phio20250930

phio20250930_10q.htm

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36304

Phio Pharmaceuticals Corp.

(Exact name of registrant as specified in its charter)

Delaware	45-3215903
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

411 Swedeland Road, Suite 23-1080, King of Prussia, PA 19406

(Address of principal executive office) (Zip code)

Registrant’s telephone number, including area code: (610) 947-0251

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value, $0.0001 per share	PHIO	The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 11, 2025, Phio Pharmaceuticals Corp. had 10,764,428 shares of common stock, $0.0001 par value, outstanding.

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PHIO PHARMACEUTICALS CORP.

FORM 10-Q — QUARTER ENDED September 30, 2025

INDEX

Part No.	Item No.	Description	Page No.

I		FINANCIAL INFORMATION	3

	1	Financial Statements (Unaudited)	3
		Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024	3
		Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2025 and 2024	4
		Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2025 and 2024	5
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2025 and 2024	6
		Notes to Condensed Consolidated Financial Statements	7
	2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
	3	Quantitative and Qualitative Disclosures About Market Risk	25
	4	Controls and Procedures	25

II		OTHER INFORMATION	26

	1	Legal Proceedings	26
	1A	Risk Factors	26
	2	Unregistered Sales of Equity Securities and Use of Proceeds	27
	3	Defaults Upon Senior Securities	27
	4	Mine Safety Disclosures	27
	5	Other Information	27
	6	Exhibits	28

Signatures			30

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PART I — FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

PHIO PHARMACEUTICALS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share data)

		(Unaudited)
	*September 30,*			*December 31,*
ASSETS	*2025*			*2024*
Current assets:
Cash and cash equivalents	$	10,705		$	5,382
Prepaid expenses and other current assets		788			354
Total current assets		11,493			5,736
Property and equipment, net		12			2
Total assets	$	11,505		$	5,738

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	516		$	253
Accrued expenses		1,150			762
Total liabilities		1,666			1,015
Commitments and contingencies
Stockholders' equity:
Series D Preferred stock, $0.0001 par value, 10,000,000 shares authorized; 0 issued and outstanding at each of September 30, 2025 and December 31, 2024		-			-
Common stock, $0.0001 par value, 100,000,000 shares authorized; 5,784,770 and 1,733,717 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively		1			-
Additional paid-in capital		162,521			151,079
Accumulated deficit		(152,683	)		(146,356	)
Total stockholders' equity		9,839			4,723
Total liabilities and stockholders' equity	$	11,505		$	5,738

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PHIO PHARMACEUTICALS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share and per share data)

(Unaudited)

	*Three Months Ended*						*Nine Months Ended*
	*September 30,*						*September 30,*
	*2025*			*2024*			*2025*			*2024*

Operating expenses:
Research and development	$	1,181		$	644		$	3,141		$	2,658
General and administrative		1,324			946			3,545			3,055
Total operating expenses		2,505			1,590			6,686			5,713
Operating loss		(2,505	)		(1,590	)		(6,686	)		(5,713	)
Interest income (expense), net		113			66			357			189
Other income (expense), net		-			-			2			-
Net loss	$	(2,392	)	$	(1,524	)	$	(6,327	)	$	(5,524	)
Net loss per common share:
Basic and diluted		(0.44	)		(1.54	)		(1.30	)		(8.23	)
Weighted average number of common shares outstanding
Basic and diluted		5,468,584			990,033			4,859,134			670,875

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PHIO PHARMACEUTICALS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Amounts in thousands, except share data)

(Unaudited)

