What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2023-03-13 compared with 2022-05-17 · 678 added, 520 removed, 51 unchanged (96% of the section changed)

ITEM 5 - MARKET FOR REGISTRANT’S COMMON

EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market for Common

common stock is traded on Nasdaq under the symbol “ALLR”.

Prior to the consummation

of the Recapitalization Share Exchange, Allarity Therapeutics A/S ordinary shares were listed on the Nasdaq First North Growth Market:

Stockholm under the symbol “ALLR:ST.”

Holders of Record of Common Stock

As of May 1, 2022, we had

approximately 2 stockholders of record for our common stock.

The foregoing number of stockholders of record does not include an unknown

number of stockholders who hold their stock in “street name.”

Dividend Policy

We do not anticipate declaring

or paying, in the foreseeable future, any cash dividends on our common stock.

We intend to retain all available funds and future earnings,

if any, to fund the development and expansion of our business.

Any future determination regarding the declaration and payment of dividends,

if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including our financial condition,

operating results, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem

Recent Sales of Unregistered Securities

Pursuant to the Purchase Agreement with the Investor, we issued 20,000

shares of our Series A Preferred Stock and a warrant to purchase 2,018,958 shares of common stock at an initial exercise price of $9.9061

to the Investor along with a PIPE Warrant, for an aggregate purchase price of $20 million.

Simultaneously with the execution of the SPA,

we also entered into a Registration Rights Agreement with the Investor wherein we agreed to register a number of shares of our common

stock equal to the maximum number of shares of our common stock that could be issued upon conversion of the Series A Preferred Stock using

a conversion price equal to 20% of $80,000,000 divided by the number of shares of common stock then outstanding plus 125% of the shares

of common stock issuable upon exercise of the PIPE Warrant, or a maximum of 12,618,590 shares of our common stock.

Pursuant the to the

Registration Rights Agreement, on September 13, 2021, we filed a registration statement with the SEC registering 12,618,590 shares of

common stock which such registration statement was declared effective on December 20, 2021.

From December 23, 2021, to May 1, 2022, pursuant to a series of exercise

of conversion by the Investor, we issued 766,466 shares of Common Stock to the Investor upon the conversion of 2,173 shares of Series

A Preferred Stock.

As of May 1, 2022, we had 17,827 shares of Series A Preferred Stock issued and outstanding.

The offers, sales, and issuances of the Series A Preferred Stock and

PIPE Warrant to the Investor described above were deemed to be exempt from registration under the Securities Act in reliance on Section

4(a)(2) of the Securities Act or Rule 506 of Regulation D promulgated thereunder as transactions by an issuer not involving a public offering.

Each of the recipients of securities in these transactions was an accredited investor within the meaning of Rule 501 of Regulation D under

the Securities Act.

Purchases of Equity Securities

Equity Compensation Plan Information

The following table provides

certain information with respect to our equity compensation plans in effect as of December 31, 2021, on a post-Recapitalization Shares

Exchange basis:

securities to be

5 - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

for Common Stock

common stock is listed on Nasdaq Global Market under the symbol “ALLR.” Prior to the consummation of the Recapitalization

Share Exchange on December 20, 2021, Allarity Therapeutics A/S ordinary shares were listed on the Nasdaq First North Growth Market:

under the symbol “ALLR:ST.”

of Record of Common Stock

As of the date of this report,

we had 2 stockholders of record for our common stock.

The foregoing number of stockholders of record does not include an unknown number

of stockholders who hold their stock in “street name.”

On November 22, 2022, our Board

declared a dividend of Series B Preferred Stock to the stockholders of record of common stock and Series A Preferred Stock as of December

5, 2022 (the “Record Date”).

On the Record Date, each share of common stock outstanding received 0.016 of a share of Series

B Preferred Stock and each share of Series A Preferred Stock outstanding received 1.744 shares of Series B Preferred Stock.

an aggregate of 190,786 shares of Series B Preferred Stock, which were redeemed on February 3, 2023.

do not anticipate declaring or paying, in the foreseeable future, any cash dividends on our common stock.

We intend to retain all available

funds and future earnings, if any, to fund the development and expansion of our business, and we do not anticipate paying any cash dividends

in the foreseeable future.

Any future determination regarding the declaration and payment of dividends, if any, will be at the discretion

of our Board of Directors and will depend on then-existing conditions, including our financial condition, operating results, contractual

restrictions, capital requirements, business prospects and other factors our Board of Directors may deem relevant.

Sales of Unregistered Securities

From January 1, 2022 to December

31, 2022, pursuant to a series of exercise of conversion of Series A Preferred Stock by 3i, LP, we issued a total of 7,801,831 shares

of common stock to 3i, LP upon the conversion of 6,214 shares of Series A Preferred Stock based on a conversion price ranging from $0.22

No proceeds were received by the Company upon such conversion.

Subsequent to December 31, 2022, pursuant to the exercise of

conversion by the 3i, LP, we issued 14,102,155 shares of Common Stock to the 3i, LP upon the conversion of 2,936 shares of Series A Preferred

Stock based on a conversion price ranging from $0.18 to $0.26.

No proceeds were received by the Company upon such conversion.

date of this report, we had 10,650 shares of Series A Preferred Stock issued and outstanding.

February 28, 2023, we entered into a Securities Purchase Agreement (the “SPA”) with 3i, L.P.

for the purchase and sale of

50,000 shares of Series C Convertible Redeemable Preferred Stock, par value of $0.0001 per share (the “Series C Preferred Stock”),

at a purchase price of $24.00 per share, for a subscription receivable in the aggregate amount equal to the total purchase price of $1.2

million (the “Series C Offering”).

The 50,000 shares of Series C Preferred Stock (the “Shares”) are convertible

into shares of the Company’s common stock, $0.0001 per share subject to the terms of the COD.

In July 2022, in connection

with the appointment of Dr.

Roth as our independent director, we granted him options to purchase 23,000 shares of common stock at an exercise

price of $1.28 per share, subject to vesting of 1/36 per month over 36 months following the grant date.

The expiration date for the options

is five years from date of grant.

In October 2022, in connection

with the appointment of Mr.

McLaughlin as our independent director, we granted him options to purchase 23,000 shares of common stock at

an exercise price of $1.10 per share, subject to vesting of 1/36 per month over 36 months following the grant date.

The expiration date

for the options is five years from date of grant.

offers, sales, and issuances of the option to Dr.

McLaughlin, and the Series C Offering were deemed to be exempt from registration

under the Securities Act in reliance on Section 4(a)(2) of the Securities Act or Rule 506 of Regulation D promulgated thereunder as transactions

by an issuer not involving a public offering.

Each of the recipients of securities in these transactions was an accredited investor within

the meaning of Rule 501 of Regulation D under the Securities Act.

The conversions of Series A Preferred Stock into common stock

were exempt pursuant to Section 3(a)(9).

Compensation Plan Information

following table provides certain information with respect to our equity compensation plans in effect as of December 31, 2022:

settlement of

8 unchanged sentences

1,165,374 (2)

Upon the closing of the Recapitalization Share Exchange and as of December 31, 2021, we had converted compensatory options to purchase ordinary shares of Allarity Therapeutics A/S to options to purchase 1,174,992 shares of our common stock.

the closing of the Recapitalization Share Exchange and as of December 31, 2021, we had converted compensatory options to purchase

ordinary shares of Allarity Therapeutics A/S to options to purchase 1,174,992 shares of our common stock.

were assumed under the 2021 Plan but are excluded from the number of reserved shares described in footnote 2 below.

Consists of 1,211,374 shares of our common stock initially reserved under the 2021 Equity Incentive Plan (“2021 Plan”).

The number of shares reserved for issuance under our 2021 Plan increases automatically on January 1 of each of 2022 through 2031 by the number of shares equal to the lesser of 5% of the aggregate number of outstanding shares of our common stock as of the immediately preceding December 31, or a number as may be determined by our Board of Directors.

ITEM 6 – [RESERVED]

There was no increase for January 1, 2022.

Our Board of Directors approved an increase of 5% of the outstanding shares of common stock at December 30, 2022, or 794,892 shares, effective as of January 1, 2023.

As a result, as of January 1, 2023, there was a total of 2,006,266 shares of common stock reserved under the 2021 Plan, of which 1,960,266 were available for issuance.

6 – [RESERVED]

- MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion

and analysis provide information which Allarity Therapeutics’ management believes is relevant to an assessment and understanding

of Allarity Therapeutics Inc’s consolidated results of operations and financial condition.

You should read the following discussion

and analysis of Allarity Therapeutics’ financial condition and results of operations together with Allarity Therapeutic Inc.’s

audited consolidated financial statements and notes thereto included elsewhere in this Annual Report.

In addition to historical financial

information, this discussion contains forward-looking statements based upon Allarity Therapeutics’ current expectations that involve

risks and uncertainties.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result

of various factors, including those set forth under “Risk Factors” and elsewhere in this Annual Report.

Unless otherwise indicated

or the context otherwise requires, references in this Management’s Discussion and Analysis of Financial Condition and Results of

Operations section to “Allarity Therapeutics,” “we,” “us,” “our,” and other similar terms

refer to Allarity Therapeutics Inc.

following discussion and analysis provide information which our management believes is relevant to an assessment and understanding of

Allarity consolidated results of operations and financial condition.

You should read the following discussion and analysis of our financial

condition and results of operations together with our audited consolidated financial statements and notes thereto included elsewhere

in this report.

