What changed in this filing

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Item 1. Financial Statements

2024-08-14 compared with 2024-05-09 · 297 added, 189 removed, 243 unchanged (67% of the section changed)

18 unchanged sentences

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

no shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

no shares issued and outstanding at June 30, 2024 and December 31, 2023

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

4,591,700 and 3,747,329 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

510,188 and 416,368 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

7 unchanged sentences

(Amounts in thousands, except share and per

Ended March 31,

Three Months Ended

Six Months Ended

Operating expenses:

3 unchanged sentences

Operating loss

Total other income, net

Total other income (expense), net

Net loss per common share:

8 unchanged sentences

(Amounts in thousands, except share data)

Series D Preferred Stock

For the Three Months Ended March 31, 2024

D Preferred Stock

the Three and Six Months Ended

Balance at December 31, 2023

1 unchanged sentence

Issuance of common stock upon exercise of warrants

Issuance of common stock upon vesting of restricted stock units

Issuance of common stock upon vesting of restricted

Shares withheld for payroll taxes

2 unchanged sentences

$ ( 141,360 )

Series D Preferred Stock

For the Three Months Ended March 31, 2023

Stock-based compensation expense

Balance at June 30, 2024

$ ( 143,206 )

D Preferred Stock

For the Three and Six Months Ended

Balance at December 31, 2022

$ ( 128,380 )

Cash-in-lieu of fractional shares for reverse stock split

Cash-in-lieu of fractional shares for reverse stock

Redemption of preferred stock

Issuance of common stock upon vesting of restricted stock units

Issuance of common stock upon vesting of restricted

Shares withheld for payroll taxes

2 unchanged sentences

$ ( 131,982 )

Issuance of common stock and warrants, net of offering

Issuance of common stock upon exercise of warrants

Stock-based compensation expense

Balance at June 30, 2023

$ ( 134,531 )

The accompanying notes are an integral part of

3 unchanged sentences

(Amounts in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

10 unchanged sentences

Net cash used in operating activities

Cash flows from investing activities:

Cash paid for purchase of property and equipment

Net cash used in investing activities

Cash flows from financing activities:

Net proceeds from the issuance of common stock and warrants

Cash in lieu of fractional shares for reverse stock split

1 unchanged sentence

Payment of taxes on net share settlements of restricted stock units

Net cash used in financing activities

Net cash (used in) provided by financing activities

Net decrease in cash, cash equivalents and restricted cash

1 unchanged sentence

Cash, cash equivalents and restricted cash at the end of period

The following table provides a reconciliation of cash, cash equivalents

and restricted cash reported within the condensed consolidated balance sheets to the totals above:

The following table provides a reconciliation

of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the totals above:

Cash and cash equivalents

8 unchanged sentences

Phio Pharmaceuticals Corp.

or the “ Company ”) is a clinical stage biotechnology company whose proprietary INTASYL™ small interfering RNA

gene silencing technology is designed to make immune cells more effective in killing tumor cells.

The Company is developing therapeutics

that are designed to leverage INTASYL to precisely target specific proteins that reduce the body’s ability to fight cancer, without

the need for specialized formulations or drug delivery systems.

Phio was incorporated in the state of Delaware

in 2011 as RXi Pharmaceuticals Corporation.

On November 19, 2018, the Company changed its name to Phio Pharmaceuticals Corp., to reflect

its transition from a platform company to one that is fully committed to developing groundbreaking immuno-oncology therapeutics.

(“ Phio ” or the “ Company ”) is a clinical stage biotechnology company whose proprietary INTASYL®

small interfering RNA gene silencing technology is designed to make immune cells more effective in killing tumor cells.

The Company is

developing therapeutics that are designed to leverage INTASYL to precisely target specific proteins that reduce the body’s ability

to fight cancer, without the need for specialized formulations or drug delivery systems.

Phio was incorporated in the

state of Delaware in 2011 as RXi Pharmaceuticals Corporation.

On November 19, 2018, the Company changed its name to Phio Pharmaceuticals

Corp., to reflect its transition from a platform company to one that is fully committed to developing groundbreaking immuno-oncology therapeutics.

July 5, 2024, the Company completed a 1-for-9 reverse stock split of the Company’s outstanding common stock, including

reclassifying an amount equal to the reduction in par value to additional paid-in capital.

