Phio Pharmaceuticals Corp. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (BDO USA, LLP; Boston, Massachusetts; PCAOB ID# 243 ) F-1 Consolidated Balance Sheets as of December 31, 2022 and 2021 F-2 Consolidated Statements of Operations for the Years Ended December 31, 2022 and 2021 F-3 Consolidated Statements of Preferred Stock and Stockholders’ Equity for the Years Ended December 31, 2022 and 2021 F-4 Consolidated Statements of Cash Flows for the Years Ended December 31, 2022 and 2021 F-5 Notes to Consolidated Financial Statements F-6 36 Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors Phio Pharmaceuticals Corp. Marlborough, Massachusetts Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Phio Pharmaceuticals Corp. (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, preferred stock and stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended , in conformity with accounting principles generally accepted in the United States of America. Going Concern Uncertainty The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company does not generate revenues and continues to suffer recurring losses from operations that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. We have served as the Company's auditor since 2011. /s/ BDO USA, LLP Boston, Massachusetts March 22, 2023 F- 1 PHIO PHARMACEUTICALS CORP. CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share data) December 31, 2022 December 31, 2021 ASSETS Current assets: Cash $ 11,781 $ 24,057 Restricted cash 50 50 Prepaid expenses and other current assets 615 620 Total current assets 12,446 24,727 Right of use asset 161 283 Property and equipment, net 183 133 Other assets 24 27 Total assets $ 12,814 $ 25,170 LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 779 $ 283 Accrued expenses 1,025 2,660 Lease liability 135 125 Total current liabilities 1,939 3,068 Lease liability, net of current portion 35 170 Total liabilities 1,974 3,238 Commitments and contingencies (Footnote 8) – – Temporary Equity Abstract Series D Preferred Stock, $ 0.0001 par value; 1 and 0 shares authorized, issued and outstanding at December 31, 2022 and December 31, 2021, respectively 2 – Stockholders’ equity: Common stock, $ 0.0001 par value, 100,000,000 shares authorized; 1,139,024 and 1,127,917 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively – – Additional paid-in capital 139,218 138,832 Accumulated deficit ( 128,380 ) ( 116,900 ) Total stockholders’ equity 10,838 21,932 Total liabilities, preferred stock and stockholders’ equity $ 12,814 $ 25,170 See accompanying notes to consolidated financial statements. F- 2 PHIO PHARMACEUTICALS CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except share and per share data) Year Ended December 31, 2022 2021 Operating expenses: Research and development $ 7,012 $ 8,886 General and administrative 4,450 4,625 Total operating expenses 11,462 13,511 Operating loss ( 11,462 ) ( 13,511 ) Total other (expense) income, net ( 18 ) 224 Loss before income taxes ( 11,480 ) ( 13,287 ) Provision for income taxes – – Net loss $ ( 11,480 ) $ ( 13,287 ) Net loss per common share: Basic $ ( 10.10 ) $ ( 12.43 ) Diluted $ ( 10.10 ) $ ( 12.43 ) Weighted average number of common shares outstanding Basic 1,136,566 1,069,234 Diluted 1,136,566 1,069,234 See accompanying notes to consolidated financial statements. F- 3 PHIO PHARMACEUTICALS CORP. CONSOLIDATED STATEMENTS OF PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (Amounts in thousands, except share data) Series D Preferred Stock Common Stock Additional Paid-in Accumulated Shares Amount Shares Amount Capital Deficit Total Balance at December 31, 2020 – $ – 481,749 $ – $ 116,630 $ ( 103,613 ) $ 13,017 Issuance of common stock, pre-funded warrants and warrants in connection with private placement, net of offering costs – – 368,405 – 12,669 – 12,669 Issuance of common stock in registered direct offering, net of offering costs – – 187,232 – 6,908 – 6,908 Issuance of common stock upon the exercise of warrants – – 90,276 – 2,146 – 2,146 Issuance of common stock upon vesting of restricted stock units – – 279 – – – – Shares withheld for payroll taxes – – ( 24 ) – ( 1 ) – ( 1 ) Stock-based compensation expense – – – – 480 – 480 Net loss – – – – – ( 13,287 ) ( 13,287 ) Balance at December 31, 2021 – $ – 1,127,917 $ – $ 138,832 $ ( 116,900 ) $ 21,932 Issuance of common stock upon vesting of restricted stock units – – 14,043 – – – – Shares withheld for payroll taxes – – ( 2,936 ) – ( 28 ) – ( 28 ) Issuance of preferred stock 1 2 – – – – – Stock-based compensation expense – – – – 414 – 414 Net loss – – – – – ( 11,480 ) ( 11,480 ) Balance at December 31, 2022 1 $ 2 1,139,024 $ – $ 139,218 $ ( 128,380 ) $ 10,838 See accompanying notes to consolidated financial statements. F- 4 PHIO PHARMACEUTICALS CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) Year Ended December 31, 2022 2021 Cash flows from operating activities: Net loss $ ( 11,480 ) $ ( 13,287 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 71 75 Amortization of right of use asset 122 117 Non-cash stock-based compensation 414 480 Forgiveness of debt – ( 233 ) Changes in operating assets and liabilities: Prepaid expenses and other assets 8 241 Accounts payable 496 ( 445 ) Accrued expenses ( 1,635 ) 1,310 Lease liability ( 125 ) ( 116 ) Net cash used in operating activities ( 12,129 ) ( 11,858 ) Cash flows from investing activities: Cash paid for purchase of property and equipment ( 121 ) ( 51 ) Net cash used in investing activities ( 121 ) ( 51 ) Cash flows from financing activities: Net proceeds from the issuance of common stock and warrants – 19,577 Net proceeds from the exercise of warrants – 2,146 Payments of taxes for net share settled restricted stock unit issuances ( 28 ) ( 1 ) Net proceeds from the issuance of preferred stock 2 – Net cash (used in) provided by financing activities ( 26 ) 21,722 Net (decrease) increase in cash and restricted cash ( 12,276 ) 9,813 Cash and restricted cash at the beginning of period 24,107 14,294 Cash and restricted cash at the end of period $ 11,831 $ 24,107 The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets to the totals above:   December 31,   2022 2021 Cash $ 11,781 $ 24,057 Restricted cash 50 50 Total cash and restricted cash $ 11,831 $ 24,107 See accompanying notes to consolidated financial statements. F- 5 PHIO PHARMACEUTICALS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Organization and Significant Accounting Policies Nature of Operations Phio Pharmaceuticals Corp. (“ Phio ,” “ we ,” “ our ” or the “ Company ”) is a clinical stage biotechnology company whose proprietary INTASYL™ self-delivering RNAi technology platform is designed to make immune cells more effective in killing tumor cells. We are developing therapeutics that are designed to leverage INTASYL to precisely target specific proteins that reduce the body’s ability to fight cancer, without the need for specialized formulations or drug delivery systems. We are committed to discovering and developing innovative cancer treatments for patients by creating new pathways toward a cancer-free future. The Company continues to respond to and monitor the ongoing coronavirus pandemic. The Company believes that the coronavirus pandemic has not had a significant impact on its financial condition and results of operations, however, 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, the emergence of variant strains of the coronavirus, the development, availability, and public acceptance of effective treatments and vaccines, and the duration of the coronavirus pandemic, which remain difficult to predict and are highly uncertain. Liquidity The Company has reported recurring losses from operations since its inception and expects to continue to have negative cash flows from operations for the foreseeable future. Historically, the Company’s primary source of funding has been from sales of its securities. The Company’s ability to continue to fund its operations is dependent on obtaining funding 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, rates of inflation 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. The Company has limited cash resources, has reported recurring losses from operations since inception and has not yet received product revenues. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern, and the Company’s current cash resources may not provide sufficient capital to fund operations for at least the next 12 months from the date of the release of these financial statements. The continuation of the Company as a going concern depends upon the Company’s ability to raise additional capital through an equity offering, debt offering or strategic opportunity to fund its operations. There can be no assurance that the Company will be successful in accomplishing these plans in order to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Basis of Presentation The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“ GAAP ”). F- 6 Principles of Consolidation The consolidated financial statements include the accounts of Phio and its wholly-owned subsidiary, MirImmune, LLC. All material intercompany accounts have been eliminated in consolidation. Reverse Stock Split Effective January 26, 2023, the Company completed a 1-for-12 reverse stock split of the Company’s outstanding common stock. All share and per share amounts in the financial statements have been retroactively adjusted for all periods presented to give effect to the reverse stock split, including reclassifying an amount equal to the reduction in par value to additional paid-in capital. Unless otherwise noted, shares of common stock issued and outstanding, shares underlying warrants and stock awards, shares reserved, conversion price of convertible securities, exercise prices of warrants and stock awards and loss per share have been proportionately adjusted to reflect the reverse stock split. The reverse stock split did not reduce the number of authorized shares of the Company’s common stock or preferred stock. Uses of Estimates in Preparation of Financial Statements The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The areas subject to significant estimates and judgement include, among others, those related to the fair value of equity awards, accruals for research and development expenses, useful lives of property and equipment, income taxes, and the 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. Actual results could differ materially from these estimates. Restricted Cash Restricted cash consists of certificates of deposit held by financial institutions as collateral for the Company’s corporate credit cards. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company maintains cash balances in several accounts with a financial institution that management believes is creditworthy, which at times are in excess of federally insured limits. These accounts are insured by the Federal Deposit Insurance Corporation for up to $ 250,000 per institution. Property and Equipment Property and equipment are stated at cost and depreciated using the straight-line method based on the estimated useful lives of the related assets. The Company provides for depreciation over the assets’ estimated useful lives as follows: Schedule of estimated useful lives Computer equipment 3 years Machinery & equipment 5 years Furniture & fixtures 5 years Leasehold improvements Lesser of remaining lease term or 5 years F- 7 Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment annually or whenever an event or change in circumstance occurs in which the related carrying amounts may not be recoverable. An impairment loss would be recognized based on the difference between the carrying value of the asset and its estimated fair value, which would be determined based on either discounted future cash flows or other appropriate fair value methods. As of December 31, 2022 and 2021, the Company believes no impairment existed. Leases At the inception of a contract, the Company determines whether the contract is or contains a lease based on all relevant facts and circumstances. For contracts that contain a lease, the Company identifies the lease and non-lease components, determines the consideration in the contract and 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. The Company’s incremental borrowing rate is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right of use asset may be required for items such as initial direct costs or incentives received. Lease payments on operating leases, including scheduled increases, are recognized on a straight-line basis over the expected term of the lease. Lease payments on financing leases are recognized using the effective interest method. 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. Accrued liabilities for the services provided by contract research organizations are recorded during the period incurred based on such estimates and assumptions as expected cost, passage of time, the achievement of milestones and other information available to us and are assessed on a quarterly basis. Actual results may differ from these estimates and could have a material impact on the Company’s reported results. The Company’s historical accrual estimates have not been materially different from its actual costs. F- 8 Collaborative Arrangements The Company follows the provisions of the Financial Accounting Standards Board (the “ FASB ”) Accounting Standards Codification (“ 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. Patents and Patent Application Costs Although the Company believes that its patents and underlying technology have continuing value, the amount of future benefits to be derived from the patents is uncertain. Patent costs are, therefore, expensed as general and administrative costs as incurred. Stock-based Compensation The 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 (“ RSUs ”) is based upon the Company’s closing stock price at the grant date. The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock options at the grant date. The Black-Scholes valuation model requires the input of valuation assumptions to calculate the value of stock options, including expected volatility, expected term, risk-free interest rate and expected dividends. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period, which generally represents the vesting period, and commences at the date of grant based on the fair value of the award. Stock-based compensation expense recognized in the 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, is recorded as a cumulative adjustment in the period the estimates are revised. Income Taxes The Company recognizes assets or liabilities for the deferred tax consequences of temporary differences between the tax basis of assets or liabilities and their reported amounts in the financial statements in accordance with the FASB ASC Topic 740, “Accounting for Income Taxes” (“ ASC 740 ”) . These temporary differences will result in taxable or deductible amounts in future years when the reported amounts of the assets or liabilities are recovered or settled. Those temporary differences referred to as deferred tax assets and liabilities are determined at the end of each period using the tax rate expected to be in effect when taxes are actually paid or recovered. Valuation allowances are established if, based on the weight of available evidence, it is more likely than not that all or a portion of a deferred tax asset will not be realized. The provision for income taxes, if any, represents the tax payable for the period and the change in deferred income tax assets and liabilities during the period. F- 9 Comprehensive Loss The Company’s comprehensive loss is equal to its net loss for all periods presented. Net Loss per Share Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding. Diluted net loss per share is computed by dividing the Company’s net loss by the weighted average number of common shares outstanding and the impact of 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, RSUs and stock options. Recent Accounting Pronouncements In May 2021, the FASB issued Accounting Standards Update 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. The Company adopted ASU 2021-04 on January 1, 2022. The adoption of this standard had no impact on the Company’s consolidated financial statements. 2. Collaboration and License Agreements AgonOx, Inc. (“ AgonOx ”) In March 2021, the Company entered into a clinical co-development collaboration agreement (the “ Clinical Agreement ”) with AgonOx, a private company developing a pipeline of novel immunotherapy drugs targeting key regulators of the immune response to cancer. Under the Clinical Agreement, Phio and AgonOx are working to develop a T cell-based therapy using the Company’s lead product candidate, PH-762, and AgonOx’s “double positive” TIL (“ DP TIL ”) technology. Per the terms of the Clinical Agreement, the Company committed to make future payments of up to $ 4,000,000 to reimburse AgonOx for expenses incurred to support the Phase 1 clinical trial with the DP TIL technology and PH-762. The Company 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. The Company recognized approximately $ 130,000 of expense in connection with these efforts during the year ended December 31, 2022. No expense under the Clinical Agreement was recognized during the year ended December 31, 2021. There was approximately $ 120,000 recorded as prepaid expenses and other current assets as of December 31, 2022. Advanced RNA Technologies, LLC (“ Advirna ”) In September 2011, the Company entered into an agreement with Advirna, pursuant to which Advirna assigned to us its existing patent and technology rights related to the INTASYL technology in exchange for an annual maintenance fee of $ 100,000 , a one-time milestone payment upon the future issuance of the first patent with valid claims covering the assigned patent and technology rights and the issuance of shares of common stock of the Company equal to 5 % of the Company’s fully-diluted shares outstanding at the time of issuance. The one-time milestone payment and the issuance of shares of common stock in the Company were completed in 2014 and 2012, respectively. Additionally, the Company is required to pay low single-digit royalties to Advirna on any licensing revenue received by the Company with respect to future licensing of the assigned Advirna patent and technology rights. To date, any royalties owed to Advirna under the agreement have been minimal. Phio’s rights under the Advirna agreement will expire upon the later of: (i) the expiration of the last-to-expire of the “patent rights” (as defined therein) included in the agreement; or (ii) the abandonment of the last-to-be abandoned of such patents, unless earlier terminated in accordance with the provisions of the agreement. Further, the Company also granted back to Advirna a license under the assigned patent and technology rights for fields of use outside human therapeutics. F- 10 3. Fair Value of Financial Instruments The Company follows the provisions of the FASB 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: Level 1 – quoted prices in active markets 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 December 31, 2022 and 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 carrying amounts of cash, accounts payable and accrued expenses of the Company approximate their fair values due to their short-term nature. 4. Property and Equipment The following table summarizes the Company’s major classes of property and equipment, in thousands: Schedule of property and equipment December 31, 2022 2021 Computer equipment $ 116 $ 108 Machinery & equipment 1,077 1,035 Furniture & fixtures 119 49 Leasehold improvements 46 46 Total gross fixed assets 1,358 1,238 Less: accumulated depreciation and amortization ( 1,175 ) ( 1,105 ) Property and equipment, net $ 183 $ 133 Depreciation and amortization expense for the years ended December 31, 2022 and 2021 was $ 71,000 and $ 75,000 , respectively. F- 11 5. Accrued Expenses Accrued expenses consist of the following, in thousands: Schedule of accrued expenses and other current liabilities December 31, 2022 2021 Compensation and benefits $ 408 $ 572 Professional fees 97 102 Research and development costs 501 1,986 Other 19 – Total accrued expenses $ 1,025 $ 2,660 6. Leases In January 2019, the Company amended the lease for its corporate headquarters and primary research facility in Marlborough, Massachusetts. The lease is for a total of 7,581 square feet of office and laboratory space and will expire on March 31, 2024 . The lease contains an option to terminate after two or three years by providing advance written notice of termination pursuant to the terms of the agreement. The exercise of this option was not determined to be reasonably certain and thus was not included in the lease liability on the Company’s balance sheet. The Company did not exercise its option to terminate in either the second or third year of the lease, and the option to terminate has expired. Additionally, the lease agreement did not contain information to determine the borrowing rate implicit in the lease. As such, the Company calculated its incremental borrowing rate based on what the Company would have to pay to borrow on a collateralized basis over the lease term for an amount equal to the remaining lease payments, taking into consideration such assumptions as, but not limited to, the U.S. treasury yield rate and borrowing rates from a creditworthy financial institution using the above lease factors. The lease for our corporate headquarters represents all of our significant lease obligations. The amounts reported in the consolidated balance sheets for operating leases in which the Company is the lessee and other supplemental balance sheet information is set forth as follows, in thousands, except the lease term (number of years) and discount rate: Schedule of lease amounts recorded in balance sheet December 31, 2022 2021 Assets Right of use asset $ 161 $ 283 Liabilities Lease liability, current 135 125 Lease liability, non-current 35 170 Total lease liability $ 170 $ 295 Lease Term and Discount Rate Weighted average remaining lease term 1.25 2.25 Weighted average discount rate 4.70 % 4.70 % Operating lease costs included in operating expense were $ 132,000 for the years ended December 31, 2022 and 2021, respectively. F- 12 Cash paid for the amounts included in the measurement of the operating lease liability on the Company’s consolidated balance sheets and included within changes in the lease liability in the operating activities of our consolidated statements of cash flows was $ 135,000 and $ 132,000 for the years ended December 31, 2022 and 2021, 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 consolidated balance sheet as of December 31, 2022 is as follows, in thousands: Aggregate future minimum lease payments 2023 $ 140 2024 35 Total lease payments 175 Less: Imputed interest ( 5 ) Total operating lease liabilities (includes current portion) $ 170 7. Debt In May 2020, the Company received loan proceeds pursuant to the Paycheck Protection Program (the “ PPP ”) under the Coronavirus Aid, Relief, and Economic Security Act. The Company followed the guidance under the FASB ASC Topic 470, “ Debt ,” (“ ASC 470 ”) in assessing the accounting for the PPP loan proceeds. Per ASC 470, the Company recorded a liability on the balance sheet for the full amount of the PPP loan proceeds received and accrued interest over the term of the loan. The Company believed it used the loan proceeds for eligible purposes and applied for full loan forgiveness. In February 2021, the Small Business Administration approved the Company’s application for full loan forgiveness, and the full amount of the PPP loan was remitted to the lender for forgiveness. Upon loan forgiveness, the Company recognized a gain on the extinguishment of debt of $ 233 ,000 for the loan proceeds received and interest accrued in the consolidated statements of operations for the year ended December 31, 2021. 8. Commitments and Contingencies Commitments In March 2021, the Company entered into a Clinical Agreement with AgonOx to develop a T cell-based therapy using the Company’s lead product candidate, PH-762, and AgonOx’s DP TIL technology. Per the terms of the Clinical Agreement, the Company committed to make future payments of up to $ 4,000,000 to reimburse AgonOx for expenses incurred to support the Phase 1 clinical trial with the DP TIL technology and PH-762. Refer to Note 2 for further details on the Clinical Agreement with AgonOx. The Company applies the disclosure provisions of the FASB ASC Topic 460, “ Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others ” (“ ASC 460 ”), to its agreements that contain guarantee or indemnification clauses. The Company provides: (i) indemnifications of varying scope and size to certain investors and other parties for certain losses suffered or incurred by the indemnified party in connection with various types of third-party claims; and (ii) indemnifications of varying scope and size to officers and directors against third-party claims arising from the services they provide to us. These indemnifications give rise only to the disclosure provisions of ASC 460. To date, the Company has not incurred costs as a result of these obligations and does not expect to incur material costs in the future. Accordingly, the Company has not accrued any liabilities in its consolidated financial statements related to these indemnifications. Refer to Note 6 for more information about the Company’s obligations under its non-cancellable lease for its corporate headquarters. F- 13 License Commitments As part of its business, the Company enters into licensing agreements with third parties that often require milestone and royalty payments based on the progress of the asset through development stages. Milestone payments may be required, for example, upon progress through clinical trials, upon approval of the product by a regulatory agency and/or upon a percentage of sales of the product pursuant to such agreements. The expenditures required under these arrangements may be material individually in relation to any product candidates covered by the intellectual property licensed under any such arrangement, and material in the aggregate in the unlikely event that milestones for multiple products covered by these arrangements were reached in the same period. Due to the contingent nature of these payments, they are not included in the table of contractual obligations shown below. During the years ended December 31, 2022 and 2021, the Company did no t trigger any milestone payments. The Company’s contractual license obligations that will require future cash payments as of December 31, 2022, which result from payments expected in connection with annual license fees, are as follows, in thousands: Schedule of future cash payments for contractual license obligations Year Ending December 31, 2023 $ 100 2024 100 2025 100 2026 100 2027 100 Thereafter 200 Total $ 700 Litigation From time to time, the Company may become a party to various legal proceedings and complaints arising in the ordinary course of business. To the Company’s knowledge, it is not currently a party to any actual or threatened material legal proceedings. Accordingly, there were no contingent liabilities recorded as of the year ended December 31, 2022. 9. Preferred Stock The Company has authorized up to 10,000,000 shares of preferred stock, $ 0.0001 par value per share, for issuance. The Company’s Board of Directors is authorized under the Company’s Amended and Restated Articles of Incorporation, to designate the authorized preferred stock into one or more series and to fix and determine such rights, preferences, privileges and restrictions of any series of preferred stock, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be determined by the Company’s Board of Directors upon its issuance. At December 31, 2022, the Company had designated one share of preferred stock as Series D Preferred Stock and the remaining authorized shares were undesignated. On November 16, 2022, the Company issued and sold one share of the Company’s Series D Preferred Stock, par value $ 0.0001 per share (the “ Series D Preferred Stock ”) to Robert Bitterman, then its interim Executive Chairman and current Chief Executive Officer, for $ 1,750 . The Series D Preferred Stock was entitled to 17,500,000 votes per share exclusively with respect to any proposal to amend the Company’s Amended and Restated Certificate of Incorporation (as may be amended and/or restated from time to time, the “ Amended Certificate ”) to effect a reverse stock split of the Company’s common stock (“ Reverse Stock Split ”). The terms of the Series D Preferred Stock provided that it would be voted, without action by the holder, on any such proposal in the same proportion as shares of the Company’s common stock were voted. The Series D Preferred Stock otherwise had no voting rights except as otherwise required by the General Corporation Law of the State of Delaware. F- 14 The Series D Preferred Stock was not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of the Company. The Series D Preferred Stock had no rights with respect to any distribution of assets of the Company, including upon a liquidation, bankruptcy, reorganization, merger, acquisition, sale, dissolution or winding up of the Company, whether voluntarily or involuntarily. The holder of the Series D Preferred Stock was not entitled to receive dividends of any kind. Under its terms, the outstanding share of Series D Preferred Stock was to be redeemed in whole, but not in part, at any time: (i) if such redemption was approved by the Board of Directors in its sole discretion or (ii) automatically and effective upon the approval by the Company's stockholders of a Reverse Stock Split. Upon such redemption, the holder of the Series D Preferred Stock was entitled to receive consideration of $ 1,750 in cash. The Series D Preferred Stock has been classified outside of permanent equity (within the mezzanine section between liabilities and equity on the balance sheets) as the Company may not be able to control the actions necessary to provide for a redemption in full of the then outstanding Series D Preferred Stock. The Series D Preferred Stock was redeemed in whole on January 4, 2023, upon the approval by the Company’s stockholders of a Reverse Stock Split. 10. Stockholders’ Equity January 2021 Private Placement — In January 2021, the Company completed a private placement of 368,405 shares of the Company’s common stock at a purchase price per share of $ 36.84 , pre-funded warrants to purchase an aggregate of 11,672 shares of the Company’s common stock at a purchase price per pre-funded warrant of $ 36.828 and warrants to purchase an aggregate of 285,061 shares of the Company’s common stock with an exercise price of $ 36.00 per warrant (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 28,509 shares of the Company’s common stock at an exercise price of $ 46.05 per warrant. Net proceeds to the Company from the Private Placement were $ 12,669,000 after deducting placement agent fees and offering expenses. February 2021 Registered Direct Offering — In February 2021, the Company completed a registered direct offering of 187,232 shares of the Company’s common stock at a purchase price of $ 41.04 per share (the “ Offering ”). In connection with the Offering, the Company issued warrants to the placement agent, HCW, to purchase a total of 14,044 shares of the Company’s common stock at an exercise price of $ 51.30 per warrant. Net proceeds to the Company from the Offering were $ 6,908,000 after deducting placement agent fees and offering expenses. Warrants 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 are no instances outside of the Company’s control that could require cash settlement from the warrants issued by the Company, the 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. 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. F- 15 The following table summarizes the Company’s outstanding equity-classified warrants at December 31, 2022:   Summary of outstanding warrants                                     Exercise   Expiration   Balance December 31,   Warrants   Warrants   Warrants   Balance December 31,   Description   Price   Date   2021   Issued   Exercised   Expired   2022   April 2018 Warrants   $ 2,079.00   5/31/2023   1,720   –   –   –   1,720   April 2018 Placement Agent Warrants   $ 2,676.00   4/9/2023   117   –   –   –   117   October 2018 Warrants   $ 125.40   10/3/2025   32,486   –   –   –   32,486   October 2018 Underwriter Warrants   $ 156.72   10/1/2023   2,438   –   –   –   2,438   November 2019 Placement Agent Warrants   $ 82.50   11/18/2024   1,138   –   –   –   1,138   February 2020 Registered Direct Warrants   $ 104.52   8/6/2025   16,425   –   –   –   16,425   February 2020 Placement Agent Warrants   $ 132.45   2/4/2025   1,233   –   –   –   1,233   February 2020 Warrants   $ 48.00   2/13/2025   110,557   –   –   –   110,557   February 2020 Underwriter Warrants   $ 60.00   2/11/2025   12,501   –   –   –   12,501   April 2020 Warrants   $ 26.52   10/2/2025   35,691   –   –   –   35,691   April 2020 Placement Agent Warrants   $ 35.0256   3/31/2025   3,481   –   –   –   3,481   January 2021 Warrants   $ 36.00   7/27/2026   285,061   –   –   –   285,061   January 2021 Placement Agent Warrants   $ 46.05   7/27/2026   28,509   –   –   –   28,509   February 2021 Placement Agent Warrants   $ 51.30   2/12/2026   14,044   –   –   –   14,044                 545,401   –   –   –   545,401   No warrants were exercised during the year ended December 31, 2022. The Company received net proceeds of $ 2,146 ,000 from the exercise of warrants during the year ended December 31, 2021. 11. Stock-based Compensation Stock Plans The Company’s approved equity plans include the Phio Pharmaceuticals Corp. 2020 Long Term Incentive Plan (the “ 2020 Plan ”) and the Phio Pharmaceuticals Corp. 2012 Long Term Incentive Plan (the “ 2012 Plan ”). These plans are administered by our Board of Directors and provide for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, RSU awards, performance stock awards, and performance cash awards. Upon adoption of the 2020 Plan, shares that remained available for grant under 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. As of December 31, 2022, there were an aggregate of 105,640 shares of common stock reserved under the 2020 Plan, including 141 shares subject to outstanding stock options and 47,328 shares subject to unvested RSUs and 43,807 shares available for future grants. RSUs granted by the Company to employees vest annually over 3 years after the grant date, stock options granted by the Company to employees generally vest annually over 4 years after the grant date and, in the instance of stock options, expire within ten years of issuance. F- 16 Restricted Stock Units RSUs are issued under 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 service requirements. Upon vesting, each outstanding RSU will be settled 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 year ended December 31, 2022: Summary of RSU activity Number of Shares Weighted- Average Grant Date Fair Value Per Share Unvested units at December 31, 2021 30,592 $ 38.52 Granted 61,250 10.08 Vested ( 14,043 ) 39.72 Forfeited ( 30,471 ) 17.40 Unvested units at December 31, 2022 47,328 $ 15.00 The weighted-average fair value of RSUs granted during the years ended December 31, 2022 and 2021 was $ 10.08 and $ 35.28 , respectively. Stock-based compensation expense related to RSUs was $ 401,000 and $ 443,000 for the years ended December 31, 2022 and 2021, respectively. The aggregate fair value of awards that vested during the years ended December 31, 2022 and 2021 was $ 138,000 and $ 9,000 , which represents the market value of the Company’s common stock on the date that the RSUs vested. As of December 31, 2022, the compensation expense for all unvested RSUs in the amount of approximately $ 458,000 will be recognized in the Company’s results of operations over a weighted average period of 1.60 years. Stock Options Stock options are available for issuance under the 2020 Plan or as inducement grants issued outside of the 2020 Plan to new employees. Stock options are generally subject to graded vesting and the satisfaction of service requirements. 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. The Company uses the Black-Scholes option-pricing model to determine the fair value of all its option grants. The risk-free interest rate used for each grant was based upon the yield on zero-coupon U.S. Treasury securities with a term similar to the expected life of the related option. The Company’s expected stock price volatility assumption is based upon the Company’s own implied volatility. As the Company has limited stock option exercise information, the expected life assumption used for option grants is based upon the simplified method provided for under ASC 718. The dividend yield assumption is based upon the fact that the Company has never paid cash dividends and presently has no intention of paying cash dividends. F- 17 The Company did not grant stock options during the years ended December 31, 2022 and 2021. The following table summarizes the activity of the Company’s stock option plan for the year ended December 31, 2022: Summary of Stock Option Activity Total Number of Shares Weighted- Average Exercise Price Per Share Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value Balance at December 31, 2021 208 $ 40,822.80 Granted – – Exercised – – Unvested shares cancelled ( 6 ) 1,181.40 Vested shares cancelled ( 61 ) 93,016.68 Balance at December 31, 2022 141 $ 19,761.12 5.18 years $ – Exercisable at December 31, 2022 141 $ 19,761.12 5.18 years $ – Stock-based compensation expense related to stock options for the years ended December 31, 2022 and 2021 was $ 13,000 and $ 37,000 , respectively. As of December 31, 2022, the compensation expense for all unvested stock options was recognized in the Company’s results of operations. There is no income tax benefit as the Company is currently operating at a loss and an actual income tax benefit may not be realized. Compensation Expense Related to Equity Awards The following table sets forth total stock-based compensation expense for the years ended December 31, 2022 and 2021, in thousands: Details of Stock-based Compensation Expense December 31, 2022 2021 Research and development $ 154 $ 117 General and administrative 260 363 Total stock-based compensation $ 414 $ 480 12. Income Taxes The provision for income taxes for the years ended December 31, 2022 and 2021 are as follows, in thousands: Components of Federal and State Income Tax Expense Years Ended December 31, 2022 2021 Current Federal $ – $ – State – – Total current – – Deferred Federal ( 1,733 ) ( 3,016 ) State ( 553 ) ( 1,329 ) Total deferred ( 2,286 ) ( 4,345 ) Valuation allowance 2,286 4,345 Total provision for income taxes $ – $ – F- 18 The following table presents a reconciliation of the U.S. statutory tax rate to the Company’s actual effective income tax rate: Schedule of effective income tax reconciliation Years Ended December 31, 2022 2021 Federal statutory rate 21.0 % 21.0 % State income taxes, net of federal benefit 7.4 8.5 Non-deductible expenses   ( 0.8 ) 0.2 Income tax credits 3.2 4.3 Valuation allowance ( 30.8 ) ( 34.0 ) Effective tax rate 0.0 % 0.0 % The Company recognizes deferred tax assets and liabilities to reflect the tax effects of temporary differences between the tax basis of assets or liabilities and their reported amounts in the financial statements in accordance with ASC 740. These temporary differences will result in taxable or deductible amounts in future years when the reported amounts of the assets or liabilities are recovered or settled. ASC 740 requires that a valuation allowance be established when management determines that it is more likely than not that all or a portion of a deferred asset will not be realized. The Company evaluates the realizability of its net deferred income tax assets and valuation allowances as necessary, at least on an annual basis. During this evaluation, the Company reviews its forecasts of income in conjunction with other positive and negative evidence surrounding the realizability of its deferred income tax assets to determine if a valuation allowance is required. Adjustments to the valuation allowance will increase or decrease the Company’s income tax provision or benefit. The significant components of the Company’s net deferred tax assets and liabilities are as follows, in thousands: Schedule of deferred tax assets Years Ending December 31, 2022 2021 Deferred tax assets: Net operating loss carryforwards $ 11,808 $ 10,150 Tax credit carryforwards 1,227 946 Stock-based compensation 435 1,363 Capitalized research and development expenses 1,662 – License fees 1,680 2,018 Lease liability 46 79 Other timing differences 120 169 Deferred tax assets 16,978 14,725 Deferred tax liabilities: Right of use asset ( 43 ) ( 76 ) Deferred tax liability ( 43 ) ( 76 ) Valuation allowance ( 16,935 ) ( 14,649 ) Net deferred tax asset $ – $ – F- 19 The Tax Cuts and Jobs Act of 2017 included a provision that requires the capitalization and amortization of research and development costs incurred in tax years beginning after December 31, 2021. Under this provision, U.S.-based research and development expenses are amortized over a period of five years and non-U.S.-based research and development expenses are amortized over a period of 15 years. The deferred tax assets as of December 31, 2022 included capitalized research and development expenses of $ 1,662,000 . The Company evaluated the realizability of its net deferred tax assets and concluded that, in accordance with the applicable accounting standards, that it is more likely than not that the Company may not realize the benefit of all of its deferred tax assets. Accordingly, a valuation allowance against 100% of its deferred tax assets has been recorded. Significant judgment is required in the evaluation of deferred tax benefits and differences in future results from our estimates could result in material differences in the realization of these assets. As of December 31, 2022, the Company had federal net operating loss (“ NOL ”) carryforwards of approximately $ 49,200,000 and state NOL carryforwards of approximately $ 23,200,000 to reduce future taxable income. The utilization of the federal carryforwards as an available offset to future taxable income is subject to limitations under federal income tax laws. Under current federal income tax law, the Company’s federal NOLs generated in tax years beginning after December 31, 2017, totaling approximately $ 48,879,000 , may be carried forward indefinitely, but are limited to offset up to 80% of future taxable income. The remaining federal NOLs generated, totaling approximately $ 321,000 , will begin to expire in 2037 and the Company’s available state NOL carryforwards will begin to expire in 2038 . In addition, the Company had federal and state research and development credits of approximately $ 819,000 and $ 517,000 , respectively, which will begin to expire in 2041 and 2036 , respectively. Ownership changes may limit the amount of NOL carryforwards or tax credit carryforwards that can be utilized to offset future taxable income or tax liability. Pursuant to Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “ Code ”), NOL and tax credit carryforwards may be subject to annual limitations in the event a cumulative change in ownership of more than 50% occurs within a three-year period. Any limitation may result in expiration of a portion of the NOL carryforwards or tax credit carryforwards before utilization. During 2021, the Company completed an assessment of the available NOL and tax credit carryforwards under Sections 382 and 383 of the Code and determined that the Company underwent six ownership changes during the period from 2012 to 2021. As a result, NOL and tax credit carryforwards attributable to the pre-ownership changes are subject to substantial annual limitations under Section 382 and 383 of Code due to the ownership changes. The Company adjusted its NOL and tax credit carryforwards to address the impact of the ownership changes. For the years ended prior to December 31, 2021, federal and state NOLs of $ 55,000,000 and $ 70,000,000 , respectively, were reduced and federal and state tax credit carryforwards of $ 1,400,000 and $ 700,000 , respectively, were also reduced. The Company assesses the need to conduct an ownership change analysis to determine whether any changes occurred in ownership that would limit NOL or tax credit carryforwards on an annual basis. Due to the minimal number of share issuances during the year, the Company did not conduct an ownership change analysis in 2022. The Company may experience ownership changes in the future as a result of subsequent shifts in stock ownership, some of which may be outside of the Company’s control. The recognition and measurement of benefits related to the Company’s tax positions requires significant judgment, as uncertainties often exist with respect to new laws, new interpretations of existing laws, and rulings by taxing authorities. The Company follows a more-likely-than not threshold for financial statement recognition and measurement of a tax position taken, or expected to be taken in a tax return. The guidance relates to, amongst other things, classification, accounting for interest and penalties associated with tax positions, and disclosure requirements. Any interest and penalties accrued related to uncertain tax positions are recorded as tax expense. Differences between actual results and the Company’s assumptions or changes in the Company’s assumptions in future periods are recorded in the period they become known. The Company has not recorded any uncertain tax positions as of December 31, 2022 or 2021. The Company does not believe there will be any material changes in its unrecognized tax positions over the next 12 months. The Company has not incurred any interest or penalties. In the event that the Company is assessed interest or penalties at some point in the future, they will be classified in the financial statements as general and administrative expenses. F- 20 The Company files income tax returns in the United States, Massachusetts and New Jersey. The Company is subject to tax examinations for federal and state purposes for tax years 2014 through 2022. 13. Net Loss per 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: Schedule of antidilutive stock December 31, 2022 2021 Options to purchase common stock 141 208 Unvested restricted stock units 47,328 30,592 Warrants to purchase common stock 545,401 545,401 Total 592,870 576,201 F- 21 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.