Phio Pharmaceuticals Corp.

1. Organization and Significant Accounting Policies

Nature of Operations

Phio Pharmaceuticals Corp. (“Phio” or the “Company”) is a clinical stage biopharmaceutical company whose proprietary INTASYL® self-delivering small interfering RNAi(siRNA) technology is designed to make immune cells more effective in killing tumor cells. The Company is developing therapeutics that are designed to leverage INTASYL to precisely target specific proteins that reduce the body’s ability to fight cancer, without the need for specialized formulations or drug delivery systems. The Company is committed to discovering and developing innovative cancer treatments for patients by creating new pathways toward a cancer-free future.

Phio was incorporated in the state of Delaware in2011 as RXi Pharmaceuticals Corporation. On* November 19, 2018,the Company changed its name to Phio Pharmaceuticals Corp., to reflect its transition from a platform company toone* that is fully committed to developing groundbreaking immuno-oncology therapeutics.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Reclassification

Certain amounts in prior periods have been reclassified to conform to the current-period presentation in segment information and accrued liabilities. These reclassifications hadno impact on previously reported net income, total assets, total liabilities, or shareholders’ equity.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, MirImmune, LLC. All material intercompany accounts have been eliminated in consolidation.

Segments

The Company operates asone operating segment and all assets are located in the United States.

Reverse Stock Split

Effective* July 5, 2024,the Company completed a1*-for-9 reverse stock split of the Company’s outstanding common stock, including reclassifying an amount equal to the reduction in par value to additional paid-in capital. The reverse stock split didnot reduce the number of authorized shares of the Company’s common or preferred stock. All share and per share amounts have been adjusted to give effect to the reverse stock split.

Uses of Estimates in Preparation of Financial Statements

The preparation of financial statements in accordance 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 as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The areas subject to significant estimates and judgement include, among others, those related to the fair value of equity awards, accruals for research and development expenses, useful lives of property and equipment, and the valuation allowance on our deferred tax assets. On an ongoing basis the Company evaluates its estimates and bases its estimates on historical experience and other relevant assumptions that the Company believes are reasonable under the circumstances. Actual results could differ materially from these estimates.

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Liquidity

The Company has reported recurring losses from operations since its inception and expects to continue to have negative cash flows from operations for the foreseeable future. Historically, the Company’s primary source of funding has been from sales of its securities. The Company’s ability to continue to fund its operations is dependent on obtaining funding fromthird parties, such as proceeds from the issuance of debt, sale of equity, or strategic opportunities. This is dependent on a number of factors, including the market demand or liquidity of the Company’s common stock. There isno guarantee that debt, additional equity or other funding will be available to the Company on acceptable terms, or at all. If the Company fails to obtain additional funding when needed, the Company would be forced to scale back or terminate its operations or seek to merge with or to be acquired by another company.

Based on current cash flow projections, the Company believes it has sufficient cash and cash equivalents, including net proceeds from its* November 2025Financing (as defined below), to meet its current planned obligations for at least12* months from the date these financial statements are issued. The Company has limited cash resources, has incurred recurring operating losses and negative cash flows from its operations since its inception and hasnot yet recognized any product revenues. These factors have previously raised doubt about the Company’s ability to continue as a going concern. With the net proceeds from the* November 2025Financing, combined with the net proceeds from the January 2025Offerings and July 2025Financing, the Company was able to alleviate such doubt as of the date of the filing of this Annual Report on Form10*-K.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits with financial institutions, and balances held in a money market fund with original maturities ofthree months or less.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company maintains cash balances with reputable financial institutions that management believes are creditworthy, and which at times exceed federally insured limits. These cash accounts are insured by the Federal Deposit Insurance Corporation (FDIC) for up to*$250,000* per institution. While FDIC insurance provides protection against the failure of a financial institution, it doesnot guarantee the value of any investments that* may*fluctuate based on market conditions.

Property and Equipment

Property and equipment are stated at cost and depreciated using the straight-line method based on the estimated useful lives of the related assets. The Company provides for depreciation over the assets’ estimated useful lives as follows:

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment annually or whenever an event or change in circumstance occurs in which the related carrying amounts* may**not* be recoverable. An impairment loss would be recognized based on the difference between the carrying value of the asset and its estimated fair value, which would be determined based on either discounted future cash flows or other appropriate fair value methods.

Leases

At the inception of a contract, the Company determines whether the contract is or contains a lease based on all relevant facts and circumstances. For contracts that contain a lease, the Company identifies the lease and non-lease components, determines the consideration in the contract and classifies the lease as operating or financing. For leases with a term greater thanone year, the Company recognizes a liability to make lease payments and an asset representing the right to use the underlying asset during the lease term at the commencement date of the lease.

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Lease liabilities and the corresponding right of use assets are recorded based on the present value of lease payments to be made over the lease term. The discount rate used to calculate the present value is the rate implicit in the lease, or ifnot readily determinable, the Company’s incremental borrowing rate. The Company’s incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right of use asset* may*be required for items such as initial direct costs or incentives received. Lease payments on operating leases, including scheduled increases, are recognized on a straight-line basis over the expected term of the lease. Lease payments on financing leases are recognized using the effective interest method.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents, accounts payable and accrued expenses of the Company approximate their fair values due to their short-term nature.

Derivative Financial Instruments

Financial instruments that meet the definition of a derivative are classified as an asset or liability and measured at fair value on the issuance date and are revalued on each subsequent balance sheet date. The changes in fair value are recognized as current period income or loss. Financial instruments that donot meet the definition of a derivative are classified as equity and measured at fair value and recorded as additional paid-in capital in stockholders’ equity at the date of issuance.No further adjustments to their valuation are made.

Research and development expenses consist primarily of personnel expenses, including salaries, benefits and stock-based compensation expenses for employees engaged in research and development functions, consultants andthird-party experts, costs to acquire technology licenses, expenses associated with preclinical studies and clinical development activities, regulatory activities and other operating costs. Research and development expenses are charged to expense as incurred. Payments made by the Company in advance for research and development servicesnot yet provided and/or for materialsnot yet received are recorded as prepaid expenses and expensed when the service has been performed or when the goods have been received.

