APT”), and certain other parties, as a result of which APT became a wholly-owned subsidiary of the Company (the “Acquisition”). See note 1D for further information regarding the Acquisition. B. Israel-Hamas war On October 7, 2023, an unprecedented attack was launched against Israel by terrorists from the Hamas terrorist organization that infiltrated Israel’s southern border from the Gaza Strip and in other areas within the state of Israel attacking civilians and military targets while simultaneously launching extensive rocket attacks on the Israeli population. These attacks resulted in extensive deaths, injuries and kidnapping of civilians and soldiers. In response, the Security Cabinet of the State of Israel declared war against Hamas and a military campaign against these terrorist organizations commenced in parallel to their continued rocket and terror attacks. In addition, Hezbollah, an Islamist terrorist group that controls large portions of southern Lebanon, has attacked military and civilian targets in Northern Israel, to which Israel has responded. To date, the State of Israel continues to be at war with Hamas and on an armed conflicts with Hezbollah . BiomX headquarters and principal offices and most of its operations are located in the State of Israel. In addition, all of the key employees and officers are residents of Israel. Accordingly, political, economic and military conditions in Israel and the surrounding region may directly affect its business. While a few employees of the Company were called to reserve duty in the Israel Defense Forces, the ongoing war with Hamas has not, since its inception, materially impacted BiomX business or operations. Furthermore, BiomX does not expect any delays to its programs as a result of the situation. However, at this time, it is not possible to predict the intensity or duration of Israel’s war against Hamas, nor predict how this war will ultimately affect BiomX business and operations or Israel’s economy in general. F- 9 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 1 - GENERAL (Cont.) C. Going concern The Company has incurred significant losses and negative cash flows from operations and incurred an accumulated deficit of $ 162,970 as of December 31, 2023. The Company expects to continue to incur additional losses and negative cash flows from operations for the foreseeable future. The Company plans to continue to fund its current operations, as well as other development activities relating to additional product candidates, through future issuances of debt and/or equity securities, loans and possibly additional grants from the Israel Innovation Authority (“IIA”) (see note 10A) and other government institutions. The Company’s ability to raise additional capital in the equity and debt markets is dependent on a number of factors including, but not limited to, the market demand for the Company’s Common Stock, which itself is subject to a number of development and business risks and uncertainties, as well as the uncertainty that the Company would be able to raise such additional capital at a price or on terms that are favorable to it. If the Company is unable to raise capital when needed or on attractive terms, it may be forced to delay or reduce its research and development programs. Subsequent to December 31, 2023, the Company raised approximately $ 50 million in a private placement in March 2024 (the “March 2024 PIPE”). Management believes that its available funds as of the issuance date of the financial statements, which includes the funds received under the March 2024 PIPE, will be sufficient to fund its operations for at least one year from the issuance date of these financial statements. However, the conversion of the Series X Non-Voting Convertible Preferred Stock (as defined below) that was issued in connection with the March 2024 PIPE and the Acquisition is subject to stockholder approval and there is no assurance that such approval will be received. If such approval is not received, the Company may be required to redeem the Convertible Preferred Stock at its fair value. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements have been prepared on a going concern basis and do not include any adjustments that may result from the outcome of such circumstances. D. Merger Agreement On March 6, 2024, the Company, entered into the Merger Agreement with BTX Merger Sub I, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“First Merger Sub”), BTX Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Second Merger Sub”), and APT. Pursuant to the Merger Agreement, First Merger Sub merged with and into APT, with APT being the surviving corporation and becoming a wholly owned subsidiary of the Company (the “First Merger”). Immediately following the First Merger, APT merged with and into Second Merger Sub, pursuant to which Second Merger Sub was the surviving entity (together with the First Merger, the “Acquisition”). The Acquisition is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes. On March 15, 2024, the effective time of the Acquisition, APT’s former stockholders were issued an aggregate of 9,164,968 shares of the Company’s Common Stock, 40,470 shares of the Company’s Series X non-voting convertible preferred stock, par value $ 0.0001 per share (“Convertible Preferred Stock”) and Warrants to purchase up to an aggregate of 2,166,497 shares of the Company Common stock (“Merger Warrants”). Each share of Convertible Preferred Stock is convertible into an aggregate of 1,000 shares of Common Stock. The Merger Warrants will be exercisable at any time after the date of the receipt of BiomX stockholder approval at an exercise price of $ 5.00 per share and will expire on January 28, 2027. In the event the Convertible Preferred Stock is not converted by the earlier to occur of (i) the time that BiomX Stockholders’ Meeting is ultimately concluded or (ii) 150 days after the initial issuance of the Convertible Preferred Stock, the Company may be required to pay to each holder of the Convertible Preferred Stock an amount in cash equal to the fair value of the shares of Convertible Preferred Stock. Concurrently with the consummation of the Acquisition, the Company entered into a securities purchase agreement with certain investors, pursuant to which such investors purchased an aggregate of 216,417 shares of Convertible Preferred Stock (“PIPE Preferred Shares”) and Private Placement Warrants to purchase up to an aggregate of 108,208,500 shares of the Company’s Common stock (“Private Placement Warrants”), at a combined price of $ 231.10 per share. The PIPE Preferred Shares and the Private Placement Warrants were issued in a private placement pursuant to an exemption from registration requirements under the Securities Act for aggregate gross proceeds of $ 50 million. Immediately following the Acquisition, and without taking into account the PIPE Preferred Shares and the Private Placement Warrants, the Company’s stockholders prior to the Acquisition owned approximate 55 % the Company and APT’s stockholders prior to the Acquisition owned approximately 45 % of the Company. F- 10 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 1 - GENERAL (Cont.) D. Merger Agreement (Cont.) The Acquisition will be accounted in accordance with Accounting Standards Codification Topic 805, “Business Combinations,” using the acquisition method of accounting. The Company was identified as the accounting acquirer, based on the evaluation of the following facts and circumstances: ● Pursuant to the Merger Agreement, the post-Acquisition board of directors of the Company consists of seven directors, out of which the Company designated four board seats, with the Company’s chair of the board prior to the Acquisition continuing in his position, i.e. the majority of the post-closing board was designated by the Company. ● The Chief Executive Officer and the majority of management roles are held by individuals who were affiliated with the Company prior to the Acquisition. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies applied in the preparation of the financial statements on a consistent basis, are as follows, except for the adoption of new accounting standards: A. Basis of presentation and principles of consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and include the accounts of the Company and its wholly owned subsidiaries, BiomX Israel and RondinX Ltd. All intercompany accounts and transactions have been eliminated in consolidation. B. Use of estimates in the preparation of financial statements The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities in the financial statements and the amounts of expenses during the reported years. The most significant estimates in the Company’s financial statements relate to accruals for research and development expenses and valuation of stock-based compensation awards. These estimates and assumptions are based on current facts, future expectations, and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. The full extent to which the Israel-Hamas war may directly or indirectly impact the Company’s business, results of operations and financial condition will depend on future developments that are uncertain, as well as the economic impact on local, regional, national and international markets. C. Functional currency and foreign currency translation The functional currency of the Company is the U.S. dollar (“USD”) since the dollar is the currency of the primary economic environment in which the Company has operated and expects to continue to operate in the foreseeable future. Transactions and balances originally denominated USD are presented at their original amounts. Balances in non-USD currencies are translated into USDs using historical and current exchange rates for non-monetary and monetary balances, respectively. For non-USD transactions and other items in the statements of income (indicated below), the following exchange rates are used: (i) for transactions – exchange rates at transaction dates or average exchange rates; and (ii) for other items (derived from non-monetary