The reverse stock split did not reduce the

number of authorized shares of the Company’s common or preferred stock.

All share and per share amounts have been adjusted to give

effect to the reverse stock split.

Basis of Presentation

17 unchanged sentences

have been eliminated in consolidation.

Company operates as one operating segment and all assets are located in the United States.

The Company operates as one operating

segment and all assets are located in the United States.

Use of Estimates

67 unchanged sentences

the immune response to cancer.

Under the Clinical Co-Development 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” tumor

On May 8, 2024, the Company terminated the Clinical Co-Development Agreement with AgonOx, which such

termination was effective immediately.

Under the Clinical Co-Development Agreement, Phio and AgonOx were working to develop a T

cell-based therapy using the Company’s lead product candidate, PH-762, and AgonOx’s “double positive” tumor

infiltrating lymphocytes (“ DP TIL ”) technology.

Per the terms of the Clinical Co-Development Agreement, the

Company agreed to reimburse AgonOx up to $4,000,000 in

expenses incurred to conduct a Phase 1 clinical trial of PH-762 treated DP TIL in patients with advanced melanoma and other advanced

solid tumors.

The Company recognizes

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

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 $ 50,000 and

$ 119,000 of expense in connection with these efforts during the three months ended March 31, 2024 and 2023, respectively.

On May 8, 2024, the Company

terminated its Clinical Co-Development Agreement with AgonOx, effective immediately.

Effective as of the date of the termination, the

Clinical Co-Development Agreement and the continuing obligations of the Company and AgonOx thereunder will be terminated in their entirety.

The Company will no longer be required to provide financial support for the development costs incurred under the Clinical Co-Development

Agreement or 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 will pay to AgonOx

all Company payment obligations that have accrued prior to the termination of the Clinical Co-Development Agreement.

The Company intends

to pay to AgonOx future fees to be incurred for patients that were treated in the Phase 1 clinical trial as of the date of termination.

The Company estimates that such payments to be made to AgonOx will amount to approximately $ 388,000 ,

which primarily relate to the Company’s accrued obligations under the Clinical Co-Development Agreement as of March 31, 2024, as

well as future fees to be incurred for patients that were treated in the Phase 1 clinical trial and other miscellaneous costs as of the

date of termination.

Pursuant to the terms of the Clinical Co-Development Agreement, the Company and AgonOx shall meet and discuss the

orderly wind-down of the Phase 1 clinical trial.

Each of the Company and AgonOx shall be responsible for its own costs and expenses incurred

in connection with the wind-down of the Phase 1 clinical trial.

Other Information included elsewhere in this Quarterly Report

for further information.

Company had agreed to reimburse AgonOx up to $ 4,000,000 in expenses incurred to conduct a Phase 1 clinical trial of PH-762 treated

DP TIL in patients with advanced melanoma and other advanced solid tumors and was entitled to certain future development milestones

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

recognized its share of costs arising from research and development activities performed by AgonOx in the Company’s condensed consolidated

financial statements in the period AgonOx incurred such expense.

Effective as of the date of termination, the Clinical Co-Development

Agreement and the continuing obligations of the Company and AgonOx thereunder were terminated in their entirety.

As a result, the Company

is no longer required to provide financial support for the development costs incurred under the Clinical Co-Development Agreement, and

is not entitled to future development milestones or royalty payments from AgonOx’s licensing of its DP TIL technology.

Company will pay to AgonOx all Company payment obligations that accrued prior to the termination of the Clinical Co-Development Agreement.

Remaining payments to be made to AgonOx as of June 30, 2024 were $344,000, which primarily related to accrued obligations for patient

fees and other miscellaneous costs as of the date of termination.

Pursuant to the terms of the Clinical Co-Development Agreement, the

Company and AgonOx are coordinating the orderly wind-down of the Phase 1 clinical trial.

Each of the Company and AgonOx shall be responsible

for its own costs and expenses incurred in connection with the wind-down of the Phase 1 clinical trial.

Company recognized approximately $ 56,000

and $ 106,000

of expense in connection with the Clinical Co-Development Agreement during the three and six months ended June 30, 2024, respectively,

which relate to the Company’s expense obligations under the Clinical Co-Development Agreement through the date of termination.

