What changed in this filing

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Item 1. Financial Statements

2022-08-11 compared with 2022-05-12 · 213 added, 303 removed, 224 unchanged (70% of the section changed)

21 unchanged sentences

Common stock, $ 0.0001 par value, 100,000,000 shares authorized;

13,658,722 and 13,534,996 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

13,658,722 and 13,534,996 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

7 unchanged sentences

(Amounts in thousands, except share and per

Ended March 31,

Three Months Ended

Six Months Ended

Operating expenses:

3 unchanged sentences

Operating loss

Total other (expense) income

Total other (expense) income, net

Net loss per common share:

5 unchanged sentences

(Amounts in thousands, except share data)

For the Three Months Ended

March 31, 2022

For the Three and Six Months Ended

June 30, 2022

Balance at December 31, 2021

5 unchanged sentences

$ ( 119,542 )

For the Three Months Ended

March 31, 2021

Stock-based compensation expense

Balance at June 30, 2022

$ ( 122,073 )

For the Three and Six Months Ended

June 30, 2021

Balance at December 31, 2020

7 unchanged sentences

Balance at March 31, 2021

Stock-based compensation expense

Balance at June 30, 2021

$ ( 109,707 )

4 unchanged sentences

(Amounts in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

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Cash and restricted cash at the end of period

The following table provides a reconciliation of cash and restricted

cash reported within the Condensed Consolidated Balance Sheets to the totals above:

Schedule of cash and restricted cash

Restricted cash

Total cash and restricted cash

The accompanying notes are an integral part of

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Organization and Significant Accounting Policies

Nature of Operations

Phio Pharmaceuticals Corp.

“ we ,” “ our ” or the “ Company ”) strives to address the biggest challenges in immuno-oncology

by working to create new pathways to a cancer-free future for patients.

We are developing therapeutics that leverage our INTASYL™

technology to target both tumor and immune cells by regulating genes to strengthen a patient’s immune system while weakening tumor

defense mechanisms.

With our INTASYL self-delivering RNAi technology, we aim to bring the benefits of RNA therapeutics into cancer care

where other modalities may fall short.

(“ Phio ,” “ we ,” “ our ” or the “ Company ”) strives to address

the biggest challenges in immuno-oncology by working to create new pathways to a cancer-free future for patients.

We are developing therapeutics

that leverage our INTASYL™ technology to target both tumor and immune cells by regulating genes to strengthen a patient’s

immune system while weakening tumor defense mechanisms.

With our INTASYL self-delivering RNAi technology, we aim to bring the benefits

of RNA therapeutics into cancer care where other modalities may fall short.

Company continues to respond to and monitor the ongoing coronavirus pandemic.

The Company’s corporate headquarters and research

facility have seen limited impact and, during the three months ended March 31, 2022, continued to

operate with safety measures in place for the health and well-being of its employees, such as working remotely and flexible scheduling,

facility have seen limited impact and, during the three and six months ended June 30, 2022, continued

to operate with safety measures in place for the health and well-being of its employees, such as working remotely and flexible scheduling,

in accordance with guidance from federal, state and local authorities.

The Company believes that the coronavirus pandemic has not had

a significant impact on its financial condition and results of operations for the three months ended March 31, 2022.

However, the Company

may experience delays in enrollment with its current clinical trial and with its clinical trial expected to commence in the middle of

The extent to which the coronavirus pandemic may materially impact our financial results and operations will depend on a number

of factors, including delays in our operations due to limited availability of supplies and services we rely on, the ability to enroll

patients in our clinical trials and the duration of the coronavirus pandemic, which remain difficult to predict and are highly uncertain.

Significant Accounting Policies

a significant impact on its financial condition and results of operations for the three and six months ended June 30, 2022.

the extent to which the coronavirus pandemic may materially impact our financial results and operations will depend on a number of factors,

including the availability of supplies and services we rely on, the ability to enroll subjects in our clinical trials and the duration

of the coronavirus pandemic, which remain difficult to predict and are highly uncertain.