In addition to historical financial information, this discussion contains forward-looking statements based upon our current

expectations that involve risks and uncertainties.

Our actual results could differ materially from those anticipated in these forward-looking

statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this report.

otherwise indicated or the context otherwise requires, references in this Management’s Discussion and Analysis of Financial Condition

and Results of Operations section to “Allarity,” “we,” “us,” “our,” and other similar

terms refer to Allarity Therapeutics, Inc.

and its consolidated subsidiaries.

We caution readers not

to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made.

We disclaim any obligation,

except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change

in our expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood

that actual results will differ from those set forth in the forward-looking statements.

We are a biopharmaceutical

company focused on discovering and developing highly targeted anti-cancer drug candidates.

caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made.

We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements

to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based, or that

may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

We are a pharmaceutical company

focused on discovering and developing highly targeted anti-cancer drug candidates.

Using its Drug Response Predictor (DRP ® )

4 unchanged sentences

polymerase (PARP) inhibitor stenoparib, and the microtubule inhibitor agent IXEMPRA.

Risks and Uncertainties

The Company is subject to risks

common to companies in the biotechnology industry, including but not limited to, risks of failure of preclinical studies and clinical

trials, the need to obtain marketing approval for any drug product candidate that it may identify and develop, the need to successfully

commercialize and gain market acceptance of its product candidates, dependence on key personnel and collaboration partners, protection

of proprietary technology, compliance with government regulations, development by competitors of technological innovations, and the ability

to secure additional capital to fund operations.

Product candidates currently under development will require significant additional research

and development efforts, including preclinical and clinical testing and regulatory approval prior to commercialization.

Even if the Company’s

research and development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product

Impacts of COVID-19 on our Business —

In March 2020, the World

Health Organization declared COVID-19 a global pandemic.

COVID-19 has had an impact on our operations as it caused some unexpected delays

in our clinical program activities as clinical trials were delayed.

Management is unable to estimate the future financial effects, if

any, to our business because of COVID-19 because of the high level of uncertainties and unpredictable outcomes of this disease.

We are continuing to evaluate

the impact of COVID-19 pandemic on our business and are taking proactive measures to protect the health and safety of our employees, as

well as to maintain business continuity.

Based on guidance issued by federal, state, and local authorities, we transitioned to a remote

work model for our employees, effective March 16, 2020.

During the last two quarters of the year ended December 31, 2021 and the first

quarter of 2022, restrictions due to COVID-19 have lifted significantly and as a result, our Danish employees have returned

Our North American employees are continuing to work remotely.

We will continue to closely monitor and seek to comply with guidance

from governmental authorities and adjust our activities as appropriate.

The ultimate impact of the

COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change.

We do not yet know the full extent of potential

delays or impacts on our business, our clinical trial, healthcare systems or the global economy.

However, these effects could harm our

operations, and we will continue to monitor the COVID-19 situation closely.

Impact of the Russia-Ukraine War

There have been immense flows of refugees to Europe and Denmark is ready to facilitate and to accept refugees

from the Ukraine.

It is far too early to estimate how many migrants Denmark will facilitate, but immigration officials have begun preparing

to accept Ukrainian refugees.

Being a North Atlantic Treaty Organization (NATO) member, Denmark will strengthen its own national

preparedness as well as that of the NATO defense alliance.

We expect the Ukraine crisis will have an impact on the Danish and worldwide

economy and energy supply, potentially increasing the Company’s costs.

Financial Operations Overview

Since our inception in September

of 2004, we have focused substantially all our resources on conducting research and development activities, including drug discovery and

preclinical studies, establishing, and maintaining our intellectual property portfolio, the manufacturing of clinical and research material,

hiring personnel, raising capital and providing general and administrative support for these operations.

In recent years, we have recorded

very limited revenue from collaboration activities, or any other sources.

We have funded our operations to date primarily from convertible

notes and the issuance and sale of our ordinary shares.

We have incurred net losses

in each year since inception.

Our net losses were $26.6 million and $6.6 million for 2021 and 2020, respectively.

Corporate Developments

November 22, 2022, the Company entered into a Secured Note Purchase Agreement with 3i, LP (the “Secured Note Purchase Agreement”)

for a bridge loan to extend the Company’s cash runaway beyond December 31, 2022, in order to provide the Company with more time

to complete the process of amending its Certificate of Incorporation to increase it authorized share capital and proposed reverse stock

split to facilitate additional capital investments (the “Bridge Loan”).

Under the Secured Note Purchase Agreement, the Company

has authorized the sale and issuance of three 3i Promissory Notes, with the first note in an aggregate principal amount of $350,000 to

be issued at closing (which loan was received in November 2022);

the second note in the principal amount of $1,666,640 to be issued at

closing and which represents the payment of $1,666,640 due to 3i, LP in Alternative Conversion Floor Amounts, as defined in the Certificate

of Designations, that began to accrue on July 14, 2022;

and the third note in an aggregate principal amount of $650,000 with respect to

a new loan to be funded upon the Company filing a registration statement with SEC in connection with a registered offering.

As of December

we had an accumulated deficit of $66.5 million.

Substantially all our net losses have resulted from costs incurred in

connection with our research and development programs and from general and administrative costs associated with our operations.

to continue to incur significant expenses and increasing operating losses over at least the next several years.

We expect our expenses

will increase substantially in connection with our ongoing activities, as we:

● advance drug candidates through clinical trials;

● pursue regulatory approval of drug candidates;

● operate as a public company;

● continue our preclinical programs and clinical development efforts;

● continue research activities for the discovery of new drug candidates;

● manufacture supplies for our preclinical studies and clinical trials.

Components of Operating Expenses

Research and Development Expenses

Research and development expenses

● expenses incurred under agreements with third-party contract organizations, and consultants;

● costs related to production of drug substance, including fees paid to contract manufacturers;

● laboratory and vendor expenses related to the execution of preclinical trials;

● employee-related expenses, which include salaries, benefits and stock-based compensation;

● maintenance and renewal fees for patents.

We expense all research and

development costs in the periods in which they are incurred.

Costs for certain development activities are recognized based on an evaluation

of the progress to completion of specific tasks and estimates of services performed using information and data provided to us by our vendors

and third-party service providers.

Non-refundable advance payments for goods or services to be received in future periods for use in research

and development activities are deferred and accounted for as prepaid expenses.

The prepayments are then expensed as the related goods

are delivered and as services are performed.

To date, most of these expenses

have been incurred to advance our lead drug candidates, dovitinib, stenoparib, and IXEMPRA ® .

We expect our research and

development expenses to increase substantially for the foreseeable future as we continue to invest in research and development activities

related to developing our drug candidates, as our drug candidates advance into later stages of development, and as we continue to

conduct clinical trials.

The process of conducting the necessary clinical research to obtain regulatory approval is costly and time-consuming,

and the successful development of our drug candidates is highly uncertain.

As a result, we are unable to determine the duration and completion

costs of our research and development projects or when and to what extent we will generate revenue from the commercialization and sale

of any of our drug candidates.

Results of Operations

Comparison of years ended December 31, 2021

The following table summarizes

our results of operations for the years ended 2021 and 2020:

31, 2022, all of the notes have been issued and are outstanding.

Each 3i Promissory Note matures on January 1, 2024, carries an interest

rate of 5% per annum, and is secured by all of the Company’s assets pursuant to the Security Agreement.

In addition, 3i, LP may

exchange the 3i Promissory Notes for the Company’s common stock, or other equity security, at an exchange price equal to the lowest

price per share of the equity security sold to other purchasers, rounded down to the nearest whole share, if the Company concludes a future

equity financing prior to the maturity date or other repayment of the 3i Promissory Notes.

In addition, each 3i Promissory Note and interest

earned thereon may be redeemed by the Company at its option or the holder may demand redemption if the Company obtains gross proceeds

of at least $5 million in a financing in an amount of up to 35% of the gross proceeds of the financing.

to the Certificate of Designation of Series A Preferred Stock

November 22, 2022, the Company amended Section 12 of the Certificate of Designation of Series A Preferred Stock to provide for voting

Subject to a 9.99% beneficial ownership limitation, the holders of Series A Preferred Stock were granted the right to vote on

all matters presented to the stockholders for approval together with the shares of common stock, voting together as a single class, on

an “as converted” basis using the “Conversion Price” (initially $9.9061 per share before any adjustment) (rounded

down to the nearest whole number and using the record date for determining the stockholders of the Company eligible to vote on such matters),

except as required by law (including without limitation, the DGCL) or as otherwise expressly provided in the Company’s Certificate

of Incorporation or the Certificate of Designations of Series A Preferred Stock.

The voting rights described above expired on February

Modification to Conversion Price of Series

A Preferred Stock

December 9, 2022, the Company and 3i, LP, the holder of outstanding shares of Series A Preferred Stock, entered into a letter agreement

which provided that pursuant to Section 8(g) of the Certificate of Designations, the parties agreed that the Conversion Price (as defined

in such Certificate of Designations) was modified to mean the lower of:

(i) the Closing Sale Price (as defined in the Certificate of

Designations) on the trading date immediately preceding the Conversion Date (as defined in the Certificate of Designations) and (ii)

the average Closing Sale Price of the common stock for the five trading days immediately preceding the Conversion Date, for the Trading

Days (as defined in the Certificate of Designations) through and inclusive of January 19, 2023.