The Company recognized approximately $ 181,000

and $ 300,000

of expense in connection with the Clinical Co-Development Agreement during the three and six months ended June 30, 2023, respectively.

Fair Value of Financial Instruments

The Company follows the provisions

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

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

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

that is broken down into three levels.

Level inputs are defined as follows:

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

Company’s financial assets and liabilities that are re-measured and reported at fair value each reporting period and are re-measured

and reported at fair value at least annually using a fair value hierarchy that is broken down into three levels.

Level inputs are defined

Level 1 – quoted prices

5 unchanged sentences

at the measurement date.

As of March 31, 2024, the

Company categorized its cash equivalents as Level 1 hierarchy as the carrying amounts approximate their fair value due to their short-term

nature and market rates of interest.

As of June 30, 2024, the Company

categorized its cash equivalents as Level 1 hierarchy as the carrying amounts approximate their fair value due to their short-term nature

and market rates of interest.

As of December 31, 2023, the Company did not identify any financial instruments required to be presented

1 unchanged sentence

Schedule of financial instruments at fair value

March 31, 2024

June 30, 2024

Quoted Prices

5 unchanged sentences

accounts payable and accrued expenses of the Company approximate their fair values due to their short-term nature.

The Company entered into

a lease for a laboratory facility located at 17 Briden Street, Worcester, Massachusetts, which covers 321

square feet of rentable space.

The lease commenced on March 1, 2024 and had an original expiration date of August

The Company has the option to renew the lease for additional 6-month periods.

On June 1, 2024, the Company elected

the option to renew the lease for an additional 6-month period, and the lease will expire on February 28, 2025.

The Company made an

accounting policy election under the FASB ASC Topic 824, “ Leases ” not to recognize leases with a term less than

one year on the balance sheet and that do not contain a purchase option.

Under the short-term lease election, the Company will

recognize the lease payments for the laboratory facility on a straight-line basis over the lease term.

The total base rent for

the premises over each 6-month term is expected to be $ 15,000 .

During the three and six month periods ending June 30, 2024, the Company recognized $ 8,180

and $ 10,780 ,

respectively, of rent expense and variable lease costs related to the laboratory facility.

The Company’s lease

7 unchanged sentences

treasury yield rate and borrowing rates from a creditworthy financial institution using the above lease

The Company has continued operations as a primarily remote business with the expiration of the lease, but has contracted a private mailbox with an address of 11 Apex Drive,

Suite 300A, PMB 2006, Marlborough, MA 01752 to use as its principal mailing address for SEC and other purposes.

The Company entered into

a lease for a laboratory facility located at 17 Briden Street, Worcester, Massachusetts, which commenced on March 1, 2024.

square feet of rentable space and expires on September

The total base rent for the premises over the term is expected to be $ 15,000

and the Company has the option to renew for additional 6-month periods.

The Company made an accounting policy election under the

FASB ASC Topic 824, “ Leases ” not to recognize leases with a term less than one year on the balance sheet and that

do not contain a purchase option.

Under the short-term lease election, the Company will recognize the lease payments for the

laboratory facility on a straight-line basis over the lease term.

The Company has continued operations as a primarily remote business with the expiration of the lease, but has contracted a private

mailbox with an address of 11 Apex Drive, Suite 300A, PMB 2006, Marlborough, MA 01752 to use as its principal mailing address for SEC

and other purposes.

The lease for the Company’s

corporate headquarters represented all of our significant lease obligations.

The amounts reported in the

condensed consolidated balance sheets for the Company’s corporate headquarters classified as an operating lease 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:

former corporate headquarters represented all of the Company’s capitalized lease obligations.

The amounts reported in

the condensed consolidated balance sheets for the Company’s former corporate headquarters classified as an operating lease 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

March 31, 2024

December 31, 2023

Right of use asset

3 unchanged sentences

Weighted average discount rate

Operating lease costs included

in operating expense were $ 33,000 for the three months ended March 31, 2024 and 2023, respectively.

Cash paid for the amounts

included in the measurement of the operating lease liability on the Company’s condensed consolidated balance sheets and included

within changes in the lease liability in the operating activities of the Company’s condensed consolidated statements of cash flows

was $ 35,000 and $ 34,000 for the three months ended March 31, 2024 and 2023, respectively.

