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Item 9A. Controls and Procedures

2023-03-22 compared with 2022-03-22 · 564 added, 103 removed, 146 unchanged (82% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief

Executive Officer (who is also acting as our principal financial officer) and our Principal Accounting Officer, evaluated the effectiveness

of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period

covered by this report to ensure that information that we are required to disclose in reports that we file or submit under the Exchange

Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms.

Our management, with the participation of our Principal

Executive Officer (who is also acting as our Principal Financial Officer), evaluated the effectiveness of disclosure controls and procedures

(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”))

as of the end of the period covered by this report to ensure that information that we are required to disclose in reports that we file

or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and

Our disclosure controls and procedures are designed

4 unchanged sentences

Based on the evaluation of our

disclosure controls and procedures as of the end of the period covered by this report, management, with the participation of our Chief

Executive Officer (who is also acting as our principal financial officer) and our Principal Accounting Officer, concluded that our disclosure

controls and procedures were effective as of such date.

disclosure controls and procedures as of the end of the period covered by this report, management, with the participation of our Principal

Executive Officer (who is also acting as our Principal Financial Officer), concluded that our disclosure controls and procedures were

effective at the reasonable assurance level as of such date.

Management’s Annual Report on Internal Control Over Financial

9 unchanged sentences

of changes in conditions, the effectiveness of internal control may vary over time.

Our management assessed the effectiveness of our

internal control over financial reporting as of December 31, 2021.

In making this assessment, management used the criteria set forth

in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013

Based on this assessment, management, with the participation of our Chief Executive Officer (who is also acting as our principal

financial officer) and our Principal Accounting Officer, concluded that, as of December 31, 2021, our internal control over financial

reporting was effective.

Our management assessed the effectiveness of our internal

control over financial reporting as of December 31, 2022.

In making this assessment, management used the criteria set forth in Internal

Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

Based on this assessment, management, with the participation of our Principal Executive Officer (who is also acting as our Principal Financial

Officer), concluded that, as of December 31, 2022, our internal control over financial reporting was effective.

Attestation Report of the Registered Public Accounting Firm

4 unchanged sentences

There have been no changes in our internal control

over financial reporting that occurred during the year ended December 31, 2021 that have materially affected, or is reasonably likely

to materially affect, our internal control over financial reporting.

over financial reporting that occurred during the fiscal quarter ended December 31, 2022 that have materially affected, or

are reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

Our certificate of incorporation provides that

the Court of Chancery of the State of Delaware is the exclusive forum for the following types of actions or proceedings:

any derivative

action or proceeding brought on behalf of the Company, any action asserting a claim of breach of a fiduciary duty owed by any director,

officer or other employee of the Company to the Company or the Company’s stockholders, any action asserting a claim against the

Company arising pursuant to any provision of the Delaware General Corporation Law or the Company’s certificate of incorporation

or bylaws, or any action asserting a claim against the Company governed by the internal affairs doctrine.

Despite the fact that our certificate

of incorporation provides for this exclusive forum provision to be applicable to the fullest extent permitted by applicable law, Section

27 of the Securities Act and Exchange Act, creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability

created by the Exchange Act or the rules and regulations thereunder and Section 22 of the Securities Act, creates concurrent jurisdiction

for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations

As a result, this provision of our certificate of incorporation would not apply to claims brought to enforce a duty or liability

created by the Securities Act, Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

1 unchanged sentence

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information

required by this Item will be incorporated by reference to the information contained in our Definitive Proxy Statement to be filed no

later than 120 days after the fiscal year end of December 31, 2021.

Board of Directors

The size of the Board is currently set at six directors.

and other information regarding our directors, whose terms expire at the 2023 Annual Meeting of Stockholders, is set forth below.

Director Name

and Year First Became a Director

Position(s) with

Bitterman (2012)

President, Chief Executive Officer and Chairman of the Board of Directors

Bradford (2022)

Geert Cauwenbergh, Dr.

Ferrara (2019)

Freeman, Ph.D.

Lockshin, Ph.D.

Bitterman has served as a member and the Chairman

of our Board since 2012 and as our President and Chief Executive Officer since February 2023.

Bitterman served as the Interim Executive

Chairman of the Company from September 2022 to February 2023 until his appointment to President and Chief Executive Officer.

served as the President and Chief Executive Officer of Cutanea Life Sciences, Inc., a private company he founded in 2005 that focused

on developing innovative technologies to treat diseases and disorders of the skin and subcutaneous tissue, until its acquisition by Biofrontera,

Inc., USA in March 2019.

Since leaving Cutanea, Mr.

Bitterman was retired until commencing the Interim Executive Chairman role with the

Company in September 2022.

Prior to his role at Cutanea Life Sciences, Inc., Mr.

Bitterman also held the position of President and Chief

Executive Officer of Isolagen, Inc., President and General Manager of Dermik Laboratories and various positions of increasing responsibility

in financial and commercial capacities within Aventis S.A.

Bitterman holds an A.B.

degree in Economics from The College of the Holy

Cross and a Master of Business Administration degree from Boston University.

He also holds a Doctor of Humane Letters (Honoris Causa)

from the New York College of Podiatric Medicine.

Bradford has served as a member of our Board since 2022.