	*Common Stock*					*Additional*
						*Paid in*			*Accumulated*
For the Three and Nine Months Ended September 30, 2025	*Shares*			*Amount*		*Capital*			*Deficit*			*Total*
Balance at December 31, 2024		1,733,717		$	-	$	151,079		$	(146,356	)	$	4,723
Issuance of common stock upon exercise of warrants		537,432			-		2,680			-			2,680
Issuance of common stock and warrants, net of offering costs of $1,028		2,507,005			-		6,493			-			6,493
Stock-based compensation expense		–			-		43			-			43
Net loss		–			-		-			(1,769	)		(1,769	)
Balance at March 31, 2025		4,778,154		$	-	$	160,295		$	(148,125	)	$	12,170
Stock-based compensation expense		-			-		51			-			51
Issuance of common stock upon exercise of warrants		20,000			-		40			-			40
Net loss		-			-		-			(2,166	)		(2,166	)
Balance at June 30, 2025		4,798,154		$	-	$	160,386		$	(150,291	)	$	10,095
Issuance of common stock upon exercise of warrants		100,000			-		200			-			200
Issuance of common stock and warrants, net of offering costs of $435		828,596			1		1,852			-			1,853
Issuance of common stock upon vesting of restricted stock units		71,000			-		-			-			-
Shares withheld for payroll taxes		(12,980	)		-		(30	)		-			(30	)
Stock-based compensation expense		-			-		113			-			113
Net loss		-			-		-			(2,392	)		(2,392	)
Balance at September 30, 2025		5,784,770		$	1	$	162,521		$	(152,683	)	$	9,839

	Common Stock					Additional
						Paid in			Accumulated
For the Three and Nine Months Ended September 30, 2024	Shares			Amount		Capital			Deficit			Total
Balance at December 31, 2023		416,368		$	-	$	146,936		$	(139,206	)	$	7,730
Issuance of common stock upon exercise of warrants		91,820			-		-			-			-
Issuance of common stock upon vesting of restricted stock units		2,689			-		-			-			-
Shares withheld for payroll taxes		(689	)		-		(4	)		-			(4	)
Stock-based compensation expense		-			-		32			-			32
Net loss		-			-		-			(2,154	)		(2,154	)
Balance at March 31, 2024		510,188		$	-	$	146,964		$	(141,360	)	$	5,604
Stock-based compensation expense		-			-		15			-			15
Net loss		-			-		-			(1,846	)		(1,846	)
Balance at June 30, 2024		510,188		$	-	$	146,979		$	(143,206	)	$	3,773
Cash-in-lieu of fractional shares for reverse stock split		(255	)		-		(1	)		-			(1	)
Issuance of common stock and warrants, net of offering costs		216,528			-		2,646			-			2,646
Issuance of common stock upon exercise of warrants		231,758			-		-			-			-
Stock-based compensation expense		-			-		52			-			52
Net loss		-			-		-			(1,524	)		(1,524	)
Balance at September 30, 2024		958,219		$	-	$	149,676		$	(144,730	)	$	4,946

The accompanying notes are an integral part of these condensed consolidated financial statements.

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PHIO PHARMACEUTICALS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)
(Unaudited)

	*Nine Months Ended*
	*September 30,*
	*2025*			*2024*
Cash flows from operating activities:
Net loss	$	(6,327	)	$	(5,524	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2			2
Amortization of right of use asset		-			33
Net gain/loss on disposal of property and equipment		-			3
Stock-based compensation		207			99
Changes in operating assets and liabilities:
Prepaid expenses and other assets		(434	)		361
Accounts payable		263			(473	)
Accrued expenses		389			(207	)
Lease liability		-			(35	)
Net cash used in operating activities		(5,900	)		(5,741	)
Cash flows from investing activities:
Cash paid for purchase of property and equipment		(12	)		-
Net cash used in investing activities		(12	)		-
Cash flows from financing activities:
Net proceeds from the exercise of warrants		2,920			2,646
Net proceeds from the issuance of common stock and warrants		8,345			(1	)
Payments of taxes for net shares settled restricted stock unit issuances		(30	)		(4	)
Net cash provided by financing activities		11,235			2,641
Net decrease in cash, cash equivalents and restricted cash		5,323			(3,100	)
Cash, cash equivalents and restricted cash at the beginning of period		5,382			8,490
Cash, cash equivalents and restricted cash at end of period	$	10,705		$	5,390

	2025		2024
Supplemental disclosure of cash flow information:
Interest paid	$	-	$	-

See accompanying notes to consolidated financial statements.