There were no

operating lease costs for our former corporate headquarters included in operating expense for the three months ended June 30, 2024.

Operating lease costs for our former corporate headquarters included in operating expense were $ 33,000

for the three months ended June 30, 2023 and $ 33,000

for the six months ended June 30, 2024 and 2023, respectively.

cash paid for the amounts included in the measurement of the operating lease liability on the Company’s condensed consolidated

balance sheets and included within changes in the lease liability in the operating activities of the Company’s condensed

consolidated statements of cash flows for the Company’s former corporate headquarters for the three months ended June 30,

Cash paid for the amounts included in the measurement of the operating lease liability on the Company’s condensed

consolidated balance sheets and included within changes in the lease liability in the operating activities of the Company’s

condensed consolidated statements of cash flows for the Company’s former corporate headquarters was $ 35,000

for the three months ended June 30, 2023 and $ 35,000

for the six months ended June 30, 2024 and 2023, respectively.

Stockholders’ Equity

The Company first assesses warrants that are issued

by the Company under the FASB ASC Topic 480, “ Distinguishing Liabilities from Equity ” (“ ASC 480 ”)

Financing — On May 16, 2024, the Company entered into a purchase agreement (the “ Purchase Agreement ”)

with Triton Funds LP (“ Triton ”), pursuant to which the Company agreed to sell, and Triton agreed to purchase,

upon the Company’s request in one or more transactions, up to 95,833

shares of the Company’s common stock at a purchase price of $ 6.48

per share (the “ Purchase Price ”), for aggregate gross proceeds of up to $ 621,000 .

The Company recorded expense of approximately $100,000, primarily related to legal fees, in connection with the execution of the

Purchase Agreement with Triton.

On July 3, 2024, the Company terminated the Purchase Agreement with Triton effective immediately.

shares of common stock were sold by the Company pursuant to the Purchase Agreement prior to termination.

April 2023 Financing

— On April 20, 2023, the Company completed a registered direct offering and a concurrent private placement of a total of:

registered shares of the Company’s common stock at a purchase price per share of $ 50.85 , unregistered five and one-half year term

Series A warrants to purchase up to 39,331 shares of common stock at an exercise price of $ 48.60 per share and unregistered eighteen month

term Series B warrants to purchase up to 39,331 shares of common stock at an exercise price of $ 48.60 per share (collectively, the “ April

2023 Financing ”).

In addition, the Company issued unregistered warrants to the placement agent, H.C.

Wainwright & Co., LLC

(“ HCW ”), in the April 2023 Financing to purchase a total of 2,950 shares of common stock at an exercise price of $ 63.56

Net proceeds to the Company from the April 2023 Financing were $ 1,538,000 after deducting placement agent fees and offering

In connection with the April

2023 Financing, the Company entered into warrant amendment agreements (the “ Warrant Amendment Agreements ”) with the

participating investors to amend the exercise price of certain existing warrants to purchase up to an aggregate of 21,291 shares of common

stock that were previously issued in April 2018 through January 2021, such that each of the amended warrants have an exercise price of

$ 48.60 per share.

The Company received $ 23,952 as consideration in connection with the Warrant Amendment Agreements.

The Company assessed

the amendments to the exercise price of the warrants under ASC Topic 815, “ Derivatives and Hedging ” (“ ASC

815 ”) and determined that the amendment to the exercise price was completed in connection with and contingent on the close of

the April 2023 Financing.

The increase in fair value of $ 293,000 related to the Warrant Amendment Agreements was recognized as an equity

issuance cost and recorded in additional paid in capital per ASC 815.

Financing — On June 2, 2023, the Company completed a registered direct offering and a concurrent private placement of a

registered shares and 8,000

unregistered shares of the Company’s common stock each at a purchase price per share of $ 38.52 ,

unregistered pre-funded warrants to purchase up to an aggregate of 69,881

shares of common stock at a purchase price per share of $ 38.511

and with a pre-funded warrant exercise price of $ 0.009

per share, unregistered five and one-half year term Series A warrants to purchase up to an aggregate of 103,842

shares of common stock at an exercise price of $ 36.27

per share and unregistered eighteen month term Series B warrants to purchase up to an aggregate of 103,842

shares of common stock at an exercise price of $ 36.27

per share (collectively, the “ June 2023 Financing ”).