Bradford served as Senior Vice President Global Human Resources at Unisys Corporation, a global information technology solutions company,

where her total service at Unisys spanned from 1982 until her retirement in 2013.

In her role at Unisys, Ms.

Bradford strategically led

all global human resource programs and initiatives, including talent management, at multiple levels of the organization.

roles at Unisys progressively included all areas of human resources, including an overseas assignment at the Unisys European headquarters

where she provided human resources leadership to the region.

Prior to Unisys, Ms.

Bradford was employed by Deloitte, an audit, consulting,

tax, and advisory services firm, from 1978 to 1982.

Since 2014, Ms.

Bradford has maintained a consulting practice focused on individual

coaching for senior executives and high potential employees recommended by management.

Bradford received a B.S.

degree with an emphasis

on accounting and statistics from Walsh College and is a Certified Public Accountant.

Geert Cauwenbergh, Dr.

has served as a member of our Board

since 2012 and served as our Interim Principal Executive and Financial Officer from May 2022 to September 2022.

He previously served as

our President and Chief Executive Officer from April 2012 to November 2018, and as our Chief Executive Officer from November 2018 until

his retirement in March 2019.

Cauwenbergh served as Chairman and Chief Executive Officer of RHEI Pharmaceuticals, Inc., a private

company that develops and commercializes proprietary drug therapies, from 2008 to 2011.

Cauwenbergh founded Barrier Therapeutics,

Inc., a biopharmaceutical company focused on dermatology drug development, until its acquisition by Stiefel Laboratories, Inc.

Prior to Barrier Therapeutics, Inc.

Cauwenbergh was employed by Johnson & Johnson for 23 years where he held a number of ascending

senior management positions.

He currently serves as a director of Legacy Health Care (Switzerland).

Cauwenbergh received his Doctorate

in Medical Sciences from the Catholic University of Leuven, Faculty of Medicine (Belgium), where he also completed his masters and undergraduate

Ferrara has served as a member of our Board since 2019

and currently serves as our Lead Independent Director.

He most recently served as the Chief Financial Officer of Cutanea Life Sciences,

Inc., a private company focused on developing innovative technologies to treat diseases and disorders of the skin and subcutaneous tissue,

from January 2012 to his retirement in June 2019.

Prior to Cutanea, Mr.

Ferrara served as the Chief Financial Officer of Storeroom Solutions

Inc., a venture capital financed, technology enhanced, integrated supply chain solutions company, from 2004 to 2011, and NER Data Products,

Inc., an IT service management company, from 2000 to 2003, as well as holding other senior level financial positions in national and international

public companies in the greater Philadelphia area.

Ferrara received a B.S.

in Accounting from Lehigh University and is a Certified

Public Accountant.

Freeman, Ph.D.

has served has a member of our Board

Freeman currently serves as the Chief Operating Officer of Anthos Therapeutics Inc., a clinical-stage biopharmaceutical

company developing therapies for cardiovascular patients, a position he has held since July 2021.

Anthos Therapeutics Inc.

by Novartis and Blackstone Life Sciences, a private investment firm, where Dr.

Freeman has also served as a Senior Advisor since July

From 2017 to June 2018, Dr.

Freeman held the position of Chief Business Officer of Vedanta Biosciences, a clinical-stage company

developing therapies for immune-mediated diseases.

Prior to his role with Vedanta Biosciences, Dr.

Freeman was the Senior Vice President

of Strategy and Portfolio Management and Head of Business Development and Licensing at Merck KGaA, a leading science and technology company,

from 2008 to 2016.

Freeman received a Ph.D.

in Molecular Pharmacology and Drug Metabolism from the Imperial Cancer Research Fund (now

CRUK), an M.A.

and First Class Honours in Biochemistry from Cambridge University and a MBA with a finance major from Webster, St.

Lockshin, Ph.D.

has served as a member of our Board since

Lockshin currently serves as the Chief Scientific Officer of Xenetic Biosciences, Inc., a biopharmaceutical company focused

on the development of novel oncology therapeutics, a position he has held since January 2017.

Prior to this appointment, Dr.

served as Xenetic Biosciences, Inc.’s Vice President of Research and Operations from March 2014 to January 2017.

From July 2016

to December 2016, Dr.

Lockshin served as Chief Technical Officer of VBI Vaccines, Inc., a company developing vaccines in infectious disease

and immuno-oncology.

VBI Vaccines, Inc.

merged with SciVac Therapeutics, Inc.

and its subsidiary SciVac, Ltd., a commercial-stage biologics

and vaccine company, in July 2016 where Dr.

Lockshin had served as its Chief Executive Officer and director since September 2014.

May 2013, Dr.

Lockshin has also served as President and Chief Executive Officer of Guardum Pharmaceuticals, LLC, a private pharmaceutical

Lockshin holds a S.B.

degree in Life Sciences and a Ph.D.

in Biological Chemistry from the Massachusetts Institute of Technology.

Executive Officers

As of the date of this Annual Report on Form 10-K, we have only one

executive officer, Robert Bitterman, who serves as our President and Chief Executive Officer.

Certain biographical information regarding

Bitterman is set forth above.

There are no family relationships among any of our directors or executive officers.

Audit Committee

We have a separately-designated standing audit committee established in

accordance with Section 3(a)(58)(A) of the Exchange Act.

