Phio Pharmaceuticals Corp.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Board of Directors and Shareholders

Phio Pharmaceuticals Corp.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Phio Pharmaceuticals Corp. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2025, the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2025, and 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, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

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 audit. 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 audit 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 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 audit 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 audit included performing procedures to assess the risks of material misstatement of the 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 financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accounting for Certain Warrants Issued in 2025

As described further in Note 8 to the consolidated financial statements, the Company has issued to certain institutional and accredited investors new Series G, Series H and Series I unregistered warrants to purchase shares of the Company's common stock in connection with registered direct offerings of common stock and concurrent private placement offerings of warrants to purchase common stock (the “January 2025 Offerings”), as well as, issued new Series J, Series K and Series A unregistered warrants to purchase shares of the Company's common stock to certain holders of existing warrants pursuant to Inducement Letter Agreements (the “July 2025 Financing” and “November 2025 Financing”). The Company accounted for the warrants as equity instruments as they were outside of the scope of ASC 480 and did not meet the definition of a derivative instrument within ASC 815 as they are indexed to the Company’s common stock. We identified the assessment of the accounting for the Series G, H, I, J, K, and A warrants (“Certain Warrants”) to purchase shares of the Company's common stock issued in connection with the January 2025 Offerings, July 2025 Financing and November 2025 Financing as a critical audit matter.

The principal consideration for our determination that the accounting for the Certain Warrants issued in 2025 is a critical audit matter is that it requires significant judgement due to the application of complex accounting guidance under ASC 480 and ASC 815 in evaluating the classification within shareholder’s equity. Auditing these conclusions required complex auditor judgement and the need for consultation with our national office related to the application of the applicable accounting standards.

Our audit procedures related to the accounting for the Certain Warrants issued in 2025 included the following, among others.

/s/GRANT THORNTON LLP

We have served as the Company’s auditor since 2025.

Philadelphia, Pennsylvania

March 5, 2026

Shareholders and Board of Directors

Phio Pharmaceuticals Corp.

King of Prussia, Pennsylvania

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Phio Pharmaceuticals Corp. (the "Company”) as of December 31, 2024, the related consolidated statements of operations, and stockholders’ equity, and cash flows for the year then ended, and 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 at December 31, 2024, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern Uncertainty

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. 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 audit. 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 audit 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 audit 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 audit 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 audit 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 audit provides a reasonable basis for our opinion.

/s/ BDO USA, P.C.

We served as the Company's auditor from 2011 to 2025.

Boston, Massachusetts

March 31, 2025