Phio Pharmaceuticals Corp. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures 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 forms. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. 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 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 Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. There are inherent limitations in the effectiveness of any system of internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even effective internal controls can provide only reasonable assurances with respect to financial statement preparation. Further, because 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, 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 This Annual Report on Form 10-K provides only management’s report. As a smaller reporting company, we are not required to provide an attestation report by our independent registered public accounting firm regarding our internal control over financial reporting. 37 Changes in Internal Control Over Financial Reporting There have been no changes in our internal control 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. ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 38 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Board of Directors The size of the Board is currently set at six directors. Biographical 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 Age Position(s) with the Company Robert J. Bitterman (2012) 72 President, Chief Executive Officer and Chairman of the Board of Directors Patricia A. Bradford (2022) 72 Director Geert Cauwenbergh, Dr. Med. Sc. (2012) 69 Director Robert L. Ferrara (2019) 71 Director Jonathan E. Freeman, Ph.D. (2017) 54 Director Curtis A. Lockshin, Ph.D. (2013) 62 Director Robert J. 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. Mr. 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. Mr. Bitterman 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. Mr. 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. Patricia A. Bradford has served as a member of our Board since 2022. Ms. 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. Ms. Bradford’s 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. Ms. 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. Med. Sc. 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. Dr. 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. In 2001, Dr. Cauwenbergh founded Barrier Therapeutics, Inc., a biopharmaceutical company focused on dermatology drug development, until its acquisition by Stiefel Laboratories, Inc. in 2008. Prior to Barrier Therapeutics, Inc. Dr. 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). Dr. 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 work. 39 Robert L. 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. Mr. Ferrara received a B.S. in Accounting from Lehigh University and is a Certified Public Accountant. Jonathan E. Freeman, Ph.D. has served has a member of our Board since 2017. Dr. 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. was launched by Novartis and Blackstone Life Sciences, a private investment firm, where Dr. Freeman has also served as a Senior Advisor since July 2018. 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. Dr. 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. Louis. Curtis A. Lockshin, Ph.D. has served as a member of our Board since 2013. Dr. 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. Lockshin 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. Since May 2013, Dr. Lockshin has also served as President and Chief Executive Officer of Guardum Pharmaceuticals, LLC, a private pharmaceutical company. Dr. 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 Mr. 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. Bradford and Dr. Freeman. 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. We 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 or waiver. 40 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. ITEM 11. EXECUTIVE COMPENSATION 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, Dr. Med. Sc., our former interim Principal Executive and Financial officer and Gerrit Dispersyn, Dr. Med. Sc., our former President and Chief Executive Officer. Summary Compensation Table Name and principal position Year Salary ($) Stock awards ($) (1) Non-equity incentive plan compensation ($) (2) All other compensation ($) (3) Total ($) Robert J. Bitterman (4) 2022 77,885 31,464 – 31 109,380 President and Chief Executive Officer 2021 47,500 30,800 – – 78,300 Geert Cauwenbergh, Dr. Med. Sc. (5) 2022 68,750 8,612 – – 77,362 Former interim Principal Executive and Financial Officer 2021 27,500 30,800 – – 58,300 Gerrit Dispersyn, Dr. Med. Sc. (6) 2022 178,514 108,511 – 202,744 489,769 Former President and Chief Executive Officer 2021 403,390 210,826 136,688 575 751,479 (1) 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. (2) 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. (3) Represents amounts for the dollar value of life insurance premiums paid, except as noted in footnote 6 below. (4) Mr. 