On January 23, 2023, the

Company and 3i, LP amended the Letter Agreement to provide the term Conversion Price will be in effect until terminated by the Company

Establishment

of Series B Preferred Stock

November 22, 2022, the Company’s Board of Directors established the Series B Preferred Stock, par value $0.0001 per share (“Series

B Preferred Stock”).

Each share of Series B Preferred Stock has 400 votes and is subject to certain redemption rights and voting

See description in exhibit titled “ Description of Capital Stock – Series B Preferred Stock.

of Series B Preferred Stock Dividend

Effective December 5, 2022,

the Company issued a stock dividend to be distributed as follows to stockholders of record as of close of business on December 5, 2022:

(i) 0.016 shares of Series B Preferred Stock for each outstanding share of common stock;

and (ii) 1.744 shares of Series B Preferred Stock

for each outstanding share of Series A Preferred Stock.

An aggregate of 190,786 shares of Series B Preferred Stock were issued as a stock

Stockholder Meeting and Redemption of Series B Preferred Stock

On February 3, 2023, we held

our previously adjourned annual meeting of stockholders (the “Annual Meeting”).

Nine proposals were submitted to our stockholders

for a vote at the Annual Meeting including a proposal to increase the number of authorized shares and a proposal to effect a reverse stock

Upon conclusion of the Annual Meeting, all of the 190,786 shares of Series B Preferred Stock were automatically redeemed, with

the holders of the Series B Preferred Stock only having a right to receive the purchase price for the redemption, which was $0.01 per

share of Series B Preferred Stock.

In addition, the proposals to increase the number of authorized shares and to effect a reverse stock

split did not pass by the requisite shareholder vote at the Annual Meeting.

In light of our financing needs and our obligations to 3i,

L.P., as holder of the Series A Preferred Stock and PIPE Warrant, we conducted a private placement offering pursuant to which we issued

50,000 shares of Series C Preferred Stock.

Establishment

of Series C Preferred Stock and Sale of Series C Preferred Stock

On February 24, 2023, the

Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Redeemable Preferred Stock (the

“Series C COD”) with the Delaware Secretary of State designating 50,000 shares of its authorized and unissued preferred stock

as Series C Preferred Stock with a stated value of $27.00 per share.

On February 28, 2023, the Company filed a Certificate of Amendment

to the Series C COD (the “COD Amendment”) to clarify the terms of conversion price and floor price based on definitions provided

in the Series C COD (the COD Amendment, together with the Series C COD, the “COD”).

Each share of Series B Preferred Stock

has 620 votes and is subject to certain redemption rights and voting limitations.

See description in exhibit titled “ Description

of Capital Stock - Series C Preferred Stock.

February 28, 2023, we entered into a Securities Purchase Agreement (the “SPA”) with 3i, L.P.

for the purchase and sale of

50,000 shares of Series C Convertible Redeemable Preferred Stock, par value of $0.0001 per share of Series C Preferred Stock at a purchase

price of $24.00 per share, for a subscription receivable in the aggregate amount equal to the total purchase price of $1.2 million (the

“Series C Offering”).

The Shares are convertible into shares of the Company’s common stock, subject to the terms of

The conversion price for the Series C Preferred Stock is initially equal the lower of:

(i) $0.182, which is the official closing

price of the Common Stock on the Nasdaq Global Market (as reflected on Nasdaq.com) on the Trading Day (as defined in the COD) immediately

preceding the Original Issuance Date (as defined in the COD);

and (ii) the lower of:

(x) the official closing price of the Common Stock

on the Nasdaq Global Market (as reflected on Nasdaq.com) on the Trading Day immediately preceding the Conversion Date or such other date

of determination;

and (y) the average of the official closing prices of the Common Stock on the Nasdaq Global Market (as reflected on

Nasdaq.com) for the five (5) Trading Days immediately preceding the Conversion Date (as defined in the COD) or such other date of determination,

subject to adjustment herein (the “Conversion Price”), with the Conversion Price being no less than $0.0370 (the “Floor

In the event that the Conversion Price on a Conversion Date would have been less than the applicable Floor Price if not

for the immediately preceding sentence, then on any such Conversion Date the Company will pay the Holder an amount in cash, to be delivered

by wire transfer out of funds legally and immediately available therefor pursuant to wire instructions delivered to the Company by the

Holder in writing, equal to the product obtained by multiplying (A) the higher of (I) the highest price that the Common Stock trades

at on the Trading Day immediately preceding such Conversion Date and (II) the applicable Conversion Price and (B) the difference obtained

by subtracting (I) the number of shares of Common Stock delivered (or to be delivered) to the Holder on the applicable Share Delivery

Date with respect to such conversion of Series C Preferred Stock from (II) the quotient obtained by dividing (x) the applicable Conversion

Amount that the Holder has elected to be the subject of the applicable conversion of Series C Preferred Stock, by (y) the applicable

Conversion Price without giving effect to clause (x) of such definition.

The Offering closed on February 28, 2023.

In connection with the Series

C Offering, concurrently with the SPA, the Company entered into a registration rights agreement with 3i, L.P.

pursuant to which the Company is required to file a registration statement with the SEC to register for resale the shares of Common Stock

that are issued upon the potential conversion of the Shares.

Under the terms of the RRA, if we fail file an Initial Registration Statement

(as defined in the RRA) on or prior to its Filing Date (as defined in the RRA), or fail to maintain the effectiveness of the registration

statement beyond defined allowable grace periods set forth in the RRA, we will incur certain registration delay payments, in cash and

as partial liquidated damages and not as a penalty, equal to 2.0% of 3i, L.P.’s subscription amount of the Shares pursuant to the

In addition, if we fail to pay any partial liquidated damages in full within seven days after the date payment, we will have to pay

interest at a rate of 18.0% per annum, accruing daily from the date such partial liquidated damages are due until such amounts, plus all

such interest thereon, are paid in full.

The Company has also agreed to pay all fees and expenses incident to the performance of the RRA,

except for any broker or similar commissions.

In connection with the Series C Offering, the Company and 3i, L.P.

entered into a limited

waiver agreement pursuant to which 3i, L.P.

confirmed that the sale and issuance of the Shares will not give rise to any, or trigger any,

rights of termination, defaults, amendment, anti-dilution or similar adjustments, acceleration or cancellation under the existing agreements

with 3i, L.P.

Meeting of Stockholders

Pursuant to a proxy statement

filed with the SEC on or about March 6, 2023 (the “Proxy Statement”), the Company will be holding a Special Meeting of Stockholders

(the “Special Meeting”) virtually online on March 20, 2023.

Stockholders of record of our outstanding shares of Common Stock

and Series C Preferred Stock on March 3, 2023 (the “Record Date”) will be entitled to notice of, and to vote at, the Special

Meeting and any adjournments, continuations or postponements thereof that may take place At the Special Meeting, the stockholders of Common

Stock and Series C Preferred Stock will be voting on the following proposals:

(1) to approve an amendment to our Certificate of Incorporation,

as amended, to increase the number of authorized shares from 30,500,000 to 750,500,000, and to increase the number of our common stock

from 30,000,000 to 750,000,000, in substantially the form attached to the Proxy Statement as Appendix A (the “Share Increase Proposal”);

and (2) to approve an amendment to our Certificate of Incorporation, as amended, in substantially the form attached to the Proxy Statement

as Appendix B, to, at the discretion of the Board of Directors of the Company (the “Board”), effect a reverse stock split

with respect to the Company’s issued and outstanding common stock, par value $0.0001 per share, at a ratio between 1-for-20 and

1-for-35 (the “Range”), with the ratio within such Range to be determined at the discretion of the Board (the “Reverse

Stock Split Proposal”) and included in a public announcement.

Under the terms of the Series C Preferred Stock, the holders thereof

may only vote on Proposal 1 (Share Increase Proposal) and Proposal 2 (Reverse Stock Split Proposal) and for no other matters.

of one share of Series C Preferred Stock is entitled to 620 votes representing 31,000,000 votes in the aggregate assuming 50,000 shares

of Series C Preferred Stock is outstanding.

and Uncertainties

Company is subject to risks common to companies in the biotechnology industry, including but not limited to, risks of failure of preclinical

studies and clinical trials, the need to obtain marketing approval for any drug product candidate that it may identify and develop, the

need to successfully commercialize and gain market acceptance of its product candidates, dependence on key personnel and collaboration

partners, protection of proprietary technology, compliance with government regulations, development by competitors of technological innovations,

and the ability to secure additional capital to fund operations.

Product candidates currently under development will require significant

additional research and development efforts, including preclinical and clinical testing and regulatory approval prior to commercialization.

Even if the Company’s research and development efforts are successful, it is uncertain when, if ever, the Company will realize

significant revenue from product sales.

of COVID-19 on our Business

March 2020, the World Health Organization declared COVID-19 a global pandemic.

COVID-19 has had an impact on our operations as it

caused some unexpected delays in our clinical program activities as clinical trials were delayed.

Management is unable to estimate the

future financial effects, if any, to our business as a result of COVID-19 because of the high level of uncertainties and unpredictable

outcomes of this disease.

are continuing to evaluate the impact of COVID-19 pandemic on our business and are taking proactive measures to protect the health and

safety of our employees, as well as to maintain business continuity.

Based on guidance issued by federal, state, and local authorities,

we transitioned to a remote work model for our employees, effective March 16, 2020.

During the 2022 restrictions due to COVID-19 have

lifted significantly and as a result, our Danish employees have returned to work.

Our North American employees are continuing to work

We will continue to closely monitor and seek to comply with guidance from governmental authorities and adjust our activities

as appropriate.