Accrued liabilities are recorded related to those expenses for which vendors havenot yet billed the Company with respect to services provided and/or materials that it has received. Accrued liabilities for the services provided by contract research organizations are recorded during the period incurred based on such estimates and assumptions as expected cost, passage of time, the achievement of milestones and other information available to us and are assessed on a quarterly basis. Actual results* maydiffer from these estimates and could have a material impact on the Company’s reported results. The Company’s historical accrual estimates havenot* been materially different from its actual costs.

Collaborative Arrangements

The Company follows the provisions of the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) Topic808, “Collaborative Arrangements,” (“Topic808”) when collaboration agreements involve joint operating activities in which both parties are active participants and that are also both exposed to significant risks and rewards. The Company also considers the guidance in the FASB ASC Topic606, “Revenue from Contracts with Customers,” (“Topic606”) in determining the appropriate treatment for activities between the Company and its collaborative partners that are more reflective of a vendor-customer relationship and therefore, within the scope of Topic606. Under Topic808, the Company determines an appropriate recognition method, either by analogy to appropriate accounting literature or by applying a reasonable accounting policy election. Generally, the classification of transactions under the collaborative arrangements is determined based on the nature and contractual terms of the arrangement along with the nature of the operations of the participants. The Company recognizes its share of costs arising from research and development activities performed by collaborators in the period its collaborators incur such expense. Reimbursements that are the result of a collaborative relationship instead of a customer relationship, such as co-development activities, are evaluated on a quarterly basis and recorded as an offset to research and development expense incurred. Payments in excess of our collaboration expense will be recorded as revenue.

Patents and Patent Application Costs

Although the Company believes that its patents and underlying technology have continuing value, the amount of future benefits to be derived from the patents is uncertain. Patent costs are, therefore, expensed as incurred.

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Stock-based Compensation

The Company follows the provisions of the FASB ASC Topic718, “Compensation —* Stock Compensation*” (“ASC718”), which requires the measurement and recognition of compensation expense for all stock-based payment awards. The fair value of RSUs is based upon the Company’s closing stock price at the grant date. The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock options at the grant date. The Black-Scholes valuation model requires the input of valuation assumptions to calculate the value of stock options, including expected volatility, expected term, risk-free interest rate and expected dividends. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period, which generally represents the vesting period, and commences at the date of grant based on the fair value of the award.

Stock- based compensation expense recognized in the consolidated financial statements is based on awards that are ultimately expected to vest. Expense is adjusted for actual forfeitures of unvested awards as they occur.

Income Taxes

The Company recognizes assets or liabilities for the deferred tax consequences of temporary differences between the tax basis of assets or liabilities and their reported amounts in the consolidated financial statements in accordance with the FASB ASC Topic740, “Accounting for Income Taxes” (“ASC740”). These temporary differences will result in taxable or deductible amounts in future years when the reported amounts of the assets or liabilities are recovered or settled. Those temporary differences referred to as deferred tax assets and liabilities are determined at the end of each period using the tax rate expected to be in effect when taxes are actually paid or recovered. Valuation allowances are established if, based on the weight of available evidence, it is more likely thannot that all or a portion of a deferred tax asset willnot be realized. The provision for income taxes, if any, represents the tax payable for the period and the change in deferred income tax assets and liabilities during the period.

The recognition and measurement of benefits related to the Company’s tax positions requires significant judgment, as uncertainties often exist with respect to new laws, new interpretations of existing laws, and rulings by taxing authorities. The Company follows a more-likely-thannot threshold for financial statement recognition and measurement of a tax position taken, or expected to be taken in a tax return. The guidance relates to, amongst other things, classification, accounting for interest and penalties associated with tax positions, and disclosure requirements. Any interest and penalties accrued related to uncertain tax positions are recorded as income tax expense. Differences between actual results and the Company’s assumptions or changes in the Company’s assumptions in future periods are recorded in the period they become known.

Comprehensive Loss

The Company’s comprehensive loss is equal to its net loss for all periods presented.

Net Loss per Share

Basic net loss per share of common stock is computed by dividing net loss by the weighted average number of shares of outstanding common stock. Diluted net loss per share of common stock is computed by dividing the Company’s net loss by the weighted average number of common stock outstanding and the impact of all dilutive potential shares of common stock, except where such dilutive potential shares of common stock would be anti-dilutive. Dilutive potential shares of common stock primarily consist of warrants, unvested restricted stock units and stock options.

Recently Adopted Accounting Pronouncements

In* December 2023,the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")2023-09, “Income Taxes (Topic740*): Improvements to Income Tax Disclosures,” which requires public business entities to disclose additional information in specified categories with respect to the reconciliation of the effective tax rate to the statutory rate for federal, state, and foreign income taxes. It also requires greater detail about individual reconciling items in the rate reconciliation to the extent the impact of those items exceeds a specified threshold. In addition to new disclosures associated with the rate reconciliation, the ASU requires information pertaining to taxes paid (net of refunds received) to be disaggregated for federal, state, and foreign taxes and further disaggregated for specific jurisdictions to the extent the related amounts exceed a quantitative threshold. The ASU also describes items that need to be disaggregated based on their nature, which is determined

F-10 by reference to the item’s fundamental or essential characteristics, such as the transaction or event that triggered the establishment of the reconciling item and the activity with which the reconciling item is associated. The ASU eliminates the historic requirement that entities disclose information concerning unrecognized tax benefits having a reasonable possibility of significantly increasing or decreasing in the12 months following the reporting date. This ASU became effective for annual periods beginning after* December 15, 2024.The Company has adopted ASU2023–09* for the year ended* December 31, 2025on a prospective basis in its consolidated financial statements, which resulted in the required additional disclosures included in Note10* to the Company’s consolidated financial statements.