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 from third 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, which may be adversely impacted by the coronavirus pandemic and the

ongoing conflict between Russia and Ukraine.

There is no guarantee that debt, additional equity or other funding will be available to

us on acceptable terms, or at all.

If we fail to obtain additional funding when needed, we would be forced to scale back or terminate

our operations or seek to merge with or to be acquired by another company.

we believe that the coronavirus pandemic has not had a significant impact on our financial condition and results of operations at this

time, the potential economic impact brought by the coronavirus pandemic, which may be exacerbated by the global macroeconomic uncertainty

from the ongoing conflict between Russia and Ukraine, is difficult to assess or predict.

There may be developments outside of our control

that require us to adjust our operating plans.

Given the nature of the situation, we cannot reasonably estimate the impact of the coronavirus

pandemic on our financial condition, results of operations or cash flows in the future.

Company believes that its existing cash should be sufficient to fund operations for at least the next 12 months from the date of the release

of these financial statements.

Basis of Presentation

The accompanying

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 included in the Company’s annual financial

statements have been condensed or omitted.

Additionally, certain prior year amounts have been reclassified for consistency with the

current year presentation.

The Company made an adjustment to reflect patent costs within general and administrative operating

expenses in the condensed consolidated statements of operations.

The reclassification increased general and administrative operating

expenses and reduced research and development operating expenses by $ 192,000

for the three months ended March 31, 2021.

This reclassification had no effect on total operating expenses, net loss, net loss per

common share and had no impact on the Company’s condensed consolidated balance sheets, statement of stockholders’ equity

and statement of cash flows for the prior year period.

The accompanying 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 included in the Company’s annual financial statements have been condensed or omitted.

Additionally, certain prior year amounts have been reclassified for consistency with the current year presentation.

The Company made an

adjustment to reflect patent costs within general and administrative operating expenses in the condensed consolidated statements of operations.

The reclassification increased general and administrative operating expenses and reduced research and development operating expenses by

$ 104,000 for the three months ended June 30, 2021 and by $ 296,000 for the six months ended June 30, 2021.

This reclassification had no

effect on total operating expenses, net loss, net loss per common share and had no impact on the Company’s condensed consolidated

balance sheets, statement of stockholders’ equity and statement of cash flows for the prior year period.

The year-end condensed consolidated

sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.

These statements should

be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form

10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission (the “ SEC ”)

balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP.

These statements

should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s most recent

Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission (the “ SEC ”)

on March 22, 2022.

opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation of the condensed

consolidated financial statements have been included.

Interim results are not necessarily indicative of results for a full year.

In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair

presentation of the condensed consolidated financial statements have been included.

Interim results are not necessarily indicative of

results for a full year.

Principles of Consolidation

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taxes, and our valuation allowance on our deferred tax assets.

On an ongoing basis we evaluate our estimates and base our estimates on

historical experience and other relevant assumptions that we believe are reasonable under the circumstances, including as a result of

new information that may emerge concerning the coronavirus pandemic.

Restricted Cash

Restricted cash consists

of certificates of deposit held by financial institutions as collateral for the Company’s corporate credit cards.

The following

table provides a reconciliation of cash and restricted cash reported within the condensed consolidated balance sheet that sum to the

total of the same such amounts shown in the condensed consolidated statement of cash flows (in thousands):

Schedule of Cash and Cash Equivalents

Restricted cash

Cash and restricted cash shown in the statement of cash flows

On an ongoing basis, we evaluate our estimates and base our estimates

on historical experience and other relevant assumptions that we believe are reasonable under the circumstances, including as a result

of new information that may emerge concerning the coronavirus pandemic and the ongoing conflict between Russia and Ukraine.

Actual results

could differ materially from these estimates.

Summary of Significant Accounting Policies

There have been no material changes to the Company’s

significant accounting policies as compared to those disclosed in “Note 2.

Summary of Significant Accounting Policies” in

our most recent Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the SEC on March 22, 2022.