The COVID-19 pandemic has not directly impacted our supply chains to date however, there is a threat of potential ongoing

delays in our clinical trials due to backup at ethical committees and staff shortages causing delays at processing the trials at the

investigator sites resulting in delayed and slow patient enrollment.

ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change.

We do not yet know the

full extent of potential delays or impacts on our business, our clinical trial, healthcare systems or the global economy.

However, these

effects could harm our operations, and we will continue to monitor the COVID-19 situation closely.

of the Russia-Ukraine War

have been immense flows of refugees to Europe and Denmark is ready to facilitate and to accept refugees from the Ukraine.

It is far too

early to estimate how many migrants Denmark will facilitate, but immigration officials have begun preparing to accept Ukrainian refugees.

a North Atlantic Treaty Organization (NATO) member, Denmark will strengthen its own national preparedness as well as that of the NATO

defense alliance.

The Ukraine crisis has become a new a destabilizing factor in the Danish and global economy.

It dampens growth and

increases inflation at a time when inflation and capacity utilization is already high.

While the Danish economy is generally robust and

able to handle new challenges, and it is expected to enter a pause in growth.

However, there are risks of a fall in activity in the Danish

economy in general.

To date the war has not yet had a direct impact on our results of operations, however our costs for clinical supply

in both the United States and Europe have increase by 5% to 10% due to inflation.

Operations Overview

our inception in September of 2004, we have focused substantially all our resources on conducting research and development activities,

including drug discovery and preclinical studies, establishing, and maintaining our intellectual property portfolio, the manufacturing

of clinical and research material, hiring personnel, raising capital and providing general and administrative support for these operations.

In recent years, we have recorded very limited revenue from collaboration activities, or any other sources.

We have funded our operations

to date primarily from convertible notes and the issuance and sale of our securities.

Since our inception of our

predecessor, Allarity Therapeutics A/S, we have incurred losses and have an accumulated deficit of $82.6 million as of December 31, 2022.

Our net losses were $16.1 million and $26.6 million for the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2022,

our cash deposits of $2.0 million were determined to be insufficient to fund our current operating plan and planned capital expenditures

for the next twelve months.

Substantially all our net losses have resulted from costs incurred in connection with our research and development

programs and from general and administrative costs associated with our operations.

We expect to continue to incur significant expenses

and increasing operating losses over at least the next several years.

We expect our expenses will increase substantially in connection

with our ongoing activities, as we:

drug candidates through clinical trials;

regulatory approval of drug candidates;

as a public company;

our preclinical programs and clinical development efforts;

research activities for the discovery of new drug candidates;

supplies for our preclinical studies and clinical trials.

of Operating Expenses

and Development Expenses

and development expenses include:

incurred under agreements with third-party contract organizations, and consultants;

related to production of drug substance, including fees paid to contract manufacturers;

and vendor expenses related to the execution of preclinical trials;

employee-related

expenses, which include salaries, benefits and stock-based compensation.

expense all research and development costs in the periods in which they are incurred.

Costs for certain development activities are recognized

based on an evaluation of the progress to completion of specific tasks and estimates of services performed using information and data

provided to us by our vendors and third-party service providers.

Non-refundable advance payments for goods or services to be received

in future periods for use in research and development activities are deferred and accounted for as prepaid expenses.

The prepayments

are then expensed as the related goods are delivered and as services are performed.

date, most of these expenses have been incurred to advance our lead drug candidates, dovitinib, stenoparib, and IXEMPRA.

expect our research and development expenses to increase substantially for the foreseeable future as we continue to invest in research

and development activities related to developing our drug candidates, as our drug candidates advance into later stages of development,

and as we continue to conduct clinical trials.

The process of conducting the necessary clinical research to obtain regulatory approval

is costly and time-consuming, and the successful development of our drug candidates is highly uncertain.

As a result, we are unable to

determine the duration and completion costs of our research and development projects or when and to what extent we will generate revenue

from the commercialization and sale of any of our drug candidates.

and Administrative Expenses

and administrative expenses consist primarily of personnel-related costs, facilities costs, depreciation and amortization expenses and

professional services expenses, including legal, human resources, audit, and accounting services.

Personnel-related costs consist of

salaries, benefits, and stock-based compensation.

Facilities costs consist of rent and maintenance of facilities.

We expect our general

and administrative expenses to increase for the foreseeable future due to anticipated increases in headcount to advance our drug candidates

and because of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC, Nasdaq

Stock Market, additional insurance expenses, investor relations activities and other administrative and professional services.

of Operations

of years ended December 31, 2022 and 2021

following table summarizes our results of operations for the years ended December 31, 2022 and 2021:

For the years ended

2 unchanged sentences

Research and development

Impairment of intangible assets

General and administrative

1 unchanged sentence

Loss from operations:

Research and Development Expenses

We currently do not track our

research and development costs by product candidate.

A breakdown by nature of type of expense for the years ended December 31, 2021, and

December 31, 2020, is provided below.

For the year ended

(In thousands)

Research study expenses

Recovery of R&D costs

Milestone payments

Manufacturing & supplies

For the year ended December

31, 2021, versus December 31, 2020:

The increase of $10.0 million in research and development cost was

due to an increase of $210 thousand in research study expenses, a decrease of $22 thousand in recovery of R&D costs, a decrease of

$33 thousand in tax credits, an increase of $5.0 million in milestone payments, an increase of $773 thousand in manufacturing and supplies,

an increase of $1.7 million in contractors costs, an increase in patents expenses of $75 thousand, and an increase in staffing costs of

$2.5 million, offset by a reduction in amortization expenses of $46 thousand and reduced other costs of $223 thousand.

Overall, the increase was because

during the year ended December 31, 2020, our research and development activity was paused or significantly slowed due to Covid-19.

and development in the last two quarters of the year ended December 31, 2021, increased as activity in the clinical trials coming back

to a pre-pandemic level.

The milestone payment to Novartis was due to the NDA filing.

Manufacturing & supplies and contractor costs

have increased significantly in preparation of our NDA filing for Dovitinib.

Staffing costs increased primarily because of stock option

grants and bonuses.

General and Administrative Expenses

and Development Expenses

currently do not track our research and development costs by product candidate.

A breakdown by nature of type of expense for the years

ended December 31, 2022 and 2021, is provided below.

the year ended

study expenses

Manufacturing

the year ended December 31, 2022, versus December 31, 2021:

decrease of $7.3 million in research and development cost was primarily due to decreases in milestone payments of $3.6 million, staffing

costs of $1.5 million, contractor costs of $1.0 million, research study expenses of $480 thousand, other of $61 thousand, amortization

of $43 thousand and patents of $5 thousand, offset by a $164 thousand decrease in tax credits.

Overall, the decrease in research

and development costs in the year ended December 31, 2022, was because during the year ended December 31, 2021, our research and development

activity increased as activity in the clinical trials came back to a pre-pandemic level.

Also, we incurred a 2021 milestone payment of

$5 million due to Novartis because of the NDA filing;

and manufacturing & supplies, and contractor costs were higher in 2021 because

of preparation of our NDA filing for Dovitinib.

Milestone expenses fluctuate depending upon our contracts as described in our financial

statement notes.

Staffing costs decreased in 2022 primarily because stock option grants and bonuses were higher in 2021.

of Intangible Assets

As a result of both the Company’s

February 15, 2022, receipt of a Refusal to File (“RTF”) from the U.S.

Food and Drug Administration regarding the Company’s

new drug application (“NDA”) for Dovitinib, and the current depressed state of the Company’s stock price, the Company

has performed an impairment assessment on its individual intangible assets utilizing a discounted cash flow model with a weighted average

cost of capital (“WACC”) of 16%, and recognized an impairment charge of $14.0 million during the quarter ended March

During the quarter ended December 31, 2022, because of continued downward pressure on the Company’s common stock, we performed

a further impairment assessment on the Company’s individual intangible asset utilizing a discounted cash flow model with a WACC

of 26% and recognized a further impairment charge of $3.6 million.

and Administrative Expenses

General and administrative

5 unchanged sentences

Legal costs incurred in connection with patents

are accounted for as general and administrative expense.

are accounted for as general and administrative expenses.

We expect our general and administrative expenses to increase for the foreseeable

future due to anticipated increases in headcount to advance our drug candidates and because of operating as a public company, including

expenses related to compliance with the rules and regulations of the SEC, Nasdaq, additional insurance expenses, investor

relations activities and other administrative and professional services.

General and administrative expenses increased by $8.3 million for the

year ended December 31, 2021, compared to 2020.

The increase was primarily due to an increase in professional fees of $3.3 million, staffing

expenses of $4 million, listings expenses of $547 thousand, premises expenses of $8 thousand, insurance of $60 thousand, and $243 thousand

in other administrative costs.

Professional fees, listing costs and other administrative expenses all increased as the Company prepared

its prospectus to file with the SEC and list on Nasdaq in the U.S.

Staffing costs increased primarily because of stock option grants and

Other Income (Expenses), Net (2020 restated

– see Financial Statement Note 3)

Other income (expense) of $41 thousand recognized in the year ended

December 31, 2021, consisted primarily of a $2.1 million fair value adjustment to warrants and derivative liabilities, and $1.0 million

in other income received in connection with our sale of intangible IP assets to Lantern Pharma, offset by ($1.3) million in finance expenses,

($499) thousand in interest expenses, ($495) thousand in loss on our equity investment in Lantern Pharma, Inc., a ($474) thousand change

in fair value of convertible debt, a ($141) thousand loss on extinguishment of convertible debt, and net foreign exchange losses of ($95)

Other income (expense) of $1.9 million recognized in the year ended

December 31, 2020, consisted primarily of a $2.1 million fair value adjustment to derivative liabilities, a gain of $708 thousand on our

investment in Lantern Pharma, and a net foreign exchange gain of $62 thousand, offset by a ($573) thousand change in fair value of convertible

debt, ($108) thousand loss on extinguishment of convertible debt, and ($320) thousand in interest expenses.