Recent Accounting Pronouncements

In* November 2024,the FASB issued ASU2024*-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure (Subtopic220-40): Disaggregation of Income Statement Expenses,” which requires additional disclosure about the specific expense categories in the notes to financial statements at interim and annual reporting periods. The amendments in this ASU donot change or remove current expense disclosure requirements but affect where this information appears in the notes to financial statements. This ASU is effective for annual reporting periods beginning after* December 15, 2026,and interim reporting periods beginning after December 15, 2027,with early adoption permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. The Company is currently evaluating the impact that ASU2024*-03 will have on its consolidated financial statements.

Recent Tax Legislation

On* July 4, 2025,the One Big Beautiful Bill Act (the “OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions and allows immediate expensing of certain domestic research and experimental expenditures under new Section174A* of the Internal Revenue Code. The Company doesnot expect the impact of the OBBBA to be material to its consolidated financial statements.

2. Collaboration Agreement

AgonOx, Inc. (“AgonOx”)

In* February 2021,the Company entered into a clinical co-development collaboration agreement (the “Clinical Co-Development Agreement”) with AgonOx, a private company developing a pipeline of novel immunotherapy drugs targeting key regulators of the immune response to cancer. Under the Clinical Co-Development Agreement, Phio and AgonOx were working to develop a T cell-based therapy using the Company’s lead product candidate, PH-762, and AgonOx’s “double positive” tumor infiltrating lymphocytes (“DP TIL”) technology. Per the terms of the Clinical Co-Development Agreement, the Company agreed to reimburse AgonOx up to $4,000,000 in expenses incurred to conduct a Phase1* clinical trial of PH-762 treated DP TIL in patients with advanced melanoma and other advanced solid tumors.

In* May 2024,the Company terminated the Clinical Co-Development Agreement with AgonOx effective immediately. Effective as of the date of termination, the Clinical Co-Development Agreement and the Company’s continuing obligations and those of AgonOx thereunder were terminated in their entirety. The Companyno* longer is required to provide financial support for the development costs incurred in the Clinical Co-Development Agreement and the Company isno longer entitled to future development milestones or royalty payments from AgonOx’s licensing of its DP TIL technology.

The Company paid AgonOx all payment obligations that accrued prior to the termination of the Clinical Co-Development Agreement. Pursuant to the terms of the Clinical Co-Development Agreement, each of the Company and AgonOx were responsible for its own costs and expenses incurred in connection with the wind-down of the Phase1 clinical trial. The Company made the final payment of $34,320, which primarily related to accrued obligations for patient fees and other miscellaneous costs as of the date of termination, to AgonOx on* March 21, 2025.*This settled all future obligations to AgonOx.

The Company didnot recognize any research and development expense in connection with these efforts during the year ended* December 31, 2025.The Company recognized approximately $106,000 of research and development expense in connection with these efforts during the year ended December 31, 2024*

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3. Property and Equipment

The following table summarizes the Company’s major classes of property and equipment, in thousands:

Depreciation and amortization expense for the years ended* December 31, 2025and2024* was $3,000 and $2,000, respectively.

4. Accrued Expenses and Accounts Payable

Accrued expenses and Accounts payable consist of the following, in thousands:

5. Leases

The Company leases space for various corporate and research purposes. It is the Company’s policy to apply the provisions of ASC842 when accounting for arrangements that meet the criteria to be a lease. The Company calculates the lease liability as the present value of the lease’s cash flows using the interest rate implicit in the lease, if determinable. If the rate implicit in the lease isnot determinable, the Company uses its incremental borrowing rate. The incremental borrowing rate is defined as the rate the Company would have to pay to borrow on a collateralized basis over the lease term. The Company has elected the accounting policy election available under ASC842 tonot record a lease liability for leases with a term of less thanone year.

From* April 2014to March 2024,the Company leased space that was utilized as its corporate headquarters and primary laboratory. The lease expired on March 31, 2024.On March 1, 2024,the Company commenced a lease for a laboratory space located at17* Briden Street, Worcester, Massachusetts. The lease expired on* February 28, 2026.We currently have shared office space at LifeSciences PA located at411* Swedeland Road, King of Prussia, PA19406 for access to full working space for normal hours of operations at a fee of $300 per month, which can be cancelled at any time.

The lease for the Company’s corporate headquarters in Worcester, Massachusetts represented all of its significant lease obligations.

Operating lease costs included in operating expense were $31,000 and $58,000 for the years ended* December 31, 2025and2024*, respectively.

Cash paid for the amounts included in the measurement of the operating lease liability on the Company’s consolidated balance sheets and included within changes in the lease liability in the operating activities of the Company’s consolidated statements of cash flows was $60,000 for the year ended* December 31, 2024*. There wasno cash paid for the amounts included in the measurement of the operating lease liability during the year ended* December 31, 2025.*

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6. Commitments and Contingencies

Commitments

In* February 2021,the Company entered into the Clinical Co-Development Agreement with AgonOx to develop a T cell-based therapy using the Company’s lead product candidate, PH-762, and AgonOx’s DP TIL technology. Per the terms of the Clinical Co-Development Agreement, the Company agreed to reimburse AgonOx up to $4,000,000 in expenses incurred to conduct a Phase1* clinical trial of PH-762 treated DP TIL in patients with advanced melanoma and other advanced solid tumors. In* May 2024,the Company terminated the Clinical Co-Development Agreement with AgonOx effective immediately. Refer to Note2* for further details on the Clinical Co-Development Agreement with AgonOx.

In* September 2011,the Company entered into an agreement with Advanced RNA Technologies, LLC (“Advirna”), pursuant to which Advirna assigned to the Company its existing patent and technology rights related to the INTASYL technology in exchange for an annual maintenance fee of $100,000, until the patent's expiration date, aone*-time milestone payment upon the future issuance of thefirst patent with valid claims covering the assigned patent and technology rights and the issuance of shares of Common Stock equal to 5% of the Company’s fully-diluted shares outstanding at the time of issuance. Theone-time milestone payment and the issuance of shares of Common Stock were completed in2014 and2012, respectively. Additionally, the Company is required to pay low single-digit royalties to Advirna on any licensing revenue received by the Company with respect to future licensing of the assigned Advirna patent and technology rights. To date, any royalties owed to Advirna under the Advirna agreement have been minimal.