Recent Accounting Pronouncements

In May 2021, the Financial

Accounting Standards Board (the “ FASB ”) issued ASU 2021-04, “ Earnings per Share (Topic 260), Debt –

Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging

– Contracts in Entity’s Own Equity (Subtopic 815-40) ” (“ ASU 2021-04 ”).

The amendments in the

updates are intended to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified

written call options that remain equity classified after modification or exchange.

The amendments in ASU 2021-04 are effective for all

entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.

An entity should apply

the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments.

Early adoption

is permitted for all entities, including within an interim period.

The Company adopted ASU 2021-04 on January 1, 2022.

The adoption of

this standard had no impact on the Company’s condensed consolidated financial statements.

Fair Value of Financial Instruments

The carrying amounts reported

in the condensed consolidated balance sheet for restricted cash, accounts payable and accrued expenses approximate their fair values due

to their short-term nature.

The Company follows the provisions

of the Financial Accounting Standards Board (the “ FASB ”) Accounting Standards Codification (“ ASC ”)

Topic 820, “ Fair Value Measurement ,” for the Company’s financial assets and liabilities that are re-measured

and reported at fair value each reporting period and are re-measured and reported at fair value at least annually using a fair value hierarchy

that is broken down into three levels.

The Company follows the

provisions of the FASB Accounting Standards Codification (“ ASC ”) Topic 820, “ Fair Value

Measurement ,” for the Company’s financial assets and liabilities that are re-measured and reported at fair value

each reporting period and are re-measured and reported at fair value at least annually using a fair value hierarchy that is broken

down into three levels.

Level inputs are defined as follows:

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for identical assets or liabilities.

Level 2 – other significant observable inputs for the

assets or liabilities through corroboration with market data at the measurement date.

Level 3 – significant unobservable inputs that reflect

management’s best estimate of what market participants would use to price the assets or liabilities at the measurement date.

At March 31, 2022 and December 31, 2021, the Company

categorized its restricted cash of $ 50,000 as Level 2 hierarchy.

The assets classified as Level 2 have initially been valued at the applicable

transaction price and subsequently valued, at the end of each reporting period, using other market observable data.

Observable market

data points include quoted prices, interest rates, reportable trades and other industry and economic events.

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 recognizes the classification of the lease as operating or financing.

For leases with a term greater than one 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.

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 if not readily determinable, the Company’s incremental borrowing rate.

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.

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 do not 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

Research and development expenses relate to compensation

and benefits for research and development personnel, facility-related expenses, supplies, external services, costs to acquire technology

licenses, research activities under our research collaborations, expenses associated with preclinical and clinical development 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 services not yet provided and/or for materials not 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 have not yet billed the Company with respect to services provided and/or materials that it has received.

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 may differ from these estimates and could have a material impact on the Company’s reported

The Company’s historical accrual estimates have not been materially different from its actual costs.

Collaborative Arrangements

Company follows the provisions of the FASB ASC Topic 808, “ Collaborative Arrangements ,” (“ Topic 808 ”)

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 Topic 606, “ Revenue

from Contracts with Customers ,” (“ Topic 606 ”) 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 Topic 606.

Under Topic 808, 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.

Payments or 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.

In the event the amounts paid to the Company by a collaborative

partner exceed the Company’s research and development expense incurred in a quarterly period, such amounts are classified as collaborative

arrangement revenue.

Stock-based Compensation

Company follows the provisions of the FASB ASC Topic 718, “ Compensation — Stock Compensation ” (“ ASC

718 ”), which requires the measurement and recognition of compensation expense for all stock-based payment awards.

The fair value

of restricted stock units 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 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.

compensation expense recognized in the financial statements is based on awards that are ultimately expected to vest.

Accordingly, we are

also required to estimate forfeitures at the time of grant and to revise those estimates in subsequent periods if actual forfeitures differ

from estimates.

We use historical data to estimate pre-vesting award forfeitures and record stock-based compensation expense only for

those awards that are expected to vest.