Changes in fair value of our

derivative liabilities and convertible debt are measured using level 3 inputs as described in our consolidated financial statements.

Income taxes (2020 restated – see

Financial Statement Note 3)

During the years ended December 31, 2021, and December 31, 2020, we

recognized ($133) and ($198) thousand in income tax expense respectively.

Liquidity, Capital Resources

and Plan of Operations

Since our inception through December 31, 2021, our operations have

been financed primarily by the sale of preferred stock, convertible promissory notes and the sale and issuance of our ordinary shares.

expenses related to compliance with the rules and regulations of the SEC, Nasdaq, additional insurance expenses, investor relations activities

and other administrative and professional services.

General and administrative

expenses decreased by $2.4 million for the year ended December 31, 2022, compared to the year ended December 31, 2021.

The decrease was

primarily due to decreased staffing costs of $3.8 million, listings expenses of $485 thousand, and other administrative costs of $168

offset by increases in insurance costs of $1.5 million, financial consultants’ fees of $245 thousand, audit and legal

fees of $224 thousand, communications expenses of $43 thousand and premises expenses of $2 thousand.

Staffing costs decreased primarily

because of reduced stock option costs.

Insurance costs were higher in 2022 because we incurred a full year of directors’ and officers’

insurance expenses versus one month in 2021.

Listings expenses decreased in 2022 versus 2021 because our initial costs of listing on Nasdaq

in 2021 were higher than maintenance costs in 2022.

Income (Expenses)

income (expense) of $16.9 million recognized in the year ended December 31, 2022, consisted primarily of a $17.1 million fair value adjustment

of derivative and warrant liabilities, $1.8 million of other income received in connection with the sale of intangible IP assets, and

$30 thousand of interest income, offset by ($913) thousand in net foreign exchange losses, ($800) thousand penalty on our Series A preferred

stock liability, loss on investment of ($115) thousand, and ($223) thousand in interest expenses.

income (expense) of $41 thousand recognized in the year ended December 31, 2021, consisted primarily of a $2.1 million fair value

adjustment to warrants and derivative liabilities, and $1.0 million in other income received in connection with our sale of intangible

IP assets to Lantern Pharma, offset by ($1.3) million in finance expenses, ($499) thousand in interest expenses, ($495) thousand in loss

on our equity investment in Lantern Pharma, Inc., a ($474) thousand change in fair value of convertible debt, a ($141) thousand loss

on extinguishment of convertible debt, and net foreign exchange losses of ($95) thousand.

Changes in the fair value

of our derivative and warrant liabilities and convertible debt are measured using level 3 inputs as described in our consolidated financial

During the years ended December

31, 2022 and 2021, we recognized $1.5 million and ($133) thousand in income tax recovery (expense) respectively.

Capital Resources and Plan of Operations

Since our inception through

December 31, 2022, our operations have been financed primarily by the sale of preferred stock, convertible promissory notes, and the sale

and issuance of our ordinary shares.

As of December 31, 2022, we had $2.0 million in cash, and an accumulated deficit of $82.6 million.

In the year ended December

31, 2021, we received $20 million in gross proceeds from the issuance of Series A preferred stock, $14.9 million in gross proceeds from

the issuance of shares, and $1.1 million in proceeds from convertible debt.

We also received and repaid a bridge loan of $2.9 million,

and we received $1 million in proceeds from the sale of IP.

In the year ended December 31, 2020, we received $3.0 million in net

proceeds from the sale and issuance of convertible notes.

We also received $3.7 million in proceeds from share issuance.

Our primary use of cash is

to fund operating expenses, which consist of research and development as well as regulatory expenses related to our lead drug candidate,

dovitinib, and clinical programs for stenoparib and IXEMPRA ® , and to a lesser extent,

general and administrative expenses.

Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as

reflected in the change in our outstanding accounts payable and accrued expenses.

As of December 31, 2021, the Company’s cash deposits of $19.6

million were determined to be insufficient to fund its current operating plan and planned capital expenditures for at least the next 12

We estimate that as of the date of this filing, our cash reserves are sufficient for approximately 6 months.

These conditions

give rise to a substantial doubt over the Company’s ability to continue as a going concern.

Management’s plans to

mitigate the conditions or events that raise substantial doubt include additional funding through public equity, private equity, debt

financing, collaboration partnerships, or other sources.

There are no assurances, however, that the Company will be successful in raising

additional working capital, or if it is able to raise additional working capital, it may be unable to do so on commercially favorable

The Company’s failure to raise capital or enter other such arrangements when needed would have a negative impact on its business,

results of operations and financial condition and its ability to develop its product candidates.

We expect to incur substantial

expenses in the foreseeable future for the development and potential commercialization of our drug candidates and ongoing internal research

and development programs.

At this time, we cannot reasonably estimate the nature, timing, or aggregate amount of costs for our development,

potential commercialization, and internal research and development programs.

However, to complete our current and future preclinical studies

and clinical trials, and to complete the process of obtaining regulatory approval for our drug candidates, as well as to build the sales,

marketing, and distribution infrastructure that we believe will be necessary to commercialize our drug candidates, if approved, we may

require substantial additional funding in the future.

The following table summarizes

our cash flows for the years indicated:

(In thousands)

(Restated – Financial Statements

the year ended December 31, 2022, we received $1.0 million in proceeds from convertible debt.

We also paid $1.5 million in cash on the

conversion of Series A preferred shares as well as $800 thousand in penalties on the Series A preferred share liability.

Our investing

activities included the receipt of $809 thousand on the sale of IP and expenditures of $18 thousand on the purchase of property and equipment.

the year ended December 31, 2021, we received $20.0 million in gross proceeds from the issuance of Series A preferred stock, $14.9 million

in gross proceeds from the issuance of shares, and $1.1 million in proceeds from convertible debt.

We also received and repaid a bridge

loan of $2.9 million, and we received $1.0 million in proceeds from the sale of IP.

primary use of cash is to fund operating expenses, which consist of research and development as well as regulatory expenses related to

our most advanced therapeutic candidate, dovitinib, and clinical programs for stenoparib and IXEMPRA ® , and to a lesser

extent, general and administrative expenses.

Cash used to fund operating expenses is impacted by the timing of when we pay these expenses,

as reflected in the change in our outstanding accounts payable and accrued expenses.

of December 31, 2022, the Company’s cash deposits of $2.0 million were determined to be insufficient to fund its current operating

plan and planned capital expenditures for at least the next 12 months.

We estimate that as of the date of this filing, our cash reserves

are sufficient for approximately 3 months.

These conditions give rise to substantial doubt over the Company’s ability to continue

as a going concern.

plans to mitigate the conditions or events that raise substantial doubt include additional funding through public equity, private equity,

debt financing, collaboration partnerships, or other sources.

There are no assurances, however, that the Company will be successful in

raising additional working capital, or if it is able to raise additional working capital, it may be unable to do so on commercially favorable

The Company’s failure to raise capital or enter other such arrangements when needed would have a negative impact on its

business, results of operations and financial condition and its ability to develop its product candidates.

following table summarizes our cash flows for the years indicated:

Net Cash used in operating activities

Net Cash provided by (used) in investing activities

Net Cash provided by financing activities

Net increase (decrease) in cash

Operating Activities

During the year ended December

31, 2021, cash used in operating activities of $15.0 million was attributable to a net loss of $26.6 million, and $6.0 million in net

non-cash charges.

This was offset by a $5.6 million change in net operating assets and liabilities.

The non-cash charges consisted

of stock-based compensation of $6.4 million, deferred tax expense of $20 thousand, non-cash interest of $238 thousand, loss on investment

of $495 thousand, non-cash finance costs of $1.3 million, an increase in fair value adjustment of convertible debt of $474 thousand, loss

on extinguishment of convertible debt of $141 thousand, depreciation and amortization of $106 thousand, and gain on foreign currency of

$74 thousand, offset by a $2.1 million fair value adjustment to derivative liabilities and $1.0 million gain from the sale of IP.

change in operating assets and liabilities of $5.6 million was primarily due to a $7.2 million increase in accrued liabilities, a decrease

in prepaid expenses of $130 thousand, and a decrease in income taxes receivable of $8 thousand, offset by a $1.3 million decrease in accounts

payable, a $330 increase in other current assets, and a decrease in operating lease liability of $124 thousand.

During the year ended December 31, 2020, cash used in operating activities

of $7.3 million was attributable to a net loss of $6.6 million, and $1.1 million in net other non-cash charges.

This was offset by a $445

thousand change in net operating assets and liabilities.

The non-cash charges consisted of a $2.1 million increase in fair value

adjustment of the derivative liability, a $708 gain on investment, a $68 thousand gain on foreign currency, deferred income

tax expense of $165 thousand, an increase of $573 thousand in fair value adjustment of convertible debt, $616 thousand in expense related

to stock-based compensation, $280 thousand in non-cash interest, $108 thousand in loss on extinguishment of convertible debt, $46 thousand

in depreciation and amortization, and $40 thousand in non-cash lease expense.