The Company’s rights under the Advirna agreement will expire upon the later of: (i) the expiration of the last-to-expire of the “patent rights” (as defined therein) included in the Advirna agreement; and (ii) the abandonment of the last-to-be abandoned of such patents, unless earlier terminated in accordance with the provisions of the Advirna agreement. Further, the Company also granted back to Advirna a license under the assigned patent and technology rights for fields of use outside human therapeutics.

As part of its business, the Company* mayenter into licensing agreements withthird* parties that require milestone and royalty payments based on the progress of the asset through development stages. Milestone payments* maybe required, for example, upon progress through clinical trials, upon approval of the product by a regulatory agency and/or upon a percentage of sales of the product pursuant to such agreements. The expenditures required under these arrangements maybe material individually in relation to any product candidates covered by the intellectual property licensed under any such arrangement, and material in the aggregate in the unlikely event that milestones for multiple products covered by these arrangements were reached in the same period. Due to the contingent nature of these payments, they arenot* included in the table of contractual obligations shown below.

During the years ended* December 31, 2025and2024*, the Company didnot trigger any milestone payments.

The Company’s contractual license obligations that will require future cash payments as of* December 31, 2025*, which result from payments expected in connection with annual license fees, are as follows, in thousands:

The Company applies the disclosure provisions of the FASB ASC Topic460, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“ASC 460”), to its agreements that contain guarantee or indemnification clauses. The Company provides: (i) indemnifications of varying scope and size to certain investors and other parties for certain losses suffered or incurred by the indemnified party in connection with various types ofthird-party claims; and (ii) indemnifications of varying scope and size to officers and directors againstthird-party claims arising from the services they provide to us. These indemnifications give rise only to the disclosure provisions of ASC460. To date, the Company hasnot incurred costs as a result of these obligations and doesnot expect to incur material costs in the future. Accordingly, the Company hasnot accrued any liabilities in its consolidated financial statements related to these indemnifications.

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Litigation

From time to time, the Company* maybecome a party to various legal proceedings and complaints arising in the ordinary course of business. To the Company’s knowledge, it isnot* currently a party to any actual or threatened material legal proceedings. Accordingly, there wereno contingent liabilities recorded as of the year ended* December 31, 2025*.

7. Preferred Stock

The Company has authorized up to 10,000,000 shares of preferred stock, $0.0001 par value per share, for issuance. The Company’s Board of Directors (the “Board”) is authorized under the Company’s Amended and Restated Certificate of Incorporation (as* maybe amended and/or restated from time to time, the “Amended Certificate”), to designate the authorized preferred stock intoone* or more series and to fix and determine such rights, preferences, privileges and restrictions of any series of preferred stock, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be determined by the Board upon its issuance.

At* December 31, 2024and December 31, 2025*, there wereno shares of preferred stock issued or outstanding.

8. Stockholders’** Equity**

The Company raised $20.6 million and $4.0 million through a series of warrants inducements, registered direct offerings, and concurrent private placements during the years ended* December 31, 2025and2024*, respectively.

** May 2024Financing

On* May 16, 2024,the Company entered into a purchase agreement (the “Purchase Agreement”) with Triton Funds LP (“Triton”), pursuant to which the Company agreed to sell, and Triton agreed to purchase, upon the Company’s request inone* or more transactions, up to 862,500 shares of Common Stock at a purchase price of $0.72 per share (the “Purchase Price”), for aggregate gross proceeds of up to $621,000. The Company recorded expense of approximately $100,000, primarily related to legal fees, in connection with the execution of the Purchase Agreement with Triton. On* July 3, 2024,*the Company terminated the Purchase Agreement with Triton effective immediately. No shares of Common Stock were sold by the Company pursuant to the Purchase Agreement prior to termination.

** July 2024Financing

On* July 11, 2024,the Company entered into inducement letter agreements (the “** July 2024Inducement Letter Agreements**”) with certain holders of certain of the Company’s existing warrants to purchase up to an aggregate of 545,286 shares of Common Stock. The existing warrants were originally issued in February 2020through December 2023,having exercise prices between $324.00 and $9.72 per share. Pursuant to the July 2024Inducement Letter Agreements, these warrants were exercised for cash at a reduced exercise of $5.45 per share in consideration of the Company’s agreement to issue new unregistered five andone*-half year term Series C warrants to purchase up to 583,098 shares of Common Stock at an exercise price of $5.45 and new unregistered eighteen month term Series D warrants to purchase up to 507,474 shares of Common Stock at an exercise price of $5.45, both issued and sold at a price of $0.125 per warrant share (the “*** July 2024Financing**”). In addition, the Company issued warrants to the placement agent, H.C. Wainwright & Co, LLC (“HCW”), to purchase a total of 40,896 shares of Common Stock at an exercise price of $6.8125 per share. The net proceeds to the Company from the July 2024*Financing were approximately $2.6 million, after deducting placement agent fees and offering expenses. The Company incurred non-cash equity issuance cost of approximately $2.4 million for the incremental fair value of the outstanding equity classified warrants and approximately $0.2 million for placement agent warrants.

F-14

Pursuant to the terms of the* July 2024Inducement Letter Agreements, in the event that the exercise of the existing warrants in the July 2024Financing would have otherwise caused a holder to exceed the beneficial ownership limitations set forth in the existing warrant, the Company issued the number of shares of Common Stock that wouldnot* cause a holder to exceed such beneficial ownership limitation and agreed to hold such balance of shares of Common Stock in abeyance. Accordingly, an aggregate of 328,758 shares of Common Stock were held in abeyance (the “*** July 2024Abeyance Shares**”) with such July 2024Abeyance Shares evidenced through the holder’s existing warrants and which are deemed to be prepaid. The July 2024Abeyance Shares were held until notice was received by the holder that the balance of the shares of Common Stock could be issued in compliance with such beneficial ownership limitations and were exercised pursuant to a notice of exercise from the holder. Until such time, the July 2024Abeyance Shares were evidenced through the holder’s existing warrants and have been included in the Company’s table of outstanding warrants below. During the year ended December 31, 2024,all of the July 2024*Abeyance Shares were released.