Our forfeiture rate estimates are based on an analysis of our actual forfeiture experience, employee

turnover behavior, and other factors.

The impact of any adjustments to our forfeiture rates or to the extent that actual forfeitures differ

from our estimates, the difference is recorded as a cumulative adjustment in the period the estimates are revised.

Comprehensive Loss

The Company’s comprehensive

loss is equal to its net loss for all periods presented.

Net Loss per Common Share

net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding.

Diluted net loss

per common share is computed by dividing the Company’s net loss by the weighted average number of common shares outstanding and

the impact of all dilutive potential common shares outstanding, except where such dilutive potential common shares would be anti-dilutive.

Dilutive potential common shares primarily consist of warrants, restricted stock units and stock options.

Liquidity and Going Concern

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

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 from third 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.

There is no guarantee that debt, additional equity or other funding will be available

to us on acceptable terms, or at all.

If we fail to obtain additional funding when needed, we would be forced to scale back or terminate

our operations or seek to merge with or to be acquired by another company.

we believe that the coronavirus pandemic has not had a significant impact on our financial condition and results of operations at this

time, the potential economic impact brought by the coronavirus pandemic, which may be exacerbated by the global macroeconomic uncertainty

from the ongoing conflict between Russia and Ukraine, is difficult to assess or predict.

There may be developments outside of our control

that require us to adjust our operating plans.

Given the nature of the situation, we cannot reasonably estimate the impact of the coronavirus

pandemic on our financial condition, results of operations or cash flows in the future.

The Company believes that

its existing cash should be sufficient to fund operations for at least the next 12 months from the date of the release of these financial

Recent Accounting Pronouncements

In May 2021, the FASB issued

ASU 2021-04, “ Earnings per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation

– Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) ”

(“ ASU 2021-04 ”).

The amendments in the updates are intended to clarify and reduce diversity in an issuer’s accounting

for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification

The amendments in ASU 2021-04 are effective for all entities for fiscal years beginning after December 15, 2021, including

interim periods within those fiscal years.

An entity should apply the amendments prospectively to modifications or exchanges occurring

on or after the effective date of the amendments.

Early adoption is permitted for all entities, including within an interim period.

Company adopted ASU 2021-04 on January 1, 2022.

The adoption of this standard had no impact on the Company’s condensed consolidated

financial statements.

Level 2 – other significant observable

inputs for the assets or liabilities through corroboration with market data at the measurement date.

Level 3 – significant unobservable

inputs that reflect management’s best estimate of what market participants would use to price the assets or liabilities at the measurement

At June 30, 2022 and December

31, 2021, the Company categorized its restricted cash of $ 50,000 as Level 2 hierarchy.

The assets classified as Level 2 have initially

been valued at the applicable transaction price and subsequently valued, at the end of each reporting period, using other market observable

Observable market data points include quoted prices, interest rates, reportable trades and other industry and economic events.

In January 2019, the Company

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Schedule of lease and supplemental balance sheet information

June 30, 2022

December 31, 2021

6 unchanged sentences

Weighted average discount rate

Operating lease costs

included in operating expense were $ 33,000

for the three months ended March 31, 2022 and 2021, respectively.

Operating lease costs included in operating

expense were $ 33,000

for the three months ended June 30, 2022 and 2021, respectively.

Operating lease costs included in operating expense were $ 66,000

for the six months ended June 30, 2022 and 2021, respectively.

Cash paid for the amounts

1 unchanged sentence

within changes in the lease liability in the operating activities of our condensed consolidated statements of cash flows was $ 34,000 and

$ 32,000 for the three months ended March 31, 2022 and 2021, respectively.

$ 33,000 for the three months ended June 30, 2022 and 2021, respectively.

Cash paid for the six months ended June 30, 2022 and 2021 was

$ 67,000 and $ 65,000 , respectively.