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PHIO PHARMACEUTICALS CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Significant Accounting Policies

Nature of Operations

Phio Pharmaceuticals Corp. (“Phio” or the “Company”) is a clinical stage biopharmaceutical company whose proprietary INTASYL® self-delivering small interfering RNAi(siRNA) 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. The Company is committed to discovering and developing innovative cancer treatments for patients by creating new pathways toward a cancer-free future.

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.

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Certain information and footnote disclosures that are included in the Company’s annual consolidated financial statements, but that are not required for interim reporting purposes, have been condensed or omitted. In the opinion of management, the interim condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of results for the periods presented.

These statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2025 (the “2024 Form 10-K”). Interim results are not necessarily indicative of results for a full year.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, MirImmune, LLC. All material intercompany accounts have been eliminated in consolidation.

Segments

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

Reverse Stock Split

Effective 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.

Use of Estimates

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 judgment include, among others, those related to the fair value of equity awards, accruals for research and development expenses, useful lives of property and equipment, and the valuation allowance on the Company’s deferred tax assets. On an ongoing basis the Company evaluates its estimates and bases its estimates on historical experience and other relevant assumptions that the Company believes are reasonable under the circumstances. Actual results could differ materially from these estimates.

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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. There is no guarantee that debt, additional equity or other funding will be available to the Company on acceptable terms, or at all. If the Company fails to obtain additional funding when needed, the Company would be forced to scale back or terminate its operations or seek to merge with or to be acquired by another company.

Based on current cash flow projections, the Company believes it has sufficient cash and cash equivalents, including net proceeds from its November 2025 Financing (as defined below), to meet its current planned obligations for at least 12 months from the date these financial statements are issued. The Company has limited cash resources, has incurred recurring operating losses and negative cash flows from its operations since its inception and has not yet recognized any product revenues. These factors have previously raised doubt about the Company’s ability to continue as a going concern. With the net proceeds from the November 2025 Financing, the Company was able to alleviate such doubt as of the date of the filing of this Quarterly Report on Form 10-Q.

Summary of Significant Accounting Policies

Cash and Cash Equivalents

Cash and cash equivalents include unrestricted cash accounts, money market investments and highly liquid investment instruments with original maturity of three months or less at the date of purchase.

Other than as set forth above, there have been no material changes to the significant accounting policies disclosed in the Company’s 2024 Form 10-K.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires public business entities to disclose additional information in specified categories with respect to the reconciliation of the effective tax rate to the statutory rate for federal, state, and foreign income taxes. It also requires greater detail about individual reconciling items in the rate reconciliation to the extent the impact of those items exceeds a specified threshold. In addition to new disclosures associated with the rate reconciliation, the ASU requires information pertaining to taxes paid (net of refunds received) to be disaggregated for federal, state, and foreign taxes and further disaggregated for specific jurisdictions to the extent the related amounts exceed a quantitative threshold. The ASU also describes items that need to be disaggregated based on their nature, which is determined by reference to the item’s fundamental or essential characteristics, such as the transaction or event that triggered the establishment of the reconciling item and the activity with which the reconciling item is associated. The ASU eliminates the historic requirement that entities disclose information concerning unrecognized tax benefits having a reasonable possibility of significantly increasing or decreasing in the 12 months following the reporting date. This ASU is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. This ASU should be applied on a prospective basis; however, retrospective application is permitted. The Company is currently evaluating the impact that ASU 2023-09 will have on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires additional disclosure about the specific expense categories in the notes to financial statements at interim and annual reporting periods. The amendments in this ASU do not change or remove current expense disclosure requirements but affect where this information appears in the notes to financial statements. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. The Company is currently evaluating the impact that ASU 2024-03 will have on its consolidated financial statements.