The Audit Committee is comprised of Mr.

Ferrara (Chairman), Ms.

The Board has determined that all members of the Audit Committee satisfy the current independence and experience requirements

of Rule 10A-3 of the Securities Exchange Act of 1934, as amended, (the “ Exchange Act ”) and the current Nasdaq independence

standards, and the Board has determined that Mr.

Ferrara is an “audit committee financial expert,” as the Securities and Exchange

Commission (the “ SEC ”) has defined that term in Item 407 of Regulation S-K.

Code of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics that applies to all

employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons

performing similar functions.

Our Code of Business Conduct and Ethics, as well as other corporate governance materials, is located on

our website at www.phiopharma.com .

Waivers of our Code of Business Conduct and Ethics may only be granted by the Board.

intend to disclose on our website any amendments to, or waivers from, the Code of Business Conduct and Ethics that are required to be

disclosed pursuant to the disclosure requirements of Item 5.05 of Form 8-K within four business days following the date of the amendment

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires the Company’s directors,

executive officers and greater-than-10% stockholders to file forms with the SEC to report their ownership of Company securities and any

changes in ownership.

We have reviewed all forms filed electronically with the SEC.

Based on that review and on written information given

to us by our officers and directors, we believe that all of our directors, officers and greater-than-10% stockholders filed the required

reports on a timely basis under Section 16(a) during 2022, except for director Patricia Bradford, who on September 26, 2022 filed a Form

4 that was due August 11, 2022.

EXECUTIVE COMPENSATION

The information

required by this Item will be incorporated by reference to the information contained in our Definitive Proxy Statement to be filed no

later than 120 days after the fiscal year end of December 31, 2021.

The following describes the compensation earned by each of the executive

officers identified below in the Summary Compensation Table, who are referred to collectively as our “named executive officers.”

Our named executive officers with respect to the fiscal year that ended on December 31, 2022 are Robert J.

Bitterman, Geert Cauwenbergh,

Sc., our former interim Principal Executive and Financial officer and Gerrit Dispersyn, Dr.

Sc., our former President and

Chief Executive Officer.

Summary Compensation Table

Name and principal position

incentive plan

Bitterman (4)

President and Chief Executive Officer

Geert Cauwenbergh, Dr.

Former interim Principal Executive and Financial Officer

Gerrit Dispersyn, Dr.

Former President and Chief Executive Officer

The amounts shown reflect the grant date fair value of

restricted stock units (“ RSUs ”) computed in accordance with the Financial Accounting Standards Board (the

“ FASB ”) Accounting Standards Codification (“ ASC ”) Topic 718, “ Compensation —

Stock Compensation ” for the indicated year.

The amounts shown reflect the annual cash bonus earned for performance for each respective year under the Company’s Incentive Bonus Program.

The annual cash bonus for fiscal years 2022 and 2021 was paid in March of the subsequent year, respectively.

Represents amounts for the dollar value of life

insurance premiums paid, except as noted in footnote 6 below.

Bitterman has served as a member of the Company’s Board of Directors since 2012 and served as the Company’s Interim Executive Chairman from September 2022 to February 2023 and was appointed as our President and Chief Executive Officer in February 2023.

The amounts listed in fiscal year 2021 reflect the compensation paid to Mr.

Bitterman as a member of our Board of Directors.

The amounts listed in fiscal year 2022 reflect the compensation paid to Mr.

Bitterman as a member of our Board of Directors, totaling $46,112, and as our Interim Executive Chairman, totaling $63,268.

Cauwenbergh has served as a member of the

Company’s Board of Directors since 2012 and served as the Company’s interim Principal Executive and Financial Officer

from May 2022 to September 2022.

Cauwenbergh was paid $37,500 in compensation in fiscal year 2022 as the Company’s interim

Principal Executive and Financial Officer, which is included within the “Salary” heading of the Summary Compensation

All other compensation listed in the Summary Compensation Table reflects the compensation paid to Dr.

Cauwenbergh as a member

of our Board of Directors.

Dispersyn served as the Company’s President and Chief Executive Officer from March 2019 to May 2022.

Included within the “All Other Compensation” heading of the Summary Compensation Table is $202,500 in severance payments made to Dr.

Dispersyn in connection with his termination consistent with and subject to the conditions set forth in his employment agreement.

Outstanding Equity Awards at Fiscal Year-End

The following table shows information regarding outstanding equity

awards as of December 31, 2022 for our named executive officers:

Option Awards

Unexercisable

Market Value of Shares or

Market Value of

Bitterman (2)

Geert Cauwenbergh, Dr.

Gerrit Dispersyn, Dr.

Value is based on the closing price of $4.46 of the Company’s common stock on December 31, 2022.

The equity awards granted to Mr.

Bitterman vest in one installment on the first anniversary of the grant date.

The equity awards granted to Dr.

Cauwenbergh from 2013 and 2018 vested over four years commencing on the first anniversary of the grant date.

The equity award granted to Dr.

Cauwenbergh in 2022 vests in one installment on the first anniversary of the grant date.