The $445 thousand change in operating assets and liabilities

was primarily due to a $605 thousand decrease in accounts receivable and other current assets and a $97 thousand decrease in prepaid expenses,

offset by an increase in tax credit receivable of $104 thousand, decrease in accounts payable of $62 thousand, decrease in accrued liabilities

of $36 thousand, and a decrease in operating lease liability of $88 thousand.

Investing Activities

During the year ended December

31, 2021, the Company received $1.0 million in proceeds from the sale of IP.

During the year ended December 31, 2020, cash used by investing activities of $3 thousand was used to purchase

Financing Activities

Net Cash provided by investing activities

Net Cash (used in) provided by financing activities

Net (decrease) increase in cash

the year ended December 31, 2022, cash used in operating activities of $16.8 million was attributable to a net loss of $16.1 million,

$400 thousand in net non-cash charges, and a $300 thousand change in net operating assets and liabilities.

non-cash charges consisted of intangible asset impairment of $17.6 million, stock-based compensation of $1.7 million, non-cash interest

of $138 thousand, loss on investment of $115 thousand, depreciation and amortization of $60 thousand, and unrealized loss on foreign

currency of $450 thousand, offset by a $17.1 million fair value adjustment to derivative liabilities, a $1.8 million gain from the sale

of IP and deferred tax benefit of $1.6 million.

The change in operating assets and liabilities of $300 thousand was primarily due to

a $4.7 million decrease in accrued liabilities, an increase in prepaid expenses of $618 thousand, a decrease in income taxes payable

of $19 thousand, a $1.1 million increase in other current assets, and a decrease in operating lease liability of $99 thousand, offset

by a $6.2 million increase in accounts payable.

During the year ended December

31, 2021, cash provided by financing activities of $33.8 million was related to proceeds of $20 million from the sale of Series A preferred

stock, $14.9 million from common stock issuance, and convertible loan proceeds of $1.1 million, offset by $1.6 million in Series A preferred

stock issuance costs, $484 thousand in share issuance costs, and $84 thousand repayment of our line of credit.

We also received and repaid

$2.9 million in loan funding during the year ended December 31, 2021.

In 2020, cash provided by financing activities of $6.0 million was

related to net proceeds of $3.7 million from the issuance of common shares, $3.0 million from convertible debt, and $84 thousand from

line of credit, partially offset by repayment of a loan of $533 thousand and share issuance costs of $223 thousand.

Contractual Obligations and Commitments

The following table summarizes

our commitments and contractual obligations as of December 31, 2021:

31, 2021, cash used in operating activities of $14.9 million was attributable to a net loss of $26.6 million, offset by $6.9 million

in net non-cash charges and a $5.6 million change in net operating assets and liabilities.

non-cash charges consisted of stock-based compensation of $6.4 million, deferred tax expense of $20 thousand, non-cash interest of $238

thousand, loss on investment of $495 thousand, non-cash finance costs of $1.3 million, an increase in fair value adjustment of convertible

debt of $474 thousand, loss on extinguishment of convertible debt of $141 thousand, depreciation and amortization of $106 thousand, and

loss on foreign currency of $95 thousand, offset by a $2.1 million fair value adjustment to derivative liabilities and $1.0 million gain

from the sale of IP.

The change in operating assets and liabilities of $5.6 million was primarily due to a $7.2 million increase in accrued

liabilities, a decrease in prepaid expenses of $130 thousand, and a decrease in income taxes receivable of $8 thousand, offset by a $1.3

million decrease in accounts payable, a $330 thousand increase in other current assets, and a decrease in operating lease liability of

$124 thousand.

the year ended December 31, 2022, the Company received $809 thousand in proceeds from the sale of IP and invested $18 thousand in property

and equipment.

the year ended December 31, 2021, the Company received $1.0 million in proceeds from the sale of IP.

the year ended December 31, 2022, cash used by financing activities of $1.3 million consisted of $1.0 million in proceeds from the issuance

of convertible debt offset by $1.5 million in cash paid on the conversion of Series A preferred shares and $800 thousand in penalties

on the Series A preferred share liability.

the year ended December 31, 2021, cash provided by financing activities of $33.8 million was related to proceeds of $20 million from

the sale of Series A preferred stock, $14.9 million from common stock issuance, and convertible loan proceeds of $1.1 million, offset

by $1.6 million in Series A preferred stock issuance costs, $484 thousand in share issuance costs, and $84 thousand repayment of our

line of credit.

We also received and repaid $2.9 million in loan funding during the year ended December 31, 2021.

Obligations and Commitments

following table summarizes our commitments and contractual obligations as of December 31, 2022:

Payments Due By Period

Less than 1 Year

More than 5 Years

(In thousands)

Operating lease obligations

We enter into agreements in

the normal course of business with vendors for preclinical studies, clinical trials and other service providers for operating purposes.

We have not included these payments in the table of contractual obligations above since these contracts are generally cancellable at any

time by us following a certain period after notice and therefore, we believe that our non-cancellable obligations under these agreements

are not material.

Operating Capital and Capital Expenditure Requirements

We believe that the net proceeds

from the PIPE Investment, together with our existing cash and cash equivalents as of the date of this Annual Report, and our anticipated

expenditures and commitments for calendar year 2022, will enable us to fund our operating expenses and capital expenditure requirements

for 6 months from the date of this Annual Report.

Our estimate as to how long we expect the net proceeds from the PIPE Investment, together

with our existing cash and cash equivalents, to be able to continue to fund our operations is based on assumptions that may prove to be

wrong, and we could use our available capital resources sooner than we currently expect.

Further, changing circumstances, some of which

may be beyond our control, could cause us to consume capital significantly faster than we currently anticipate, and we may need to seek

additional funds sooner than planned.

Critical Accounting Policies and Significant

Judgments and Estimates

Our management’s discussion and analysis of financial condition

and results of operations is based upon our audited condensed consolidated financial statements for the years ended December 31, 2021,

and December 31, 2020, which have been prepared in accordance with U.S.

The preparation of financial statements in conformity

with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure

of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses

during the reporting years.

Significant estimates and assumptions reflected in these consolidated financial statements include, but are

not limited to, the fair value of the Series A preferred shares, warrants, convertible debt and the accrual

for research and development expenses, fair values of acquired intangible assets and impairment review of those assets, share based compensation

expense, and income tax uncertainties and valuation allowances.

The Company bases its estimates on historical experience, known trends

and other market-specific or other relevant factors that it believes to be reasonable under the circumstances.

Estimates are periodically

reviewed considering reasonable changes in circumstances, facts, and experience.

Changes in estimates are recorded in the period in which

they become known and if material, their effects are disclosed in the notes to the consolidated financial statements.

Actual results could

differ from those estimates or assumptions.

Milestone payments

enter into agreements in the normal course of business with vendors for preclinical studies, clinical trials and other service providers

for operating purposes.

We have not included these payments in the table of contractual obligations above since these contracts are generally

cancellable at any time by us following a certain period after notice and therefore, we believe that our non-cancellable obligations

under these agreements are not material.

Capital and Capital Expenditure Requirements

believe that our existing cash and cash equivalents as of the date of this report, based on our anticipated expenditures and commitments

for the next twelve months including contractual obligations for milestone payments, will not enable us to fund our operating expenses

and capital expenditure requirements for at least twelve (12) months from the date of this report.

Our estimate as to how long we expect

our cash to be able to continue to fund our operations is based on assumptions that may prove to be wrong, and we could use our available

capital resources sooner than we currently expect.

Further, changing circumstances, some of which may be beyond our control, could cause

us to consume capital significantly faster than we currently anticipate, and we may need to seek additional funds sooner than planned.

In November 2022, we entered

into a Secured Note Purchase Agreement with 3i, LP for a bridge loan to extend our cash runaway beyond December 31, 2022, in order to

provide us with more time to complete the process of amending its Certificate of Incorporation to increase our authorized share capital

and proposed reverse stock split to facilitate additional capital investments (the “Bridge Loan”).

Under the Secured Note

Purchase Agreement, we authorized the sale and issuance of three promissory notes, with the first note in an aggregate principal amount

of $350,000 to be issued at closing, which was received in November 2022;

the second note in the principal amount of $1,666,640 to be

issued at closing and which represents the payment of $1,666,640 due to 3i, LP in Alternative Conversion Floor Amounts, as defined in

the Series A Certificate of Designations, that began to accrue on July 14, 2022;

and the third note in an aggregate principal amount of

$650,000 with respect to a new loan to be funded upon our filing of a registration statement with SEC in connection with a registered

As of January 28, 2023, all of the notes have been issued and are outstanding.

On February 3, 2023, we held

our previously adjourned annual meeting of stockholders (the “Annual Meeting”).

Nine proposals were submitted to our stockholders

for a vote at the Annual Meeting including a proposal to increase the number of authorized shares and a proposal to effect a reverse stock

Such proposals did not pass by the requisite stockholder vote at the Annual Meeting.

In light of our financing needs and our obligations

as holder of the Series A Preferred Stock and PIPE Warrant, we conducted the a private placement offering for the purchase

and sale of 50,000 shares of Series C Preferred Stock, par value of $0.0001 per share at a purchase price of $24.00 per share, for a subscription

receivable in the aggregate amount equal to the total purchase price of $1.2 million.

The proceeds were used to fund operating expenses.

discussed before, we do not have sufficient cash to support our anticipated expenditures and commitments and the Company is seeking capital

to support its current and planned operations.