Recent Tax Legislation

On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions and allows immediate expensing of certain domestic research and experimental expenditures under new Section 174A of the Internal Revenue Code. The Company does not expect the impact of the OBBBA to be material to its consolidated financial statements.

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2. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities are comprised of the following:

	*September 30,*		*December 31,*
	*2025*		*2024*
Accounts payable trade	$	516	$	253
Research and development accruals		665		558
Professional fee accrual		67		173
Payroll accruals		418		31
	$	1,666	$	1,015

3. Collaboration Agreement

AgonOx, Inc. (“AgonOx”)

In February 2021, the Company entered into a clinical co-development collaboration agreement (the “Clinical Co-Development 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 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.

In May 2024, the Company terminated the Clinical Co-Development Agreement with AgonOx, effective immediately. 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. The Company is no longer required to provide financial support for the development costs incurred in the Clinical Co-Development Agreement and the Company is no longer entitled to future development milestones or royalty payments from AgonOx’s licensing of its DP TIL technology.

The Company paid AgonOx all payment obligations that accrued prior to the termination of the Clinical Co-Development Agreement. Pursuant to the terms of the Clinical Co-Development Agreement, each of the Company and AgonOx were responsible for its own costs and expenses incurred in connection with the wind-down of the Phase 1 clinical trial. The Company made the remaining payment of $34,320, which primarily related to accrued obligations for patient fees and other miscellaneous costs as of the date of termination, to AgonOx on March 21, 2025. This settled all future obligations to AgonOx.

The Company did not recognize expense with respect to the Clinical Co-Development Agreement during the three and nine months ended September 30, 2025. During the three and nine months ended September 30, 2024, the Company recognized approximately $308,000 and $414,000, respectively, of expense with respect to the Clinical Co-Development Agreement.

4. Leases

The Company leases space for various corporate and research purposes. It is the Company’s policy to apply the provisions of ASC 842 when accounting for arrangements that meet the criteria to be a lease. The Company calculates the lease liability as the present value of the lease’s cash flows using the interest rate implicit in the lease, if determinable. If the rate implicit in the lease is not determinable, the Company uses its incremental borrowing rate. The incremental borrowing rate is defined as the rate the Company would have to pay to borrow on a collateralized basis over the lease term. The Company has elected the accounting policy election available under ASC 842 to not record a lease liability for leases with a term of less than one year.

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From April 2014 to March 2024, the Company leased space that was utilized as its corporate headquarters and primary laboratory. The lease expired on March 31, 2024. On March 1, 2024, the Company commenced a lease for a laboratory facility located at 17 Briden Street, Worcester, Massachusetts. The lease had an original expiration date of August 31, 2024 and was subsequently extended through February 28, 2025. The Company continues to lease the space on a month-to-month basis. Monthly rent is approximately $2,600. In March 2025, the Company contracted with LifeSciences PA located at 411 Swedeland Road, King of Prussia, PA 19406 for access to full working space for normal hours of operations at a fee of $300 per month, which can be cancelled at any time.

Operating lease costs included in operating expense were approximately $9,000 and $8,000 for the three months ended September 30, 2025 and 2024, respectively. Operating lease costs included in operating expense were approximately $22,000 and $19,000 for the nine months ended September 30, 2025 and 2024, respectively.

There was no 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 September 30, 2025 and 2024. 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 $0 and $35,000 for the nine months ended September 30, 2025 and 2024, respectively.

5. Stockholders’ Equity

Financings

May 2024 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 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. No shares of Common Stock were sold by the Company pursuant to the Purchase Agreement prior to termination.

July 2024 Financing

On July 11, 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 Common Stock. The existing warrants were originally issued in February 2020 through December 2023, having exercise prices between $324.00 and $9.72 per share. Pursuant 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 H.C. Wainwright & Co., LLC (the “Placement Agent”) 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 were approximately $2,646,000, after deducting placement agent fees and offering expenses. The Company incurred non-cash equity issuance costs of approximately $2.4 million for the incremental fair value of the outstanding equity classified warrants and approximately $0.2 million for placement agent warrants.