When reviewing and approving our executive compensation arrangements, including

the base salaries paid to our executive officers, the Compensation Committee of the Company's Board of Directors (the “ Compensation

Committee ”) considers a number of factors, including, but not limited to:

the performance of the executive officer to the Company’s

overall performance, the performance of the executive officer against the Company’s corporate objectives, the executive officer’s

skills, experience and qualifications in such executive officer’s role, review of compensation surveys of base salaries paid by

comparable organizations and market compensation data.

These factors provide the framework for decisions regarding the base salary compensation

for each executive officer.

No single factor is determinative in setting base salary levels, nor was the impact of any factor on the determination

of pay levels quantifiable.

Incentive Compensation

Annual Incentive Bonus

Annual bonuses are based on the achievement of corporate goals typically

comprised of a mix of clinical development, discovery, financial, business development, and investor relations related performance objectives.

The corporate goals are approved by the Board on an annual basis at the start of each year.

Annual bonuses for all employees, including

executive officers, take into account the achievement of specified business objectives and individual performance objectives, with the

exception of the Company's President and Chief Executive Officer, whose annual bonus is determined solely by the achievement of business

The Compensation Committee reviews our achievements against these corporate goals and their assessment of the goals and recommendations

regarding funding is presented to our full Board for approval.

The Compensation Committee maintains full discretion in determining overall

performance under the annual bonus and may adjust bonus payouts based on factors it deems relevant.

Annual incentive bonus payouts to

our named executive officers are disclosed in the Summary Compensation Table above.

Equity Incentive

We maintain our 2020 Long Term Incentive Plan (“ 2020 Plan ”)

pursuant to which we currently grant RSU awards to eligible participants.

Grants of restricted stock units under this

plan to our named executive officers are disclosed in the Summary Compensation Table and Outstanding Equity Awards at Fiscal Year-End

Employment and Change of Control Agreements

The following provides descriptions of the employment agreements that

are currently or were in effect for our named executive officers:

Bitterman was appointed President and Chief

Executive Officer and entered into an employment agreement, dated February 20, 2023, pursuant to which he will be entitled to an initial

annual base salary of $440,000 and will be eligible to receive an annual bonus of up to 40% of his annual base salary, based on the achievement

of certain performance goals established annually by the Board.

In connection with his appointment, the Company granted Mr.

RSUs settleable for 11,000 shares of the Company's common stock under the Company's 2020 Plan.

The RSUs will vest in two equal annual

installments, commencing on the first anniversary of the date of grant, subject to Mr.

Bitterman’s continuous service with the Company

through each such vesting date.

Bitterman’s employment is terminated

by the Company due to death or disability, the Company shall pay to Mr.

Bitterman or to his estate, as applicable, any earned, but unpaid,

base salary and any amounts owed to Mr.

Bitterman for reimbursement of expenses properly incurred which are reimbursable, in each case

as earned or incurred, as applicable through the date of termination (the “ Accrued Benefits ”), as well as pay any accrued

but unpaid bonus then due to Mr.

Bitterman and all equity awards that have been granted will immediately vest on a pro-rata basis.

Bitterman’s employment is terminated by the Board for cause or by Mr.

Bitterman without good reason, the Company shall pay to

Bitterman the Accrued Benefits through the date of termination.

Bitterman’s employment is terminated by Mr.

for good reason or by the Company other than as a result of death or disability and other than for cause, then the Company shall pay to

Bitterman the Accrued Benefits through the date of termination, continue to pay Mr.

Bitterman his base salary for three months from

the date of separation, pay any accrued but unpaid bonus and if, and only if, such termination occurs within one year of a change in control

all equity awards that have been granted but are not exercisable at the time of such termination shall immediately become exercisable

Bitterman is eligible to participate in the

Company’s 2020 Plan and other benefits available to the Company’s executive officers.

Geert Cauwenbergh, Dr.

In connection with his appointment as the Company’s interim Principal

Executive Officer and Principal Financial Officer, Dr.

Cauwenbergh received a monthly cash payment of $7,500.

Gerrit Dispersyn, Dr.

We entered into an employment agreement with Dr.

Dispersyn effective April

24, 2017 as our Chief Development Officer.

As Chief Development Officer, Dr.

Dispersyn was entitled to receive an initial base salary

of $285,000 per annum, as well as a performance bonus of up to 30% of his base salary, subject to the achievement of performance goals

to be established annually.

In connection with Dr.

Dispersyn’s appointment to Chief Development Officer, he received a stock option

entitling him to purchase 14 shares of the Company’s common stock, which were subject to vesting in equal monthly installments over

four years following the date of grant.

Dispersyn served as the Company’s President and Chief Executive

Officer from March 2019 to May 2022.

As President and Chief Executive Officer, Dr.

Dispersyn was entitled to an initial base salary of

$380,000 per annum, as well as a performance bonus of up to 50% of his base salary, subject to the achievement of performance goals to

be established annually.

As a one-time award in connection with his appointment on March 1, 2019, Dr.

Dispersyn received RSUs settleable

for 617 shares of the Company’s common stock, which was subject to vesting in equal annual installments over four years.

Dispersyn’s employment agreement provided that, upon termination

Dispersyn’s employment without cause by us, he would be entitled to payment of:

(1) any accrued but unpaid salary and unused

vacation as of the date of his termination;

(2) six months of salary from the date of termination;

and (3) continued participation, at

our expense, during the applicable six-month severance period in our sponsored group medical and dental plans.