Future lease payments for

our non-cancellable operating leases and a reconciliation to the carrying amount of the operating lease liability presented in the condensed

consolidated balance sheet as of March 31, 2022 is as follows, in thousands:

consolidated balance sheet as of June 30, 2022 is as follows, in thousands:

Schedule of future minimum lease payments

14 unchanged sentences

Upon loan forgiveness, the Company recognized a gain on the extinguishment of debt

for the loan proceeds received and interest accrued in the condensed consolidated statements of operations for the three months

ended March 31, 2021.

of $ 233,000 for the loan proceeds received and interest accrued in the condensed consolidated statements of operations for the six months

ended June 30, 2021.

Stockholders’ Equity

January 2021 Private

Placement — On January 25, 2021, the Company completed a private placement of 4,420,863

shares of the Company’s common stock at a purchase price per share of $ 3.07 ,

pre-funded warrants to purchase an aggregate of 140,065

shares of the Company’s common stock (the “ January 2021 Pre-Funded Warrants ”) at a purchase price per

pre-funded warrant of $ 3.069

and warrants to purchase an aggregate of 3,420,696

shares of the Company’s common stock with an exercise price of $ 3.00

per warrant (the “ January 2021 Warrants ”) (the “ Private Placement ”).

In connection with the

Private Placement, the Company issued warrants to the placement agent, H.C.

Wainwright & Co., LLC (“ HCW ”), to

purchase a total of 342,070

shares of the Company’s common stock at an exercise price of $ 3.8375

per warrant (the “ January 2021 Placement Agent Warrants ”).

Net proceeds to the Company from the Private Placement

were $ 12,669,000

after deducting placement agent fees and offering expenses.

2021 Registered Direct Offering — On February 17, 2021, the Company completed a registered direct offering

shares of the Company’s common stock at a purchase price of $ 3.42

per share (the “ Offering ”).

In connection with the Offering, the Company issued warrants to the placement agent,

HCW, to purchase a total of 168,509

shares of the Company’s common stock at an exercise price of $ 4.275

per warrant (the “ February 2021 Placement Agent Warrants ”).

Net proceeds to the Company from the Offering were

after deducting placement agent fees and offering expenses.

The Company first assesses the warrants it

issues under the FASB ASC Topic 480, “ Distinguishing Liabilities from Equity ” (“ ASC 480 ”) to determine

whether they are within the scope of ASC 480.

As there were no instances outside of the Company’s control that could require cash

settlement from any of the warrant series issued in the Company’s financing transactions, the Company’s outstanding warrants

are outside the scope of ASC 480.

The Company then applies

and follows the applicable accounting guidance in the FASB ASC Topic 815, “ Derivatives and Hedging.

instruments are accounted for as either derivative liabilities or equity instruments depending on the specific terms of the

The warrants issued by the Company do not meet the definition of a derivative instrument as they are indexed to the

Company’s common stock and classified within stockholders’ equity.

Based on this determination, the Company’s

warrants are classified within stockholders’ equity.

January 2021 Private Placement — On

January 25, 2021, the Company completed a private placement of 4,420,863 shares of the Company’s common stock at a purchase

price per share of $ 3.07 , pre-funded warrants to purchase an aggregate of 140,065 shares of the Company’s common stock (the “ January

2021 Pre-Funded Warrants ”) at a purchase price per pre-funded warrant of $ 3.069 and warrants to purchase an aggregate of 3,420,696

shares of the Company’s common stock with an exercise price of $ 3.00 per warrant (the “ January 2021 Warrants ”)

(the “ Private Placement ”).

In connection with the Private Placement, the Company issued warrants to the placement agent,

Wainwright & Co., LLC (“ HCW ”), to purchase a total of 342,070 shares of the Company’s common stock at

an exercise price of $ 3.8375 per warrant (the “ January 2021 Placement Agent Warrants ”).

Net proceeds to the Company

from the Private Placement were $ 12,669,000 after deducting placement agent fees and offering expenses.

2021 Registered Direct Offering — On February 17, 2021, the Company completed a registered direct offering of 2,246,784

shares of the Company’s common stock at a purchase price of $ 3.42 per share (the “ Offering ”).