balance sheet items such as depreciation and amortization) – historical exchange rates. Currency transaction gains and losses are presented in finance income, net as appropriate. D. Cash and cash equivalents and restricted cash The Company considers cash equivalents to be all short-term, highly liquid investments, which include money market funds, that are not restricted as to withdrawal or use, and short-term bank deposits with original maturities of three months or less from the date of purchase that are not restricted as to withdrawal or use and are readily convertible to known amounts of cash. Restricted cash consists of funds that are contractually restricted to a credit line for outstanding short-term foreign exchange contracts and bank guarantee due to rental agreements. The Company has presented restricted cash separately from cash and cash equivalents in the consolidated balance sheets. The Company includes its restricted bank deposits in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the combined statement of cash flows. F- 11 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.) E. Concentrations of credit risk Financial instruments which potentially subject us to credit risk consist primarily of cash, cash equivalents, and short-term deposits. These amounts at times may exceed federally insured limits. We have not experienced any credit losses in such accounts and do not believe we are exposed to any significant credit risk on these funds. Most of the Company’s cash and cash equivalents and bank deposits are invested in major banks in the U.S. and Israel. Management believes that the credit risk with respect to the financial institutions that hold the Company’s cash and cash equivalents and bank deposits is low. Refer to note 2J. F. Property and equipment Property and equipment are presented at cost less accumulated depreciation. Depreciation is calculated based on the straight-line method over the estimated useful lives of the related assets or terms of the related leases, as follows: Estimated Useful Lives Laboratory equipment 7 years Computers and software 3 years Equipment and furniture 15 years Leasehold improvements Shorter of lease term or useful life G. Long-lived assets In accordance with ASC 360-10, “Impairment and Disposal of Long-Lived Assets”, management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable based on estimated future undiscounted cash flows. If so indicated, an impairment loss would be recognized for the difference between the carrying amount of the asset and its fair value. For the years ended December 31, 2023 and 2022, no impairment expenses were recorded. H. Income taxes The Company accounts for income taxes using the asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all the deferred tax assets will not be realized. As of December 31, 2023 and 2022, the Company had a full valuation allowance against deferred tax assets. The Company is subject to the provisions of ASC 740-10-25, “Income Taxes” (“ASC 740”). ASC 740 prescribes a more likely-than-not threshold for the financial statement recognition of uncertain tax positions. ASC 740 clarifies the accounting for income taxes by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. On a yearly basis, the Company undergoes a process to evaluate whether income tax accruals are in accordance with ASC 740 guidance on uncertain tax positions. The Company has not recorded any liability for uncertain tax positions for the years ended December 31, 2023 and 2022. The Company presents unrecognized tax benefits as a reduction to deferred tax asset where a net operating loss, a similar tax loss, or a tax credit carryforward that are available, under the tax law of the applicable jurisdiction, to offset any additional income taxes that would result from the settlement of a tax position. I. Derivative activity The Company uses foreign exchange contracts (option and forward contracts) to hedge cash flows from currency exposure. These foreign exchange contracts are not designated as hedging instruments for accounting purposes. In connection with these foreign exchange contracts, the Company recognizes gains or losses that offset the revaluation of the cash flows also recorded under financial expenses (income), net in the consolidated statements of operations. As of December 31, 2023, the Company had outstanding short-term foreign exchange contracts for the exchange of USD to NIS in the amount of approximately $ 4,136 with a fair value asset of $ 256 . As of December 31, 2022, the Company had outstanding short-term foreign exchange contracts for the exchange of USD to NIS in the amount of approximately $ 4,547 with a fair value liability of $ 55 . F- 12 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.) J. Fair value of financial instruments The Company accounts for financial instruments in accordance with ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”). ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC 820 are described below: Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 – Quoted prices in non-active markets or in active markets for similar assets or liabilities, observable inputs other than quoted prices, and inputs that are not directly observable but are corroborated by observable market data. Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. There were no changes in the fair value hierarchy levelling during the years ended December 31, 2023 and 2022. The following table summarizes the fair value of our financial assets and liabilities that were accounted for at fair value on a recurring basis, by level within the fair value hierarchy: December 31, 2023 Level 1 Level 2 Level 3 Fair Value Assets: Cash equivalents: Money market funds 11,377 - - 11,377 Foreign exchange contracts receivable - 256 - 256 11,377 256 - 11,633 Liabilities: Contingent consideration - - 155 155 - - 155 155 December 31, 2022 Level 1 Level 2 Level 3 Fair Value Assets: Cash equivalents: Money market funds 27,824 - - 27,824 27,824 - - 27,824 Liabilities: Contingent consideration - - 148 148 Foreign exchange contracts payable - 55 - 55 - 55 148 203 F- 13 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.) J. Fair value of financial instruments (Cont.) Financial instruments with carrying values approximating fair value include cash and cash equivalents, restricted cash, short-term deposits, other current assets, trade accounts payable and other current liabilities, due to their short-term nature. The Company determined the fair value of the liabilities for the contingent consideration based on a probability discounted cash flow analysis. This fair value measurement is based on significant unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy. The fair value of the contingent consideration is based on several factors, such as: the attainment of future clinical, developmental, regulatory, commercial and strategic milestones relating to product candidates for treatment of primary sclerosing cholangitis. The discount rate applied ranged from 2.4 % to 4.6 %. The contingent consideration is evaluated quarterly, or more frequently, if circumstances dictate. Changes in the fair value of contingent consideration are recorded in consolidated statements of operations. Significant changes in unobservable inputs, mainly the probability of success and cash flows projected, could result in material changes to the contingent consideration liability. Changes in contingent consideration for the years ended December 31, 2023 and 2022 resulted from the passage of time and discount rate revaluation. K. Defined contribution plans Under Israeli employment laws, employees of BiomX Israel are included under Section 14 of the Severance Compensation Act, 1963 (“Section 14”) for a portion of their salaries. Pursuant to Section 14, these employees are entitled to monthly deposits made by the Company on their behalf with insurance companies. Payments in accordance with Section 14 release the Company from any future severance payments (under the Israeli Severance Compensation Act, 1963) with respect of those employees. The aforementioned deposits are not recorded as an asset on the Company’s balance sheet, and there is no liability recorded as the Company does not have a future obligation to make any additional payments. The Company’s contributions to the defined contribution plans are charged to the consolidated statements of operations as and when the services are received from the Company’s employees. Total expenses with respect to these contributions were $ 426 and $ 562 for the years ended December 31, 2023 and 2022, respectively. The Company expects to contribute approximately $ 400 in the year ending December 31, 2024 to insurance companies in connection with its expected severance liabilities for the year. For U.S. employees the Company has a defined contribution savings plan under Section 401(k) of the Internal Revenue Code. This plan covers substantially all employees of BiomX Inc in the U.S. who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. The Company has not elected to match any of the employee’s deferral. During the years ended December 31, 2023 and 2022 the Company did not record any expenses for 401(k) match contributions. L. Financial instruments When the Company issues freestanding instruments, it first analyzes the provisions of ASC 480, “Distinguishing Liabilities From Equity” (“ASC 480”) in order to determine whether the instrument should be classified as a liability, with subsequent changes in fair value recognized in the consolidated statements of operations in each period. If the instrument is not within the scope of ASC 480, the Company further analyzes the provisions of ASC 815-10 in order to determine whether the instrument is considered indexed to the entity’s own stock and qualifies for classification within equity. All warrants issued by the Company are classified within stockholders’ equity as “Additional paid-in capital”. Equity classification is permitted when warrants are indexed to the Company’s own shares and meet the classification requirements for stockholders’ equity classification of ASC 815-40,”Contracts in Entity’s Own Equity” (“ASC 815-40”). F- 14 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.) M. Research and development costs Research and development costs are charged to statements of operations as incurred. Royalty-bearing grants from the IIA are recognized at the time the Company is entitled to such grants, on the basis of the costs incurred and applied as a deduction from research and development expenses. N. Basic and diluted loss per share Basic loss per share is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding during the year, fully vested warrants with no exercise price for the Company’s Common Stock and fully vested Pre-Funded Warrants for the Company’s Common Stock at an exercise price of $ 0.001 per share, as the Company considers these shares to be exercised for little to no additional consideration. The calculation excludes o shares of Common Stock purchased by the Company and held as treasury shares. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding during the year, plus the number of shares of Common Stock that would have been outstanding if all potentially dilutive shares of Common Stock had been issued, using the treasury stock method, in accordance with ASC 260-10 “Earnings per Share.” Potentially dilutive shares of Common Stock were excluded from the calculation of diluted loss per share for all periods presented due to their anti-dilutive effect due to losses in each period. O. Stock compensation plans The Company applies ASC 718-10, “Stock-Based Payment,” (“ASC 718-10”) which requires the measurement and recognition of compensation expenses for all stock-based payment awards made to employees and directors including employee stock options under the Company’s stock plans based on estimated fair values. ASC 718-10 requires companies to estimate the fair value of stock-based payment awards granted to employees and non-employees on the date of grant using an option-pricing model. The fair value of the award is recognized as an expense over the requisite service periods in the Company’s statements of operations using the graded vesting method. The Company accounts for share-based payment awards classified as equity awards. The Company recognizes stock-based award forfeitures as they occur rather than estimate by applying a forfeiture rate. All issuances of stock options or other equity instruments to non-employees as consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued. F- 15 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.) O. Stock compensation plans (Cont.) The Company estimates the fair value of stock options granted as equity awards using a Black-Scholes option-pricing model. The option-pricing model requires a number of assumptions, of which the most significant are share price, expected volatility and the expected option term (the time from the grant date until the options are exercised or expire). The Company uses an average historical stock price volatility based on a combined weighted average of the Company’s historical average volatility and that of a selected peer group of comparable public companies within the biotechnology and pharmaceutical industry that were deemed to be representative of future stock price trends as the Company does not have a sufficient historical trading history of its own Common Stock. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available. The Company has historically not paid dividends and has no foreseeable plans to issue dividends. The risk-free interest rate is based on the yield from governmental zero-coupon bonds with an equivalent term. The expected option term is calculated for all stock option grants using the “simplified” method. Changes in the determination of each of the inputs can affect the fair value of the options granted and the results of operations of the Company. P. Leases Under Accounting Standards Update, “Leases” (“ASC 842”), the Company determines if an arrangement is a lease at inception. Upon initial recognition, the Company recognizes a liability at the present value of the lease payments to be made over the lease term, and concurrently recognizes a right-of-use asset at the same amount of the liability, adjusted for any prepaid or accrued lease payments, plus initial direct costs incurred in respect of the lease. The Company uses its incremental borrowing rate based on the information available at the commencement date to determine the present value of the lease payments. The subsequent measurement depends on whether the lease is classified as a finance lease or an operating lease. During the reporting periods, the Company has only operating leases. Lease terms include options to extend the lease when it is reasonably certain that the Company will exercise that option. Lease expenses for operating leases are recognized on a straight-line basis over the lease term. The Company has made a policy election not to capitalize leases with a term of 12 months or less. In accordance with ASC 360-10, management reviews operating lease assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable based on estimated future undiscounted cash flows. If so indicated, an impairment loss would be recognized for the difference between the carrying amount of the asset and its fair value. Q. Treasury stock Treasury shares are presented as a reduction of equity, at their cost to the Company. F- 16 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.) R. New accounting pronouncements Recently adopted accounting pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments—Credit Losses—Measurement of Credit Losses on Financial Instruments.” This guidance replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for smaller reporting companies (as defined by the rules under the Securities Exchange Act of 1934, as amended) for the fiscal year beginning on January 1, 2023, including interim periods within that year. The Company adopted the guidance on January 1, 2023, and has concluded the adoption did not have a material impact on its consolidated financial statements. In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606. The guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree. The guidance should be applied prospectively to acquisitions occurring on or after the effective date. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Effective January 1, 2023, the Company has concluded the adoption has not a material impact on its consolidated financial statements. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. This ASU extends the temporary optional practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts through December 31, 2024. The Company adopted the guidance immediately and has concluded the adoption did not have a material impact on its consolidated financial statements. Recently issued accounting pronouncements, not yet adopted In November 2023, the FASB issued ASU 2023-07 “Segment Reporting: Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). This guidance expands public entities’ segment disclosures primarily by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets that are currently required annually. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures required under ASC 280, Segment Reporting. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments are required to be applied retrospectively to all prior periods presented in an entity’s financial statements. The Company is currently evaluating the impact that the adoption of ASU 2023-07 may have on its consolidated financial statements. In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). This guidance is intended to enhance the transparency and decision-usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to disclosure regarding rate reconciliation and income taxes paid both in the U.S. and in foreign jurisdictions. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 on a prospective basis, with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures. NOTE 3 - SHORT-TERM DEPOSITS Short-term deposits represent time deposits placed with banks with original maturities of greater than three months but less than one year. Interest earned is recorded as finance income, net in the consolidated statements of operations during the years for which the Company held short-term deposits. As of December 31, 2023, the Company had no deposits. As of December 31, 2022, the Company had deposits in USD at Leumi Bank (Israel) that bore fixed annual interest of 4.3 %. F- 17 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 4 - OTHER CURRENT ASSETS As of December 31, 2023 2022 Government institutions 66 90 Prepaid insurance 505 1,410 Other prepaid expenses 128 84 Grants receivables 574 567 Other 495 436 1,768 2,587 NOTE 5 - PROPERTY AND EQUIPMENT, NET Composition of assets, grouped by major classifications, is as follows: As of December 31, 2023 2022 Computers and software 525 508 Laboratory equipment 3,715 3,847 Equipment and furniture 154 158 Leasehold improvements 2,989 2,987 Accumulated depreciation ( 3,481 ) ( 2,710 ) 3,902 4,790 Substantially all of the Company’s non-current assets are concentrated in Israel. Depreciation expenses were $ 871 and $ 1,001 in the years ended December 31, 2023 and 2022, respectively. NOTE 6 - ACQUISITION OF SUBSIDIARY In November 2017, BiomX Israel signed a share purchase agreement with the shareholders of RondinX Ltd. In accordance with the share purchase agreement, BiomX Israel acquired 100 % control and ownership of RondinX Ltd. The share purchase agreement included a contingent consideration mechanism. The contingent consideration is based on the attainment of future clinical, developmental, regulatory, commercial and strategic milestones relating to product candidates for treatment of primary sclerosing cholangitis or entry into qualifying collaboration agreements with certain third parties and may require the Company to issue 567,729 shares of Common Stock upon the attainment of certain milestones, as well as make future cash payments and/or issue additional