Effective May 5, 2022,

Dispersyn’s employment with the Company ended, which was treated as a termination without “cause,” and Dr.

became entitled to receive severance benefits totaling $202,500 consistent with the above and subject to the conditions set forth in the

separation agreement between Dr.

Dispersyn and the Company.

Director Compensation

Non-Employee Director Compensation Policy

We compensate our non-employee directors for their service as a member

of our Board.

Each non-employee director is entitled to receive an annual cash retainer of $35,000.

The chairs of our Board and Audit

Committee are entitled to receive an additional annual cash retainer of $15,000 and the chairs of the Compensation, Governance and Nominating

Committees are entitled to receive an additional cash retainer of $7,500.

In addition, the Lead Independent Director, if any, is entitled

to receive an additional annual cash retainer of $12,500.

Each non-employee director is also entitled to receive 1,667 RSUs, which vest

in full on the one-year anniversary of the respective date of grant.

The Compensation Committee and the Board reassess the appropriate levels

of cash and equity compensation for non-employee directors on an annual basis.

Non-employee directors are also reimbursed for their travel and reasonable

out-of-pocket expenses incurred in connection with attending Board and committee meetings and in attending continuing education seminars,

to the extent that attendance is required by the Board or the committee(s) on which that director serves.

Non-Employee Director Compensation Table

The following table shows the compensation to the Company’s non-employee

directors in fiscal year 2022.

We compensate our non-employee directors for their service as

a member of our Board.

Compensation paid to Robert J.

Bitterman, the Company's President, Chief Executive Officer and Chairman

of the Board, and Geert Cauwenbergh, Dr.

Sc., who served as the Company’s interim Principal Executive Officer and interim Principal

Financial Officer from May 2022 to September 2022, in connection with their service as directors of the Company is set forth above in

the Summary Compensation Table due to Mr.

Bitterman and Dr.

Cauwenbergh’s status as named executive officers of the Company.

Fees Earned or

Paid in Cash ($)

Paul Dorman (2)

Freeman, Ph.D.

Lockshin, Ph.D.

The amounts shown reflect the grant date fair value of RSUs computed in accordance with the FASB ASC Topic 718, “Compensation — Stock Compensation”.

Dorman did not be stand for reelection at the 2022 Annual Stockholder Meeting held on August 8, 2022 and served as a director until the end of his term.

As of December 31, 2022, the aggregate number of shares underlying

stock options and RSUs by our non-employee directors is as follows:

Bradford — 1,667 RSUs, Robert L.

834 RSUs, Jonathan E.

Freeman, Ph.D.

— 1 option award and 834 RSUs, and Curtis A.

Lockshin, Ph.D.

— 5 option awards and 834

Bitterman and Dr.

Cauwenbergh’s outstanding equity awards are also included in the Outstanding Equity Awards at Fiscal

Year-End table above due to their status as named executive officers during the fiscal year ended December 31, 2022.

Upon his appointment to President and Chief Executive Officer of the Company

effective February 20, 2023, Mr.

Bitterman ceased receiving compensation in connection with his positions as a director of the Company,

including as Chairman of the Board.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

information required by this Item will be incorporated by reference to the information contained in our Definitive Proxy Statement to

be filed no later than 120 days after the fiscal year end of December 31, 2021.

Security Ownership of Certain Beneficial Owners and Management

Based on information available to us and filings with the SEC, the following

table sets forth certain information regarding the beneficial ownership (as defined by Rule 13d-3 under the Exchange Act) of our outstanding

common stock for (i) each of our directors, (ii) each of our named executive officers, (iii) all of our directors and executive officers

as a group and (iv) persons known to us to beneficially own more than 5% of our outstanding common stock.

The following information is

presented as of February 28, 2023 or such other date as may be reflected below.

Beneficial ownership and percentage ownership are determined in accordance

with the rules of the SEC and include voting or investment power with respect to shares of stock.

This information does not necessarily

indicate beneficial ownership for any other purpose.

Under these rules, shares of common stock not outstanding but deemed beneficially

owned by virtue of the right of a person to acquire them as of February 28, 2023, or within 60 days of February 28, 2023, are deemed outstanding

for the purpose of computing the percentage ownership of each person, but are not deemed outstanding for the purpose of computing the

percentage ownership of any other person.

Unless otherwise indicated and subject to applicable community property

laws, to our knowledge, each stockholder named in the following table possesses sole voting and investment power over their shares of

common stock, except for those jointly owned with that person’s spouse.

Unless otherwise indicated below, the address of each person

listed on the table is c/o Phio Pharmaceuticals Corp., 257 Simarano Drive, Suite 101, Marlborough, MA 01752.

Shares Beneficially Owned

Name and Address of Beneficial Owner

Greater than 5% Holders

Intracoastal Capital LLC (3)

Directors and Named Executive Officers:

Bitterman (4)

Geert Cauwenbergh, Dr.

Robert Ferrara

Freeman, Ph.D.

Lockshin, Ph.D.

All current directors and executive officers as a group (six persons)

Indicates less than 1%.

Represents shares of common stock held as of February 28, 2023 plus shares of common stock that may be acquired upon the exercise of options and warrants within 60 days of February 28, 2023.