No assurances can be given

that any ongoing discussions will be successful or that we will be able to raise additional capital on favorable terms, or at all.

failure to raise capital or enter into other such arrangements when needed would have a negative impact on our business, results of operations

and financial condition and our ability to maintain current operations and develop our product candidates which in turn may force us to

seek protection under the U.S.

bankruptcy laws.

We are actively exploring raising capital through equity and debt financing which may

require collateralizing debt financing with our assets.

However, if the share increase and/or reverse stock split proposals are not approved

by the required stockholder vote, we will be limited in the ways we can raise additional capital.

expect to incur substantial expenses in the foreseeable future for the development and potential commercialization of our drug candidates

and ongoing internal research and development programs.

At this time, we cannot reasonably estimate the nature, timing, or aggregate

amount of costs for our development, potential commercialization, and internal research and development programs.

However, to complete

our current and future preclinical studies and clinical trials, and to complete the process of obtaining regulatory approval for our

drug candidates, as well as to build the sales, marketing, and distribution infrastructure that we believe will be necessary to commercialize

our drug candidates, if approved, we may require substantial additional funding in the future.

Accounting Policies and Significant Judgments and Estimates

Our management’s discussion

and analysis of financial condition and results of operations is based upon our audited condensed consolidated financial statements for

the years ended December 31, 2022, and 2021, which have been prepared in accordance with U.S.

The preparation of financial statements

in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,

the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues

and expenses during the reporting years.

Significant estimates and assumptions reflected in these consolidated financial statements include,

but are not limited to, the fair value of the Series A preferred shares, warrants, convertible debt and the accrual for research and development

expenses, fair values of acquired intangible assets and impairment review of those assets, share based compensation expense, and income

tax uncertainties and valuation allowances.

The Company bases its estimates on historical experience, known trends and other market-specific

or other relevant factors that it believes to be reasonable under the circumstances.

Estimates are periodically reviewed considering reasonable

changes in circumstances, facts, and experience.

Changes in estimates are recorded in the period in which they become known and if material,

their effects are disclosed in the notes to the consolidated financial statements.

Actual results could differ from those estimates or

While our significant accounting

policies are described in the notes to our consolidated financial statements for the years ended December 31, 2021, and December 31, 2020,

we believe that the following critical accounting policies are most important to understanding and evaluating our reported financial results.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent

assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the

reporting years.

Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited

to, the fair value of the Series A preferred shares, warrants, convertible debt, and the accrual for research and development expenses,

fair values of acquired intangible assets and impairment review of those assets, share based compensation expense, and income tax uncertainties

and valuation allowances.

The Company bases its estimates on historical experience, known trends and other market-specific or other relevant

factors that it believes to be reasonable under the circumstances.

Estimates are periodically reviewed considering reasonable changes

in circumstances, facts, and experience.

Changes in estimates are recorded in the period in which they become known and if material, their

effects are disclosed in the notes to the consolidated financial statements.

policies are described in the notes to our consolidated financial statements for the years ended December 31, 2022, and 2021, we believe

that the following critical accounting policies are most important to understanding and evaluating our reported financial results.

preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported

amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements

and the reported amounts of revenues and expenses during the reporting years.

Significant estimates and assumptions reflected in these

consolidated financial statements include, but are not limited to, the fair value of the Series A preferred shares, warrants, convertible

debt, and the accrual for research and development expenses, fair values of acquired intangible assets and impairment review of those

assets, share based compensation expense, and income tax uncertainties and valuation allowances.

The Company bases its estimates on historical

experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances.

Estimates are periodically reviewed considering reasonable changes in circumstances, facts, and experience.

Changes in estimates are

recorded in the period in which they become known and if material, their effects are disclosed in the notes to the consolidated financial

Actual results could differ from those estimates or assumptions.

1 unchanged sentence

Acquired IPR&D represents

the fair value assigned to research and development assets that the Company acquires and have not been completed at the acquisition date.

The fair value of IPR&D acquired in a business combination is recorded on the consolidated balance sheets at the acquisition-date

fair value and is determined by estimating the costs to develop the technology into commercially viable products, estimating the resulting

revenue from the projects, and discounting the projected net cash flows to present value.

IPR&D is not amortized, but rather is reviewed

for impairment on an annual basis or more frequently if indicators of impairment are present, until the project is completed, abandoned,

or transferred to a third-party.

The projected discounted cash flow models used to estimate the fair value of partnered assets and cost

approach model used to estimate proprietary assets as part of the Company’s IPR&D reflect significant assumptions regarding

the estimates a market participant would make in order to evaluate a drug development asset, including the following:

the fair value assigned to research and development assets that the Company acquired as part of a business combination and have not been

completed at the acquisition date.

The fair value of IPR&D acquired in a business combination is recorded on the consolidated balance

sheets at the acquisition-date fair value and is determined by estimating the costs to develop the technology into commercially viable

products, estimating the resulting revenue from the projects, and discounting the projected net cash flows to present value.

is not amortized, but rather is reviewed for impairment on an annual basis or more frequently if indicators of impairment are present,

until the project is completed, abandoned, or transferred to a third-party.

Management assesses its acquired IPR&D for impairment

at year end as well as when events and circumstances indicate there is a potential impairment.

Significant quantitative indicators considered

are the Company’s market capitalization, market share, length of remaining clinical trials, and projected revenue per treatment.

The projected discounted cash flow models used to estimate the fair value of partnered assets and cost approach model used to estimate

proprietary assets as part of the Company’s IPR&D reflect significant assumptions regarding the estimates a market participant

would make to evaluate a drug development asset, including the following:

Estimates of obsolescence of development expenditure;

Probability of successfully completing clinical trials and obtaining regulatory approval;

● Estimates of future cash flows from potential milestone payments and royalties related to out-licensed

product sales;

● A discount rate reflecting the Company’s weighted average cost of capital and specific risk inherent

in the underlying assets.

Estimates of future cash flows from potential milestone payments and royalties related to out-licensed product sales;

A discount rate reflecting the Company’s weighted average cost of capital and specific risk inherent in the underlying assets.

Once brought into use, intangible

assets are amortized over their estimated useful economic lives, which for acquired IPR&D assets is over the remaining life of the

relevant patents.

Research contract costs and accruals

The Company has entered into

various research and development contracts with companies both inside and outside of the United States.

These agreements are generally

cancellable, and related payments are recorded as research and development expenses as incurred.

The Company records accruals for estimated

ongoing research costs.

When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the studies or trials,

including the phase or completion of events, invoices received and contracted costs.

Significant judgments and estimates are made in determining

the accrued balances at the end of any reporting period.

Actual results could differ from the Company’s estimates.

The Company’s

historical accrual estimates have not been materially different from the actual costs.

Convertible note:

The Company accounts for certain

convertible notes issued during the years ended December 31, 2021, and December 31, 2020, under the fair value option (“FVO”)

election of ASC 825, Financial Instruments (“ASC-825”) as discussed below.

The convertible notes accounted

for under FVO wherein the financial instrument is initially measured at its issue-date estimated fair value and then subsequently re-measured

at estimated fair value on a recurring basis at each reporting period date.

The estimated fair value adjustments are based upon a discounted

cash flow valuation technique using a weighted cost of capital of 15% and are recognized as other income (expense) in the accompanying

consolidated statement of operations and the portion of the fair value adjustment attributed to a change in the instrument-specific credit

risk is recognized as a component of other comprehensive income (“OCI”).

Convertible debt instruments:

The Company follows ASC 480-10, Distinguishing Liabilities

from Equity in its evaluation of the accounting for a hybrid instrument.

A financial instrument that embodies an unconditional

obligation, or a financial instrument other than an outstanding share that embodies a conditional obligation, that the issuer must or

may settle by issuing a variable number of its equity shares shall be classified as a liability (or an asset in some circumstances) if,

at inception, the monetary value of the obligation is based solely or predominantly on any one of the following:

(a) a fixed monetary

amount known at inception;

(b) variations in something other than the fair value of the issuer’s equity shares;

variations inversely related to changes in the fair value of the issuer’s equity shares.

Hybrid instruments meeting these criteria

are not further evaluated for any embedded derivatives and are carried as a liability at fair value at each balance sheet date with remeasurements

reported in change on fair value expense in the accompanying Statements of Operations.

If it is determined that an instrument is not within

the scope of ASC 480-10, further evaluation of all identified features is performed pursuant to ASC 815 in order to determine if any bifurcation

from the host instrument is required.

assets are amortized over their estimated useful economic lives using the economic consumption method if anticipated future revenues can

be reasonably estimated.

The straight-line method is used when revenues cannot be reasonably estimated.

The Company has recorded impairment

losses of $17,571 on its intangible assets in the year ended December 31, 2022.

contract costs and accruals

Company has entered into various research and development contracts with companies both inside and outside of the United States.

These agreements are generally cancellable, and related payments are recorded as research and development expenses as incurred.

records accruals for estimated ongoing research costs.

When evaluating the adequacy of the accrued liabilities, the Company analyzes

progress of the studies or trials, including the phase or completion of events, invoices received and contracted costs.

Significant judgments

and estimates are made in determining the accrued balances at the end of any reporting period.