shares of the most senior class of the Company’s shares of Common Stock authorized or outstanding as of the time the payment is due, or a combination of both, up to $ 32,000 within ten years from the closing of the agreement. The Company has the discretion of determining whether milestone payments will be made in cash or by issuance of shares of Common Stock. The contingent consideration is accounted for at fair value (level 3). There were no changes in the fair value hierarchy levelling during the years ended December 31, 2023 and December 31, 2022. Refer to note 2J. The consolidated financial statements as of December 31, 2023 and 2022 include a liability with respect to this agreement in the amount of $ 155 and $ 148 , respectively, recorded as other liabilities. Intangible asset acquired in the RondinX Ltd. Acquisition was fully amortized as of December 31, 2022. For the year ended December 31, 2022, amortization expense recorded in the consolidated statements of operations was $ 1,519 . F- 18 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 7 - LEASES In September 2020, BiomX Israel entered into a lease agreement for office space in Ness Ziona, Israel for five years beginning on September 1, 2020, with an option to extend for an additional period until November 30, 2030. The monthly lease payments under the lease agreement are approximately $ 56 . As part of the agreement, the lessor reimbursed BiomX Israel for costs incurred for leasehold improvements by a pre-defined amount. BiomX Israel will pay back the reimbursed amount with interest during the entire contract term. As a result, the Company recognized a lease incentive asset in an amount of $ 1,030 that is deducted from the operating lease right-of-use asset. The operating lease right-of-use assets and operating lease liabilities contemplate the option period. As a part of the agreement, BiomX Israel provided a bank guarantee to the landlord in the amount of approximately $ 257 , representing four monthly lease and related payments. On October 1, 2020, the Company entered into a lease agreement for office space in Branford, Connecticut, U.S., for 25 months beginning on October 5, 2020. Monthly lease payments under the agreement are approximately $ 4 . As part of the agreement, the Company deposited $ 8 as a security, representing two monthly lease and related payments. The agreement ended in October 2022. In August 2022, BiomX Israel entered into a sublease agreement for a portion of its office space in Ness Ziona, Israel. The agreement is for a period of two years beginning on August 15, 2022. The monthly lease payments under the agreement are approximately $ 29 . The monthly lease proceeds are recorded as other income in the consolidated statements of operations. Lease expenses recorded in the consolidated statements of operations were $ 628 and $ 713 for the years ended December 31, 2023 and 2022, respectively. Supplemental cash flow information related to operating leases was as follows: Year ended December 31, 2023 Year ended December 31, 2022 Cash payments for operating leases 676 786 As of December 31, 2023, the Company’s operating leases had a weighted average remaining lease term of 6.9 years and a weighted average discount rate of 6 %. The maturity analysis of operating leases as of December 31, 2023 were as follows: Operating Leases 2024 688 2025 688 2026 688 2027 688 2028 688 2029 688 2030 630 Total operating lease payments 4,758 Less imputed interest ( 853 ) Total operating lease liability balance 3,905 NOTE 8 - OTHER ACCOUNT PAYABLES As of December 31, 2023 2022 Employees and related institutions 1,852 800 Accrued expenses 1,289 887 Government institutions 175 166 Deferred fees from collaboration agreements and prepaid sublease income 28 242 Other - 55 3,344 2,150 F- 19 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 9 - TRANSACTION WITH RELATED PARTIES A. In October 2019, BiomX Israel entered into a loan agreement in the amount of $ 19 with a stockholder who was subject to taxation in Israel in connection with the Recapitalization Transaction. As part of the loan agreement, the stockholder’s shares of Common Stock were restricted and allocated to the Company. The number of shares of Common Stock in respect of which the loan was granted was 5,700 . The granting of the loan and the restrictions imposed on the related Common Stock until repayment of the loan were accounted as an acquisition of treasury stock by the Company at an amount equal to the loan. During the year ended December 31, 2022, the loan was repaid by the stockholder to the Company and was accounted as proceeds on account of shares in the statements of changes in stockholders’ equity. During the year ended December 31, 2023, the shares of Common Stock were transferred to the stockholder and were accounted as reissuance of treasury stock. B. Refer to note 12A regarding a Securities Purchase Agreement with institutional investors, all of the Company’s directors and certain executive officers. C. Refer to note 12B regarding stock options granted to related parties. NOTE 10 - COMMITMENTS AND CONTINGENCIES A. In March 2021, the IIA approved two new applications in relation to the Company’s cystic fibrosis product candidate for an aggregate budget of NIS 10,879 thousands (approximately $ 3,286 ) and for the Company’s product candidate for Inflammatory Bowel Disease (“IBD”) and Primary Sclerosing Cholangitis for an aggregate revised budget of NIS 6,753 thousands (approximately $ 2,118 ). The IIA committed to fund 30 % of the approved budgets. The programs are for the period beginning January 2021 through December 2021. Through December 31, 2023, the Company received NIS 5,289 thousands (approximately $ 1,622 ) from the IIA and does not expect to receive additional funds with respect to these programs. In August 2021, the IIA approved an application that supports upgrading the Company’s manufacturing capabilities for an aggregate budget of NIS 5,737 thousands (approximately $ 1,778 ). The IIA committed to fund 50 % of the approved budget. The program is for the period beginning July 2021 through June 2022. The program does not bear royalties. Through December 31, 2023, the Company received NIS 1,912 thousands (approximately $ 577 ) from the IIA with respect to this program. In March 2022, the IIA approved an application for a total budget of NIS 13,004 thousands (approximately $ 4,094 ) in relation to the Company’s cystic fibrosis product candidate. The IIA committed to fund 30 % of the approved budget. The program is for the period beginning January 2022 through December 2022. Through December 31, 2023, the Company received NIS 1,365 thousands (approximately $ 395 ) from the IIA with respect to this program. In March 2023, the IIA approved an application for a total budget of NIS 11,283 thousands (approximately $ 3,164 ) in relation to the Company’s cystic fibrosis product candidate. The IIA committed to fund 30 % of the approved budget. The program is for the period beginning January 2023 through December 2023. Through December 31, 2023, the Company received NIS 2, 783 thousands (approximately $ 768 ) from the IIA with respect to this program. According to the agreements with the IIA, BiomX Israel will pay royalties of 3 % to 3.5 % of future sales up to an amount equal to the accumulated grant received including annual interest of LIBOR linked to the USD. Starting January 2024, the IIA has notified that the interest has changed to the 12-month SOFR rate as published on the first trading day of each calendar year. BiomX Israel may be required to pay additional royalties upon the occurrence of certain events as determined by the IIA, that are within the control of BiomX Israel. No such events have occurred or were probable of occurrence as of the balance sheet date with respect to these royalties. Repayment of the grant is contingent upon the successful completion of the BiomX Israel’s R&D programs and generating sales. BiomX Israel has no obligation to repay these grants if the R&D program fails, is unsuccessful or aborted or if no sales are generated. The Company had not yet generated sales as of December 31, 2023; therefore, no liability was recorded in these consolidated financial statements. IIA grants are recorded as a reduction of R&D expenses, net. Through December 31, 2023, total grants approved from the IIA aggregated to approximately $ 9,353 (NIS 32,068 thousands). Through December 31, 2023, BiomX Israel had received an aggregate amount of $ 8,003 (NIS 27,423 thousands) in the form of grants from the IIA. Total grants subject to royalties’ payments aggregated to approximately $ 7,413 . As of December 31, 2023, BiomX Israel had a contingent obligation to the IIA in the amount of approximately $ 7,941 including annual interest of LIBOR linked to the USD. B. F- 20 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 10 - COMMITMENTS AND CONTINGENCIES (Cont.) In July 2019, the Company and Yeda Research and Development Company Limited (“Yeda”) amended the Research and License Agreement (the “License Agreement”) entered into in 2015. Pursuant to the amendment, following the closing of the Recapitalization Transaction, the provisions of the Yeda license agreements related to the Exit Fee were amended so that the Company is obligated to pay Yeda a one-time payment as described in the amendment which will not exceed 1% of the consideration received in the event of any merger or acquisition involving the Company instead of the Exit Fee, with respect to each license agreement. The Merger Agreement as described in note 1D, does not apply for such merger or acquisition as defined in the amendment. C. As successor in interest to RondinX Ltd., BiomX Israel is a party to a license agreement dated March 20, 2016 with Yeda, pursuant to which the Company has a worldwide exclusive license to Yeda’s know-how, information and patents related to the Company’s meta-genomics target discovery platform. As consideration for the license, the Company is obligated to pay annual license fees of $ 10 , subject to the terms and