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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 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 year ended December 31, 2024, all of the July 2024 Abeyance Shares were released.

December 19, 2024 Concurrent Registered Direct Offering and Private Placement

On December 19, 2024, the Company entered into a securities purchase agreement (the “ December 19, 2024 Securities Purchase Agreement”) with certain institutional and accredited investors in connection with a registered direct offering (the “ December 19, 2024 Registered Direct Offering”) and concurrent private placement (the “ December 19, 2024 Private Placement” and, together with the December 19, 2024 Registered Direct Offering, the “ December 19, 2024 Offerings”). The December 19, 2024 Offerings closed on December 20, 2024. The net proceeds to the Company from the December 19, 2024 Offerings were approximately $900,000, after deducting placement agent fees and offering expenses.

Pursuant to the December 19, 2024 Securities Purchase Agreement, the Company offered and sold in the December 19, 2024 Registered Direct Offering 437,192 shares of Common Stock at a purchase price of $2.635 per share. In the December 19, 2024 Private Placement, the Company also issued to such institutional and accredited investors unregistered warrants to purchase up to 437,192 shares of Common Stock (the “Series E Warrants”). Under the terms of the December 19, 2024 Securities Purchase Agreement, for each share of Common Stock issued in the December 19, 2024 Registered Direct Offering, an accompanying Series E Warrant was issued to the purchaser thereof. Each Series E Warrant is exercisable for one share of Common Stock at an exercise price of $2.51 per share and will expire on December 20, 2029. The Series E Warrants were offered and sold at a purchase price of $0.125 per Series E Warrant, which purchase price is included in the offering price per share of Common Stock issued in the December 19, 2024 Registered Direct Offering.

December 23, 2024 Concurrent Registered Direct Offering and Private Placement

On December 23, 2024, the Company entered into a securities purchase agreement (the “ December 23, 2024 Securities Purchase Agreement”) with certain institutional and accredited investors in connection with a registered direct public offering (the “ December 23, 2024 Registered Direct Offering”) and concurrent private placement (the “ December 23, 2024 Private Placement” and, together with the December 23, 2024 Registered Direct Offering, the “ December 23, 2024 Offerings” and, together with the December 19,2024 Offerings, the “ December 2024 Offerings”). The December 23, 2024 Offerings closed on December 24, 2024. The net proceeds to the Company from the December 23, 2024 Offerings were approximately $480,000, after deducting placement agent fees and offering expenses.

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Pursuant to the December 23, 2024 Securities Purchase Agreement, the Company offered and sold in the December 23, 2024 Registered Direct Offering 240,000 shares of Common Stock at a purchase price of $2.00 per share. In the December 23, 2024 Private Placement, the Company also issued to such institutional and accredited investors unregistered warrants to purchase up to 240,000 shares of Common Stock (the “Series F Warrants”). Under the terms of the December 23, 2024 Securities Purchase Agreement, for each share of Common Stock issued in the December 23, 2024 Registered Direct Offering, an accompanying Series F Warrant was issued to the purchaser thereof. Each Series F Warrant is exercisable for one share of Common Stock at an exercise price of $2.00 per share and will expire on December 24, 2029. The Series F Warrants were offered and sold at a purchase price of $0.125 per Series F Warrant, which purchase price is included in the offering price per share of Common Stock issued in the December 23, 2024 Registered Direct Offering.

In connection with the December 2024 Offerings, the Company agreed to issue to the Placement Agent, or its designees, warrants to purchase up to an aggregate of 50,789 shares of Common Stock (the “Placement Agent Warrants”), which represent 7.5% of the aggregate number of shares of Common Stock sold in the December 19, 2024 Registered Direct Offering and the December 23, 2024 Registered Direct Offering. The Placement Agent Warrants have substantially the same terms as the Series E Warrants and the Series F Warrants, except that (i) 32,789 of the Placement Agent Warrants have an exercise price equal to $3.2938, or 125% of the offering price per share of Common Stock sold in the December 19, 2024 Registered Direct Offering, and are exercisable until December 19, 2029, and (ii) 18,000 of the Placement Agent Warrants have an exercise price equal to $2.50, or 125% of the offering price per share of Common Stock sold in the December 23, 2024 Registered Direct Offering, and are exercisable until December 23, 2029.