** December 19, 2024Concurrent Registered Direct Offering and Private Placement

On* December 19, 2024,the Company entered into a securities purchase agreement (the “** December 19, 2024Securities Purchase Agreement**”) with certain institutional and accredited investors in connection with a registered direct offering (the “** December 19, 2024Registered Direct Offering**”) and concurrent private placement (the “** December 19, 2024Private Placement**” and, together with the December 19, 2024Registered Direct Offering, the “** December 19, 2024Offerings**”). The December 19, 2024Offerings closed on December 20, 2024.The net proceeds to the Company from the December 19, 2024*Offerings were approximately $900,000, after deducting placement agent fees and offering expenses.

Pursuant to the* December 19, 2024Securities Purchase Agreement, the Company offered and sold in the December 19, 2024Registered Direct Offering 437,192 shares of Common Stock at a purchase price of $2.635 per share. In the December 19, 2024Private Placement, the Company also issued to such institutional and accredited investors unregistered warrants to purchase up to 437,192 shares of Common Stock (the “Series E Warrants”). Under the terms of the December 19, 2024Securities Purchase Agreement, for each share of Common Stock issued in the December 19, 2024Registered Direct Offering, an accompanying Series E Warrant was issued to the purchaser thereof. Each Series E Warrant is exercisable forone share of Common Stock at an exercise price of $2.51 per share and will expire on December 20, 2029.The Series E Warrants were offered and sold at a purchase price of $0.125 per Series E Warrant, which purchase price is included in the offering price per share of Common Stock issued in the December 19, 2024*Registered Direct Offering.

** December 23, 2024Concurrent Registered Direct Offering and Private Placement

On* December 23, 2024,the Company entered into a securities purchase agreement (the “** December 23, 2024Securities Purchase Agreement**”) with certain institutional and accredited investors in connection with a registered direct public offering (the “** December 23, 2024Registered Direct Offering**”) and concurrent private placement (the “** December 23, 2024Private Placement**” and, together with the December 23, 2024Registered Direct Offering, the “** December 23, 2024Offerings**” and together with the December 19*,2024 Offerings, the “*** December 2024Offerings**”). The December 23, 2024Offerings closed on December 24, 2024.The net proceeds to the Company from the December 23, 2024*Offerings were approximately $480,000, after deducting placement agent fees and offering expenses.

Pursuant to the* December 23, 2024Securities Purchase Agreement, the Company offered and sold in the December 23, 2024Registered Direct Offering 240,000 shares of Common Stock at a purchase price of $2.00 per share. In the December 23, 2024Private Placement, the Company also issued to such institutional and accredited investors unregistered warrants to purchase up to 240,000 shares of Common Stock (the “Series F Warrants”). Under the terms of the December 23, 2024Securities Purchase Agreement, for each share of Common Stock issued in the December 23, 2024Registered Direct Offering, an accompanying Series F Warrant was issued to the purchaser thereof. Each Series F Warrant is exercisable forone share of Common Stock at an exercise price of $2.00 per share and will expire on December 24, 2029.The Series F Warrants were offered and sold at a purchase price of $0.125 per Series F Warrant, which purchase price is included in the offering price per share of Common Stock issued in the December 23, 2024*Registered Direct Offering.

F-15

In connection with the* December 2024Offerings, the Company agreed to issue to the placement agent, HCW, or its designees, warrants to purchase up to an aggregate of 50,789 shares of Common Stock (the “** December 2024Placement Agent Warrants**”), which represent 7.5% of the aggregate number of shares of Common Stock sold in the December 19, 2024Registered Direct Offering and the December 23, 2024Registered Direct Offering. The December 2024Placement Agent Warrants have substantially the same terms as the Series E Warrants and the Series F Warrants, except that (i)32,789 of the December 2024Placement Agent Warrants have an exercise price equal to $3.2938, or 125% of the offering price per share of Common Stock sold in the December 19, 2024Registered Direct Offering, and are exercisable until December 19, 2029,and (ii)18,000 of the December 2024Placement Agent Warrants have an exercise price equal to $2.50, or 125% of the offering price per share of Common Stock sold in the December 23, 2024Registered Direct Offering, and are exercisable until December 23, 2029.*

** January 13, 2025Concurrent Registered Direct Offering and Private Placement

On* January 13, 2025,the Company entered into a securities purchase agreement (the “** January 13, 2025Securities Purchase Agreement**”) with certain institutional and accredited investors in connection with a registered direct public offering (the “** January 13, 2025Registered Direct Offering**”) and concurrent private placement (the “** January 13, 2025Private Placement**” and, together with the January 13, 2025Registered Direct Offering, the “** January 13, 2025Offerings**”). The January 13, 2025Offerings closed on January 14, 2025.In addition, the Company issued warrants to the placement agent, HCW, to purchase a total of 79,775 shares of Common Stock at an exercise price of $3.75 per share. The net proceeds to the Company from the January 13, 2025*Offerings were approximately $2.8 million, after deducting fees and offering expenses.

Pursuant to the* January 13, 2025Securities Purchase Agreement, the Company offered and sold in the January 13, 2025Registered Direct Offering 1,063,670 shares of Common Stock at a purchase price of $3.00 per share. In the January 13, 2025Private Placement, the Company also issued to certain institutional and accredited investors unregistered warrants to purchase up to 2,127,340 shares of Common Stock (the “Series G Warrants”). Under the terms of the January 13, 2025Securities Purchase Agreement, for each share of Common Stock issued in the January 13, 2025Registered Direct Offering, two accompanying Series G Warrants were issued to the purchaser thereof. Each Series G Warrant is exercisable forone share of Common Stock at an exercise price of $3.00 per share and will expire on January 14, 2027.*

** January 14, 2025Concurrent Registered Direct Offering and Private Placement

On* January 14, 2025,the Company entered into a securities purchase agreement (the “** January 14, 2025Securities Purchase Agreement**”) with certain institutional and accredited investors in connection with a registered direct public offering (the “** January 14, 2025Registered Direct Offering**”) and concurrent private placement (the “** January 14, 2025Private Placement**” and together with the January 14, 2025Registered Direct Offering, the “** January 14, 2025Offerings**”). The January 14, 2025Offerings closed on January 15, 2025.In addition, the Company issued warrants to the placement agent, HCW, to purchase a total of 62,500 shares of Common Stock at an exercise price of $3.75 per share. The net proceeds to the Company from the January 14, 2025*Offerings were approximately $2.1 million, after deducting fees and offering expenses.