In addition, the Company issued unregistered warrants to the

placement agent, HCW, in the June 2023 Financing to purchase a total of 7,788

shares of common stock at an exercise price of $ 48.15

Net proceeds to the Company from the June 2023 Financing were $ 3,510,000

after deducting placement agent fees and offering expenses.

The Company first assesses

warrants that are issued by the Company under the FASB ASC Topic 480, “ Distinguishing Liabilities from Equity ” (“ ASC

480 ”) to determine whether the warrants are within the scope of ASC 480.

If there are no instances outside of the Company’s control that

could require cash settlement, the Company then applies and follows the applicable accounting guidance in the FASB ASC Topic 815, “ Derivatives

and Hedging ” (“ ASC 815 ”).

Financial instruments are accounted for as either derivative liabilities or equity

instruments depending on the specific terms of the agreement.

Based on the assessment of the warrants issued by the Company under the

guidance in ASC 480 and ASC 815, the warrants issued by the Company have been classified within stockholder’s equity.

December 2023, the Company entered into an inducement letter agreement (the “ Inducement Letter Agreement ”) with certain

holders of the Company’s existing warrants to purchase up to an aggregate of 2,130,252

shares of the Company’s common stock (the “ December 2023 Financing ”).

Pursuant to the terms of the Inducement

Letter Agreement, in the event that the exercise of the existing warrants in the December 2023 Financing would have otherwise caused

a holder to exceed the beneficial ownership limitations set forth in the existing warrant, the Company issued the number of shares that

would not cause a holder to exceed such beneficial ownership limitation and agreed to hold such balance of shares of common stock in

Accordingly, an aggregate of 826,370

shares of common stock were held in abeyance (the “ Abeyance Shares ”) with such Abeyance Shares evidenced through

the holder’s existing warrants and which were deemed to be prepaid.

The Abeyance Shares were held until notice was received by

the holder that the balance of the shares of common stock could be issued in compliance with such beneficial ownership limitations and

were exercised pursuant to a notice of exercise from the holder.

Until such time, the Abeyance Shares were evidenced through the holder’s

existing warrants and have been included in the Company’s table of outstanding warrants below.

During the three months ended March 31, 2024, all

of the Abeyance Shares were released and issued.

There were no warrant exercises during the three months ended March 31, 2023.

The following table summarizes the Company’s

outstanding warrants, all of which are classified as equity instruments, at March 31, 2024:

If there are no instances outside of the Company’s

control that could require cash settlement, the Company then applies and follows the applicable accounting guidance in ASC 815.

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

Based on the assessment of the warrants issued by the Company under the guidance in ASC 480 and ASC 815, the warrants issued by the Company

have been classified within stockholder’s equity.

December 2023, the Company entered into an inducement letter agreement (the “ December 2023 Inducement Letter Agreement ”)

with certain holders of the Company’s existing warrants to purchase up to an aggregate of 236,695 shares of the Company’s

common stock (the “ December 2023 Financing ”).

Pursuant to the terms of the December 2023 Inducement Letter Agreement,

in the event that the exercise of the existing warrants in the December 2023 Financing would have otherwise caused a holder to exceed

the beneficial ownership limitations set forth in the existing warrant, the Company issued the number of shares that would not cause a

holder to exceed such beneficial ownership limitation and agreed to hold such balance of shares of common stock in abeyance.

an aggregate of 91,820 shares of common stock were held in abeyance (the “ December 2023 Abeyance Shares ”) with such

December 2023 Abeyance Shares evidenced through the holder’s existing warrants and which were deemed to be prepaid.

2023 Abeyance Shares were held until notice was received by the holder that the balance of the shares of common stock could be issued

in compliance with such beneficial ownership limitations and were exercised pursuant to a notice of exercise from the holder.

time, the December 2023 Abeyance Shares were evidenced through the holder’s existing warrants and have been included in the Company’s

table of outstanding warrants below.

the three months ended June 30, 2024 and 2023, there were no

warrant exercises.