Based on 1,137,318 shares of common stock that were issued and outstanding as of February 28, 2023.

Shares not outstanding but deemed beneficially owned by virtue of the right of a person to acquire them as of February 28, 2023, or within 60 days of February 28, 2023, are treated as outstanding only when determining the ownership and voting power for each person (or all directors and executive officers as a group).

Based solely on information set forth in a Schedule 13G/A filed with the SEC on February 8, 2023 by Intracoastal Capital LLC (“ Intracoastal ”), Mitchell P.

Kopin ”) and Daniel B.

Each of Intracoastal, Mr.

Kopin and Mr.

Asher may be deemed to have beneficial ownership of 67,654 shares of common stock consisting of (i) 17,845 shares of common stock issuable upon exercise of a warrant held by Intracoastal (“ Intracoastal Warrant 1 ”), (ii) 19,271 shares of common stock issuable upon exercise of a second warrant held by Intracoastal (“ Intracoastal Warrant 2 ”), (iii) 30,538 shares of common stock issuable upon exercise of a third warrant held by Intracoastal (“ Intracoastal Warrant 3 ”), and all such shares of common stock represented beneficial ownership of approximately 5.6% of the common stock, based on (1) 1,138,997 shares of common stock outstanding as of November 17, 2022, as reported by the Issuer, plus (2) 17,845 shares of common stock issuable upon exercise of Intracoastal Warrant 1, (3) 19,271 shares of common stock issuable upon exercise of Intracoastal Warrant 2 and (4) 30,538 shares of common stock issuable upon exercise of Intracoastal Warrant 3.

The foregoing excludes (I) 4,625 shares of common stock issuable upon exercise of a fourth warrant held by Intracoastal (“ Intracoastal Warrant 4 ”) because Intracoastal Warrant 4 contains a blocker provision under which the holder thereof does not have the right to exercise Intracoastal Warrant 4 to the extent (but only to the extent) that such exercise would result in beneficial ownership by the holder thereof, together with the holder’s affiliates, and any other persons acting as a group together with the holder or any of the holder’s affiliates, of more than 4.99% of the common stock and (II) 342 shares of common stock issuable upon exercise of a fifth warrant held by Intracoastal (“ Intracoastal Warrant 5 ”) because Intracoastal Warrant 5 contains a blocker provision under which the holder thereof does not have the right to exercise Intracoastal Warrant 5 to the extent (but only to the extent) that such exercise would result in beneficial ownership by the holder thereof, together with the holder’s affiliates, and any other persons acting as a group together with the holder or any of the holder’s affiliates, of more than 4.99% of the common stock.

Without such blocker provisions, each of the Reporting Persons may have been deemed to have beneficial ownership of 72,621 shares of common stock.

The principal business office of Mr.

Kopin and Intracoastal is 245 Palm Trail, Delray Beach, Florida 33483.

The principal business office of Mr.

Asher is 111 W.

Jackson Boulevard, Suite 2000, Chicago, Illinois 60604.

Includes 5 stock options exercisable within 60 days of February 28, 2023.

Includes 46 stock options exercisable within 60 days of February 28, 2023.

Includes 1 stock option exercisable within 60 days of February 28, 2023.

Includes 5 stock options exercisable within 60 days of February 28, 2023.

Equity Compensation Plan Information

The following table sets forth certain information, as of December

31, 2022, about the securities authorized for issuance under our equity compensation plans, which consisted of our 2020 Plan and our 2013

Employee Stock Purchase Plan.

Upon adoption of the 2020 Plan, shares that remained available for grant under our prior Phio Pharmaceuticals

2012 Long-Term Incentive Plan (the “ 2012 Plan ”) and shares that were subject to outstanding awards under the

2012 Plan were included in the authorized shares available for grant under the 2020 Plan.

Further, upon adoption of the 2020 Plan, the

Company no longer grants new equity awards under the 2012 Plan.

Plan Category

Number of Securities

to be Issued Upon

Outstanding Options,

Weighted-Average

Exercise Price of

Outstanding Options,

Warrants and Rights

Number of Securities

Remaining Available for

Future Issuance

Under Equity Compensation

Plans (Excluding

Securities Reflected in

First Column)

Equity compensation plans approved by security holders (1)

Equity compensation plans not approved by security holders

___________________

Includes options outstanding representing 141 shares of common stock under the 2020 Plan.

Also includes 47,328 RSUs subject to the 2020 Plan.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

information required by this Item will be incorporated by reference to the information contained in our Definitive Proxy Statement to

be filed no later than 120 days after the fiscal year end of December 31, 2021.

Our Board, with the assistance of the Audit Committee, reviews and

approves all transactions with directors, officers and holders of more than 5% of our voting securities and their affiliates.

the Board’s consideration of a transaction with such a related party, the material facts as to the related party’s relationship

or interest in the transaction must be disclosed to the Board, and the transaction will not be considered approved by the Board unless

a majority of the directors who are not interested in the transaction (if applicable) approve the transaction.

Furthermore, when stockholders

are entitled to vote on a transaction with a related party, the material facts of the related party’s relationship or interest in

the transaction must be disclosed to the stockholders, who must approve the transaction in good faith.

Since the past two years, there has not been, nor is there currently proposed,

any transaction or series of related transactions to which we were or will be a party in which the amount involved exceeded or will exceed

the lesser of (i) $120,000 or (ii) one percent of the average of Company's total assets at yearend for the last two completed fiscal years

and in which the other parties included or will include any of our directors, executive officers, holders of 5% or more of our voting

securities, or any member of the immediate family of any of the foregoing persons, other than compensation arrangements with directors

and executive officers, which are described where required in Item 11.

Executive Compensation of this Annual Report on Form 10-K.

Indemnification Agreements

We have entered into indemnification agreements with each of our executive

officers and directors.

These agreements provide that, subject to limited exceptions and among other things, we will indemnify each of

our executive officers and directors to the fullest extent permitted by law and advance expenses to each indemnitee in connection with

any proceeding in which a right to indemnification is available.

Director Independence

We believe that the Company benefits from having a strong and independent

For a director to be considered independent, the Board must determine that the director does not have any direct or indirect material

relationship with the Company that would affect his or her exercise of independent judgment.

On an annual basis, the Board reviews the

independence of all directors under the applicable Nasdaq listing standards.

The Board also considers each director’s affiliations

with the Company and members of management, as well as significant holdings of Company securities.

This review considers all known relevant

facts and circumstances in making an independence determination.

Based on this review, the Board has made an affirmative determination

that all directors are independent, other than our President and Chief Executive Officer and Chairman of the Board, Mr.

In addition, Nasdaq listing standards require that, subject to specified

exceptions, each member of our Audit, Compensation, Governance and Nominating Committees be independent and that our Audit Committee members

also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act.

Our Board has determined that all members of the Audit

Committee, Compensation Committee, Governance Committee, and Nominating Committee are independent under the applicable Nasdaq listing

standards and the Exchange Act.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

information required by this Item will be incorporated by reference to the information contained in our Definitive Proxy Statement to

be filed no later than 120 days after the fiscal year end of December 31, 2021.

The following is a summary of the fees billed and expected to be billed

to the Company by BDO USA, LLP (“ BDO ”), our independent registered public accounting firm, for professional services

rendered for the fiscal years ended December 31, 2022 and 2021.

All fees incurred in fiscal years 2022 and 2021 for services rendered

by BDO were approved in accordance with the pre-approval policies and procedures described below.

Audit-Related Fees

All Other Fees

Total All Fees:

Audit Fees consist of fees for the audit of the Company’s

financial statements included in our annual reports on Form 10-K, the review of the Company’s financial statements included in our

quarterly reports on Form 10-Q and other statutory and regulatory filings, including auditor consents.

Audit-Related Fees consist of fees billed for assurance and

related services that are also performed by our independent registered public accounting firm.

Tax Fees consist of services rendered for tax compliance, tax

advice and tax planning.

All Other Fees consist of the aggregate fees billed for

products and services provided by BDO and not otherwise included in Audit Fees, Audit-Related Fees or Tax Fees.

Pre-Approval Policies and Procedures

Under the Sarbanes-Oxley Act of 2002, all audit and permissible non-audit

services provided by our auditors must be approved in advance by our Audit Committee to ensure that such services do not impair the auditors’

independence from us.

Accordingly, the Audit Committee reviews and pre-approves all audit and non-audit services performed by its independent

registered public accounting firm, as well as the fees charged for such services.

In its review of non-audit service fees, the Audit Committee

considers, among other things, the possible impact of the performance of such services on the auditor’s independence.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

5 unchanged sentences

not applicable, or are not required by smaller reporting companies.

Incorporated by Reference Herein

by Reference Herein

Amended and Restated Certificate of Incorporation of Phio Pharmaceuticals Corp.

4 unchanged sentences

January 14, 2020

Certificate of Amendment to the Amendment and Restated Certificate of Incorporation of Phio Pharmaceuticals Corp.

Current Report on Form 8-K (File No.

January 25, 2023

Certificate of Designation of Series D Preferred Stock, dated November 16, 2022.

Current Report on Form 8-K (File No.

November 16, 2022

Amended and Restated Bylaws of Phio Pharmaceutical Corp.

Current Report on Form 8-K (File No.

October 13, 2020

Form of Warrant.

26 unchanged sentences

April 2, 2020

of Common Stock Warrant.

Form of Common Stock Warrant.

Current Report on Form 8-K (File No.

7 unchanged sentences

Patent and Technology Assignment Agreement between RXi Pharmaceuticals Corporation (formerly RNCS, Inc.) and Advirna, LLC, effective as of September 24, 2011.

Registration Statement on Form S-1 (File No.

October 25, 2011

Registration Statement on

Form S-1 (File No.

Clinical Co-development Agreement, dated February 26, 2021, by and between Phio Pharmaceuticals Corp.

and AgonOx, Inc .*+

Phio Pharmaceuticals Corp.

2020 Long Term Incentive Plan.

Registration Statement on Form S-8 (File No.

Registration Statement on

Form S-8 (File No.

December 23, 2020

8 unchanged sentences

Amendment No.

2 to the Registration Statement on Form S-1 (File No.

the Registration Statement on Form S-1 (File No.

December 29, 2011

Form of Incentive Stock Option Award under the Company’s 2012 Long Term Incentive Plan, as amended.