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. (5) Dr. 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. Dr. 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 Table. All other compensation listed in the Summary Compensation Table reflects the compensation paid to Dr. Cauwenbergh as a member of our Board of Directors. (6) Dr. 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 $202,500 in severance payments made to Dr. Dispersyn in connection with his termination consistent with and subject to the conditions set forth in his employment agreement. 41 Outstanding Equity Awards at Fiscal Year-End The following table shows information regarding outstanding equity awards as of December 31, 2022 for our named executive officers: Option Awards Stock Awards Name Grant Date Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($) Equity Incentive Plan Awards: Number of Unearned Shares or Units of Stock That Have Not Vested (#) Equity Incentive Plan Awards: Market Value of Unearned Shares or Units of Stock That Have Not Vested ($) (1) Robert J. Bitterman (2) 6/7/2013 1 – 396,000.00 6/7/2023 – – – – 6/2/2014 1 – 188,100.00 6/2/2024 – – – – 6/1/2015 1 – 25,080.00 6/1/2025 – – – – 2/10/2016 1 – 18,876.00 2/10/2026 – – – – 2/1/2017 1 – 4,151.40 2/1/2027 – – – – 2/15/2022 – – – – – – 834 3,720 10/1/2022 – – – – – – 3,334 14,870 Geert Cauwenbergh, Dr. Med. Sc. (3) 6/7/2013 3 – 396,000.00 6/7/2013 – – – – 6/2/2014 3 – 188,100.00 6/2/2014 – – – – 6/1/2015 3 – 25,080.00 6/1/2025 – – – – 2/10/2016 3 – 18,876.00 2/10/2026 – – – – 2/1/2017 2 – 4,151.40 2/1/2027 – – – – 8/1/2018 32 – 1,181.40 8/1/2028 – – – – 2/15/2022 – – – – – – 834 3,720 Gerrit Dispersyn, Dr. Med. Sc. – – – – – – – – – (1) Value is based on the closing price of $4.46 of the Company’s common stock on December 31, 2022. (2) The equity awards granted to Mr. Bitterman vest in one installment on the first anniversary of the grant date. (3) 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. 42 Base Salary 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 objectives. 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 table above. 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: Robert J. Bitterman Mr. 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. Bitterman 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.   43 If Mr. 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. If Mr. Bitterman’s employment is terminated by the Board for cause or by Mr. Bitterman without good reason, the Company shall pay to Mr. Bitterman the Accrued Benefits through the date of termination. If Mr. Bitterman’s employment is terminated by Mr. Bitterman 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 Mr. 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 in full.   Mr. Bitterman is eligible to participate in the Company’s 2020 Plan and other benefits available to the Company’s executive officers. Geert Cauwenbergh, Dr. Med. Sc. 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. Med. Sc. 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. Dr. 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. Dr. Dispersyn’s employment agreement provided that, upon termination of Dr. 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, Dr. Dispersyn’s employment with the Company ended, which was treated as a termination without “cause,” and Dr. Dispersyn 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 $12,500. Each non-employee director is also entitled to receive 1,667 RSUs, which vest in full on the one-year anniversary of the respective date of grant. The Compensation Committee and the Board reassess the appropriate levels of cash and equity compensation for non-employee directors on an annual basis. 44 Non-employee directors are also reimbursed for their travel and reasonable out-of-pocket expenses incurred in connection with attending Board and committee meetings and in attending continuing education seminars, to the extent that attendance is required by the Board or the committee(s) on which that director serves. Non-Employee Director Compensation Table The following table shows the compensation to the Company’s non-employee directors in fiscal year 2022. We compensate our non-employee directors for their service as a member of our Board. Compensation paid to Robert J. Bitterman, the Company's President, Chief Executive Officer and Chairman of the Board, and Geert Cauwenbergh, Dr. Med. Sc., who served as the Company’s interim Principal Executive Officer and interim Principal Financial Officer from May 2022 to September 2022, in connection with their service as directors of the Company is set forth above in the Summary Compensation Table due to Mr. Bitterman and Dr. Cauwenbergh’s status as named executive officers of the Company. Name Fees Earned or Paid in Cash ($) Stock Awards ($) (1) Total ($) Patricia A. Bradford 27,292 15,000 42,292 H. Paul Dorman (2) 16,667 8,612 25,279 Robert L. Ferrara 49,375 8,612 57,987 Jonathan E. Freeman, Ph.D. 31,250 8,612 39,862 Curtis A. Lockshin, Ph.D. 38,750 8,612 47,362 (1) The amounts shown reflect the grant date fair value of RSUs computed in accordance with the FASB ASC Topic 718, “Compensation — Stock Compensation”. (2) Mr. 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: Patricia A. Bradford — 1,667 RSUs, Robert L. Ferrara — 834 RSUs, Jonathan E. Freeman, Ph.D. — 1 option award and 834 RSUs, and Curtis A. Lockshin, Ph.D. — 5 option awards and 834 RSUs. Mr. 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. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 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. 45 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 Number (1) Percent of Class (2) Greater than 5% Holders Intracoastal Capital LLC (3) 67,654 5.6% Directors and Named Executive Officers: Robert J. Bitterman (4) 2,883 * Patricia A. Bradford – * Geert Cauwenbergh, Dr. Med. Sc. (5) 2,782 * Robert Ferrara 2,500 * Jonathan E. Freeman, Ph.D. (6) 1,698 * Curtis A. Lockshin, Ph.D. (7) 1,702 * All current directors and executive officers as a group (six persons) 11,565 1.02% * Indicates less than 1%. (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. (2) 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). (3) 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 (“ Mr. Kopin ”) and Daniel B. Asher (“ Mr. Asher ”). 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. (4) Includes 5 stock options exercisable within 60 days of February 28, 2023. (5) Includes 46 stock options exercisable within 60 days of February 28, 2023. (6) Includes 1 stock option exercisable within 60 days of February 28, 2023. (7) Includes 5 stock options exercisable within 60 days of February 28, 2023. 46 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 Corp. 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 Exercise of Outstanding Options, Warrants and Rights 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) 47,469 $ 19,761.12 43,807 Equity compensation plans not approved by security holders – – – Total 47,469 $ 19,761.12 43,807 ___________________ (1) Includes options outstanding representing 141 shares of common stock under the 2020 Plan. Also includes 47,328 RSUs subject to the 2020 Plan. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 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. Prior to 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. 47 Director Independence We believe that the Company benefits from having a strong and independent Board. 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. Bitterman. 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. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 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. 2022 2021 Audit Fees $ 215,974 $ 187,352 Audit-Related Fees – – Tax Fees – 36,250 All Other Fees – – Total All Fees: $ 215,974 $ 223,602 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. 48 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES Financial Statements Our consolidated financial statements are set forth in Item 8 to this Annual Report on Form 10-K. Financial Statement Schedules Certain schedules are omitted because they are not applicable, or are not required by smaller reporting companies. Exhibits Exhibit Incorporated by Reference Herein Number Description Form Date 3.1   Amended and Restated Certificate of Incorporation of Phio Pharmaceuticals Corp.   Current Report on Form 8-K (File No. 001-36304)   November 19, 2018               3.2   Certificate of Amendment to the Amendment and Restated Certificate of Incorporation of Phio Pharmaceuticals Corp.   Current Report on Form 8-K (File No. 001-36304)   January 14, 2020 3.3 Certificate of Amendment to the Amendment and Restated Certificate of Incorporation of Phio Pharmaceuticals Corp. Current Report on Form 8-K (File No. 001-36304) January 25, 2023 3.4 Certificate of Designation of Series D Preferred Stock, dated November 16, 2022. Current Report on Form 8-K (File No. 001-36304) November 16, 2022 3.5 Amended and Restated Bylaws of Phio Pharmaceutical Corp. Current Report on Form 8-K (File No. 001-36304) May 2, 2022 4.1 Form of Warrant. Current Report on Form 8-K (File No. 001-36304) April 11, 2018 4.2 Form of Placement Agent Warrant. Current Report on Form 8-K (File No. 001-36304) April 11, 2018 4.3 Form of Warrant. Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-221173) September 28, 2018 4.4 Form of Underwriter Warrant. Current Report on Form 8-K (File No. 001-36304) October 5, 2018 4.5 Form of Placement Agent Warrant. Current Report on Form 8-K (File No. 001-36304) November 19, 2019 49 4.6 Form of Warrant. Current Report on Form 8-K (File No. 001-36304) February 6, 2020 4.7 Form of Warrant. Current Report on Form 8-K (File No. 001-36304) February 13, 2020 4.8 Form of Underwriter Warrant. Current Report on Form 8-K (File No. 001-36304) February 13, 2020 4.9 Form of Warrant. Current Report on Form 8-K (File No. 001-36304) April 2, 2020 4.10 Form of Common Stock Warrant. Current Report on Form 8-K (File No. 001-36304) January 25, 2021 4.11 Form of Placement Agent Warrant. Current Report on Form 8-K (File No. 001-36304) February 17, 2021 4.12 Description of Securities Registered Pursuant to Section 12(b) of the Securities Exchange Act of 1934.* Annual Report on Form 10-K (File. 001-36304) March 26, 2020 10.1 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. 333-177498) October 25, 2011 10.2 Clinical Co-development Agreement, dated February 26, 2021, by and between Phio Pharmaceuticals Corp. and AgonOx, Inc .*+ 10.3 Phio Pharmaceuticals Corp. 2020 Long Term Incentive Plan. # Registration Statement on Form S-8 (File No. 333-251670) December 23, 2020 10.4 Form of Restricted Stock Unit Award under the Company’s 2020 Long Term Incentive Plan. # Annual Report on Form 10-K (File. 001-36304) March 25, 2021 10.5 Phio Pharmaceuticals Corp. 2012 Long Term Incentive Plan. # Quarterly Report on Form 10-Q (File No. 001-36304) November 12, 2019 10.6 Form of Restricted Stock Unit Award under the Company’s 2012 Long Term Incentive Plan. # Amendment No. 2 to the Registration Statement on Form S-1 (File No. 333-177498) December 29, 2011 10.7 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. 333-191236) September 18, 2013 10.8 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. 333-191236) September 18, 2013 10.9 RXi Pharmaceuticals Corporation Employee Stock Purchase Plan. # Registration Statement on Form S-8 (File No. 333-277013) August 24, 2018 50 10.10 Form of Indemnification Agreement. # Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-177498) January 23, 2012 10.11 Separation Agreement, date May 5, 2022, by and between Phio Pharmaceuticals Corp. and Gerrit Dispersyn, Dr. Med. Sc .#* 10.12 Employment Agreement, dated February 20, 2023, by and between Phio Pharmaceuticals Corp. and Robert Bitterman. # Current Report on Form 8-K (File No. 001-36304) February 22, 2023 10.13 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. 001-36304) November 16, 2022 10.14 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. 000-54910) December 20, 2013 10.15 First Amendment to Lease dated January 22, 2019. Current Report on Form 8-K (File No. 001-36304) January 28, 2019 10.16 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. 001-36304) January 25, 2021 23.1 Consent of BDO USA, LLP, an Independent Registered Public Accounting Firm. * 31.1 Sarbanes-Oxley Act Section 302 Certification of Principal Executive Officer and Principal Financial Officer. * 32.1 Sarbanes-Oxley Action Section 906 Certification of Principal Executive Officer and Principal Financial Officer. ** 101.INS Inline XBRL Instance Document.* 101.SCH Inline XBRL Taxonomy Extension Schema Document.* 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.* 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.* 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.* 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.* 104 The cover page for this report, formatted in Inline XBRL (included in Exhibit 101).* _________________ * Filed herewith. ** 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. ITEM 16. FORM 10-K SUMMARY None. 51 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PHIO PHARMACEUTICALS CORP. By: /s/ Robert J. Bitterman Robert J. Bitterman President and Chief Executive Officer (as Principal Executive and Financial Officer) Date: March 22, 2023 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signatures Title Date /s/ Robert J. Bitterman Robert J. Bitterman President, Chief Executive Officer and Director (Principal Executive Officer and Principal Financial Officer) March 22, 2023 /s/ Caitlin Kontulis Caitlin Kontulis Vice President of Finance and Administration and Secretary (Principal Accounting Officer) March 22, 2023 /s/ Patricia Bradford Patricia Bradford Director March 22, 2023 /s/ Geert Cauwenbergh Geert Cauwenbergh, Dr. Med. Sc. Director March 22, 2023 /s/ Robert L. Ferrara Robert L. Ferrara Director March 22, 2023 /s/ Jonathan E. Freeman Jonathan E. Freeman, Ph.D. Director March 22, 2023 /s/ Curtis A. Lockshin Curtis A. Lockshin, Ph.D. Director March 22, 2023 52