During the six months ended June 30, 2024, all of the December 2023 Abeyance Shares were released and issued, and

during the six months ended June 30, 2023, 19,444

shares of common stock were issued related to the exercise of pre-funded warrants from the June 2023 Financing.

The following table summarizes

the Company’s outstanding warrants, all of which are classified as equity instruments, at June 30, 2024:

Schedule of outstanding warrants

1 unchanged sentence

Outstanding at December 31, 2023

Outstanding at March 31, 2024

Outstanding at June 30, 2024

Stock-based Compensation

Restricted Stock Units

Restricted stock units

(“ RSUs ”) are issued under the Company’s 2020 Long-Term Incentive Plan (the “ 2020 Plan ”)

or as inducement grants issued outside of the 2020 Plan to new employees.

RSUs are generally subject to graded vesting and the

satisfaction of certain service requirements.

RSUs granted by the Company to employees generally vest annually over 3

years after the grant date and over 1

year after the grant date for non-employee members of the Board of Directors.

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.

does not expect to repurchase shares to satisfy RSU vests.

The fair value of the RSUs awarded are based upon the Company’s

closing stock price at the grant date and are expensed over the requisite service period.

The following table summarizes the activity of

the Company’s RSUs for the three months ended March 31, 2024:

Summary of RSU activity

Restricted stock units (“ RSUs ”)

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

outside of the 2020 Plan to new employees.

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

RSUs granted by the Company to employees generally vest annually over 3 years after the grant date and over 1 year after the grant date

for non-employee members of the Board of Directors.

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 Company does not expect to repurchase shares to satisfy

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 six months ended June 30, 2024:

Summary of RSUs activity

Grant Date Fair Value

Unvested units at December 31, 2023

Unvested units at March 31, 2024

Unvested units at June 30, 2024

There were no RSUs granted

during the three months ended March 31, 2024.

The weighted-average fair value of RSUs granted during the three months ended March 31,

2023 was $ 5.24 .

during the three months or six months ended June 30, 2024 or the three months ended June 30, 2023.

The weighted-average fair value of

RSUs granted during the six months ended June 30, 2023 was $ 47.16 .

Stock-based compensation expense

related to RSUs was $ 26,000 and $ 111,000 for the three months ended March 31, 2024 and 2023, respectively.

related to RSUs was $ 15,000 and $ 94,000 for the three months ended June 30, 2024 and 2023, respectively.

Stock-based compensation expense

related to RSUs was $ 41,000 and $ 205,000 for the six months ended June 30, 2024 and 2023, respectively.

The aggregate fair value of

awards that vested during the three months ended March 31, 2024 and 2023 was $ 17,000 and $ 95,000 , respectively, which represents the market

awards that vested during the six months ended June 30, 2024 and 2023 was $ 17,000 and $ 95,000 , respectively, which represents the market

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

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.

Stock options granted by the Company to employees generally vest annually over 4

years after the grant date and generally vest over 1 year after the grant date for members of the Board of Directors and expire within

ten years of grant.

Upon the exercise of a stock option, the Company issues new shares and delivers them to the recipient.

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.

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.

Stock options granted by the Company to employees generally vest

annually over 4 years after the grant date and generally vest over 1 year after the grant date for non-employee members of the Board of

Directors and expire within ten years of grant.

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 the FASB ASC Topic

718, “ Compensation — Stock Compensation ”.

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.

The Company did not grant any stock options during

the three months ended March 31, 2024 and 2023.

The following table summarizes the activity of

the Company’s stock options for the three months ended March 31, 2024:

Summary of stock option activity

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

the FASB ASC Topic 718, “ Compensation — Stock Compensation ”.

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.

The Company did not grant

any stock options during the three or six months ended June 30, 2024 and 2023.

The following table summarizes

the activity of the Company’s stock options for the six months ended June 30, 2024:

Summary of stock options activity

Balance at December 31, 2023

Balance at March 31, 2024

Exercisable at March 31, 2024

Balance at June 30, 2024

Exercisable at June 30, 2024

Stock-based compensation expense

related to stock options for the three months ended March 31, 2024 was $ 6,000 .

related to stock options for the six months ended June 30, 2024 was $ 6,000 .

The Company did no t have any stock-based compensation expense

related to stock options for the three months ended March 31, 2023.

related to stock options for the three months ended June 30, 2024 and 2023 or the six months ended June 30, 2023.