conditions of the agreement. Either party has the option to terminate the agreement at any time by way of notice to the other party, as outlined in the agreement. In addition, the Company is obligated to pay a royalty in the low single digits based on revenue of products. The consolidated financial statements as of December 31, 2023 and 2022 include a liability with respect to this agreement in the amount of $ 155 and $ 148 , respectively, recorded as other liabilities. Refer to note 6 regarding a contingent consideration with respect to the RondinX Ltd. acquisition. D. In December 2017, BiomX Israel signed a patent license agreement with Keio University and JSR Corporation in Japan. According to the agreement, BiomX Israel received an exclusive patent license to certain patent rights related to inflammatory bowel disease (“IBD”) In return, the Company will pay an annual license fee of between $ 15 and $ 25 subject to the terms and conditions specified in the agreement. Additionally, the Company is obligated to make additional payments based upon the achievement of clinical and regulatory milestones up to an aggregate of $ 32,100 and royalty payments based on future revenue. As the Company has not yet generated revenue from operations and the achievement of certain milestones is not probable, no provision was included in the consolidated financial statements as of December 31, 2023 and 2022 with respect to the agreement. In April 2019, BiomX Israel signed an additional patent license agreement with Keio University and JSR Corporation in Japan. According to the agreement, BiomX Israel received an exclusive sublicense by JSR to certain patent rights related to the treatment of primary sclerosing cholangitis. In return, the Company is required (i) to pay a license issue fee of $ 20 and annual license fees ranging from $ 15 to $ 25 (ii) make additional payments based upon the achievement of clinical and regulatory milestones up to an aggregate of $ 32,100 and (iii) make tiered royalty payments, in the low single digits based on future revenue. As the Company has not yet generated revenue from operations and the achievement of certain milestones is not probable, no provision was included in the consolidated financial statements as of December 31, 2023. As of December 31, 2022, the consolidated financial statements included liabilities with respect to this agreement in the amount of $ 40 recorded as other liabilities. For the year ended December 31, 2023, the Company recorded $ 40 in the consolidated statements of operations as a reduction of R&D expenses. F- 21 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 10 - COMMITMENTS AND CONTINGENCIES (Cont.) F. On June 23, 2022 (the “Effective Date”), BiomX Israel entered into a research collaboration agreement with Boehringer Ingelheim International GmbH (“BI”) for a collaboration to identify biomarkers for IBD. Under the agreement, BiomX Israel is eligible to receive fees totaling $ 1,411 to cover costs to be incurred by BiomX Israel in conducting the research plan under the collaboration. The fees will be paid in instalments of $500 within 30 days of the Effective Date and three additional installments of $500, $200 and $211 upon completion of certain activities under the research plan. Unless terminated earlier, this agreement will remain in effect until (a) a period of eighteen (18) months thereafter or (b) completion of the project plan and submission and approval of the final report, whichever occurs sooner, unless otherwise extended. The consideration is recorded as a reduction of R&D expenses, net in the consolidated statements of operations according to the input model method on a cost-to-cost basis. The remainder of the consideration is recorded as other accounts payable in the consolidated balance sheets. In December 2023, the Company completed its obligations with respect to this agreement. As of December 31, 2023, the Company received consideration of $ 1,200 . For the years ended December 31, 2023 and 2022, the Company recorded $ 1,124 and $ 287 , respectively, in the consolidated statements of operations as a reduction of R&D expenses. See note 19A regarding funds received after the balance sheet date. G. Refer to note 7 for information regarding the Company’s lease liabilities. NOTE 11 - LONG-TERM DEBT On August 16, 2021, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Hercules Capital, Inc. (“Hercules”), with respect to a venture debt facility. Under the Loan Agreement, Hercules provided the Company with access to a term loan with an aggregate principal amount of up to $ 30,000 (the “Term Loan Facility”), available in three tranches, subject to certain terms and conditions. The first tranche of $ 15,000 was advanced to the Company on the date the Loan Agreement was executed. Upon the occurrence of specified milestones and continuing through December 31, 2022 and through September 30, 2023, a loan in the aggregate principal amount of up to $ 10,000 (“the second tranche”) and $ 5,000 (“the third tranche”), would have become available. The milestones for the second and third tranches were not reached and have expired. The Company was required to make interest only payments through March 1, 2023, and started then to repay the principal balance and interest in equal monthly installments through September 1, 2025. The Company may prepay advances under the Loan Agreement, in whole or in part, at any time subject to a prepayment charge equal to: (a) 3.0 % of amounts prepaid, if such prepayment occurs during the first 12 months following the closing date; (b) 2.0% after 12 months but prior to 24 months; (c) 1.0% after 24 months but prior to 36 months, and (d) no charge after 36 months. Upon prepayment or repayment of all or any of the term loans under the Term Loan Facility, the Company is required to pay an end of term charge (“End of Term Charge”) equal to 6.55 % of the total aggregate amount of the term loans being prepaid or repaid. See note 19D regarding prepayment of the term loan after the balance sheet date. Interest on the term loan accrues at a per annum rate equal to the greater of (i) the Prime Rate as reported in The Wall Street Journal plus 5.70% and (ii) 8.95%. On December 31, 2023, the Prime Rate was 8.50 %. Interest expense is calculated using the effective interest method and is inclusive of non-cash amortization of capitalized loan issuance costs and of the End of Term Charge. Debt issuance costs are recorded on the consolidated balance sheet as a reduction of liabilities. Amounts allocated to the debt, net of issuance cost, are subsequently recognized at amortized cost using the effective interest method. On December 31, 2023, the effective interest rate was 19.39 %. F- 22 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 11 - LONG-TERM DEBT (Cont.) As of December 31, 2023, the carrying value of the term loan consists of $ 10,747 principal outstanding in addition to the unamortized debt discount, issuance costs and End of Term Charge of approximately $ 440 . The full End of Term Charge of $ 983 is recognized over the life of the term loan as an interest expense using the effective interest method. The debt issuance costs have been recorded as a debt discount which is being accreted to interest expense through the maturity date of the term loan. Interest expense relating to the term loan, which is included in interest expense in the consolidated statements of operations was $ 2,404 and $ 2,069 for the years ended December 31, 2023 and 2022, respectively. Under the terms of the Loan Agreement, the Company granted first priority liens and security interests in substantially all of the Company’s intellectual property as collateral for the obligations thereunder. The Company also granted Hercules the right, at their discretion, to participate in any closing of any single subsequent broadly marketed financing as defined up to a maximum aggregate amount of $ 2,000 under the terms as afforded to other investors in such financing. The Loan Agreement also contains representations and warranties by the Company and Hercules, indemnification provisions in favor of Hercules and customary affirmative and negative covenants, including a liquidity covenant beginning October 1, 2022, requiring the Company to maintain a minimum aggregate compensating cash balance of $ 5,000 , and events of default, including a material adverse change in the Company’s business, payment defaults, breaches of covenants following any applicable cure period, and a material impairment in the perfection or priority of Hercules’ security interest in the collateral. In the event of default by the Company under the Loan Agreement, the Company may be required to repay all amounts then outstanding under the Loan Agreement. Future principal payments for the long-term debt are as follows: December 31, 2023 2024 5,785 2025 4,962 Total principal payments 10,747 Unamortized discount, debt issuance costs and accretion of End of Term Charge 440 Total future principal payments $ 11,187 Current portion of long-term debt ( 5,785 ) Long-term debt, net $ 5,402 NOTE 12 - STOCKHOLDERS EQUITY A. Share Capital: Common Stock: On August 24, 2022, the Company’s stockholders approved increasing the number of authorized shares of Common Stock from 60,000,000 shares, par value $ 0.0001 per share, to 120,000,000 shares, par value $ 0.0001 per share. Treasury Stock: Refer to note 9A. Initial Public Offering: On December 18, 2018, the Company consummated its initial public offering (“IPO”) of 7,000,000 units (“Public Units”). The Public Units sold in the IPO were sold at an offering price of $ 10.00 per Public Unit, generating total gross proceeds of $ 70,000 . The Public Units each consist of one share of Common Stock and one warrant to purchase one-half of a share of Common Stock (“Public Warrant”), with every two Public Warrants entitling the holder to purchase one share of Common Stock for $ 11.50 per full share. Simultaneous with the consummation of the IPO, the Company consummated the private placement of an aggregate of 2,900,000 warrants (“Private Placement Warrants”). The Private Placement Warrants were expired on December 13, 2023. F- 23 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 12 - STOCKHOLDERS EQUITY (Cont.) A. Share Capital: (Cont.) Stock Exchange: As detailed in note 1, as part of the Recapitalization Transaction on October 28, 2019, the Company issued 15,069,058 shares of Common Stock in exchange for approximately 65 % of the issued and outstanding ordinary shares and all the preferred shares of BiomX Israel. In addition, the Company also agreed to issue the following number of additional shares of Common Stock, in the aggregate, to stockholders on a pro rata basis, subject to the Company’s achievement of the conditions specified below following the recapitalization transaction (all with respect to the Company’s Common Stock traded on the NYSE American): A. 2,000,000 additional shares of the Company’s Common Stock if the daily volume weighted average price of the Company’s Common Stock in any 20 trading days within a 30 -trading day period prior to January 1, 2024 is greater than or equal to $ 22.75 per share. As of December 31, 2023, the condition was not achieved and the Company’s conditional undertaking to issue additional shares expired. B. 2,000,000 additional shares of the Company’s Common Stock if the daily volume weighted average price of the Company’s Common Stock in any 20 trading days within a 30 -trading day period prior to January 1, 2026 is greater than or equal to $ 29.00 per share. Private Investment in Public Equity: On February 22, 2023, the Company entered into a Securities Purchase Agreement to issue and sell an aggregate of 15,997,448 shares of its Common Stock and 14,610,714 pre-funded warrants (the “Pre-Funded Warrants”, and collectively, the “Securities”) at a price of $ 0.245 per share and $ 0.244 per Pre-Funded Warrant, through a PIPE. The gross proceeds from this offering are approximately $ 7,485 , before deducting issuance costs. The offering closed in two parts. The first closing, which covered 3,199,491 shares of Common Stock and 2,776,428 Pre-Funded Warrants for gross proceeds of $ 1,469 , occurred on February 27, 2023. Such Pre-Funded Warrants became exercisable on February 27, 2023, at an exercise price of $ 0.001 per share of Common Stock and have no expiration date. At the first closing, the Company raised net proceeds of $ 1,293 , after deducting issuance costs of $ 176 . On April 24, 2023, the Company’s stockholders approved the issuance of up to 24,632,243 shares of Common Stock, comprised of shares and shares underlying Pre-Funded Warrants, in accordance with NYSE American rules. On May 4, 2023, the Company completed the second closing of the offering and issued an aggregate of 12,797,957 shares of Common Stock and 11,834,286 Pre-Funded Warrants. Such Pre-Funded Warrants became exercisable on May 4, 2023, at an exercise price of $ 0.001 per share of Common Stock and have no expiration date. At the second closing, the Company raised net proceeds of $ 5,859 , after deducting issuance costs of $ 157 . As of December 31, 2023, no Pre-Funded Warrants were exercised. The exercise of the outstanding Pre-Funded Warrants is subject to a beneficial ownership limitation between 9.90 %- 9.99 %, The exercise price and number of shares of Common Stock issuable upon the exercise of the Pre-Funded Warrants are subject to adjustment in the event of any stock dividends, stock splits, reverse stock split and reclassification, as described in the agreements. Pursuant to the sole discretion of the holder, the Pre-Funded Warrants may be exercisable on a “cashless” basis. The Pre-Funded Warrants were classified as a component of stockholders’ equity. F- 24 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 12 - STOCKHOLDERS EQUITY (Cont.) A. Share Capital: (Cont.) At-the-market Sales Agreement: In December 2020, pursuant to a registration statement on Form S-3 declared effective by the Securities and Exchange Commission on December 11, 2020, the Company entered into an Open Market Issuance Sales Agreement (“ATM Agreement”) with Jefferies LLC. (“Jefferies”), which provided that, upon the terms and subject to the conditions and limitations in the ATM Agreement, the Company could elect, from time to time, to offer and sell shares of Common Stock having an aggregate offering price of up to $ 50,000 through Jefferies acting as sales agent. During the year ended December 31, 2023, the Company sold 200 shares of Common Stock under the ATM Agreement, at an average price of $ 0.62 per share. During the year ended December 31, 2022, the Company sold 229,044 shares of Common Stock under the ATM Agreement, at an average price of $ 1.19 per share, raising aggregate net proceeds of approximately $ 273 , after deducting an aggregate commission of $ 8 . The ATM Agreement was terminated on December 7, 2023. In December 2023, pursuant to a registration statement on Form S-3 declared effective by the Securities and Exchange Commission on January 2, 2024, the Company entered into an Open Market Offering Agreement with H.C. Wainwright & Co., LLC (“Wainwright”), pursuant to which the Company may issue and sell shares of Common Stock having an aggregate offering price of up to $ 7,500,000 from time to time through Wainwright. The Company recorded transaction costs of $ 210 in the consolidated statements of operations. Maruho Agreement: In October 2021, the Company entered into a Stock Purchase Agreement with a subsidiary of Maruho Co. Ltd., (“Maruho”), a leading dermatology-focused pharmaceutical company in Japan, pursuant to which the Company issued to Maruho 375,000 shares of Common Stock at a price of $ 8.00 per share for gross proceeds of $ 3,000 . The company also granted Maruho a right of first offer to license its atopic dermatitis product candidate, BX005, in Japan. The right of first offer will commence following the availability of results from the Phase 1/2 study initially expected in 2022. The Company applied ASC 606 by analogy to the agreements. The agreements were combined into a single unit of account for the purpose of applying ASC 606. Part of the consideration paid under the agreements, equal to the grant date fair value of the shares issued to Maruho of $ 1,024 , is attributed to the issuance of shares and accounted for as an increase in equity. The remainder of $ 1,976 was attributed to a contract liability, to be recognized as other income, at a point in time, once the clinical trials related to the product candidate are completed. Following the Company’s announcement on May 24, 2022, as mentioned in note 18 below regarding the delaying of the Company’s atopic dermatitis program, the contract liability was classified as a non-current liability. F- 25 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 12 - STOCKHOLDERS EQUITY (Cont.) A. Share Capital: (Cont.) CFF Agreement: In December 2021, the Company entered into a Securities Purchase Agreement with the CF Foundation, an organization that historically played a role in supporting the development of innovative therapies for patients suffering from cystic fibrosis (CF). Under the terms of the agreement, the Company will receive up to $ 5,000 in two tranches. In the first tranche, which closed and fully received on December 21, 2021, the CF Foundation invested $ 3,000 as an initial equity investment based on a share price of $ 2.57 . Upon completion of patient dosing in Part 1 of the Company’s Phase 1b/2a study of BX004, the Company would have the right to receive the second tranche of $ 2,000 , also as an equity investment. In the event that the average closing price of the Common Stock for the ten trading days prior to the second tranche completion is less than $ 2.57 , the Company shall have the right in its sole discretion to waive the second tranche payment and in such event the CF Foundation would not have had any right to receive additional shares. However, the CF Foundation may waive the Milestone in its discretion and make the Milestone Payment nonetheless. In February 2023, the Company waived its right to receive the second tranche of $ 2,000 mentioned above, as the CF Foundation participated in the PIPE and invested an aggregate amount of $2,000. Preferred Stock: The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $ 0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s Board of Directors (the “Board”). See note 1D regarding issuance of shares of preferred stock after the balance sheet date. Warrants: The Public Warrants became exercisable upon the closing of the Recapitalization Transaction. No fractional shares will be issued upon exercise of the Public Warrants. Therefore, the Public Warrants must be exercised in multiples of two warrants. The Public Warrants will expire five years after the completion of the Recapitalization Transaction or earlier upon redemption or liquidation. The Company may redeem the Public Warrants: ● in whole and not in part; ● at a price of $ 0.01 per warrant; ● at any time during the exercise period; ● upon a minimum of 30 days prior written notice of redemption; ● if, and only if, the last sale price of the Company’s Common Stock equals or exceeds $ 16.00 per share for any 20 trading days within a 30 -trading day period ending on the third business day prior to the date on which the Company sends the notice of redemption to the warrant holders; and ● if, and only if, there is a current registration statement in effect with respect to the shares of Common Stock underlying such warrants at the time of redemption and for the entire 30 -day trading period referred to above and continuing each day thereafter until the date of redemption. If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of Common Stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of Common Stock at a price below their exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. F- 26 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 12 - STOCKHOLDERS EQUITY (Cont.) A. Share Capital: (Cont.) As of December 31, 2023, the Company had the following outstanding warrants to purchase