January 13, 2025 Concurrent Registered Direct Offering and Private Placement

On January 13, 2025, the Company entered into a securities purchase agreement (the “ January 13, 2025 Securities Purchase Agreement”) with certain institutional and accredited investors in connection with a registered direct public offering (the “ January 13, 2025 Registered Direct Offering”) and concurrent private placement (the “ January 13, 2025 Private Placement” and, together with the January 13, 2025 Registered Direct Offering, the “ January 13, 2025 Offerings”). The January 13, 2025 Offerings closed on January 14, 2025. In addition, the Company issued warrants to the Placement Agent to purchase a total of 79,775 shares of Common Stock at an exercise price of $3.75 per share. The net proceeds to the Company from the January 13, 2025 Registered Direct Offerings and the January 13, 2025 Private Placement were approximately $2.9 million, after deducting fees and estimated offering expenses.

Pursuant to the January 13, 2025 Securities Purchase Agreement, the Company offered and sold in the January 13, 2025 Registered Direct Offering 1,063,670 shares of Common Stock at a purchase price of $3.00 per share. In the January 13, 2025 Private Placement, the Company also issued to certain institutional and accredited investors unregistered warrants to purchase up to 2,127,340 shares of Common Stock (the “Series G Warrants”). Under the terms of the January 13, 2025 Securities Purchase Agreement, for each share of Common Stock issued in the January 13, 2025 Registered Direct Offering, two accompanying Series G Warrants were issued to the purchaser thereof. Each Series G Warrant is exercisable for one share of Common Stock at an exercise price of $3.00 per share and will expire on January 14, 2027.

January 14, 2025 Concurrent Registered Direct Offering and Private Placement

On January 14, 2025, the Company entered into a securities purchase agreement (the “ January 14, 2025 Securities Purchase Agreement”) with certain institutional and accredited investors in connection with a registered direct public offering (the “ January 14, 2025 Registered Direct Offering”) and concurrent private placement (the “ January 14, 2025 Private Placement” and together with the January 14, 2025 Registered Direct Offering, the “ January 14, 2025 Offerings”). The January 14, 2025 Offerings closed on January 15, 2025. In addition, the Company issued warrants to the Placement Agent to purchase a total of 62,500 shares of Common Stock at an exercise price of $3.75 per share. The net proceeds to the Company from the January 14, 2025 Registered Direct Offering and the January 14, 2025 Private Placement were approximately $2.2 million, after deducting fees and estimated offering expenses.

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Pursuant to the January 14, 2025 Securities Purchase Agreement, the Company offered and sold in the January 14, 2025 Registered Direct Offering 833,335 shares of Common Stock at a purchase price of $3.00 per share. In the January 14, 2025 Private Placement, the Company also issued to such institutional and accredited investors unregistered warrants to purchase up to 1,666,670 shares of Common Stock (the “Series H Warrants”). Under the terms of the January 14, 2025 Securities Purchase Agreement, for each share of Common Stock issued in the January 14, 2025 Registered Direct Offering, two accompanying Series H Warrants were issued to the purchaser thereof. Each Series H Warrant is exercisable for one share of Common Stock at an exercise price of $3.00 per share and will expire on January 15, 2027.