Pursuant to the* January 14, 2025Securities Purchase Agreement, the Company offered and sold in the January 14, 2025Registered Direct Offering 833,335 shares of Common Stock at a purchase price of $3.00 per share. In the January 14, 2025Private Placement, the Company also issued to such institutional and accredited investors unregistered warrants to purchase up to 1,666,670 shares of Common Stock (the “Series H Warrants”). Under the terms of the January 14, 2025Securities Purchase Agreement, for each share of Common Stock issued in the January 14, 2025Registered Direct Offering, two accompanying Series H Warrants were issued to the purchaser thereof. Each Series H Warrant is exercisable forone share of Common Stock at an exercise price of $3.00 per share and will expire on January 15, 2027.*

** January 16, 2025Concurrent Registered Direct Offering and Private Placement

On* January 16, 2025,the Company entered into a securities purchase agreement (the “** January 16, 2025Securities Purchase Agreement**”) with certain institutional and accredited investors in connection with a registered direct public offering (the “** January 16, 2025Registered Direct Offering**”) and concurrent private placement (the “** January 16, 2025Private Placement**” and, together with the January 16, 2025Registered Direct Offering, the “** January 16, 2025Offerings**” and the January 16, 2025Offerings, together with the January 13, 2025Offerings and the January 14, 2025Offerings, the “** January 2025Offerings**”). The January 16, 2025Offerings closed on January 17, 2025.In addition, the Company issued warrants to the placement agent, HCW, to purchase a total of 45,750 shares of Common Stock at an exercise price of $3.75 per share. The net proceeds to the Company from the January 16, 2025*Offerings were approximately $1.5 million, after deducting fees and offering expenses.

F-16

Pursuant to the* January 16, 2025Securities Purchase Agreement, the Company offered and sold in the January 16, 2025Registered Direct Offering 610,000 shares of Common Stock at a purchase price of $3.00 per share. In the January 16, 2025Private Placement, the Company also issued to such institutional and accredited investors unregistered warrants to purchase up to 1,220,000 shares of Common Stock (the “Series I Warrants”). Under the terms of the January 16, 2025Securities Purchase Agreement, for each share of Common Stock issued in the January 16, 2025Registered Direct Offering, two accompanying Series I Warrants were issued to the purchaser thereof. Each Series I Warrant is exercisable forone share of Common Stock at an exercise price of $3.00 per share and will expire on January 19, 2027.*

** July 2025Financing

On* July 25, 2025,the Company entered into inducement letter agreements (the “** July 2025Inducement Letter Agreements**”) with certain holders of certain of the Company’s existing warrants to purchase an aggregate of 928,596 shares of Common Stock. The existing warrants were originally issued in December 2024and January 2025,*having exercise prices between $2.00 and $3.00 per share. Warrants to purchase 100,000 shares of Common Stock at the existing exercise price of $2.00 per share were exercised at their existing exercise price of $2.00 per share, and warrants to purchase 828,596 shares of Common Stock were exercised at a reduced exercise price of $2.485 per share.

Pursuant to the* July 2025Inducement Letter Agreements, in consideration for the immediate exercise of such warrants for cash and the payment of an additional $0.125 per New July 2025Warrant (as defined below), or an aggregate of $232,149 for all New July 2025Warrants, the Company agreed to issue new unregistered five-year term Series J warrants (the “Series J Warrants”) to purchase an aggregate of up to 318,596 shares of Common Stock at an exercise price of $2.485 and new unregistered 24-month term Series K warrants (the “Series K Warrants” and, together with the Series J Warrants, the “*New July 2025Warrants**”) to purchase an aggregate of up to 1,538,596 shares of Common Stock at an exercise price of $2.485 (the “*** July 2025Financing**”). In addition, the Company issued warrants to the placement agent, HCW, to purchase up to 69,645 shares of Common Stock.7,500 of the placement agent warrants issued have an exercise price of $2.8125 per share of Common Stock and a term offive years,16,395 of the placement agent warrants issued have an exercise price of $3.4188 per share of Common Stock and a term offive years, and 45,750 of the placement agent warrants issued have an exercise price of $3.4188 per share of Common Stock and a term oftwenty-four months. The net proceeds to the Company from the July 2025*Financing were approximately $2.1 million, after deducting placement agent fees and offering expenses.

** November 2025Financing

On* November 3,2025, the Company entered into inducement letter agreements (the “** November*** 2025 Inducement Letter Agreements”) with certain holders of the Company’s existing warrants to purchase an aggregate of 5,663,182 shares of Common Stock. The existing warrants were originally issued in* July 2024,** December 2024,** January 2025and July 2025,*having exercise prices between $2.00 and $5.45 per share. Warrants to purchase 60,000 shares of Common Stock were exercised at their existing exercise price of $2.00 per share, warrants to purchase 948,596 shares of Common Stock were exercised at their existing exercise price of $2.485 per share and warrants to purchase 4,654,586 shares of Common Stock were exercised at a reduced exercise price of $2.05 per share.

Pursuant to the* November 2025Inducement Letter Agreements, in consideration for the exercise of such warrants for cash and the payment of an additional $0.125 per Series A Warrant (as defined below), or an aggregate of $1.4 million for all Series A2025* Warrants, the Company agreed to issue new unregistered twenty-four month term Series A Warrants (the “Series A Warrants”) to purchase an aggregate of up to 11,326,364 shares of Common Stock at an exercise price of $2.05 (the “*** November 2025*** Financing”). In addition, the Company issued warrants to the placement agent, HCW, to purchase up to 424,739 shares of Common Stock.4,500 of the placement agent warrants issued have an exercise price of $2.8125 per share of Common Stock and a term oftwenty-four months,349,094 of the placement agent warrants issued have an exercise price of $2.875 per share of Common Stock and a term oftwenty-four months, and 71,145 of the placement agent warrants issued have an exercise price of $3.4188 per share of Common Stock and a term oftwenty-four months. The net proceeds to the Company from the* November 2025*Financing were approximately $12.1 million, after deducting placement agent fees and offering expenses.