Common Stock issued to stockholders: Warrant Issuance Date Expiration Date Exercise Price Per Share Number of Shares of Common Stock Underlying Warrants Public Warrants IPO (December 13, 2018) October 28, 2024 11.50 3,500,000 2021 Registered Direct Offering Warrants SPA (July 28, 2021) January 28, 2027 5.00 2,812,501 Pre-Funded Warrants February 27, 2023 - 0.001 2,776,428 Pre-Funded Warrants May 4, 2023 - 0.001 11,834,286 20,923,215 B. Stock-based compensation: Equity Incentive Plan: In 2015, the Board of Directors of BiomX Israel approved a plan for the allocation of options to employees, service providers, and officers (the “2015 Plan”). The options represented a right to purchase one Ordinary Share of the BiomX Israel in consideration of the payment of an exercise price. Also, the options were granted in accordance with the “capital gains route” under section 102 and section 3(i) of the Israeli Income Tax Ordinance and section 409A of the U.S. Internal Revenue Code as technically adjusted following the Recapitalization Transaction on October 28, 2019. As of December 31, 2023, there are no shares of Common Stock remaining for issuance under the 2015 Plan. In 2019, the Company adopted a new incentive plan (the “2019 Plan”) to grant 1,000 options, exercisable for Common Stock. The aggregate number of shares of Common Stock that may be delivered pursuant to the 2019 Plan will automatically increase on January 1 of each year, commencing on January 1, 2020 and ending on (and including) January 1, 2029, in an amount equal to four percent ( 4 %) of the total number of shares of Common Stock outstanding on December 31 of the preceding calendar year. Notwithstanding the foregoing, the Board may act prior to January 1 of a given year to provide that there will be no January 1 increase for such year or that the increase for such year will be a lesser number of shares of Common Stock than provided herein. As of December 31, 2023, there were 1,011,104 shares of Common Stock remaining for issuance under the 2019 Plan. On January 1, 2024, the number of shares of Common Stock available to grant under the 2019 Plan was increased by 1,839,187 . F- 27 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 12 - STOCKHOLDERS EQUITY (Cont.) B. Stock-based compensation: (Cont.) Stock Options: On March 29, 2022, the Board of Directors approved the grant of 1,153,500 options to 89   employees, three senior officers, one consultant, and five directors under the Company ’ s 2019 Plan, without consideration. Options were granted at an exercise price of $ 1.41 per share with a vesting period of four years . Directors and senior officers are entitled to full acceleration of their unvested options upon the occurrence of both a change in control of the Company and the end of their engagement with the Company.   On June 21, 2022, the Board of Directors approved the grant of 350,500 options to 53 employees, and one consultant under the Company’s 2019 Plan, without consideration. Options were granted at an exercise price of $ 0.66 per share with a vesting period of four years .   On August 22, 2022, the Board of Directors approved the grant of 290,000 options to four senior officers under the Company’s 2019 Plan, without consideration. Options were granted at an exercise price of $ 0.66 per share with a vesting period of four years . Senior officers are entitled to full acceleration of their unvested options upon the occurrence of both a change in control of the Company and the end of their engagement with the Company.   On September 30, 2022, the Board of Directors approved the grant of 20,000 options to a consultant under the Company’s 2019 Plan, without consideration. Options were granted at an exercise price of $ 0.37 per share with a vesting period of one year . On March 1, 2023, the Board of Directors approved the grant of 1,543,000 options to 49 employees, five senior officers and three directors under the 2019 Plan, without consideration. The options were granted at an exercise price of $ 0.40 per share with a vesting period of four years . Directors and senior officers are entitled to full acceleration of their unvested options upon the occurrence of both a change in control of the Company and the end of their engagement with the Company. On August 21, 2023, the Board of Directors approved the grant of 82,000 options to two directors under the Company’s 2019 Plan, without consideration. Options were granted at an exercise price of $ 0.363 per share with a vesting period of four years . Directors are entitled to full acceleration of their unvested options upon the occurrence of both a change in control of the Company and the end of their engagement with the Company. On October 19, 2023, the Board of Directors approved the grant of 41,000 options to one director under the 2019 Plan, without consideration. The options were granted at an exercise price of $ 0.32 per share with a vesting period of four years . Such director is entitled to full acceleration of his unvested options upon the occurrence of both a change in control of the Company and the end of his engagement with the Company. On October 29, 2023, the Board of Directors approved the grant of 151,100 options to 4 employees and one senior officer under the 2019 Plan, without consideration. The options were granted at an exercise price of $ 0.275 per share with a vesting period of four years . The senior officer is entitled to full acceleration of her unvested options upon the occurrence of both a change in control of the Company and the end of her engagement with the Company. On October 29, 2023, the Board of Directors approved a reduction in the exercise price (“the Repricing”) of each outstanding option to purchase shares of the Company’s Common Stock currently held by employees of BiomX with an original exercise price above $ 0.69 per share granted under the Company’s 2015 Employee Stock Option Plan to $ 0.275 per share. Other than the exercise price, no other terms of grant of the repriced options were changed; however, the options may not be exercised until one year after the repricing date. The reduction of the exercise price of the options was considered a type I modification according to ASC 718. As a result of the Repricing, the Company recognized immediately the incremental fair value in the amount of $ 167 as the repriced options were fully vested on October 29, 2023. On November 9, 2023, the Company filed with the Securities and Exchange Commission a Tender Offer Statement defining the terms and conditions of a one-time voluntary stock option exchange of certain eligible options for its employees (the “Option Exchange”). the Company offered to exchange certain out-of-the-money stock options for new stock options at an exchange ratio of between 1.4 and 3.8 surrendered options for one new option exercisable for shares of common stock with a lower exercise price. On December 11, 2023, the completion date of the Option Exchange, stock options covering an aggregate of 1,508,280 shares of Common Stock were tendered by eligible employees, and the Company granted new options at an exercise price of $ 0.275 , the Company’s closing stock price on December 11, 2023, covering an aggregate of 694,871 shares of Common Stock under the 2019 Plan in exchange for the tendered options. The Cancellation and new stock options grant qualifies as a “cancellation of an award accompanied by the concurrent grant of a replacement award,” as defined in ASC 718, which is accounted for as a modification. Under ASC 718, incremental compensation cost is measured as the excess, if any, of the fair value of the modified award over the fair value of the original award immediately before its terms are modified. As a result of the Option Exchange, the Company will recognize an incremental stock-based compensation expense of $ 19 over the remaining vesting period of the new stock options, which is three or four years . The Company will recognize the sum of the incremental stock-based compensation expense and the remaining unrecognized compensation expense for the original awards on the modification date, over the remaining vesting period of the new stock options. The fair value of each option was estimated as of the date of grant or reporting period using the Black-Scholes option-pricing model using the following assumptions: 2023 2022 Underlying value of Common Stock ($) 0.28 - 0.40 0.37 - 1.41 Exercise price ($) 0.28 - 0.40 0.37 - 1.41 Expected volatility (%) 90.0 - 96.6 85.3 - 88.4 Expected terms of the option (years) 6.11 5.31 - 6.11 Risk-free interest rate (%) 4.21 - 4.98 2.50 - 4.05 F- 28 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 12 - STOCKHOLDERS EQUITY (Cont.) B. Stock-based compensation: (Cont.) Stock Options: (Cont.) Total fair value embodied in the options granted in 2023 and 2022 at the grant date, is estimated to be $ 552 and $ 1,311 respectively. These amounts will be recognized in statements of operations over the vesting period. As of December 31, 2023, the unrecognized compensation cost related to all unvested, equity classified stock options of $ 742 is expected to be recognized as an expense on a graded vesting method over a weighted-average period of 1.65 years. A summary of options granted to purchase the Company’s Common Stock under the Company’s stock option plans are as follows: For year ended December 31, 2023 Number of Options Weighted average exercise price Aggregate intrinsic value Outstanding at the beginning of period 4,769,441 $ 2.93 $ 40 Granted 1,817,100 0.36 Forfeited/canceled ( 1,838,140 ) 3.98 Replacement options granted 694,871 0.27 Expired ( 162,561 ) 4.66 Exercised - $ - Outstanding at the end of period 5,280,711 0.54 $ 72 Exercisable at end of period 2,790,269 0.58 Weighted average remaining contractual life – years as of December 31, 2023 6.85 Warrants: As of December 31, 2023, and 2022, the Company had the following outstanding compensation related warrants to purchase Common Stock as follows: Warrant Issuance Date Expiration Date Exercise Price Per Share Number of Shares of Common Stock