Registration Statement on Form S-1 (File No.

September 18, 2013

Registration Statement on

Form S-1 (File No.

Form of Non-Qualified Stock Option Award under the Company’s 2012 Long Term Incentive Plan, as amended.

Registration Statement on Form S-1 (File No.

September 18, 2013

Registration Statement on

Form S-1 (File No.

RXi Pharmaceuticals Corporation Employee Stock Purchase Plan.

Registration Statement on Form S-8 (File No.

Registration Statement on

Form S-8 (File No.

August 24, 2018

1 unchanged sentence

Amendment No.

3 to the Registration Statement on Form S-1 (File No.

January 23, 2012

Employment Agreement, dated April 24, 2017, between RXi Pharmaceuticals Corporation and Gerrit Dispersyn, Dr.

Post-effective Amendment No.

1 to the Registration Statement on Form S-1 (File No.

the Registration Statement on Form S-1 (File No.

Separation Agreement, date May 5, 2022, by and between Phio Pharmaceuticals Corp.

and Gerrit Dispersyn, Dr.

Agreement, dated February 20, 2023, by and between Phio Pharmaceuticals Corp.

and Robert Bitterman.

Current Report on Form 8-K

February 22, 2023

Subscription and Investment Representation Agreement, dated November 16, 2022, by and between Phio Pharmaceuticals Corp.

and Robert Bitterman.

Current Report on Form

8-K (File No.

November 16, 2022

Lease Agreement dated December 17, 2013 between RXi Pharmaceuticals Corporation and 257 Simarano Drive, LLC, Brighton Properties, LLC, Robert Stubblebine 1, LLC and Robert Stubblebine 2, LLC.

Current Report on Form 8-K (File No.

December 20, 2013

Current Report on

Form 8-K (File No.

First Amendment to Lease dated January 22, 2019.

Current Report on Form 8-K (File No.

January 28, 2019

Purchase Agreement, dated as of August 7, 2019 by and between Phio Pharmaceuticals Corp.

and Lincoln Park Capital Fund, LLC.

Current Report on Form 8-K (File No.

August 9, 2019

First Amendment to Purchase Agreement by and between Phio Pharmaceuticals Corp.

and Lincoln Park Capital Fund, LLC.

Registration Statement on Form S-1 (File No.

August 30, 2019

Registration Rights Agreement, dated as of August 7, 2019, by and between Phio Pharmaceuticals Corp.

and Lincoln Park Capital Fund, LLC.

Current Report on Form 8-K (File No.

August 9, 2019

Securities Purchase Agreement, dated February 4, 2020, by and between the Company and the Purchasers signatory therein.

Current Report on Form 8-K (File No.

February 6, 2020

Securities Purchase Agreement, dated March 31, 2020, by and between the Company and the

Purchasers signatory therein.

Current Report on Form 8-K (File No.

April 2, 2020

Securities Purchase Agreement, dated January 21, 2021, by and between the Company and the

Purchasers signatory therein.

Current Report on Form 8-K (File No.

Current Report on Form 8-K

January 28, 2019

Registration Rights Agreement, dated January 21, 2021, by and between the Company and the

Purchasers signatory therein.

Registration Rights Agreement, dated January 21, 2021, by and between the Company and the Purchasers signatory therein.

Current Report on Form 8-K (File No.

January 25, 2021

Securities Purchase Agreement, dated February 12, 2021, by and between the Company and the

Purchasers signatory therein.

Current Report on Form 8-K (File No.

February 17, 2021

Consent of BDO USA, LLP, an Independent Registered Public Accounting Firm.

6 unchanged sentences

Inline XBRL Taxonomy Extension Label Linkbase Document.*

XBRL Taxonomy Extension Presentation Linkbase Document.*

The cover page for this report, formatted in Inline XBRL (included

in Exhibit 101).*

Inline XBRL Taxonomy Extension Presentation Linkbase Document.*

The cover page for this report, formatted in Inline XBRL (included in Exhibit 101).*

_________________

Indicates a management contract or compensatory plan or arrangement.

Filed herewith.

Confidential treatment has been requested or granted for certain portions which have been blanked out in the copy of the exhibit filed with the Securities and Exchange Commission.

The omitted information has been filed separately with the Securities and Exchange Commission.

Furnished herewith.

Indicates a management contract or compensatory plan or arrangement.

Certain portions of this Exhibit have been redacted pursuant to Item

601(b)(10) of Regulation S-K.

The Company agrees to furnish supplementally an unredacted copy of this Exhibit to the SEC upon request.

FORM 10-K SUMMARY

3 unchanged sentences

PHIO PHARMACEUTICALS CORP.

/s/ Gerrit Dispersyn

Gerrit Dispersyn, Dr.

/s/ Robert J.

President and Chief Executive Officer

4 unchanged sentences

on the dates indicated.

Gerrit Dispersyn, Dr.

President, Chief Executive Officer and Director

5 unchanged sentences

March 22, 2023

/s/ Robert J.

Patricia Bradford

March 22, 2023

2 unchanged sentences

March 22, 2023

March 22, 2022

Freeman, Ph.D.

4 unchanged sentences

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-K

Item 9A. Controls and Procedures