F-17

Warrants

The Companyfirst assessed the warrants in the* July 2024Financing, December 2024Offerings, January 2025Offerings, July 2025Financing and November 2025Financing (collectively, the**“2024*** and2025 Offerings”) under the FASB ASC Topic480, “Distinguishing Liabilities from Equity” (“ASC480”) to determine whether they were within the scope of ASC480. As there wereno transactions outside of the Company’s control that could require cash settlement, the Company’s warrants issued in the2024 and2025 Offerings were determined to be outside the scope of ASC480.

The Company then applied and followed the applicable accounting guidance in ASC815. Financial instruments are accounted for as either derivative liabilities or equity instruments depending on the specific terms of the agreement. The warrants issued in the2024 and2025 Offerings didnot meet the definition of a derivative instrument as they are indexed to Common Stock and classified within stockholders’ equity. Based on this determination, the warrants issued in the2024 and2025 Offerings were classified within stockholders’ equity.

The Company accounted for the2025 and2024 placement agent warrants, issued to HCW in conjunction with the financings, as issuance costs related to the applicable offering of the Company’s shares of Common Stock and warrants to purchase shares of Common Stock. These placement agent warrants meet the criteria for equity classification.

The following table summarizes the Company’s outstanding warrants, all of which are classified as equity instruments, at* December 31, 2025*:

9. Stock-based Compensation

Stock Plans

The Company’s approved equity plans include the Phio Pharmaceuticals Corp.2020 Long Term Incentive Plan (the “2020 Plan”) and the Phio Pharmaceuticals Corp.2012 Long Term Incentive Plan (the “2012 Plan”). These plans are administered by our Board and provide for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards (RSUs), performance stock awards, and performance cash awards. Upon adoption of the2020 Plan, (i) shares that remained available for grant under the2012 Plan and (ii) shares that were subject to outstanding awards under the2012 Plan that were later forfeited, terminated, expired or otherwise lapsed without being exercised were included in the authorized shares available for grant under the2020 Plan. Further, upon adoption of the2020 Plan, the Companyno longer grants new equity awards under the2012 Plan.

On* September 11, 2025,the Company’s stockholders, upon the recommendation of the Board, approved an amendment and restatement of the2020* Plan to increase the number of shares of Common Stock that* may*be issued thereunder by 950,000 shares, to a total of 1,023,017 shares.

As of* December 31, 2025*, there were 1,121 shares subject to outstanding stock options and 477,700 shares subject to unvested RSUs and 473,196 shares remained available for grant under the2020 Plan.

F-18

Restricted Stock Units

RSUs can be issued either under the2020 Plan or as inducement grants issued outside of the2020 Plan to new employees. RSUs granted by the Company to employees generally vest 1 year after the grant date. Upon vesting, each outstanding RSU will be settled forone share of Common Stock. Employee RSU recipients* mayelect to net share settle upon vesting, in which case the Company pays the employee’s income taxes due upon vesting and withholds a number of shares of equal value. The Company doesnot* expect to repurchase shares to satisfy RSU vests. The fair value of the RSUs awarded is based upon the Company’s closing stock price at the grant date and is expensed over the requisite service period.

The following table summarizes the activity of the Company’s RSUs for the years ended* December 31, 2024and2025:*

The weighted-average fair value of RSUs granted during the years ended* December 31, 2025and2024* was $2.32 and $2.77, respectively.

Stock-based compensation expense related to RSUs was $481,000 and $141,000 for the years ended* December 31, 2025and2024*, respectively.

The aggregate fair value of awards that vested during the years ended* December 31, 2025and2024* was $163,680 and $21,000, respectively, which represents the market value of Common Stock on the date that the RSUs vested.

As of* December 31, 2025*, the compensation expense for all unvested RSUs in the amount of approximately $769,000 will be recognized in the Company’s results of operations over a weighted average period of 0.79 years.

Stock Options

The Company didnot issue any stock option awards during the years ended* December 31, 2025or2024.* All remaining outstanding stock options continue to be accounted for in accordance with ASC718. These options are service-based awards granted by the Company to employees that generally vest annually over four years from the grant date and expireten years from the date of grant. Upon the exercise of a stock option, the Company issues new shares of common stock. Becauseno stock options were granted during the periods presented, no Black-Scholes fair value calculations were required.

F-19

The following table summarizes the Company’s stock option activity for the years ended* December 31, 2024and2025:*

Stock-based compensation expense related to stock options for the year ended* December 31, 2024* was $6,000.

There wasno compensation expense related to stock options for the year ended* December 31, 2025*.

There isno income tax benefit as the Company is currently operating at a loss and an actual income tax benefit* may**not* be realized.

Compensation Expense Related to Equity Awards

The following table sets forth total stock-based compensation expense for the years ended* December 31, 2025and2024*, in thousands:

F-20

10. Income Taxes

As further described in Note1, Summary of Significant Accounting Policies, the Company has elected to prospectively adopt the guidance in ASUNo. 2023-09. The following table is a reconciliation of the U.S. federal statutory rate of 21% to the Company's effective tax rate for the year ended* December 31, 2025in accordance with the guidance in ASUNo.* 2023-09, in thousands, except percentages:

The following table is a reconciliation of the U.S. federal statutory rate of 21% to the Company's effective rate for the year ended* December 31, 2024in accordance with the guidance prior to the adoption of ASU2023*-09:

The provision for income taxes for the years ended* December 31, 2025and2024* are as follows, in thousands:

The Company recognizes deferred tax assets and liabilities to reflect the tax effects of temporary differences between the tax basis of assets or liabilities and their reported amounts in the consolidated financial statements in accordance with ASC740. These temporary differences will result in taxable or deductible amounts in future years when the reported amounts of the assets or liabilities are recovered or settled.