Compensation Expense Related to Equity Awards

The following table sets forth

total stock-based compensation expense for the three months ended March 31, 2024 and 2023, in thousands:

The following table sets

forth total stock-based compensation expense for the three and six months ended June 30, 2024 and 2023, in thousands:

Schedule of stock-based compensation expense

Three Months Ended

Six Months Ended

Research and development

2 unchanged sentences

Net Loss per Common Share

Basic net loss per share is computed by dividing

net loss by the weighted average number of common shares outstanding.

Diluted net loss per share is computed by dividing the Company’s

net loss by the weighted average number of common shares outstanding and the impact of the dilutive effect of potential common stock equivalents,

except when the inclusion of such potential common stock equivalents would be anti-dilutive.

Dilutive potential common stock equivalents

primarily consist of stock options, RSUs and warrants.

Therefore, basic and diluted net loss per share applicable to common stockholders

were the same for all periods presented because the impact of these items is generally anti-dilutive during periods of net loss.

The following table sets forth the potential common

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

Schedule of anti dilutive stock

Basic net loss per share is

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

Diluted net loss per share is computed by dividing

the Company’s net loss by the weighted average number of common shares outstanding and the impact of the dilutive effect of potential

common stock equivalents, except when the inclusion of such potential common stock equivalents would be anti-dilutive.

Dilutive potential

common stock equivalents primarily consist of stock options, RSUs and warrants.

Therefore, basic and diluted net loss per share applicable

to common stockholders were the same for all periods presented because the impact of these items is generally anti-dilutive during periods

The weighted average number

of common shares outstanding as of June 30, 2023 includes the pre-funded warrants issued in connection with the June 2023 Financing, the

exercise of which requires nominal consideration for the delivery of the shares of common stock.

Therefore, these pre-funded warrants

are not included in the table below.

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 anti dilutive shares

Stock options

Unvested RSUs

Subsequent Events

In July 2024, the Company

entered into inducement letter agreements (the “ July 2024 Inducement Letter Agreements ”) with certain holders of certain

of the Company’s existing warrants to purchase up to an aggregate of 545,286 shares of the Company’s common stock.

warrants were originally issued in February 2020 through December 2023, having exercise prices between $ 324.00 and $ 9.72 per share.

to the July 2024 Inducement Letter Agreements, these warrants were exercised for cash at a reduced exercise of $ 5.45 per share in consideration

of the Company’s agreement to issue new unregistered five and one-half year term Series C warrants to purchase up to 583,098 shares

of common stock at an exercise price of $ 5.45 and new unregistered eighteen month term Series D warrants to purchase up to 507,474 shares

of common stock at an exercise price of $ 5.45 , both issued and sold at a price of $ 0.125 per warrant share (the “ July 2024 Financing ”).

In addition, the Company issued warrants to the placement agent, HCW, to purchase a total of 40,896 shares of common stock at an exercise

price of $ 6.8125 per share.

The net proceeds to the Company from the July 2024 Financing are approximately $ 2,600,000 , after deducting

placement agent fees and offering expenses.

Pursuant to the terms of

the July 2024 Inducement Letter Agreements, in the event that the exercise of the existing warrants in the July 2024 Financing would

have otherwise caused a holder to exceed the beneficial ownership limitations set forth in the existing warrant, the Company issued

the number of shares that would not cause a holder to exceed such beneficial ownership limitation and agreed to hold such balance of

shares of common stock in abeyance.

Accordingly, an aggregate of 328,758

shares of common stock were held in abeyance (the “ July 2024 Abeyance Shares ”) with such July 2024 Abeyance

Shares evidenced through the holder’s existing warrants and which are deemed to be prepaid.

The July 2024 Abeyance Shares will

be held until notice is received by the holder that the balance of the shares of common stock may be issued in compliance with such

beneficial ownership limitations and may be exercised pursuant to a notice of exercise from the holder.

Until such time, the

Abeyance Shares are evidenced through the holder’s existing warrants.

Subsequent to the balance sheet date and through the

date of the filing with the SEC of this Quarterly Report on Form 10-Q, 201,758 of the July 2024 Abeyance Shares were released.

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

What changed 10-Q

Item 1. Financial Statements