Underlying Warrants Private Warrants issued to scientific founders (see below) November 27, 2017 - - 2,974 F- 29 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 12 - STOCKHOLDERS EQUITY (Cont.) B. Stock-based compensation: (Cont.) Warrants: (Cont.) In November 2017, BiomX Israel issued 2,974 warrants to its founders. The warrants were fully vested at their grant date and will expire immediately prior to a consummation of an M&A transaction. The warrants did not expire as a result of the Recapitalization Transaction and have no exercise price. The Merger Agreement as described in note 1D does not apply for such M&A transaction as defined in the grant agreement. The following table sets forth the total stock-based payment expenses resulting from options and warrants granted, included in the statements of operations: Year ended December 31, 2023 2022 Research and development expenses, net 369 490 General and administrative 690 1,039 1,059 1,529 The Company recognized stock-based compensation expenses in connection with options granted to executive officers of the Company in the amount of $ 722 and $ 923 for the years ended December 31, 2023 and 2022, respectively. F- 30 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 13 - RESEARCH AND DEVELOPMENT EXPENSES, NET Year ended December 31, 2023 2022 Professional service and subcontractors 10,349 5,218 Salaries and related expenses 5,636 8,640 Stock-based compensation 369 490 Depreciation 782 909 Materials and supplies 930 1,149 Rent and related expenses 905 1,101 Other 104 160 19,075 17,667 Less change in contingent liabilities (see Note 10D) ( 40 ) - Less income from collaboration agreements (see Note 10F) ( 1,272 ) ( 287 ) Less grants from the IIA (see Note 10A) ( 1,065 ) ( 1,136 ) 16,698 16,244 NOTE 14 - GENERAL AND ADMINISTRATIVE EXPENSES Year ended December 31, 2023 2022 Salaries and related expenses 2,714 2,423 Stock-based compensation 690 1,039 Professional services 2,289 2,067 Travel expenses 112 160 Rent and related expenses 298 346 Insurance expenses 1,577 2,447 Other 970 974 8,650 9,456 NOTE 15 - FINANCE EXPENSES (INCOME), NET Year ended December 31, 2023 2022 Exchange rate differences ( 106 ) ( 862 ) Interest income from bank deposits ( 1,122 ) ( 464 ) Bank fees and other 56 13 Loss (income) from foreign exchange contracts ( 77 ) 411 ( 1,249 ) ( 902 ) F- 31 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 16 - INCOME TAXES A. The Company files income tax returns in the U.S. federal jurisdiction and in state and local jurisdictions and is subject to examination by the various taxing authorities. The Company’s income tax returns since 2020 remain open and subject to examination. The statutory U.S. federal income tax rate is 21 %. As of December 31, 2023, the Company had total net operating losses in the U.S. of approximately $ 19,633 , which may be carried forward and offset against taxable income in the future. B. BiomX Ltd. and RondinX Ltd. file income tax returns in Israel. Their tax assessments through 2017 are deemed to be final. The statutory Israeli income tax rate is 23 %. C. As of December 31, 2023 and 2022, BiomX Israel had total carryforward losses in Israel of approximately $ 108,364 and $ 90,878 respectively, which may be offset against taxable income in the future for an indefinite period. See Note 19E for further information regarding the carryforward losses in respect to the tax assessment. D. Management has considered the Company’s history of cumulative net losses incurred since inception and its lack of commercialization of any products or generation of any revenue from product sales since inception and has concluded that it is more likely than not that the Company will not realize the benefits of the deferred tax assets. Accordingly, a full valuation allowance has been established against the deferred tax assets as of December 31, 2023 and 2022. Management reevaluates the positive and negative evidence at each reporting period. E. The Company’s policy is to record estimated interest and penalties related to uncertain tax positions in income tax expense. The Company has no amounts recorded for any unrecognized tax positions, accrued interest or penalties as of December 31, 2023 and 2022. A reconciliation of the U.S. federal statutory tax rate and the effective tax rate is as follow: As of December 31, 2023 2022 Statutory U.S. federal income tax rate ( 21 )% ( 21 )% U.S. vs foreign tax rate differential ( 2 ) ( 2 ) Change in deferred tax asset valuation allowance 23 23 Effective tax rate - % - % Loss before taxes on income, consists of the following: As of December 31, 2023 2022 United States 6,085 6,645 Israel 20,061 21,607 26,146 28,252 Net deferred tax assets as of December 31, 2023 and 2022 consisted of the following: As of December 31, 2023 2022 Deferred tax assets: Net operating loss carryforwards 29,047 24,509 Research and development expenses, net 2,982 3,183 Lease liability 898 1,031 Other 200 192 Total deferred tax assets 33,127 28,915 Deferred tax liabilities: Right of use assets ( 964 ) ( 1,071 ) Fixed assets ( 16 ) ( 12 ) Total deferred tax liabilities ( 980 ) ( 1,083 ) Valuation allowance ( 32,147 ) ( 27,832 ) Net deferred tax assets - - F- 32 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 17 - BASIC LOSS PER SHARE The basic and diluted net loss per share and weighted average number of shares of Common Stock used in the calculation of basic and diluted net loss per share are as follows: For the year ended December 31, 2023 2022 Net loss 26,169 28,317 Net loss per share 0.51 0.95 Weighted average number of Common Stock 51,330,324 29,854,003 Basic loss per share is computed on the basis of the net loss for the period divided by the weighted average number of shares of Common Stock outstanding during the period, fully vested warrants with no exercise price for the Company’s Common Stock and fully vested Pre-Funded Warrants for the Company’s Common Stock at an exercise price of $ 0.001 per share, as the Company considers these shares to be exercised for little to no additional consideration. As of December 31, 2023, the basic loss per share calculation included a weighted average number of 2,974 of fully vested warrants and 10,176,995 of fully vested Pre-Funded Warrants. As the inclusion of shares of Common Stock equivalents in the calculation would be anti-dilutive for all periods presented, diluted net loss per share is the same as basic net loss per share. The calculation of diluted loss per share as of December 31, 2023 does not include 5,280,711 , 6,312,501 and 2,000,000 of shares underlying options, shares underlying warrants and contingent shares, respectively, because the effect would be anti-dilutive. The calculation of diluted loss per share as of December 31, 2022 does not include 4,769,441 , 9,215,475 and 4,000,000 of shares underlying options, shares underlying warrants and contingent shares, respectively, because the effect would be anti-dilutive. NOTE 18 - CORPORATE RESTRUCTURING On May 24, 2022, the Company announced a Corporate Restructuring, intended to extend the Company’s capital resources, while prioritizing the Company’s ongoing cystic fibrosis program and delaying the Company’s atopic dermatitis program. The Corporate Restructuring included a reduction of 36 full-time employees, two consultants and 9 part-time employees, or 42% of the Company’s employees as of such date . The Company incurred a one-time employee benefits and severance cost of approximately $ 214 in operating expenses as of December 31, 2022. Non-cash stock-based compensation credits related to the forfeiture of stock options of approximately $ 376 are included in operating expenses as of December 31, 2022. F- 33 BIOMX INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (USD in thousands, except share and per share data) NOTE 19 - SUBSEQUENT EVENTS A. On January 18, 2024, the Company received the last instalment of $ 211 with respect to the BI research collaboration agreement as described in note 10F. B. On March 6, 2024, the Company entered into a Merger Agreement with APT and certain other parties, as a result of which APT became a wholly-owned subsidiary of the Company. See note 1D for further information. Under the disclosure requirements of Accounting Standards Codification Topic 805, “Business Combinations”, the Company is required to provide information regarding the effect of the business combination. Due to the following limitations, the initial accounting for the business combination was incomplete at the time of the issuance of the financial statements, therefore, the Company did not include the above mentioned information as permitted by ASC 805-10-50-4 and ASC 805-30-50-3. a. The Acquisition closed on March 15, 2024, while the filing date of the Company’s annual financial statements in its annual report on Form 10-K is April 3, 2024. b. Full and final financial data of APT was not available to the Company by the filing date of the Company’s annual financial statements in form 10-K. c. The Company hasn’t completed the work of the purchase price allocation needed under ASC 805. C. On March 6, 2024, concurrently with the consummation of the Acquisition, the Company entered into a securities purchase agreement with certain investors for aggregate gross proceeds of $ 50 million. See note 1D for further information. D. On March 19, 2024, the Company prepaid all of the term loan under the Term Loan Facility in a total of $ 10,428 . The prepayment included the End of Term Charge of $ 983 and accrued interest of $ 69 . The Company received a waiver regarding the prepayment charge that should have been 1 % out of the prepaid principal amount that equals to $ 94 . E. On March 21, 2024, RondinX signed an agreement with the Israeli tax authority in respect to an assessment for the years 2018-2022. The agreement concluded that RondinX’s IP and employees were transferred to BiomX Israel on the acquisition date. As a result, RondinX had a capital gain equal to its carryforward losses of $ 2,785 (NIS 10,036 thousands) and no further payment will be required. F- 34