January 16, 2025 Concurrent Registered Direct Offering and Private Placement

On January 16, 2025, the Company entered into a securities purchase agreement (the “ January 16, 2025 Securities Purchase Agreement”) with certain institutional and accredited investors in connection with a registered direct public offering (the “ January 16, 2025 Registered Direct Offering”) and concurrent private placement (the “ January 16, 2025 Private Placement” and, together with the January 16, 2025 Registered Direct Offering, the “ January 16, 2025 Offerings” and the January 16, 2025 Offerings, together with the January 13, 2025 Offerings and the January 14, 2025 Offerings, the “ January 2025 Offerings”). The January 16, 2025 Offerings closed on January 17, 2025. In addition, the Company issued warrants to the Placement Agent to purchase a total of 45,750 shares of Common Stock at an exercise price of $3.75 per share The net proceeds to the Company from the January 16, 2025 Registered Direct Offering and the January 16, 2025 Private Placement were approximately $1.6 million, after deducting fees and estimated offering expenses.

Pursuant to the January 16, 2025 Securities Purchase Agreement, the Company offered and sold in the January 16, 2025 Registered Direct Offering 610,000 shares of Common Stock at a purchase price of $3.00 per share. In the January 16, 2025 Private Placement, the Company also issued to such institutional and accredited investors unregistered warrants to purchase up to 1,220,000 shares of Common Stock (the “Series I Warrants”). Under the terms of the January 16, 2025 Securities Purchase Agreement, for each share of Common Stock issued in the January 16, 2025 Registered Direct Offering, two accompanying Series I Warrants were issued to the purchaser thereof. Each Series I Warrant is exercisable for one share of Common Stock at an exercise price of $3.00 per share and will expire on January 19, 2027.

July 2025 Financing

On July 25, 2025, the Company entered into inducement letter agreements (the “ July 2025 Inducement Letter Agreements”) with certain holders of certain of the Company’s existing warrants to purchase an aggregate of 928,596 shares of the Company’s common stock. Pursuant to the July 2025 Inducement Letter Agreements, the existing warrants were originally issued in December 2024 and January 2025, having exercise prices between $2.00 and $3.00 per share. Warrants to purchase 100,000 shares of common stock at the existing exercise price of $2.00 per share were exercised at their existing exercise price of $2.00 per share, and warrants to purchase 828,596 shares of common stock were exercised at a reduced exercise price of $2.485 per share. In consideration for the immediate exercise of such warrants for cash and the payment of an additional $0.125 per New Warrant (as defined below), or an aggregate of $232,149 for all New Warrants, the Company agreed to issue new unregistered five-year term Series J warrants (the “Series J Warrants”) to purchase an aggregate of up to 318,596 shares of common stock at an exercise price of $2.485 and new unregistered 24-month term Series K warrants (the “Series K Warrants” and, together with the Series J Warrants, the “New Warrants”) to purchase an aggregate of up to 1,538,596 shares of common stock at an exercise price of $2.485 (the “ July 2025 Financing”).

In addition, the Company issued warrants to the placement agent, H.C. Wainwright & Co., LLC, to purchase up to 69,645 shares of common stock (the “Placement Agent Warrants”). 7,500 of the Placement Agent Warrants issued have an exercise price of $2.8125 per share of Common Stock and a term of five years, 16,395 of the Placement Agent Warrants issued have an exercise price of $3.4188 per share of Common Stock and a term of five years, and 45,750 of the Placement Agent Warrants issued have an exercise price of $3.4188 per share of Common Stock and a term of twenty-four months. The net proceeds to the Company from the July 2025 Financing were approximately $2.1 million, after deducting placement agent fees and offering expenses.

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Warrants

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.

During the three months ended September 30, 2025 and 2024, there were 928,596 and 448,292 warrants exercised, respectively. During the nine months ended September 30, 2025 and 2024, there were 1,486,028 and 540,112 warrants exercised, respectively.

During the three and nine months ended September 30, 2025, there were no abeyance shares released and issued. During the three months ended September 30, 2024, 231,758 of the July 2024 Abeyance Shares were released and issued and during the nine months ended September 30, 2024, all of the shares held in abeyance in connection with the Company's December 2023 financing transaction were released and issued, and 231,758 of the July 2024 Abeyance Shares were released and issued.

The following table summarizes the Company’s outstanding warrants, all of which are classified as equity instruments, at September 30, 2025:

	2025					2024
				Weighted-					Weighted-
				Average					Average
	*Number*			*Exercise Price*		*Number*			*Exercise Price*
	*of Shares*			*Per Share*		*of Shares*			*Per Share*
Outstanding at January 1,		1,925,867		$	12.66		703,530		$	35.99
Issued		7,170,679			2.91		1,131,468			5.50
Exercised		(1,486,028	)		3.73		(540,112	)		6.56
Expired		(10,186	)		482.89		-			-
Outstanding at September 30,		7,600,332		$	4.57		1,294,886		$	21.62

6. Stock-based Compensation

Restricted Stock Units

Restricted stock units (“RSUs”) are issued under the Company’s 2020 Long-Term Incentive Plan (the “2020 Plan”). RSUs are generally subject to the satisfaction of certain service requirements. RSUs granted by the Company to employees generally cliff vest 1 year after the grant date. 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 withholding taxes due upon vesting and withholds a number of shares of equal value. The Company does not expect to repurchase shares to satisfy RSU vests. The fair value of the RSUs awarded is based upon the Company’s closing stock price at the grant date and is expensed over the requisite service period.

The following table summarizes the activity of the Company’s RSUs for the nine months ended September 30, 2025:

				*Weighted-*
				*Average*
				*Grant Date*
	*Number*			*Fair Value*
	*of Shares*			*Per Share*
Unvested units at December 31, 2024		71,000		$	2.77
Granted		512,800			2.32
Vested		(71,000	)		2.77
Forfeited		–			–
Unvested units at September 30, 2025		512,800		$	2.32

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There were 512,800 RSUs granted during the three and nine months ended September 30, 2025 and 71,000 RSUs granted during the three and nine months ended September 30, 2024.

Stock-based compensation expense related to RSUs was $113,000 and $52,000 for the three months ended September 30, 2025 and 2024, respectively. Stock-based compensation expense related to RSUs was $207,000 and $99,000 for the nine months ended September 30, 2025 and 2024, respectively.

The aggregate fair value of awards that vested during the nine months ended September 30, 2025 was $164,000, which represents the market value of the Company's common stock on the date that the RSU vested. The aggregate fair value of awards that vested during the nine months ended September 30, 2024 was $21,000, 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. Stock options granted by the Company to participants 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.

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 or nine months ended September 30, 2025 or 2024.

The following table summarizes the activity of the Company’s stock options for the nine months ended September 30, 2025:

				*Weighted-*
				*Average*
				*Exercise*		*Aggregate*
	*Number*			*Price*		*Intrinsic*
	*of Shares*			*Per Share*		*Value*
Balance at December 31, 2024		1,126		$	1,206.29
Granted		–			–
Exercised		–			–
Forfeited		–			–
Expired		(5	)		133,863.84
Balance at September 30, 2025		1,121		$	614.60	$	-
Exercisable at September 30, 2025		1,121		$	614.60	$	-

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Stock-based compensation expense related to stock options for the nine months ended September 30, 2025 and 2024 was $0 and $6,000, respectively. The Company did not have any stock-based compensation expense related to stock options for the three months ended September 30, 2025 and 2024.

Compensation Expense Related to Equity Awards

The following table sets forth total stock-based compensation expense for the three and nine months ended September 30, 2025 and 2024, in thousands:

	*Three Months Ended*				*Nine Months Ended*
	*September 30,*				*September 30,*
	*2025*		*2024*		*2025*		*2024*
Research and development	$	30	$	25	$	61	$	14
General and administrative		83		27		146		85
Total stock-based compensation	$	113	$	52	$	207	$	99

As of September 30, 2025, the total unrecognized compensation cost related to non-vested RSUs was approximately $1,125,000. This cost is expected to be recognized over a weighted-average period of 0.95 years.

7. 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:

	*September 30,*
	*2025*		*2024*
Stock options		1,121		1,133
Unvested RSUs		512,800		71,000

SEC Form 10-Q filed by Phio Pharmaceuticals Corp.