Allarity Therapeutics, Inc. 10-Q/A

Item 1A. Risk Factors. The risks that we believe are material to our investors are discussed in the Company’s registration statement on form S-4 filed on August 20, 2021, under the caption “Risk Factors,” which is on file with the SEC. Except as set forth herein, there have been no material changes during the nine months ended November 23, 2021, to our previously reported Risk Factors. We have identified material weaknesses in our internal control over financial reporting and have restated our financial statements for prior periods. If we are unable to remediate these material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business and stock price. As a newly reporting company under the Exchange Act, we are not required to evaluate the effectiveness of our internal controls over financial reporting until the end of the fiscal year after we file our first annual report on Form 10-K, which will occur on December 31, 2022. However, in connection with the audit of our financial statements for the year ended December 31, 2020, we were required to restate our financial statements for the year ended December 31, 2020 and for the quarterly period ended September 30, 2021. We identified material weaknesses in our internal controls over financial reporting because we did not have a formal process for period end financial closing and reporting, we historically had insufficient resources to conduct an effective monitoring and oversight function independent from our operations and we lack accounting resources and personnel to maintain effective segregation of duties and to properly account for accounting transactions such as the issuance of warrants with a derivative liability component and a convertible promissory note. If we are unable to remediate these material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business and stock price. The material weaknesses identified were: ● a lack of accounting resources required to fulfill US GAAP and SEC reporting requirements; ● a lack of comprehensive US GAAP accounting policies and financial reporting procedures and personnel; ● lack of adequate procedures and controls to appropriately account for accounting transactions including liability and the valuation allowance on the deferred tax asset relating to the net operating losses; and ● a lack of segregation of duties given the size of our finance and accounting team. We have implemented and are continuing to implement various measures to address the material weaknesses identified; these measures include: ● the hiring of a chief financial officer that is a CPA in the U.S; ● the hire of a Director of Financial Reporting, a CPA (Illinois) who is experienced with public company reporting and is conversant in US GAAP and SEC accounting issues. With this hire we are addressing our ongoing development of our comprehensive US GAAP accounting policies, financial reporting procedures and internal controls over financial reporting; ● retaining consulting services to assist with the accounting treatment of complex financial instruments and tax; ● and engage an independent US GAAP advisory firm. A significant deficiency is a control deficiency, or a combination of control deficiencies, that adversely affects our ability to initiate, authorize, record, process, or report external financial data reliably in accordance with US GAAP such that there is more than a remote likelihood that a misstatement of our annual or interim financial statements that is more than inconsequential will not be prevented or detected by our employees. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of our annual or interim financial statement will not be prevented or detected by our employees. In response, we have begun the process of evaluating our internal control over financial reporting. We have also taken several remedial actions set forth above to address these material weaknesses. 39 Furthermore, it is possible that, had our independent registered public accounting firm conducted an audit of our internal control over financial reporting such firm might have identified additional material weaknesses and deficiencies. We are a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, requires that we include a report of management on our internal control over financial reporting in our annual report on Form 10-K beginning with our annual report for the fiscal year ending December 31, 2022. In addition, once we cease to be an “emerging growth company” as such term is defined in the JOBS Act and a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated, or reviewed, or if it interprets the relevant requirements differently from us. In addition, our reporting obligations may place a significant strain on our management, operational and financial resources, and systems for the foreseeable future. We may be unable to timely complete our evaluation, testing and any required remediation. While documenting and testing our internal control procedures to satisfy the requirements of Section 404, we may identify other weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented, or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. If we fail to achieve and maintain an effective internal control environment, we could experience material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of our common stock. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from Nasdaq, regulatory investigations and civil or criminal sanctions. We may also be required to restate our financial statements for prior periods. We are committed to remediating our material weakness as promptly as possible. However, there can be no assurance as to when this material weakness will be remediated or that additional material weaknesses will not arise in the future. If we are unable to maintain effective internal control over financial reporting, our ability to record, process and report financial information timely and accurately could be adversely affected, which could subject us to litigation or investigations, require management resources, increase our expenses, negatively affect investor confidence in our financial statements and adversely impact the trading price of our common stock. 40 Item 6. Exhibits EXHIBIT INDEX Exhibit No Exhibit Description Method of Filing 31.1* Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed electronically herewith 31.2* Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed electronically herewith 32.1* Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished electronically herewith 32.2* Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished electronically herewith 101.INS* Inline XBRL Instance Document Filed electronically herewith 101.SCH* Inline XBRL Taxonomy Extension Schema Document Filed electronically herewith 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document Filed electronically herewith 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document Filed electronically herewith 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document Filed electronically herewith 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document Filed electronically herewith 104* Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) 41 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ALLARITY THERAPEUTICS, INC., A Delaware Corporation Date: May 16, 2022 By: /s/ Steve Carchedi Name:   Steve Carchedi Title: Chief Executive Officer (Principal Executive Officer) Date: May 16, 2022 By: /s/ Jens Erik Knudsen Name: Jens Erik Knudsen Title: Chief Financial Officer (Principal Financial and Accounting Officer) 42