Item 1.01. Entry into a Material Definitive Agreement.
Common Stock Offering
On November 18, 2019, Phio Pharmaceuticals
Corp. (the “Company”) entered into a Placement Agency Agreement (the “Placement Agency Agreement”) with
H.C. Wainwright & Co., LLC, as placement agent, pursuant to which the Company agreed to issue and sell, in a registered public
offering of the Company (the “Offering”), 10,000,000 shares of the Company’s common stock, par value $0.0001
per share (the “Common Stock”) to certain investors. The offering price was $0.10 per share of Common Stock.
Each purchaser in the Offering was
required, as a condition to such purchase, to execute a subscription agreement pursuant to which they (i) agreed, effective
until November 19, 2019, the record date of our next stockholder meeting, not to sell, dispose or otherwise transfer, directly or indirectly any shares of our Common
Stock that they own or control as of the closing of this Offering and (ii) agreed to vote at our next stockholder meeting
the shares of our Common Stock that they own or control as of the closing of this Offering in favor of an amendment of
our articles of incorporation to undertake a reverse stock split of our Common Stock.
The Placement Agency Agreement contains
customary representations and warranties, agreements and obligations, conditions to closing and termination provisions.
The net proceeds to the Company from the
Offering is approximately $725,000, after deducting fees and expenses. The Company intends to use substantially all of the net
proceeds of the Offering primarily for the development of the Company’s immuno-oncology program, for other research and development
activities and for general working capital.
Pursuant to the Placement Agency Agreement,
the Company agreed to pay the placement agent a cash fee of 7.5% and a management fee of 1.0% of the aggregate gross proceeds of
the Offering We also agreed to pay the placement agent up to $40,000 for legal expenses and reimburse the placement agent up to
$10,000 for clearing expenses. In addition, the Company, upon closing of the Offering, issued to the placement agent warrants to
purchase up to 750,000 shares of Common Stock (the “Placement Agent Warrants”), or 7.5% of the aggregate number of
shares of Common Stock sold in the Offering. The Placement Agent Warrants are immediately exercisable at a price of $0.125 per
share of Common Stock, subject to adjustment in certain circumstances, may be exercised on a cashless basis under certain circumstances,
and expire on November 19, 2024.
The shares of Common Stock sold in the
Offering were offered and sold pursuant to a prospectus, dated April 6, 2018, and a prospectus supplement dated November 18, 2019,
in connection with a takedown from the Company’s shelf registration statement on Form S-3 (File No. 333-224031), which was
declared effective by the Securities and Exchange Commission on April 6, 2018. The Offering was made only by means of a prospectus
forming a part of the effective registration statement.
The foregoing descriptions of the Placement
Agency Agreement and the Placement Agent Warrants are not complete and are qualified in their entirety by reference to the full
text of the Placement Agency Agreement and the forms of the Placement Agent Warrant, copies of which are filed as Exhibit 1.1 and
Exhibit 4.1 to this Current Report on Form 8-K and hereby incorporated by reference herein. Attached as Exhibit 5.1 is an opinion of counsel regarding the due authorization of the Common Stock
sold in the Offering.
On November 17, 2019, the Company unilaterally reduced the per share exercise price of all of the outstanding
common stock warrants (but excluding any pre-funded warrants) issued under the Company’s prospectus dated as of October
1, 2018 (the “Warrants”) to an exercise price of $0.19 per share, which was equal to the closing price of the Company’s
common stock on the Nasdaq Capital Market on November 15, 2019. The reduction in the exercise price became effective as of November
19, 2019 concurrent with the closing of the Offering. Other than the reduction in the per share exercise price, all other terms
and provisions of the Warrants remain unchanged. Upon the exercise of the Warrants, the Company would potentially receive proceeds
of up to $4.07 million. There can be no assurance that the Warrants will be exercised.