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 condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Certain information and footnote disclosures that are included in the Company’s annual consolidated financial statements, but that arenot required for interim reporting purposes, have been condensed or omitted. In the opinion of management, the interim condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of results for the periods presented.

These statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s most recent Annual Report on Form10-K for the year ended* December 31, 2025*, as filed with the Securities and Exchange Commission (the “SEC”) on* March 5, 2026 (the “2025 Form10-K*”). Interim results arenot necessarily indicative of results for a full year.

Principles of Consolidation

The condensed 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.

Use of Estimates

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 judgment 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 the Company’s 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, in order to maintain its operations. This is dependent on a number of factors, including the market demand or liquidity of the Company’s common stock ("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.

The Company has limited cash resources, has reported recurring losses from operations since inception, has negative operating cash flows and hasnot yet generated product revenues. As of* September 30, 2026,the Company had cash and cash equivalents of approximately $10.6 million. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. Based on the Company's current operating plan and existing cash resources, management believes the Company may**not* have sufficient cash and cash equivalents to fund planned operations for at least the next12 months from the date these condensed consolidated financial statements are released. The continuation of the Company as a going concern depends upon the Company’s ability to raise additional capital through an equity offering, debt offering and/or strategic opportunity to fund its operations. There can beno assurance that the Company will be successful in accomplishing these plans in order to continue as a going concern. These condensed consolidated financial statements donot include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Summary of Significant Accounting Policies

The Company’s significant accounting policies as of* September 30, 2026* are consistent with those described in the Company’s Annual Report on Form10‑K for the year ended* December 31, 2025.There have beenno* material changes during the current period.

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 hasnot had a material impact from the OBBBA to its consolidated financial statements.

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2. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities are comprised of the following:

3. 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 continuing obligations of the Company and AgonOx thereunder were terminated in their entirety. The Company isno* longer 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 remaining 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.

4. Leases

The Company leases space for various corporate and research purposes and accounts for lease arrangements in accordance with the provisions of ASC842, Leases. 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.

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On* March 1, 2024,the Company commenced an operating lease for a laboratory facility located at17* Briden Street, Worcester, Massachusetts, which expired on* February 28, 2026.The Company currently maintains shared office space at LifeSciences PA located at411* Swedeland Road, King of Prussia, PA for access to full working space during normal business hours of operations for a monthly fee of $300. This arrangement is cancellable at any time.

Operating lease costs included in operating expense were approximately $900 and $9,000 for thethree months ended* September 30, 2026and2025*, respectively. Operating lease costs included in operating expense were approximately $2,700 and $22,000 for thenine months ended* September 30, 2026and2025*, respectively.

There wasno cash paid for the amounts included in the measurement of the operating lease liability on the Company’s condensed consolidated balance sheets and included within changes in the lease liability in the operating activities of the Company’s condensed consolidated statements of cash flows for the Company’s former corporate headquarters for thenine months ended* September 30, 2026and2025*.

5. Stockholders’** Equity**

Financings

** 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, H.C. Wainwright & Co, LLC (“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, 2025Registered Direct Offerings and the January 13, 2025*Private Placement were approximately $2.8 million, after deducting fees and estimated 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, 2025Registered Direct Offering and the January 14, 2025*Private Placement were approximately $2.1 million, after deducting fees and estimated offering expenses.

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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, 2025Registered Direct Offering and the January 16, 2025*Private Placement were approximately $1.5 million, after deducting fees and estimated offering expenses.

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. Pursuant to the July 2025Inducement Letter Agreements, 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 2025*Financing**”).

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.

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** 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.

Warrants

The Companyfirst assesses warrants that are issued by the Company under the FASB ASC Topic480, “Distinguishing Liabilities from Equity” (“ASC480”) to determine whether the warrants are within the scope of ASC480. If there areno instances outside of the Company’s control that could require cash settlement, the Company then applies and follows the applicable accounting guidance in the FASB ASC Topic815, “Derivatives and Hedging” (“ASC815”). Financial instruments are accounted for as either derivative liabilities or equity instruments depending on the specific terms of the agreement. Based on the assessment of the warrants issued by the Company under the guidance in ASC480 and ASC815, the warrants issued by the Company have been classified within stockholder’s equity.

During thethree months ended* September 30, 2026and2025*, there were zero and 928,596 warrants exercised, respectively. During thenine months ended* September 30, 2026and2025*, there were zero and 1,486,028 warrants exercised, respectively.

The following table summarizes the Company’s outstanding warrants, all of which are classified as equity instruments, at* September 30, 2026* and2025:

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At The Market Offering Agreement

On* April 8, 2026,the Company entered into an At the Market Agreement ("Sales Agreement") with HCW pursuant to which the Company may*offer and sell shares of Common Stock, having an aggregate price of up to $6,360,000 from time to time through HCW, acting as sales agent (the "ATM Program").

The Company isnot obligated to sell any shares under the ATM Program and* maysuspend or terminate the program at any time. Net proceeds from sales of shares under the ATM Program, after deducting sales commissions and other offering expenses, are intended to fund the development of PH-762 in an expected Phase2b* clinical trial for cutaneous squamous cell carcinoma, other development activities and for general working capital needs.

As of* September 30, 2026*, and through the date of issuance of these financial statements, the Company hasnot sold any shares of Common Stock under the ATM Program and hasnot received any proceeds therefrom.

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6. Stock-based Compensation

Restricted Stock Units

Restricted stock units (“RSUs”) are issued under the Company’s2020 Long-Term Incentive Plan (the “2020 Plan”). RSUs are generally subject to the satisfaction of certain service requirements. RSUs granted by the Company to employees generally cliff vestone 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 withholding 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 thenine months ended* September 30, 2026*:

There were 730,000 and 512,800 RSUs granted during thethree months ended* September 30, 2026and2025*, respectively. There were 1,083,500 and 512,800 RSUs granted during thenine months ended* September 30, 2026* and2025, respectively.

Stock-based compensation expense related to RSUs was $285,000 and $113,000 for thethree months ended* September 30, 2026and2025*, respectively. Stock-based compensation expense related to RSUs was $881,000 and $207,000 for thenine months ended* September 30, 2026* and2025, respectively.

The aggregate fair value of RSUs that vested during both thethree andnine months ended* September 30, 2026* was$452,000, which represents the market value of the Company's common stock on the date that the applicable RSU vested. The aggregate fair value of RSUs that vested during both thethree andnine months ended* September 30, 2025*was $164,000, which represents the market value of the Company's common stock on the date that the applicable RSU vested.

Stock Options

Stock options are available for issuance under the2020 Plan. Stock options granted by the Company to participants generally vest annually over four years from the grant date and expireten years from the date of the grant. All outstanding stock options continue to be accounted for in accordance with ASC718.

The Company didnot grant any stock options during thenine months ended* September 30, 2026* or2025. As of* September 30, 2026*, there were 1,115 stock options outstanding.

The Company didnot have any stock-based compensation expense related to stock options for both thethree andnine months ended* September 30, 2026and2025*, respectively.

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Compensation Expense Related to Equity Awards

The following table sets forth total stock-based compensation expense for thethree andnine months ended* September 30, 2026and2025*, in thousands:

As of* September 30, 2026*, the total unrecognized compensation cost related to non-vested RSUs was approximately $837,000. This cost is expected to be recognized over a weighted-average period of 0.78 years.

7. Net Loss per Common Share

Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding. Diluted net loss per share is computed by dividing the Company’s net loss by the weighted average number of common shares 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:

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8. Segment Information

The Company hasone reportable segment and operates as a clinical stage biopharmaceutical company. To date, the Company has yet to generate operating revenues and doesnot expect to generate any revenue in the foreseeable future. The Company's chief operating decision maker (CODM) is the President and Chief Executive Officer (CEO). The accounting policies of the single segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance for the single segment and decides how to allocate resources based on net loss as reported on the condensed consolidated statements of operations. The CODM uses net loss to monitor budget versus actual results and to evaluate overall cash burn of the business. 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):

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