In connection with

the Offering, the Company issued warrants to the placement agent, HCW, to purchase a total of 168,509 shares of the Company’s common

stock at an exercise price of $ 4.275 per warrant (the “ February 2021 Placement Agent Warrants ”).

Net proceeds to the

Company from the Offering were $ 6,908,000 after deducting placement agent fees and offering expenses.

The Company first assesses

the warrants it issues under the FASB ASC Topic 480, “ Distinguishing Liabilities from Equity ” (“ ASC 480 ”)

to determine whether they are within the scope of ASC 480.

As there were no instances outside of the Company’s control that could

require cash settlement from any of the warrant series issued in the Company’s financing transactions, the Company’s

outstanding warrants are outside the scope of ASC 480.

The Company then applies and

follows the applicable accounting guidance in the FASB ASC Topic 815, “ Derivatives and Hedging.

” Financial instruments

are accounted for as either derivative liabilities or equity instruments depending on the specific terms of the agreement.

issued by the Company do not meet the definition of a derivative instrument as they are indexed to the Company’s common stock and

classified within stockholders’ equity.

Based on this determination, the Company’s warrants are classified within stockholders’

The following table summarizes the Company’s

outstanding equity-classified warrants at March 31, 2022:

outstanding equity-classified warrants at June 30, 2022:

Schedule of outstanding warrants

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February 2021 Placement Agent Warrants

No warrants were exercised

during the three months ended March 31, 2022.

The Company received net proceeds of $ 2,146,000 from the exercise of warrants during the

three months ended March 31, 2021.

Loss per Common Share

were exercised during the three months ended June 30, 2022 and 2021 and during the six months ended June 30, 2022.

The Company received

net proceeds of $ 2,146,000

from the exercise of warrants during the six months ended June 30, 2021.

Net Loss per Common Share

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:

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

Schedule of antidilutive stock

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Restricted Stock Units

Restricted stock units (“ RSUs ”) are issued under

the Company’s 2020 Long-Term Incentive Plan (the “ 2020 Plan ”) or as inducement grants issued outside of the 2020

Plan to new employees.

Restricted stock units (“ RSUs ”)

are issued under the Company’s 2020 Long-Term Incentive Plan (the “ 2020 Plan ”) or as inducement grants issued

outside of the 2020 Plan to new employees.

RSUs are generally subject to graded vesting and the satisfaction of certain service requirements.

Upon vesting,

each outstanding RSU will be exchanged for one share of the Company’s common stock.

Employee RSU recipients may elect 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 fair value of the RSUs awarded are based upon the Company’s closing stock price at the grant date and are expensed

over the requisite service period.

Upon vesting, each outstanding RSU will be exchanged for one share of the Company’s common stock.

Employee RSU recipients may elect

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 fair value of the RSUs awarded are based upon the Company’s closing stock price at the grant date

and are expensed over the requisite service period.

The following table summarizes the activity of

the Company’s RSUs for the three months ended March 31, 2022:

the Company’s RSUs for the six months ended June 30, 2022:

Schedule of RSU activity

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Unvested units at December 31, 2021

Unvested units at March 31, 2022

compensation expense related to RSUs was $ 179,000 and $ 57,000 for the three months ended March 31, 2022 and 2021, respectively.

The aggregate fair value of awards that

vested during the three months ended March 31, 2022 and 2021 was $ 128,000

and $ 8,000 ,

respectively, which represents the market value of the Company’s common stock on the date that the RSUs vested.

Unvested units at June 30, 2022

compensation expense related to RSUs was $ 82,000 and $ 124,000 for the three months ended June 30, 2022 and 2021, respectively.

compensation expense related to RSUs was $ 261,000 and $ 181,000 for the six months ended June 30, 2022 and 2021, respectively.

The aggregate fair value of awards that vested

during the six months ended June 30, 2022 and 2021 was $ 128,000 and $ 8,000 , respectively, which represents the market value

of the Company’s common stock on the date that the RSUs vested.