F-21

ASC740 requires that a valuation allowance be established when management determines that it is more likely thannot that all or a portion of a deferred asset willnot be realized. The Company evaluates the realizability of its net deferred income tax assets and valuation allowances as necessary, at least on an annual basis. During this evaluation, the Company reviews its forecasts of income in conjunction with other positive and negative evidence surrounding the realizability of its deferred income tax assets to determine if a valuation allowance is required. As a result of this evaluation, the Company has recorded a full valuation allowance against its deferred tax assets as the Company believes it is more likely thannot that the benefit of all of its deferred tax assets willnot be realized.

The significant components of the Company’s deferred tax assets and liabilities are as follows, in thousands:

During the year ended* December 31, 2025,the Company paidno* federal income taxes, net of refunds. Additionally, the amount paid in state income taxes, net of refunds received, was immaterial for the year ended* December 31, 2025.*

On* July 4, 2025,the One Big Beautiful Bill Act (OBBBA) was enacted, reinstating full expensing of domestic research and experimental (R&E) expenditures under new Internal Revenue Code Section174A,* effective for tax years beginning after* December 31, 2024.The legislation also provides taxpayers with the option to accelerate deductions for unamortized domestic R&E costs incurred during the2022–2024* period. The Company intends to continue Tax Cuts and Jobs Act amortization for unamortized domestic R&E costs incurred during2022–2024 period. As of* December 31, 2025,$77,000 remained unamortized related to domestic R&D costs. Final elections will be made with the2025* tax return filing.

Ownership changes* maylimit the amount of net operating loss (“NOL”) carryforwards or tax credit carryforwards that can be utilized to offset future taxable income or tax liability. Pursuant to Sections382* and383 of the Internal Revenue Code of1986, as amended (the “Code”), NOL and tax credit carryforwards* maybe subject to annual limitations in the event a cumulative change in ownership of more than50%* occurs within athree-year period. Any limitation* may*result in expiration of a portion of the NOL carryforwards or tax credit carryforwards before utilization.

For2024, the Company updated its previously completed assessment of the available NOL and tax credit carryforwards to determine the annual Section382 NOL utilization limitation as a result of a change in ownership that occurred on* December 20, 2024.*As a result of this ownership change, federal and state NOLs were reduced by $6,265,000 and $4,893,000 respectively, federal and state research and development tax credits carryforwards were reduced by $401,000 and $174,000 respectively.

The federal capitalized research and development expense deferred tax asset has been reduced by $0 and $4,122,000 as a result of the Section382 limitations as of* December 31, 2025and2024,* respectively.

F-22

Under Section382 of the Internal Revenue Code the utilization of the Company's NOLs and certain other tax attributes* maybe limited if the Company experiences an ownership change, as defined in Section382.* An ownership change generally occurs when there is a cumulative change in ownership of more than50 percentage points among certain stockholders over athree-year testing period.

The Company didnot complete a formal Section382 study during the year ended* December 31, 2025to determine whether an ownership change has occurred. Accordingly,no assurance can be given that the Company hasnot* experienced, or willnot experience in the future, an ownership change that could limit the ability to utilize its NOLs and other tax attributes. If such limitations were to apply, the Company's future cash flows and income tax expense could be adversely affected.

At* December 31, 2025,the Company had federal and state NOL carryforwards of approximately $8,153,000 and $4,331,000, respectively, to reduce future taxable income. The utilization of the federal carryforwards as an available offset to future taxable income is subject to limitations under federal income tax laws. Under current federal income tax law, federal NOLs incurred in tax years beginning after December 31, 2017** maybe carried forward indefinitely, but are limited to offset up to80%* of future taxable income. As of* December 31, 2025,all of the Company's federal NOL carryforwards will carry forward indefinitely. The Company's available state NOL carryforwards will begin to expire in2045,* unless previously utilized.

At* December 31, 2025,the Company also had federal and state research and development credits of approximately $185,000 and $34,000, respectively. The federal tax credit carryforwards will begin to expire in2045.*

The Company hasnot recorded any uncertain tax positions as of* December 31, 2025or2024.* The Company doesnot believe there will be any material changes in its unrecognized tax positions over the next12 months.

The Company hasnot incurred any interest or penalties. In the event that the Company is assessed interest or penalties at some point in the future, they will be classified in the financial statements as general and administrative expenses.

The Company files income tax returns in the United States and in multiple state jurisdictions. The Company is subject to tax examinations for federal and state purposes for tax years2022 through2025.Ownership changes* maylimit the amount of NOL carryforwards or tax credit carryforwards that can be utilized to offset future taxable income or tax liability. Pursuant to Sections382* and383 of the Code, NOL and tax credit carryforwards* maybe subject to annual limitations in the event a cumulative change in ownership of more than50%* occurs within athree-year period. Any limitation* may*result in expiration of a portion of the NOL carryforwards or tax credit carryforwards before utilization.

F-23

11. Net Loss per Share

Basic net loss per share is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding. Diluted net loss per share is computed by dividing the Company’s net loss by the weighted average number of shares of Common Stock outstanding and the impact of the dilutive effect of potential Common Stock equivalents, except when the inclusion of such potential Common Stock equivalents would be anti-dilutive. Dilutive potential Common Stock equivalents primarily consist of stock options, RSUs and warrants. Therefore, basic and diluted net loss per share applicable to common stockholders were the same for all periods presented because the impact of these items is generally anti-dilutive during periods of net loss.

The following table sets forth the potential common shares excluded from the calculation of net loss per common share because their inclusion would be anti-dilutive:

12. Segment Information

The Company is a clinical stage biopharmaceutical company that has yet to generate operating revenues. Management has determined that the Company operates with asingle operating segment and asingle reportable segment – the Clinical segment. The Chief Operating Decision Maker (CODM) is the Chief Executive Officer (CEO). The CEO assesses performance and allocates resources to achieve the Company’s goals based on operating loss and net loss as reported in the Consolidated Statements of Operations. The measure of segment assets is Total Assets as presented on the Consolidated Balance Sheets. All of the Company’s operations occur within the United States.

The following table presents selected financial information with respect to the Company's single operating segment (in thousands):