Actual results could differ from the Company’s

The Company’s historical accrual estimates have not been materially different from the actual costs.

debt instruments

Company follows ASC 480-10, Distinguishing Liabilities from Equity in its evaluation of the accounting for a hybrid

A financial instrument that embodies an unconditional obligation, or a financial instrument other than an outstanding share

that embodies a conditional obligation, that the issuer must or may settle by issuing a variable number of its equity shares shall be

classified as a liability (or an asset in some circumstances) if, at inception, the monetary value of the obligation is based solely

or predominantly on any one of the following:

(a) a fixed monetary amount known at inception;

(b) variations in something other than

the fair value of the issuer’s equity shares;

or (c) variations inversely related to changes in the fair value of the issuer’s

equity shares.

Hybrid instruments meeting these criteria are not further evaluated for any embedded derivatives and are carried as a

liability at fair value at each balance sheet date with remeasurements reported in change on fair value expense in the accompanying Statements

of Operations and Comprehensive Loss.

Additionally,

the Company accounts for certain convertible debt (“Convertible Notes”) issued under the fair value option election of ASC

825, Financial Instruments wherein the financial instrument is initially measured at its issue-date estimated fair value and

then subsequently re-measured at estimated fair value on a recurring basis at each reporting period date.

The estimated fair value adjustment

is recognized as other income (expense) in the accompanying consolidated statements of operations and the portion of the fair value adjustment

attributed to a change in the instrument-specific credit risk is recognized as a component of other comprehensive loss.

Convertible Notes

are settled with shares at fair value of the stock issued with any differences recorded to other income (expense), as a gain or (loss)

on extinguishment.

When the Company issues warrants

it evaluates the proper balance sheet classification of the warrant to determine whether the warrant should be classified as equity or

as a derivative liability on the consolidated balance sheets.

In accordance with ASC 815-40, Derivatives and Hedging-Contracts in the

Entity’s Own Equity (ASC 815-40), the Company classifies a warrant as equity so long as it is “indexed to the Company’s

equity” and several specific conditions for equity classification are met.

A warrant is not considered indexed to the Company’s

equity, in general, when it contains certain types of exercise contingencies or adjustments to exercise price.

If a warrant is not indexed

to the Company’s equity or it has net cash settlement that results in the warrants to be accounted for under ASC 480, Distinguishing

Liabilities from Equity, or ASC 815-40, it is classified as a derivative liability which is carried on the consolidated balance sheet

at fair value with any changes in its fair value recognized immediately in the statement of operations.

Warrants are fair valued using

either the Black-Scholes option pricing model or Monte Carlo simulations.

Both the Black-Scholes option pricing model and Monte Carlo

simulations require the use of highly subjective and complex assumptions, including the option’s expected term and the price volatility

of the underlying stock, to determine the fair value of the award.

As of December 31, 2021, the Company had warrants that were classified

as equity and warrants that were classified as liabilities.

it evaluates the proper balance sheet classification to determine classification as either equity or as a derivative liability on the

consolidated balance sheets.

In accordance with ASC 815-40, Derivatives and Hedging-Contracts in the Entity’s Own Equity (“ASC

815-40”), the Company classifies a warrant as equity so long as it is “indexed to the Company’s equity” and several

specific conditions for equity classification are met.

A warrant is not considered indexed to the Company’s equity, in general,

when it contains certain types of exercise contingencies or adjustments to exercise price.

If a warrant is not indexed to the Company’s

equity or it has net cash settlement that results in the warrants to be accounted for under ASC 480, Distinguishing Liabilities from Equity,

or ASC 815-40, it is classified as a derivative liability, which is carried on the Consolidated Balance Sheet at fair value with any changes

in its fair value recognized immediately in the Consolidated Statement of Operations and Comprehensive Loss.

As of December 31, 2022 and

2021, the Company had warrants outstanding for share-based compensation that were classified as equity, and outstanding investor warrants

that were classified as derivative liabilities and classified as “Warrant liabilities” in the Consolidated Balance Sheets.

Derivative financial instruments

The Company does not use derivative

instruments to hedge exposures to interest rate, market, or foreign currency risks.

The Company evaluates all its financial instruments

to determine if such instruments contain features that qualify as embedded derivatives.

Embedded derivatives must be separately measured

from the host contract if all the requirements for bifurcation are met.

The assessment of the conditions surrounding the bifurcation of

embedded derivatives depends on the nature of the host contract.

Bifurcated embedded derivatives are recognized at fair value, with changes

in fair value recognized in the Consolidated Statements of Operations and Comprehensive Loss each reporting period.

Bifurcated embedded

derivatives are classified as “Derivative liabilities” in the Consolidated Balance Sheets.

Share-based compensation

The Company accounts for share-based

compensation in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718”).

ASC 718 requires companies

to estimate the fair value of equity-based payment awards on the date of grant.

The value of the portion of the award that is ultimately

expected to vest is recognized as an expense over the requisite service period in the Company’s consolidated statements of operations

and comprehensive loss.

The Company records the expense

for option awards using either a graded or straight-line vesting method.

The Company accounts for forfeitures as they occur.

For share-based

awards granted to employees, directors and non-employee consultants, the measurement date is the date of grant.

The compensation expense

is then recognized over the requisite service period, which is the vesting period of the respective award.

The Company reviews stock award

modifications when there is an exchange of original award for a new award.

The Company calculates for the incremental fair value based

on the difference between the fair value of the modified award and the fair value of the original award immediately before it was modified.

The Company immediately recognizes the incremental value as compensation cost for vested awards and recognizes, on a prospective basis

over the remaining requisite service period, the sum of the incremental compensation cost and any remaining unrecognized compensation

cost for the original award on the modification date.

The fair value of stock options

(“options”) on the grant date is estimated using the Black-Scholes option-pricing model using the single-option approach.

The Black-Scholes option pricing model requires the use of highly subjective and complex assumptions, including the option’s expected

term and the price volatility of the underlying stock, to determine the fair value of the award.

The Company applies the Black-Scholes

model as it believes it is the most appropriate fair value method for all equity awards.

Contingencies

Liabilities for loss contingencies

arising from claims, assessments, litigation, fines, penalties, and other sources are recorded when it is probable that a liability has

been incurred and the amount can be reasonably estimated.

At each reporting date, the Company evaluates whether a potential loss amount

or a potential loss range is probable and reasonably estimable under the provisions of the authoritative guidelines that address accounting

for contingencies.

The Company expenses costs as incurred in relation to such legal proceedings as general and administrative expense

within the consolidated statements of operations and comprehensive loss.

Interest Rate Risk

We had cash of $19.6 million

as of December 31, 2021, consisting of cash.

We had no cash equivalents at December 31, 2021.

To date, fluctuations in interest income

have not been significant.

We do not enter into investments

for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure.

We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates.

A hypothetical 10%

change in interest rates during any of the periods presented would not have had a material impact on our consolidated financial statements.

Recently Issued Accounting Pronouncements

See the sections titled “ Recently

Adopted Accounting Pronouncements ” in Note 2(dd) and in “ Recently issued accounting pronouncements not yet adopted ”

in Note 2(ee) to the Company’s consolidated financial statements for the years ended December 31, 2021, and December 31, 2020, respectively,

appearing elsewhere herein.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

The Company is a smaller reporting

company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item.

FINANCIAL STATEMENTS AND SUPPLEMENTARY

The financial statements required

by this item begin on page F-1 with the index to financial statements followed by the financial statements.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURE

Company does not use derivative instruments to hedge exposures to interest rate, market, or foreign currency risks.

The Company evaluates

all its financial instruments to determine if such instruments contain features that qualify as embedded derivatives.

Embedded derivatives

must be separately measured from the host contract if all the requirements for bifurcation are met.

The assessment of the conditions

surrounding the bifurcation of embedded derivatives depends on the nature of the host contract.

Bifurcated embedded derivatives are recognized

at fair value, with changes in fair value recognized in the Consolidated Statements of Operations and Comprehensive Loss each reporting

Bifurcated embedded derivatives are classified as “Derivative liabilities” in the Consolidated Balance Sheets.

Company accounts for share-based compensation in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718”).

ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant.

The value of the portion of

the award that is ultimately expected to vest is recognized as an expense over the requisite service period in the Company’s consolidated

statements of operations and comprehensive loss.

Company records the expense for option awards using either a graded or straight-line vesting method.

The Company accounts for forfeitures

as they occur.

For share-based awards granted to employees, directors and non-employee consultants, the measurement date is the date

The compensation expense is then recognized over the requisite service period, which is the vesting period of the respective

Company reviews stock award modifications when there is an exchange of original award for a new award.

The Company calculates the incremental

fair value based on the difference between the fair value of the modified award and the fair value of the original award immediately

before it was modified.

The Company immediately recognizes the incremental value as compensation cost for vested awards and recognizes,

on a prospective basis over the remaining requisite service period, the sum of the incremental compensation cost and any remaining unrecognized

compensation cost for the original award on the modification date.

fair value of stock options (“options”) on the grant date is estimated using the Black-Scholes option-pricing model using

the single-option approach.

The Black-Scholes option pricing model requires the use of highly subjective and complex assumptions, including

the option’s expected term and the price volatility of the underlying stock, to determine the fair value of the award.

applies the Black-Scholes model as it believes it is the most appropriate fair value method for all equity awards.

Issued Accounting Pronouncements

the sections titled “ Recently adopted accounting pronouncements” in Note 2 (cc) and “Recently issued

accounting pronouncements ” in Note 2 (dd) to the Company’s consolidated financial statements for the year ended

December 31, 2022, appearing elsewhere herein.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required

under this item.

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-K

Item 5. Market for Registrant’s Common Equity