As of June 30, 2022, the compensation

expense for all unvested RSUs in the amount of approximately $768,000 will be recognized in the Company’s results of operations

over a weighted average period of 2.08 years.

Stock Options

2 unchanged sentences

subject to graded vesting and the satisfaction of certain service requirements.

Upon the exercise of a stock option, the Company

issues new shares and delivers them to the recipient.

Upon the exercise of a stock option, the Company issues

new shares and delivers them to the recipient.

The Company does not expect to repurchase shares to satisfy stock option exercises.

8 unchanged sentences

and presently has no intention of paying cash dividends.

Company did not grant stock options during the three months ended March 31, 2022 and 2021.

Company did not grant stock options during the three and six months ended June 30, 2022 and 2021.

The following table summarizes the activity of

the Company’s stock options for the three months ended March 31, 2022:

the Company’s stock options for the six months ended June 30, 2022:

Schedule of Stock Option Activity

Balance at December 31, 2021

Balance at March 31, 2022

Exercisable at March 31, 2022

Balance at June 30, 2022

Exercisable at June 30, 2022

Stock-based compensation expense

related to stock options for the three months ended March 31, 2022 and 2021 was $ 7,000 and $ 10,000 , respectively.

related to stock options for the three months ended June 30, 2022 and 2021 was $ 1,000 and $ 8,000 , respectively.

Stock-based compensation

expense related to stock options for the six months ended June 30, 2022 and 2021 was $ 8,000 and $ 18,000 , respectively.

As of June 30, 2022, the compensation

expense for all unvested stock options in the amount of approximately $5,000 will be recognized in the Company’s results of operations

over a weighted average period of 0.09 years.

Compensation Expense Related to Equity Awards

The following table sets

forth total stock-based compensation expense for the three months ended March 31, 2022 and 2021, in thousands:

forth total stock-based compensation expense for the three and six months ended June 30, 2022 and 2021, in thousands:

Schedule of stock based compensation expense

Three Months Ended

Six Months Ended

Research and development

2 unchanged sentences

Collaboration Agreements

In March 2021, the Company

entered into a clinical co-development collaboration agreement with AgonOx Inc.

(“ AgonOx ”), a private company developing

a pipeline of novel immunotherapy drugs targeting key regulators of the immune response to cancer.

Under the clinical development agreement,

the companies are working to develop a T cell-based therapy using PH-762 and AgonOx’s “double positive” TIL (“ DP

TIL ”) technology.

Per the terms of the clinical development agreement, the Company committed to make future payments of up to

In March 2021, the

Company entered into a clinical co-development collaboration agreement with AgonOx, Inc.

(“ AgonOx ”), a private

company developing a pipeline of novel immunotherapy drugs targeting key regulators of the immune response to cancer.

clinical development agreement, the companies are working to develop a T cell-based therapy using PH-762 and AgonOx’s

“double positive” TIL (“ DP TIL ”) technology.

Per the terms of the clinical development agreement, the

Company committed to make future payments of up to $ 4,000,000

to reimburse AgonOx for expenses incurred to support a clinical trial with AgonOx’s DP TIL technology and PH-762.

Company will recognize its share of costs arising from research and development activities performed by AgonOx in the Company’s

will recognize its share of costs arising from research and development activities performed by AgonOx in the Company’s

financial statements in the period AgonOx incurs such expense.

Phio will be entitled to certain future development milestones and low

single-digit sales-based royalty payments from AgonOx’s licensing of its DP TIL technology.

There were no reimbursable costs incurred

by AgonOx under the clinical development agreement during the three months ended March 31, 2022 and 2021.

No milestone or sales-based

royalty payments from AgonOx have been received to date.

Phio will be entitled to certain future development milestones and

low single-digit sales-based royalty payments from AgonOx’s licensing of its DP TIL technology.

There were no reimbursable

costs incurred by AgonOx under the clinical development agreement during the three and six months ended June 30, 2022 and 2021.

milestone or sales-based royalty payments from AgonOx have been received to date.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements