What changed in this filing

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Item 9A. Controls and Procedures

2023-03-13 compared with 2022-05-17 · 2201 added, 2393 removed, 1480 unchanged (76% of the section changed)

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal

financial officer, respectively), evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2021.

“disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange

Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information

required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized

and reported, within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without

limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files

or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive

and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Management recognizes that any

controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives

and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation of

our disclosure controls and procedures as of December 31, 2021, our Chief Executive Officer and Chief Financial Officer concluded that,

as of such date, because (i) of the material weaknesses identified in our internal controls over financial reporting;

and (ii) we were

required to restate our financial statements for the year ended December 31, 2020, and quarterly period ended September 30, 2021, which

delayed the filing of or required an amendment to our SEC reports, our disclosure controls, and procedures, as defined above, were not

As a newly reporting company under the Exchange Act, we are not required

to evaluate the effectiveness of our internal controls over financial reporting until the end of the fiscal year after we file our first

annual report on Form 10-K, which will occur on December 31, 2022.

However, in connection with the audit of our financial statements for

the years ended December 31, 2020 and 2021, we identified material weaknesses in our internal controls over financial reporting because

we did not have a formal process for period end financial closing and reporting, we historically had insufficient resources to conduct

an effective monitoring and oversight function independent from our operations and we lack accounting resources and personnel to properly

account for accounting transactions such as the issuance of warrants with a derivative liability component.

In particular, the material

weaknesses identified were:

a lack of accounting resources required to fulfill US GAAP and SEC reporting requirements;

a lack of comprehensive US GAAP accounting policies and financial reporting

procedures and personnel;

a lack of adequate procedures and controls to appropriately account

for accounting transactions including liability and the valuation allowance on the deferred tax asset relating to the net operating losses;

a lack of segregation of duties given the size of our finance and accounting team.

have implemented and are continuing to implement various measures to address the material weaknesses identified;

of Disclosure Controls and Procedures

the supervision and with the participation of our management, including our principal executive officer and principal financial officer,

as of the end of the period covered by this report, we conducted an evaluation of the effectiveness of the design and operation of our

disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Act of 1934.

Our disclosure controls

and procedures are designed to provide reasonable assurance that the information required to be included in our SEC reports is recorded,

processed, summarized and reported within the time periods specified in SEC rules and forms, relating to the Company, including our consolidated

subsidiaries, and was made known to them by others within those entities, particularly during the period when this report was being prepared.

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures

were not effective as of December 31, 2022 because of the material weaknesses identified in our internal controls over financial reporting.

Report on Internal Control over Financial Reporting

of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined

in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

As of December 31, 2022, management assessed the effectiveness of the Company’s

internal control over financial reporting based on the criteria for effective internal control over financial reporting established in

“Internal Control - Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission

(the “COSO criteria”).

A material weakness is a control deficiency (within the meaning of Public Company Accounting Oversight

Board (United States) Auditing Standard No.

5) or a combination of control deficiencies that result in more than a remote likelihood

that a material misstatement of the annual or interim financial statements will not be prevented or detected.

Based on such assessment,

management concluded that as of December 31, 2022, our internal control over financial reporting was not effective.

Management has identified

the following material weakness:

connection with the audit of our financial statements for the years ended December 31, 2022 and 2021, we identified material weaknesses

in our internal controls over financial reporting because we did not have a formal process for period end financial closing and reporting,

we historically had insufficient resources to conduct an effective monitoring and oversight function independent from our operations

and we lack accounting resources and personnel to properly account for accounting transactions such as the issuance of warrants with

a derivative liability component.

In particular, the material weaknesses identified were:

lack of accounting resources required to fulfill US GAAP and SEC reporting requirements;

● a lack of comprehensive US GAAP accounting policies and financial

reporting procedures and personnel;

● a lack of adequate procedures and controls to appropriately

account for accounting transactions including liability and the valuation allowance on the deferred tax asset relating to the net operating

● a lack of segregation of duties given the size of our finance

and accounting team.

We have implemented and are continuing to implement

various measures to address the material weaknesses identified;

these measures include:

the hiring of a chief financial officer that is a CPA in the U.S.;

The hiring of a Director of Financial Reporting, a CPA, CA, CPA (Illinois) who is experienced with public company reporting and is conversant in US GAAP and SEC accounting issues.

With this hire we are addressing our ongoing development of our comprehensive US GAAP accounting policies, financial reporting procedures and internal controls over financial reporting;

retaining consulting services to assist with the accounting treatment of complex financial instruments and tax;

engaged independent US GAAP consulting firm.

significant deficiency is a control deficiency, or a combination of control deficiencies, that adversely affects our ability to initiate,

authorize, record, process, or report external financial data reliably in accordance with US GAAP such that there is more than a remote

likelihood that a misstatement of our annual or interim financial statements that is more than inconsequential will not be prevented or

detected by our employees.

material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood

that a material misstatement of our annual or interim financial statements will not be prevented or detected by our employees.

we have begun the process of evaluating our internal control over financial reporting and to address the material weaknesses identified.

as of June 30, 2022, upon separation with our former Chief Financial Officer, our Director of Financial Reporting, a CPA (Illinois) in 2021 who is experienced with public company reporting and is conversant in US GAAP and SEC accounting issues, was promoted to Interim Chief Financial Officer.

Effective January 1, 2023, our Interim Chief Financial Officer was promoted to our full time Chief Financial Officer.

With this hire we are continuing to address our ongoing development of our comprehensive US GAAP accounting policies, financial reporting procedures and internal controls over financial reporting;

retaining independent US GAAP consulting services to assist with the accounting treatment of complex financial instruments;

engaged an independent US based tax consulting firm.

A significant deficiency is

a control deficiency, or a combination of control deficiencies, that adversely affects our ability to initiate, authorize, record, process,

or report external financial data reliably in accordance with US GAAP such that there is more than a remote likelihood that a misstatement

of our annual or interim financial statements that is more than inconsequential will not be prevented or detected by our employees.

A material weakness is a significant

deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of

our annual or interim financial statements will not be prevented or detected by our employees.

In response, we have begun the process

of evaluating our internal control over financial reporting and to address the material weaknesses identified.

We intend to continue to take

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weaknesses in our internal controls over financial reporting, which may necessitate further action.

Management’s Report on Internal Controls

over Financial Reporting

This annual report does not

include a report of management’s assessment regarding internal controls over financial reporting or an attestation report of the

company’s registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission

for newly public companies.

Change in Internal Controls over Financial

There have been no

changes in the Company’s internal controls over financial reporting during the quarter ended December 31, 2021, that have

materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting

other than as described above in the section titled “Evaluation of Disclosure Controls and Procedures.”

This Annual Report on Form

10-K does not include an attestation report of the Company’s independent registered public accounting firm regarding the effectiveness

of the Company’s internal control over financial reporting, as such report is not required due to the Company’s status as

a smaller reporting company.

Change in Internal Control over Financial Reporting

Except as discussed above, there have been no

changes in the Company’s internal controls over financial reporting during the year ended December 31, 2022 other than as noted

above, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial

OTHER INFORMATION

DISCLOSURE REGARDING

FOREIGN JURISDICTION THAT PREVENTS INSPECTIONS

DISCLOSURE REGARDING FOREIGN JURISDICTION

THAT PREVENTS INSPECTIONS

Not Applicable.

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The following table and text

set forth the names and ages of our current directors, executive officers and significant employees as of December 31, 2021.

of Directors is comprised of four (4) members and is divided into three (3) classes, Class I, Class II and Class III, with members of

each class serving staggered three-year terms.

Our directors receive compensation in the form of cash and equity grant for their services

on the Board.

Each of our current directors became our director upon the closing of the Recapitalization Shares Exchange on December 20,

Chief Executive Officer and Director

Chief Financial Officer

Senior Vice President, Corporate Development

Steen Knudsen

set forth the names and ages of our current directors and executive officers as of February 1, 2023.

The number of directors is fixed

at five and is divided into three classes, Class I, Class II and Class III, with members of each class serving staggered three-year terms.

There are currently four members on our Board of Director.

Our directors receive compensation in the form of cash and equity grant for

their services on the Board of Directors.

Executive Officers

Chief Executive Officer, Chief Business Officer, Senior Vice President, Corporate Development and Director

Chief Financial Officer and Director of Financial Reporting

Senior Vice President, Investor Relations and Director

Steen Knudsen, Ph.D.

Chief Scientific Officer

Marie Foegh, M.D.

Chief Medical Officer

Senior Vice President, Information Technology

Duncan Moore (1)

Gail Maderis (1)

(1) Independent Director

Non-Employee Directors

David Roth, M.D .

Gerald McLaughlin (2)

Member of our compensation committee and nominating and corporate governance committee.

Chair of our audit committee, compensation committee and nominating and corporate governance committee.

Business Experience

has been our Chief Executive Officer and a director since September 2019.

Carchedi brings more than 30 years of commercial

industry experience focused in oncology from several leading multinational pharmaceutical biotech companies.

Carchedi was previously

President & Chief Executive Officer and member of the board of directors of Apexian Pharmaceuticals, an early stage oncology

discovery and development company focused in novel targets to treat cancer from 2016 to 2019.

He also served as Chief Executive Officer

and member of the board of directors of Raphael Pharmaceuticals (formerly Cornerstone Pharmaceuticals), an oncology company focused in

cancer metabolism, from 2014 to 2016.

From 2012 to 2013, Mr.

Carchedi also served as the Senior Vice President and President, Commercial

Operations (North America) for Mallinckrodt Pharmaceuticals and led the company’s listing on NYSE.

In addition, Mr.

the Chief Marketing Officer at General Electric from 2010 to 2012, the Franchise Vice President for Sales and Marketing at Johnson &

Johnson from 2005 to 2008, a Director of the Oncology Product Group-Global Oncology Franchise Leader at Eli Lilly & Company from

1998 to 2003, and a Director of Marketing Strategy, Business Development, and Product Planning at Bristol Myers Squibb from 1989 to 1998.

Carchedi also currently serves on the Board of Directors of Drummond Scientific Company, a privately held global manufacturer and

distributor of precision laboratory equipment that serves the pharmaceutical and laboratory industries and previously served on the board

of directors of Sunesis Pharmaceuticals 2013 to 2021 and Bionumerik Pharmaceuticals from 2012 to 2017.

In addition to his executive experience,

Carchedi was Co-Chair of the BioNJ Personalized Medicine & Diagnostics Committee Council (CMOC) from 2010 to 2012, the Ontario

Institute of Cancer Research Commercial Committee (OICR) from 2007 to 2008, and the Pharmaceutical Industry Board of the American Pediatric

Family Foundation from 2006 to 2008.

Carchedi received a B.S.

in Marketing from West Chester University and an MBA in Marketing from

Drexel University.

Carchedi is well qualified to serve as our director because of his experience serving on the board of directors

and executive experience as CEO with public and private companies in the biotechnology sector and over 30 years of commercial industry

Knudsen has been our Chief Financial Officer since November 2020.

Knudsen has over 30 years of experience

leading financial organizations from previous positions as a Vice President of Finance and Controller in numerous public and private

companies, including in the life sciences sector.

Before joining us in November 2020, Mr.

Knudsen served as Vice President of

Finance & Operations at Metabo Corporation from June 2012 to September 2020.

Prior to that, he served as

Controller at multiple companies, including Eurand Pharmaceuticals, Inc.

from April 2008 to June 2012, Beijing Med-Pharm

Corporation from June 2005 to April 2008, and Eximias Pharmaceutical Corporation from May 2004 to June 2005.

Knudsen is a member of the American Institute of Certified Public Accountants and the Pennsylvania Institute of Certified Public

He received his bachelor’s degree in Economic and Business from the Copenhagen Business School, is a Certified

Public Accountant (CPA) and holds a Master degree in Business Administration from Philadelphia University.

Cullem has been our Senior Vice President, Corporate Development since October 2019.

was appointed to the Board of Directors on July 7, 2022.

Cullem has been our Interim Chief Executive Officer since June 2022, and

our Chief Business Officer and Senior Vice President, Corporate Development since July 2021.

Cullem is an experienced biotechnology

executive and previously served as the Vice President, Corporate Development of our predecessor from August 2014 to September 2019.

From 2017 to 2020, Mr.

2017 to 2020, Mr.

Cullem was the co-founder and a board member of 2X-Oncology, Inc.

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and worldwide.

Cullem has experience in designing and negotiating a broad span of

life science deals, has founded and led several early-stage biotech companies, and is a catalyst for businesses taking the next step

in the fields of precision medicine and predictive/companion diagnostics, novel drug targets, proteomics and genomics, and clinical-stage

cancer therapeutic development.

Cullem has experience in designing and negotiating a broad span of life

science deals, has founded and led several early-stage biotech companies, and is a catalyst for businesses taking the next step in the

fields of precision medicine and predictive/companion diagnostics, novel drug targets, proteomics and genomics, and clinical-stage cancer

therapeutic development.

He holds a B.S.

degree in Biochemistry from The University of California at Davis, a Juris Doctorate

(JD) degree from The University of New Hampshire Franklin Pierce School of Law, specializing in patent & I.P.

law, and is a

registered patent attorney before the United States Patent & Trademark Office.

Steen Knudsen

has been our Chief Scientific Officer since 2006.

Knudsen is a co-founder of our predecessor Allarity Therapeutics A/S and

the inventor of DRP ® , the Drug Response Prediction Platform, which is our core technology and companion diagnostics platform.

Knudsen is also a former Professor of Systems Biology with extensive expertise in mathematics, bioinformatics, biotechnology,

and systems biology.

He co-founded our predecessor in 2004 and served as its CEO from 2004 to 2006.

Knudsen also previously served

as a member on our predecessor’s Board of Directors from 2016 to 2020.

In addition, Dr.

Knudsen also currently serves as the

Chief Executive Officer of MPI, Inc., our operating subsidiary in the U.S.

Knudsen holds an M.Sc.

degree in Engineering from

the Technical University of Denmark and a Ph.D.

degree in Microbiology from the University of Copenhagen.

He received Postdoctoral training

in computational biology from Harvard Medical School.

Foegh has been our Chief Medical Officer since January 2018.

Foegh previously served as Chief Medical Officer of

our subsidiary, 2X-Oncology, Inc.

(later Oncology Venture US, Inc.) from 2016 to 2018.

Foegh brings thirty years of

experience in the pharmaceutical and biotechnology industries to our senior management team and has a strong track record leading

successful clinical development of therapeutics, including regulatory and medical affairs.

She is also Adjunct Clinical Professor at

Georgetown University, Department of Medicine and Adjunct Professor at New York Medical College, Department of Pharmacology.

Foegh was the Chief Medical Officer and cofounder of Ell Imaging, LLC, an ultrasound device company, from 2014 to 2016.

serves as the Chair of the Board of Directors at the device company, Injecto A/S, since 2014.

Foegh leads clinical

development of our current precision medicine oncology pipeline, including our lead assets stenoparib, dovitinib, and

Foegh previously led the successful development and regulatory approval of more than 10 novel drug

products in the U.S.

and U.K., within oncology, endocrinology and cardiology.

Foegh has fluency in regulatory interactions

with the FDA and EMEA, including INDs, NDAs, IDEs (for predictive biomarkers and/or companion diagnostics), and product issues.

also manages interactions with the oncology key opinion leaders including our Scientific Advisory Board.

Foegh holds both a

Medical Doctorate (M.D.) degree and a Doctorate of Science (Dr.Sc.) degree from Copenhagen University, Denmark, and is a member of

the American College of Physicians (ACP), American Medical Association (AMA), the American Society of Clinical Oncology, and the

American College of Obstetricians and Gynecologists (ACOG).

Jensen has been our Senior Vice President, Information Technology since June 2020.

degree in Biochemistry from The University of California at Davis, a Juris Doctorate (JD) degree

from The University of New Hampshire Franklin Pierce School of Law, specializing in patent & I.P.

law, and is a registered patent

attorney before the United States Patent & Trademark Office.

Based on the above qualifications and Mr.

Cullem’s extensive experience

in business development within the life sciences industry, the Company believes that Mr.

Cullem is well qualified to serve on our Board

of Directors.

Brown has been our Interim Chief Financial Officer since July 2022 and has served as our Director of Financial Reporting since September

From June 2016 to May 2021, Ms.

Brown provided financial reporting services as a consultant to various publicly listed and private

companies, including as our financial reporting consultant (contract) from September 2020 to April 2021.

Brown’s consulting

experience includes public company reporting in accordance with US GAAP and IFRS, SEC correspondence, tax compliance, and audit and operations

From August 2018 to May 2019, Ms.

Brown was a senior manager at MNP, LLP, Chartered Professional Accountants, a chartered accounting

firm in Vancouver, B.C., Canada, where she was responsible for auditing Canadian and US publicly listed companies pursuant to the requirements

of CPAB and PCAOB, respectively.

From November 2014 to May 2016, Ms.

Brown was a director of Prudential Supervision for the Financial

Institutions Commission (FICOM) in Vancouver, B.C., Canada.

Brown received her degree in Business Administration from Simon Fraser

University in 1986, and is a Chartered Accountant in Canada (CPA, CA) (since 1998) and a Registered Certified Public Accountant licensed

in the State of Illinois (since 2004).

appointed to the Board of Directors on July 7, 2022.

Jensen has been our Senior Vice President, Investor Relations since July 2022,

and was previously our Senior Vice President, Information Technology since July 2021, and the Senior Vice President, Information Technology

of Allarity Therapeutics A/S, our predecessor, since June 2020.

Since January 2006, Mr.

served as the Chief Technology Officer of the Medical Prognosis Institute.

Jensen previously served as the Chief Technology Officer

of our predecessor from 2004 to June 2020.

Jensen has served as the Chief Technology Officer

of the Medical Prognosis Institute.

Jensen previously served as the Chief Technology Officer of our predecessor from 2004 to June

Jensen co-founded Allarity Therapeutics A/S in 2004.

Jensen also established

and currently leads our laboratories in Denmark.

Jensen also established and currently leads our laboratories in Denmark.

Alongside nurturing our global laboratories, Mr.

Jensen is instrumental in building

our investor relations operations, securing operational financing, and fostering the business growth of Allarity Therapeutics.

Jensen’s accolades are his inventions of molecular biological guidelines combined with techniques for high quality reproducible

RNA extraction and downstream processing.

This allows for high resolution analysis of cancer patients’ biopsies.

inventions are an important foundation of the DRP ® -Drug Response Prediction platform.

Jensen holds a Bachelor of

Science degree in Biology from the Technical University of Denmark and conducted further studies in Biology at the University of Copenhagen.

has been our Chairman of the Board since 2018.

Moore has previously served as chairman of Oncology Venture Sweden AB (publ) since

2015 until its merger with our predecessor in 2018.

Moore is currently a partner in the company East West Capital Partners and

has previously worked as Global Head of Healthcare Research at Morgan Stanley where he was employed from 1990 to 2006, latterly as a Managing

Moore is a board member of Forward Pharma Nasdaq;

FWP, as well as privately held Lamellar Biomedical and Cycle Pharma.

Moore has over twenty years’ experience in capital markets analysis within health care.

Moore holds a PhD in Biochemistry

from the University of Cambridge where he was also a post-doctoral research fellow.

He also has a degree in Biochemistry and Microbiology

from the University of Leeds.

Moore is well qualified to serve on our board of directors based on the above qualifications and

his extensive experience in capital markets within the healthcare industry.

Jensen has been one of our directors since September 2020.

Jensen is a current Member of the European Parliament

for the Danish Liberal Party (Venstre) and was previously a member of the Danish Parliament for the Danish Liberal Party (Venstre) from

2015 to 2019, of which he was the Group Chairman from 2015 to 2018 and an appointed State Auditor of the Danish Parliament from 2015

Jensen currently serves as the Chairman of TecLeaf ApS, CSR Invest ApS, and is also currently the chief executive officer

of SGJ Holstebro ApS and CSR Invest ApS.

In addition, Mr.

Jensen also serves on the board of various non-profit organizations and is

currently a board member for Fulton Foundation and Samfonden, and the Chairman for Memorial Park for the Battle of Jutland 1916.

Jensen holds an MSc degree in Economics from the University of Aarhus.

Jensen is well qualified to serve on our board of directors

due to his experience serving on the board of directors of private and non-profit companies.

has been one of our directors since October 2020.

Since 2015, Ms.

Maderis has also served as the President & CEO of

Antiva Biosciences, Inc., a venture-backed biopharmaceutical company pioneering topical therapies to treat the pre-cancerous lesions caused

Previously, Ms.

Maderis led BayBio, Northern California’s life science industry organization, as its President and

CEO from 2019 to 2015.

From 2003-2009, she served as President and CEO of FivePrime Therapeutics, a protein discovery company focused

on immuno-oncology.

Prior to her tenure at FivePrime Therapeutics, Ms.

Maderis held senior executive positions at Genzyme Corporation,

including founder and president of Genzyme Molecular Oncology.

Maderis also practiced management and strategy consulting with

She currently serves on the corporate boards of DURECT Corporation (DRRX), Valitor, Inc.

and Antiva Biosciences, as

well as on the non-profit boards of BIO (Emerging Company and Health Sections), CLS, The Termeer Foundation, and the University of California

Berkeley Foundation Board of Trustees.

Maderis received a BS in business from UC Berkeley, and an MBA from Harvard Business School.

Maderis is well qualified to serve on our board of directors due to her operational, industry and leadership experience in the

biopharmaceutical industry as CEO of FivePrime Therapeutics, President of Genzyme Molecular Oncology and her current position at Antiva,

and her insight into business and policy trends impacting the biopharma industry.

Jensen is instrumental in building our investor relations operations, securing operational

financing, and fostering the business growth of Allarity Therapeutics.

Jensen’s accolades are his inventions of molecular

biological guidelines combined with techniques for high quality reproducible RNA extraction and downstream processing.

This allows for

high resolution analysis of cancer patients’ biopsies.

Jensen’s inventions are an important foundation of the DRP ®

-Drug Response Prediction platform.

Jensen holds a Bachelor of Science degree in Biology from the Technical University of Denmark

and conducted further studies in Biology at the University of Copenhagen.

The Company believes that Mr.

Jensen is well qualified to serve

on our Board of Directors based on the above qualifications and his experience in investor relations, business operations and strong track

record with the ongoing development of the Company.

Steen Knudsen, Ph.D.

has been our Chief Scientific Officer since July 2021.

Knudsen is a co-founder of our predecessor Allarity Therapeutics A/S and the

inventor of DRP ® , the Drug Response Prediction Platform, which is our core technology and companion diagnostics platform,

and was the Chief Scientific Officer of Allarity Therapeutics A/S since 2006.

Knudsen is also a former Professor of Systems Biology

with extensive expertise in mathematics, bioinformatics, biotechnology, and systems biology.

He co-founded our predecessor in 2004 and

served as its CEO from 2004 to 2006.

Knudsen also previously served as a member on our predecessor’s Board of Directors from

2016 to 2020.

In addition, Dr.

Knudsen also currently serves as the Chief Executive Officer of MPI, Inc., our operating subsidiary in

Knudsen holds an M.Sc.

degree in Engineering from the Technical University of Denmark and a Ph.D.

degree in Microbiology

from the University of Copenhagen.

He received Postdoctoral training in computational biology from Harvard Medical School.

Marie Foegh, M.D.

been our Chief Medical Officer since July 2021.

Foegh was the Chief Medical Officer of Allarity A/S, our predecessor, since January

2018, and previously served as Chief Medical Officer of our subsidiary, 2X-Oncology, Inc.

(later Oncology Venture US, Inc.) from 2016

Foegh brings thirty years of experience in the pharmaceutical and biotechnology industries to our senior management team

and has a strong track record leading successful clinical development of therapeutics, including regulatory and medical affairs.

also Adjunct Clinical Professor at Georgetown University, Department of Medicine and Adjunct Professor at New York Medical College, Department

of Pharmacology.

Foegh was the Chief Medical Officer and cofounder of Ell Imaging, LLC, an ultrasound device company, from 2014 to

She serves as the Chair of the Board of Directors at the device company, Injecto A/S, since 2014.

Foegh leads clinical development

of our current precision medicine oncology pipeline, including our lead assets stenoparib, dovitinib, and IXEMPRA ® .

Foegh previously led the successful development and regulatory approval of more than 10 novel drug products in the U.S.

and U.K., within

oncology, endocrinology and cardiology.

Foegh has fluency in regulatory interactions with the FDA and EMEA, including INDs, NDAs,

IDEs (for predictive biomarkers and/or companion diagnostics), and product issues.

She also manages interactions with the oncology key

opinion leaders including our Scientific Advisory Board.

Foegh holds both a Medical Doctorate (M.D.) degree and a Doctorate of Science

(Dr.Sc.) degree from Copenhagen University, Denmark, and is a member of the American College of Physicians (ACP), American Medical Association

(AMA), the American Society of Clinical Oncology, and the American College of Obstetricians and Gynecologists (ACOG).

Non-Employee Directors

was appointed to the Board of Directors in July 2022.

Roth is currently the Chief Medical Officer of Syros Pharmaceuticals,

SYRS) since December 2015.

Roth has served in numerous executive management positions, including as Chief Medical Officer,

executive vice president and senior vice president with Infinity Pharmaceuticals, Inc., and as Vice President of Early Development and

interim Co-head of Clinical Development with Pfizer Inc.

in its oncology business unit.

Prior to joining the pharmaceutical industry,

Roth’s experience included over ten years in research and clinical practice as an academic hematologist, and he served on the

full-time faculty at Harvard Medical School and Beth Israel Deaconess Medical Center in Boston.

Roth completed his fellowship in Hematology

and Oncology at the New England Medical Center in Boston, and his residency at the New England Deaconess Hospital in Boston.

received his Bachelor of Science degree from the Massachusetts Institute of Technology and his medical degree from Harvard Medical School

in the Harvard-M.I.T.

Division of Health Sciences and Technology.

As an accomplished academic researcher and physician-scientist with

more than 25 years of experience in corporate leadership positions in the biotechnology industry and academic clinical research and based

Roth’s strong track record of successful oncology and hematology drug development, including in areas of biomarker-directed

targeted therapies, the Company believes Dr.

Roth is qualified to serve on our Board of Directors.

McLaughlin was appointed to the Board of Directors in October 2022 and has been our Chairman since January 2023.

has extensive experience serving as a senior executive and board member in the biopharmaceutical industry, including financings, mergers

& acquisitions, licensing, product development, commercialization, lifecycle management, and operations.

McLaughlin is currently

the chief executive officer and board member of Life Biosciences LLC, a biotechnology company, since 2021.

Previously, Mr.

was the President and CEO for Neos Therapeutics, Inc., a commercial stage pharmaceutical company from 2018 to 2021.

He also served as

president and CEO of AgeneBio, Inc., a clinical-stage biopharmaceutical company developing therapies for neurological and psychiatric

diseases from 2014 to 2018.

McLaughlin holds a B.A.

in Economics from Dickinson College and an MBA from the Villanova School of Business.

Based on the above qualifications and Mr.

McLaughlin’s extensive experience in leading operational and executive management roles

in the life sciences industry, the Company believes Mr.

McLaughlin is well qualified to serve on our Board of Directors.

Involvement in Certain Legal Proceedings

17 unchanged sentences

our directors and officers was elected or appointed as a director or named executive officer.

Board Composition, Committees, and Independence

Our business and affairs are

managed under the direction of our board of directors.

Moore serves as Chair of our board of directors.

The primary responsibilities

of our board of directors is to provide oversight, strategic guidance, counseling and direction to our management.

Our board of directors

meets on a regular basis and additionally as required under the Nasdaq rules.

Director Independence

As required under the Nasdaq

listing standards, a majority of the members of a listed company’s Board of Directors must qualify as “independent,”

as affirmatively determined by the Board of Directors.

Our Board of Directors consults with our legal counsel to ensure that its determinations

are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including

those set forth in Nasdaq listing standards, as in effect from time to time.

Consistent with these considerations, after review of all

relevant identified transactions or relationships between each of our directors, or any of his or her family members, and the Company,

its senior management and its independent auditors, our Board of Directors affirmatively determined that all of our directors, except

Cullem and T.

Jensen who are not considered independent because they are our executive officers, are independent directors

as defined by Rule 5605(a)(2) of the Nasdaq Listing Rules.

Role of the Board of Directors and Composition

Our Board of Directors oversees

and provides guidance for our business and affairs.

Our Board of Directors oversees the development of our strategy and business planning

process and management’s implementation of them and oversees management.

McLaughlin serves as Chair of our Board of Directors.

The primary responsibilities of our Board of Directors are to provide oversight, strategic guidance, counseling, and direction to our

Our Board of Directors meets on a regular basis and additionally as required under the Nasdaq rules.

In accordance with the terms

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number of directors from time to time by resolution.

The board of directors consists of four (4) members and is divided into three

(3) classes, Class I, Class II and Class III, with members of each class serving staggered three-year terms.

Our board of directors

is divided into the following classes:

The Board of Directors consists of four members and is divided into three classes,

Class I, Class II and Class III, with members of each class serving staggered three-year terms.

Our Board of Directors is divided into

the following classes:

Class I, consists of Mr.

Jensen, whose term will expire at our first annual meeting of stockholders to

be held after December 2021;

● Class II, consists of Ms.

Maderis, whose term will expire at our second annual meeting of stockholders

to be held after December 2021;

● Class III, consists of Messrs.

Moore and Carchedi, whose terms will expire at our third annual meeting

of stockholders to be held after December 2021.

Class II, consists of Dr.

Class III, consists of Mr.

Board of Directors Leadership Structure

The positions

of Chairman of our Board of Directors and Chief Executive Officer are separated.

The Chairman of our Board of Directors has authority,

among other things, to call and preside over Board of Directors meetings, to set meeting agendas and to determine materials to be distributed

to our directors.

The Chairman has substantial ability to shape the work of our Board of Directors.

We believe that separation of the

positions of chairman and chief executive officer reinforces the independence of our Board of Directors in its oversight of our business

In addition, we believe that separation of the positions of chairman and chief executive officer creates an environment that

is more conducive to objective evaluation and oversight of management’s performance, increasing management accountability and improving

the ability of our Board of Directors to monitor whether management’s actions are in our best interests and in the best interests

of our stockholders.

As a result, we believe that having the positions of chairman and chief executive officer separated can enhance the

effectiveness of our Board of Directors as a whole.

In addition, we have a separate

chair for each committee of our Board of Directors.

The chair of each committee is expected to report to our Board of Directors from time

to time, or whenever so requested by our Board of Directors, on the activities of the committee he or she chairs in fulfilling its responsibilities

as detailed in its respective charter or specify any shortcomings should that be the case.

Board of Directors Diversity

Our Board of Directors is

committed to fostering a diversity of backgrounds and perspectives so that our Board of Directors positions our company for the future.

The members of our Board of Directors represent a mix of ages, genders, races, ethnicities, geographies, cultures, and other perspectives

that we believe expand our Board of Directors’ understanding of the needs and viewpoints of our partners, employees, stockholders,

and other stakeholders.

The matrix below provides certain information regarding the composition of our Board of Directors as of the date

of this report.

Each of the categories listed in the below table has the meaning as it is used in Nasdaq Stock Market Rule 5605(f).

of Directors Diversity Matrix

Gender Identity

Demographic Background

African American or Black

Director Independence

Nasdaq listing standards

require that a majority of our board of directors be independent.

In addition, applicable Nasdaq rules require that, subject to specified

exceptions, each member of a listed company’s audit and compensation committees be independent within the meaning of the applicable

Nasdaq rules.

Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act.

The board of directors has undertaken a review of the independence of each director.

Based on information provided by each director concerning

her or his background, employment and affiliations, our board of directors has determined that none of the directors, other than Mr.

Carchedi, has any relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of

a director and that each of the directors is “independent” as that term is defined under the Nasdaq listing standards.

making these determinations, our board of directors considered the current and prior relationships that each non-employee director has

with us, and all other facts and circumstances our board of directors deemed relevant in determining their independence, including the

beneficial ownership of our securities by each non-employee director and the transactions described in the section titled “ Certain

Relationships and Related Transactions and Director Independence.”

Role of our Board of Directors in Risk Oversight

One of the key functions of

the board of directors is informed oversight of our risk management process.

The board of directors does not anticipate having a standing

risk management committee, but rather anticipates administering this oversight function directly through our board of directors as a whole,

as well as through various standing committees of our board of directors that address risks inherent in their respective areas of oversight.

In particular, our board of directors is responsible for monitoring and assessing strategic risk exposure and our audit committee has

the responsibility to consider and discuss our major financial risk exposures and the steps our management has to take to monitor and

control such exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken.

The audit committee also monitors compliance with legal and regulatory requirements.

Our compensation committee also assesses and monitors

whether our compensation plans, policies and programs comply with applicable legal and regulatory requirements.

Board Committees

As required under the Nasdaq

listing standards, a majority of the members of a listed company’s Board of Directors must qualify as “independent,”

as affirmatively determined by the Board of Directors.

Our Board of Directors consults with our legal counsel to ensure that its determinations

are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including

those set forth in Nasdaq listing standards, as in effect from time to time.

Consistent with these considerations, after review of all

relevant identified transactions or relationships between each of our directors, or any of his or her family members, and the Company,

its senior management and its independent auditors, our Board of Directors affirmatively determined that all of our directors, except

Cullem and T.

Jensen who are not considered independent because they are our executive officers, are independent directors

as defined by Rule 5605(a)(2) of the Nasdaq Listing Rules.

2023 Change in Board of Directors

January 19, 2023, Mr.

Moore and Ms.

Maderis resigned as directors, including their positions on each committee on which they serve and,

effective February 4, 2023, Mr.

Soren Gade Jensen also resigned all of his board positions.

The resignations by Messrs.

Moore and Jensen,

Maderis are for personal reasons and not due to any disagreement with the Company’s management team or the Company’s

Board on any matter relating to the operations, policies or practices of the Company or any issues regarding the Company’s accounting

policies or practices.

As a result of the resignations by Mr.

Moore and Ms.

Maderis, on January 19, 2023, the Board of the Company decreased

the fixed number of authorized directors on the Board from seven to five.

In addition, Mr.

McLaughlin was appointed as chairperson of

the Board and as a member of the Nominating Committee.

Roth, was appointed as a member of the Compensation Committee and a member

of the Nominating Committee.

Board of Directors Committees

Our Board of Directors has

established an audit committee, compensation committee, and nominating and corporate governance committee.

The board of directors has

also adopted new charters for each of these committees, which comply with the applicable requirements of current SEC and Nasdaq rules.

established an Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee comprised of the members identified

The Board of Directors has also adopted charters for each of these committees, which comply with the applicable requirements of

current SEC and Nasdaq rules.

Copies of the charters for each committee are available at www.allarity.com .

Our Board of Directors

has determined that all committee members are independent under applicable Nasdaq and SEC rules for committee memberships.

Board of Directors Oversight of Risk

One of the key functions of

our Board of Directors is informed oversight of our risk management process.

Our Board of Directors does not have a standing risk management

committee, but rather administers this oversight function directly through the Board of Directors as a whole, as well as through various

standing committees of our Board of Directors that address risks inherent in their respective areas of oversight.

In particular, our Board

of Directors is responsible for monitoring and assessing strategic risk exposure, and our Audit Committee has the responsibility to consider

and discuss our major financial risk exposures and the steps our management has taken to monitor and control these exposures, including

guidelines and policies to govern the process by which risk assessment and management is undertaken.

The Audit Committee also monitors

compliance with legal and regulatory requirements and reviews our information technology and data security policies and practices and

assesses cybersecurity related risks.

The Nominating and Corporate Governance Committee monitors the effectiveness of our corporate governance

practices, including oversight of processes and procedures designed to prevent illegal or improper conduct.

The Compensation Committee

assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.

Audit Committee

The Audit Committee consists

Jensen and Mr.

Moore, each of whom the board of directors has determined satisfies the independence requirements

McLaughlin whom the Board of Directors has determined satisfies the independence requirements

under Nasdaq listing standards and Rule 10A-3(b)(1) of the Exchange Act.

The chair of the audit committee is Mr.

Moore, who the board

of directors has determined is an “audit committee financial expert” within the meaning of SEC regulations.

Each member of

the audit committee can read and understand fundamental financial statements in accordance with applicable requirements.

In arriving at

these determinations, the board of directors has examined each audit committee member’s scope of experience and the nature of their

employment in the corporate finance sector.

The chair of the Audit Committee is Dr.

who the Board of Directors has determined is an “Audit Committee financial expert” within the meaning of SEC regulations.

Each member of the Audit Committee can read and understand fundamental financial statements in accordance with applicable requirements.

In arriving at these determinations, the Board of Directors has examined each Audit Committee member’s scope of experience and the

nature of their employment in the corporate finance sector.

The primary purpose of the

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of the Audit Committee are to:

● Appoint, compensate, and oversee the work of any independent

● Resolve any disagreements between management and the independent

auditor regarding financial reporting;

● Pre-approve all audit and permitted non-audit services by

the independent auditor;

● Retain independent counsel, independent registered accounting

firm, or other advisors or consultants to advise and assist the Audit Committee in carrying out its duties, without needing to seek approval

for the retention of such advisors or consultants from the Board, and determine the appropriate compensation for any such advisors or

consultants retained by the Audit Committee;

● Seek any information it requires from our employees or any

direct or indirect subsidiary of ours (each, a “Subsidiary”), all of whom are directed to cooperate with the Audit Committee’s

requests, or external parties;

● Meet with any of our officers or employees (or officers or

employees of any Subsidiary), our independent auditor or outside counsel, as necessary, or request that any such persons meet with any

members of, or advisors or consultants to, the Audit Committee;

● Oversee that management has established and maintained processes

to assure our compliance with applicable laws, regulations and corporate policy.

Appoint, compensate, and oversee the work of any independent auditor;

Resolve any disagreements between management and the independent auditor regarding financial reporting;

Pre-approve all audit and permitted non-audit services by the independent auditor;

Retain independent counsel, independent registered accounting firm, or other advisors or consultants to advise and assist the Audit Committee in carrying out its duties, without needing to seek approval for the retention of such advisors or consultants from the Board of Directors, and determine the appropriate compensation for any such advisors or consultants retained by the Audit Committee;

Seek any information it requires from our employees or any direct or indirect subsidiary of ours (each, a “Subsidiary”), all of whom are directed to cooperate with the Audit Committee’s requests, or external parties;

Meet with any of our officers or employees (or officers or employees of any Subsidiary), our independent auditor or outside counsel, as necessary, or request that any such persons meet with any members of, or advisors or consultants to, the Audit Committee;

Oversee that management has established and maintained processes to assure our compliance with applicable laws, regulations and corporate policy.

Compensation Committee

The Compensation Committee

consists of Ms.

Jensen and Mr.

The chair of the compensation committee is Ms.

The board of directors

has determined that each member of the compensation committee is independent under the Nasdaq listing standards and a “non-employee

director” as defined in Rule 16b-3 promulgated under the Exchange Act.

consists of Dr.

The chair of the Compensation Committee is Mr.

The Board of Directors has determined

that each member of the Compensation Committee is independent under the Nasdaq listing standards and a “non-employee director”

as defined in Rule 16b-3 promulgated under the Exchange Act.

The primary purpose of the

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Committee are to:

● Establish a compensation policy for executive officers designed

to (i) enhance our profitability and increase stockholder value, (ii) reward executive officers for their contribution to our

growth and profitability, (iii) recognize individual initiative, leadership, achievement, and other contributions and (iv) provide

competitive compensation that will attract and retain qualified executives.

● Subject to variation where appropriate, the compensation policy

for executive officers shall include (i) base salary, which shall be set on an annual or other periodic basis, (ii) annual

or other time or project based incentive compensation, which shall be awarded for the achievement of predetermined financial, project,

research or other designated objectives applicable to us as a whole and of the executive officers individually and (iii) long-term

incentive compensation in the forms of equity participation and other awards with the goal of aligning, where appropriate, the long-term

interests of executive officers with those of our stockholders and otherwise encouraging the achievement of superior results over an

extended time period.

● Review competitive practices and trends to determine the adequacy

of the executive compensation program.

● Annually review and recommend to the board of directors corporate

goals and objectives relevant to CEO compensation, evaluate the CEO’s performance in light of those goals and objectives, and recommend

to the board of directors the CEO’s compensation levels based on this evaluation;

the CEO may not be present during any deliberations

or voting with respect to the CEO’s compensation.

● Annually review and approve compensation of our executive

officers other than the CEO.

● Annually review and approve compensation of our directors,

including with respect to any equity-based plan.

● As deemed necessary or appropriate, approve employment contracts,

severance arrangements, change in control provisions and other agreements.

● Approve and administer cash incentives and deferred compensation

plans for executive officers (including any modification to such plans) and oversight of performance objectives and funding for executive

incentive plans.

● Approve and oversee reimbursement policies for directors and

executive officers.

● Periodically review and make recommendations to the board

of directors with respect to equity-based plans that are subject to approval by the board of directors.

The compensation committee shall

oversee our compliance with the requirement under Nasdaq rules that, with limited exceptions, stockholders approve equity compensation

Subject to such stockholder approval, or as otherwise required by the Exchange Act, or other applicable law, the compensation

committee shall have the power to manage all equity-based plans.

● If we are required by applicable Securities and Exchange Commission

(“SEC”) rules to include a Compensation Discussion and Analysis (“CD&A”) in its SEC filings in the future,

review the CD&A prepared by management, discuss the CD&A with management and, based on such review and discussions, recommend

to the board of directors that the CD&A be included in our Annual Report on Form 10-K, proxy statement, or any other applicable

filing as required by the SEC.

● Review all compensation policies and practices for all employees

to determine whether such policies and practices create risks that are reasonably likely to have a material adverse effect on our business

or financial condition.

● Recommend to the board of directors that our stockholders

approve, on an advisory basis, the compensation of our named executive officers, as disclosed in our proxy statement, if such proposal

will be contained in the proxy statement.

● Recommend to the board of directors the frequency of holding

a vote on the compensation of our named executive officers, if such proposal will be contained in our proxy statement.

● Periodically review executive supplementary benefits and,

as appropriate, the organization’s retirement, benefit, and special compensation programs involving significant cost.

Establish a compensation policy for executive officers designed to (i) enhance our profitability and increase stockholder value, (ii) reward executive officers for their contribution to our growth and profitability, (iii) recognize individual initiative, leadership, achievement, and other contributions and (iv) provide competitive compensation that will attract and retain qualified executives.

Subject to variation where appropriate, the compensation policy for executive officers shall include (i) base salary, which shall be set on an annual or other periodic basis, (ii) annual or other time or project based incentive compensation, which shall be awarded for the achievement of predetermined financial, project, research or other designated objectives applicable to us as a whole and of the executive officers individually and (iii) long-term incentive compensation in the forms of equity participation and other awards with the goal of aligning, where appropriate, the long-term interests of executive officers with those of our stockholders and otherwise encouraging the achievement of superior results over an extended time period.

Review competitive practices and trends to determine the adequacy of the executive compensation program.

Annually review and recommend to the Board of Directors corporate goals and objectives relevant to CEO compensation, evaluate the CEO’s performance in light of those goals and objectives, and recommend to the Board of Directors the CEO’s compensation levels based on this evaluation;

the CEO may not be present during any deliberations or voting with respect to the CEO’s compensation.

Annually review and approve compensation of our executive officers other than the CEO.

Annually review and approve compensation of our directors, including with respect to any equity-based plan.

As deemed necessary or appropriate, approve employment contracts, severance arrangements, change in control provisions and other agreements.

Approve and administer cash incentives and deferred compensation plans for executive officers (including any modification to such plans) and oversight of performance objectives and funding for executive incentive plans.

Approve and oversee reimbursement policies for directors and executive officers.

Periodically review and make recommendations to the Board of Directors with respect to equity-based plans that are subject to approval by the Board of Directors.

The Compensation Committee shall oversee our compliance with the requirement under Nasdaq rules that, with limited exceptions, stockholders approve equity compensation plans.

Subject to such stockholder approval, or as otherwise required by the Exchange Act, or other applicable law, the Compensation Committee shall have the power to manage all equity-based plans.

If we are required by applicable Securities and Exchange Commission (“SEC”) rules to include a Compensation Discussion and Analysis (“CD&A”) in our SEC filings in the future, review the CD&A prepared by management, discuss the CD&A with management and, based on such review and discussions, recommend to the Board of Directors that the CD&A be included in our Annual Report on Form 10-K, proxy statement, or any other applicable filing as required by the SEC.

Review all compensation policies and practices for all employees to determine whether such policies and practices create risks that are reasonably likely to have a material adverse effect on our business or financial condition.

Recommend to the Board of Directors that our stockholders approve, on an advisory basis, the compensation of our named executive officers, as disclosed in our proxy statement, if such proposal will be contained in the proxy statement.

Recommend to the Board of Directors the frequency of holding a vote on the compensation of our named executive officers, if such proposal will be contained in our proxy statement.

Periodically review executive supplementary benefits and, as appropriate, our retirement, benefit, and special compensation programs involving significant cost.

Make regular reports to the Board of Directors.

● Annually review and reassess the adequacy of the compensation

committee Charter and recommend any proposed changes to the board of directors for approval.

Annually review and reassess the adequacy of the Compensation Committee Charter and recommend any proposed changes to the Board of Directors for approval.

Annually evaluate its own performance.

● Oversee the annual process of performance evaluations of our

● Fulfill such other duties and responsibilities as may be assigned

to the compensation committee, from time to time, by the board of directors and/or the Chairman of the board of directors.

Oversee the annual process of performance evaluations of our management.

Fulfill such other duties and responsibilities as may be assigned to the Compensation Committee, from time to time, by the Board of Directors and/or the Chairman of the Board of Directors.

Nominating and Corporate Governance Committee

The Nominating and Corporate

governance committee consists of Ms.

Jensen and Mr.

The chair of the nominating and corporate governance committee

The board of directors has determined that each member of the nominating and corporate governance committee is independent

under the Nasdaq listing standards.

Governance Committee consists of Dr.

The chair of the Nominating and Corporate Governance Committee is Mr.

The Board of Directors has determined that each member of the Nominating and Corporate Governance Committee is independent under the Nasdaq

listing standards.

The primary purpose of the

Nominating and Corporate Governance Committee is (1) to assist the Board of Directors by identifying qualified candidates for director,

and to recommend to the board of directors the director nominees for the next annual meeting of shareholders;

(2) to lead the board

of directors in its annual review of the board of directors’ performance;

(3) to recommend to the board of directors director

nominees for each board of directors committee;

and (4) develop and recommend to the board of directors our corporate governance

and to recommend to the Board of Directors the director nominees for the next annual meeting of stockholders;

(2) to lead the Board of

Directors in its annual review of the Board of Directors’ performance;

(3) to recommend to the Board of Directors director nominees

for each Board of Directors committee;

and (4) to develop and recommend to the Board of Directors our corporate governance guidelines.

Specific responsibilities of the Nominating and Corporate Governance Committee are to:

● Evaluate the current composition, organization, and governance

of the board of directors and its committees and make recommendations to the board of directors for approval.

● Annually review for each director and nominee, the experience,

qualifications, attributes, or skills that contribute to the board of directors’ conclusion that the person should serve or continue

to serve as one of our directors, as well as how the directors’ skills and background enable them to function well together as

a board of directors.

● Determine desired member skills and attributes and conduct

searches for prospective directors whose skills and attributes reflect those desired.

Evaluate and propose nominees for election to the

board of directors.

At a minimum, nominees for service on the board of directors must meet the threshold requirements set forth in the

Nominating and Corporate Governance Committee Policy Regarding Qualifications of Directors .

Each nominee will be considered both

on his or her individual merits and in relation to existing or other potential members of the board of directors, with a view to establishing

a well-rounded, diverse, knowledgeable, and experienced board of directors.

● Administer the annual board of directors’ performance

evaluation process, including conducting surveys of director observations, suggestions, and preferences.

● Evaluate and make recommendations to the board of directors

concerning the appointment of directors to board of directors’ committees, the selection of board of directors committee chairs,

and proposal of the slate of directors for election to the board of directors.

● Consider bona fide candidates recommended by shareholders

for nomination for election to the board of directors in accordance with Section 2.12 of our Bylaws.

● As necessary in the nominating and corporate governance committee’s

judgment from time to time, retain and compensate third-party search firms to assist in identifying or evaluating potential nominees

to the board of directors.

● Evaluate and recommend termination of membership of individual

directors in accordance with the board of directors’ governance principles, for cause or for other appropriate reasons.

● Oversee the process of succession planning for the Chief Executive

Officer and as warranted, other senior officers.

● Develop, adopt and oversee the implementation of a Code of

Business Conduct and Ethics for all directors, executive officers and employees.

● Review and maintain oversight of matters relating to the independence

of board of directors and committee members, keeping in mind the independence standards of the Sarbanes-Oxley Act of 2002 and applicable

Nasdaq rules.

● Oversee and assess the effectiveness of the relationship between

the board of directors and our management.

● Form and delegate authority to subcommittees when appropriate,

each subcommittee to consist of one or more members of the nominating and corporate governance committee.

Any such subcommittee, to the

extent provided in the resolutions of the nominating and corporate governance committee and to the extent not limited by applicable law,

shall have and may exercise all the powers and authority of the nominating and corporate governance committee.

● Make regular reports to the board of directors concerning

its activities.

● Annually review and reassess the adequacy of the nominating

and corporate governance charter and the appendices thereto and recommend any proposed changes to the board of directors for approval.

Evaluate the current composition, organization, and governance of the Board of Directors and its committees and make recommendations to the Board of Directors for approval.

Annually review for each director and nominee, the experience, qualifications, attributes, or skills that contribute to the Board of Directors’ conclusion that the person should serve or continue to serve as one of our directors, as well as how the directors’ skills and background enable them to function well together as a Board of Directors.

Determine desired member skills and attributes and conduct searches for prospective directors whose skills and attributes reflect those desired.

Evaluate and propose nominees for election to the Board of Directors.

At a minimum, nominees for service on the Board of Directors must meet the threshold requirements set forth in the Nominating and Corporate Governance Committee Policy Regarding Qualifications of Directors .

Each nominee will be considered both on his or her individual merits and in relation to existing or other potential members of the Board of Directors, with a view to establishing a well-rounded, diverse, knowledgeable, and experienced Board of Directors.

Administer the annual Board of Directors’ performance evaluation process, including conducting surveys of director observations, suggestions, and preferences.

Evaluate and make recommendations to the Board of Directors concerning the appointment of directors to Board of Directors’ committees, the selection of Board of Directors committee chairs, and proposal of the slate of directors for election to the Board of Directors.

Consider bona fide candidates recommended by stockholders for nomination for election to the Board of Directors in accordance with Section 2.12 of our Bylaws.

As necessary in the Nominating and Corporate Governance Committee’s judgment from time to time, retain and compensate third-party search firms to assist in identifying or evaluating potential nominees to the Board of Directors.

Evaluate and recommend termination of membership of individual directors in accordance with the Board of Directors’ governance principles, for cause or for other appropriate reasons.

Oversee the process of succession planning for the Chief Executive Officer and as warranted, other senior officers.

Develop, adopt and oversee the implementation of a Code of Business Conduct and Ethics for all directors, executive officers and employees.

Review and maintain oversight of matters relating to the independence of the Board of Directors and committee members, keeping in mind the independence standards of the Sarbanes-Oxley Act of 2002 and applicable Nasdaq rules.

Oversee and assess the effectiveness of the relationship between the Board of Directors and our management.

Form and delegate authority to subcommittees when appropriate, each subcommittee to consist of one or more members of the Nominating and Corporate Governance Committee.

Any such subcommittee, to the extent provided in the resolutions of the Nominating and Corporate Governance Committee and to the extent not limited by applicable law, shall have and may exercise all the powers and authority of the nominating and corporate governance committee.

Make regular reports to the Board of Directors concerning its activities.

Annually review and reassess the adequacy of the Nominating and Corporate Governance charter and the appendices thereto and recommend any proposed changes to the Board of Directors for approval.

Annually evaluate its own performance.

● Maintain appropriate records regarding its process of identifying

and evaluating candidates for election to the board of directors.

● Fulfill such other duties and responsibilities as may be assigned

to the nominating and corporate governance committee, from time to time, by the board of directors and/or the Chairman of the board of

None of the members of the

compensation committee has been an executive officer or employee.

None of our executive officers currently serves, or has served during

the last completed fiscal year, on the compensation committee or board of directors of any other entity that has one or more executive

officers that serves or will serve as a member of our board of directors or compensation committee.

Maintain appropriate records regarding its process of identifying and evaluating candidates for election to the Board of Directors.

Fulfill such other duties and responsibilities as may be assigned to the Nominating and Corporate Governance Committee, from time to time, by the Board of Directors and/or the Chairman of the Board of Directors.

Director Qualifications

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our Board of Directors and, if appropriate, recommends changes to such criteria.

Board Diversity

Board of Directors Diversity

Our Board of Directors desires

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Our Board of Directors does not have a formal policy with respect to diversity and inclusion but is in

process of establishing a policy on diversity.

the process of establishing a policy on diversity.

Diversity of experience, expertise and viewpoints is one of many factors the Nominating

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backgrounds, based upon the contributions they can make to our company.

We believe that our current

board composition reflects our commitment to diversity in the areas of gender and professional background.

Board Diversity Matrix (as of March 28, 2022)

Total Number of Directors

Gender Identity

Demographic Background

We believe that our current board composition reflects our commitment

to diversity in the areas of gender and professional background.

Code of Conduct and Ethics

Our Board of Directors has

adopted a Code of Business Conduct and Ethics, or the Code of Conduct, applicable to all of our employees, executive officers and directors.

We will provide any person, without charge, a copy of our Code of Conduct upon written request to Investor Relations, Allarity Therapeutics,

Inc., 24 School Street, 2 nd Floor, Boston, Massachusetts 02108.

The Code of Conduct is available at the Investors section of

our website at www.allarity.com .

Information contained on or accessible through this website is not a part of this report, and

the inclusion of such website address in this report is an inactive textual reference only.

Any amendments to the Code of Conduct, or

any waivers of its requirements, are expected to be disclosed on its website to the extent required by applicable SEC and Nasdaq rules

and requirements.

Limitation on Liability and Indemnification

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will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except for liability:

● for any breach of the director’s duty of loyalty to

the corporation or its stockholders;

● for acts or omissions not in good faith or which involve intentional

misconduct or a knowing violation of law;

● for unlawful payment of dividend or unlawful stock purchase

or redemption pursuant to the provisions of Section 174 of the DGCL;

● for any transaction from which the director derived an improper

personal benefit.

If the DGCL is amended to authorize

corporate action further eliminating or limiting the personal liability of directors, then the liability of the directors will be eliminated

or limited to the fullest extent permitted by the DGCL, as so amended.

for any breach of the director’s duty of loyalty to the corporation or its stockholders;

for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;

for unlawful payment of dividend or unlawful stock purchase or redemption pursuant to the provisions of Section 174 of the DGCL;

for any transaction from which the director derived an improper personal benefit.

If the DGCL is amended to

authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of the directors will

be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.

Delaware law and our bylaws

provide that we will, in certain situations, indemnify its directors and officers and may indemnify other employees and other agents,

provide that we will, in certain situations, indemnify our directors and officers and may indemnify other employees and other agents,

to the fullest extent permitted by law.

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of the proceeding.

In addition, we intend to enter

into separate indemnification agreements with our directors and officers.

In addition, we intend to

enter into separate indemnification agreements with our directors and officers.

These agreements, among other things, require us to indemnify

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or enterprise to which the person provides services at our request.

We have obtained a directors’

and officers’ insurance policy pursuant to which our directors and officers are insured against liability for actions taken in their

capacities as directors and officers.

We believe these provisions in the Certificate of Incorporation and Bylaws and these indemnification

agreements are necessary to attract and retain qualified persons as directors and officers.

We anticipate maintaining

a directors’ and officers’ insurance policy pursuant to which our directors and officers are insured against liability for

actions taken in their capacities as directors and officers.

We believe these provisions in the Certificate of Incorporation and bylaws

and these indemnification agreements are necessary to attract and retain qualified persons as directors and officers.

Insofar as indemnification

1 unchanged sentence

such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Code of Business Conduct and Ethics for Employees,

Executive Officers, and Directors

Our board of directors has

adopted a Code of Business Conduct and Ethics, or the Code of Conduct, applicable to all of our employees, executive officers and directors.

The Code of Conduct is available at the Investors section of our website at www.allarity.com .

Information contained on or accessible

through this website is not a part of this Annual Report, and the inclusion of such website address in this Annual Report is an inactive

textual reference only.

Any amendments to the Code of Conduct, or any waivers of its requirements, are expected to be disclosed on its

website to the extent required by applicable rules and exchange requirements.

Delinquent Section 16(a) Reports

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EXECUTIVE COMPENSATION

Executive Compensation and Director Compensation

Emerging Growth Company Status

We are an “emerging

growth company,” as defined in the JOBS Act.

As an emerging growth company we will be exempt from certain requirements related to

executive compensation, including the requirements to hold a nonbinding advisory vote on executive compensation and to provide information

relating to the ratio of total compensation of our President and Chief Executive Officer to the median of the annual total compensation

of all of its employees, each as required by the Investor Protection and Securities Reform Act of 2010, which is part of the Dodd-Frank

The Compensation Committee

of our Board of Directors assists in discharging our Board of Directors’ responsibilities regarding the compensation of our executive

officers and of our Board of Directors members.

The Compensation Committee is currently comprised of the following two non-employee members

of our Board of Directors:

2022 Named Executive Officer Compensation

The table below shows the

compensation awarded to or paid to or earned by our named executive officers for the years ended December 31, 2022 and 2021.

and Knudsen resigned as officers of the Company in June 2022.

Upon their departure, Mr.

Cullem, our Chief Business Officer, was appointed

to also serve as our Chief Executive Officer and Ms.

Brown, our Director of Financial Reporting, was appointed to also serve as Chief

Financial Officer.

Summary Compensation Table

The following table provides information regarding total compensation

awarded to, earned by, and paid to our named executive officers for services rendered to the Company in all capacities for the fiscal

years ended December 31, 2021 and 2020.

The following table provides

information regarding total compensation awarded to, earned by, and paid to our named executive officers for services rendered to the

Company in all capacities for the fiscal years ended December 31, 2022 and 2021.

Name and Principal Position

Option Awards (2)

All Other Compensation ($)

Chief Executive Officer

Chief Financial Officer

Chief Executive Office (3)

$ 251,049 (5)

$ 253,125 (6)

former Chief Financial Officer (3)

$ 139,620 (7)

Chief Medical Officer

Senior Chief Business Officer

Chief Executive Officer, Chief Business Officer (8)

$ 62,000 (10)

Chief Financial Officer, Director of Financial Reporting (9)

All compensation amounts are in full numbers and not presented in $1,000’s.

The bonuses reported in this column for 2021 consist of cash payments

(2) The amounts reported in this column represent the aggregate grant date fair value of service-based option

grants awarded to the named executive officer during 2021 and 2020, calculated based on a Black Scholes model.

Such grant date fair values

do not consider any estimated forfeitures related to service-vesting conditions.

This calculation assumes that the named executive officer

will perform the requisite service for the award to vest in full as required by SEC rules.

The assumptions used in calculating the grant

date fair values of the equity awards reported in this column are set forth in Note 18 of the Audited Consolidated Financial Statements

for the twelve months ended December 31, 2021, appearing elsewhere in this Annual Report.

The amounts reported in this column reflect

the accounting cost for these equity awards and do not correspond to the actual economic value that may be realized by named executive

officers upon the vesting of the stock options, the exercise of the stock options or the sale of the securities underlying such stock

and were earned in 2021 and paid in 2022.

The amounts reported in this column represent the aggregate grant date fair value of service-based option grants awarded to the named executive officer during 2022 and 2021, calculated based on a Black Scholes model.

Such grant date fair values do not consider any estimated forfeitures related to service-vesting conditions.

This calculation assumes that the named executive officer will perform the requisite service for the award to vest in full as required by SEC rules.

The assumptions used in calculating the grant date fair values of the equity awards reported in this column are set forth in Note 18 of the Audited Consolidated Financial Statements for the twelve months ended December 31, 2021, appearing in our Form 10-K.

The amounts reported in this column reflect the accounting cost for these equity awards and do not correspond to the actual economic value that may be realized by named executive officers upon the vesting of the stock options, the exercise of the stock options or the sale of the securities underlying such stock options .

Resigned in June 2022.

Consists of life insurance premiums.

Consists of consulting fees, and severance payment of $233,549.

Knudsen was appointed as Chief Financial Officer in November 2020.

Total compensation reflects

pro-rata compensation since appointment in November 2020.

(5) The bonuses reported in this column were earned in 2021 and paid in 2022.

Total compensation reflects pro-rata compensation since appointment in November 2020.

Consists of severance payment of $139,620.

Appointed as Chief Executive Officer in June 2022.

Appointed as Interim Chief Financial Officer in June 2022.

Consists of consulting fees.

Outstanding Equity Awards as of December 31,

The following table sets forth

information regarding outstanding equity awards held by our named executive officers as of December 31, 2021, which reflects the conversion

of the “Compensatory Warrants” assumed by us upon consummation of our Recapitalization Share Exchange.

(#) Exercisable

information regarding outstanding equity awards held by our named executive officers as of December 31, 2022.

Unexercisable

Incentive Plan

Option Exercise

Option Expiration

Chief Executive Officer

Chief Financial Officer

Chief Executive Officer, Chief Business Officer

Chief Financial Officer, Director of Financial Reporting

Chief Medical Officer

Senior Vice President, Corporate Development

(1) This option was 100% vested as of December 31, 2021.

(2) This option vests as to 25% on November 24, 2021, the grant

date, and the remaining 75% vests over 36 months.

(3) This option vests over 36 months from the grant date of November

This option vests as to 25% on November 24, 2021, the grant date, and the remaining 75% vests over 36 months.

This option vests 25% on grant, 25% 12 months from grant, 25% 18 months from grant and 25% 24 months from grant & balance on listing on the Nasdaq Stock Market.

The Company listed on Nasdaq Stock Market on December 2021 resulting in the options becoming fully vested.

Pension Benefits

The Company maintains a 401(k)

Plan (the “401(k) Plan”) for its full-time employees in the U.S.

The 401(k) Plan allows employees of the Company to contribute

up to the Internal Revenue Code prescribed maximum amount.

Employees may elect to contribute from 1 to 100 percent of their annual

compensation to the 401(k) Plan.

Plan for its full-time employees in the U.S.

The 401(k) Plan allows employees of the Company to contribute up to the Internal Revenue

Code prescribed maximum amount.

Employees may elect to contribute from 1 to 100 percent of their annual compensation to the 401(k) Plan.

The 401(k) Plan includes a 3% safe harbor contribution.

Both employee and employer contributions vest

immediately upon contribution.

During fiscal year ended December 31, 2021, the Company’s contributions to the 401(k) Plan amounted

to approximately $33,644.

Both employee and employer contributions vest immediately upon contribution.

fiscal year ended December 31, 2022, the Company did not make a contributions to the 401(k) Plan.

Nonqualified Deferred Compensation

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Employment Agreements and Arrangements

We have entered into an employment

or consultancy agreement with each of the following named executive officers, Messrs.

Knudsen and Cullem, and Ms.

The employment or consultancy agreement with each of the following individuals provides for the initial annual base salary and bonus set

of the year ended December 31, 2022, we had an employment or consultancy agreement with each of the following named executive officers,

Foegh and Ms.

The employment or consultancy agreement with each of the following individuals provides for the initial

annual base salary as of December 31, 2022, current base salary and bonus set forth below.

With the departure of Mr.

Carchedi, the Board

of Directors appointed James G.

Cullem, the Company’s Chief Business Officer, to also serve as the interim Chief Executive Officer

of the Company, effective as of June 29, 2022, and a director of the Company.

In connection with Mr.

Cullem’s new position as interim

Chief Executive Officer, the Company increased his base salary from $270,250 to $350,000.

In addition, with the departure of Mr.

the Board of Directors appointed Joan Brown, the Company’s Director of Financial Reporting, to also serve as the interim Chief Financial

Officer of the Company effective as of June 29, 2022.

In connection with Ms.

Brown’s additional

position, the Company increased her salary from $160,000 to $200,000.

Named Executive Officers and Position

Initial Annual

Carchedi, Chief Executive Officer

Knudsen, Chief Financial Officer

Cullem, Chief Executive Officer, Chief Business Officer (1)

$ 425,000 (3)

Joan Brown, Chief Financial Officer (2) Director of Financial Reporting

$ 250,000 (3)

Marie Foegh, Chief Medical Officer

Cullem, Senior Vice-President/Chief Business Officer

All compensation amounts are in full numbers and not presented in $1,000’s.

Appointed Chief Executive Officer in June 2022.

Appointed Chief Financial Officer in June 2022.

Proposed Annual Base Salary under employment agreements entered into in January 2023 (see below section titled “2023 Compensation Decisions”

Named Executive Officer

Discretionary Annual Bonus for 2022

Calendar Year 2021 (1)

Carchedi, Chief Executive Officer

Marie Foegh, Chief Medical Officer

up to 40% of annual base salary

Knudsen, Chief Financial Officer

Cullem, Chief Executive Officer, Chief Business Officer

up to 40% of annual base salary

Marie Foegh, Chief Medical Officer

Joan Brown, Chief Financial Officer, Director of Financial Reporting

up to 20% of annual base salary

Cullem, Senior Vice-President/Chief Business Officer

Up to 40% annual base salary

(1) +/- 20% at the discretion of the board and/or compensation committee

The annual bonus payable will

be dependent on the achievement of individual and corporate performance targets, metrics and/or management-by-objectives to be determined

and approved by our board of directors and/or compensation committee, and such executive officer’s continued performance of services

through the scheduled annual incentive compensation payment date of the applicable bonus year.

The annual bonus may be paid in cash or

equity at the discretion of the board and/or compensation committee.

Material Terms of Employment Agreements

Unless otherwise indicated,

the following material terms of employment agreements apply to all of the named executive officers.

The employment agreements with each

of the named executive officers provide for at-will employment and may be terminated in writing with thirty (30) days prior written notice.

The Chief Executive Officer may accelerate termination after notice;

however, the employee will still be paid as if they worked the full

In the event of change of control (as defined below in the 2021 Equity Incentive Plan, or any other change in control of us similar

in effect to that definition) the employment agreement provides for twelve (12) months’ pay at the base salary.

If the employment

agreement is terminated voluntarily by an employee without good reason, by us for cause, or because of the employee’s incapacity,

salary and benefits will cease at the effective date of termination.

The named executive will have no duty to attempt to mitigate the

severance pay amounts payable by us by seeking employment or otherwise, and no amounts earned from other employment shall reduce the amounts

In the event the employment agreement with Mr.

Carchedi is terminated without cause by us or for good reason by Mr.

Carchedi, the employment

agreement provides for severance payment equal to eighteen (18) months’ pay at the base salary rate.

During the fiscal year ended

December 31, 2022, the Company had an employment agreement with the named executive officers.

Unless otherwise indicated, the following

material terms of employment agreements applied to all of the named executive officers.

The employment agreements with each of the named

executive officers provide for at-will employment and may be terminated in writing with 30 days prior written notice.

The Chief Executive

Officer may accelerate termination after notice;

however, the employee will still be paid as if they worked the full 30 days.

of change of control (as defined below in the 2021 Equity Incentive Plan, or any other change in control of us similar in effect to that

definition) the employment agreement provides for 12 months’ pay at the base salary.

If the employment agreement is terminated voluntarily

by an employee without good reason, by us for cause, or because of the employee’s incapacity, salary and benefits will cease at

the effective date of termination.

The named executive will have no duty to attempt to mitigate the severance pay amounts payable by us

by seeking employment or otherwise, and no amounts earned from other employment shall reduce the amounts due.

the event the employment agreement with Mr.

Knudsen is terminated without cause by us or for good reason by Mr.

Knudsen, the employment

agreement provides for severance payment equal to four (4) months’ pay (after December 1, 2022, six (6) months’ pay) at the

base salary rate.

Cullem is terminated without cause by us or for good reason by Mr.

Cullem, the employment

agreement provides for severance payment equal to 8 months’ pay at the base salary rate.

Marie Foegh .

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Foegh, the employment agreement

provides for severance payment equal to six (6) months’ pay at the base salary rate.

the event the employment agreement with Mr.

Cullem is terminated without cause by us or for good reason by Mr.

Cullem, the employment

agreement provides for severance payment equal to eight (8) months’ pay at the base salary rate.

provides for severance payment equal to 6 months’ pay at the base salary rate.

Bonus and Annual Bonus Plan

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entitled to bonuses subject to and pursuant to the terms of their respective employment or consultancy agreement.

Stock Options as of December 31, 2021

Prior to the closing of the

Recapitalization Share Exchange, Allarity Therapeutics A/S had 58,749,579 compensatory warrants conferring the right to subscribe for

Allarity Therapeutics A/S ordinary shares.

At the effective time of the Recapitalization Share Exchange, each warrant (option) to purchase

Allarity Therapeutics A/S ordinary shares held by the officers, directors, employees and consultants (each, a “Compensatory Warrant”)

that is outstanding immediately prior to the effective time, whether vested or unvested, was converted into an option (each, a “Converted

Option”) to purchase a number of shares of our common stock equal to the product (rounded down to the nearest whole number) of (a) the

number of ordinary shares of Allarity Therapeutics A/S subject to such Compensatory Warrant immediately prior to the effective time multiplied

by (b) the exchange ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to (i) the exercise price

per share of such Compensatory Warrant immediately prior to the effective time divided by (ii) the exchange ratio and then converted

provided, however, that the exercise price and the number of shares of our common stock purchasable pursuant to the

Converted Options to be determined in a manner consistent with the requirements of Section 409A of the Internal Revenue Code of 1986,

as amended (the “Code”);

provided, further, however, that in the case of any Converted Option to which Section 422 of

the Code applies, the exercise price and the number of shares of common stock purchasable pursuant to such option have been determined

in accordance with the foregoing, subject to such adjustments in a manner consistent with Treasury Regulation Section 1.424-1, such

that the Converted Option does not constitute a modification of such Converted Option for purposes of Section 409A or Section 424

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.

Except as specifically provided above, following the effective time of

our Recapitalization Share Exchange, each Converted Option continues to be governed by the same terms and conditions (including vesting

and exercisability terms) as were applicable to the corresponding former Compensatory Warrant immediately prior to the effective time.

Other Benefits

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Employee Benefit Plans

Equity-based compensation has

been and will continue to be an important foundation in executive compensation packages as we believe it is important to maintain a strong

link between executive incentives and the creation of stockholder value.

We further believe that performance and equity-based compensation

can be an important component of the total executive compensation package for maximizing stockholder value while, at the same time, attracting,

motivating, and retaining high-quality executives.

Formal guidelines for the allocations of cash and equity-based compensation have not

yet been determined, but it is expected that the 2021 Equity Incentive Plan (“2021 Plan”) described below will be an important

element of our compensation arrangements for both executive officers and directors.

Equity-based compensation

has been and will continue to be an important foundation in executive compensation packages as we believe it is important to maintain

a strong link between executive incentives and the creation of stockholder value.

We further believe that performance and equity-based

compensation can be an important component of the total executive compensation package for maximizing stockholder value while, at the

same time, attracting, motivating, and retaining high-quality executives.

Formal guidelines for the allocations of cash and equity-based

compensation have not yet been determined, but it is expected that the 2021 Equity Incentive Plan (“2021 Plan”) described

below will be an important element of our compensation arrangements for both executive officers and directors.

2021 Equity Incentive Plan

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on December 20, 2021.

It was approved by shareholders in connection with the Recapitalization Share Exchange.

It was approved by stockholders in connection with the Recapitalization Share Exchange.

Our 2021 Plan authorizes

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Units (“RSUs”), cash awards, performance awards and stock bonus awards.

We have initially reserved 1,211,374 shares of our

common stock under the 2021 Plan.

The number of shares reserved for issuance under our 2021 Plan will increase 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.

We initially reserved 1,211,374 shares of our common

stock under the 2021 Plan.

The number of shares reserved for issuance under our 2021 Plan will increase 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.

There was no adjustment

to increase on 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.

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.

Except as specifically provided above, following the effective time of

our Recapitalization Share Exchange, each Converted Option continues to be governed by the same terms and conditions (including vesting

and exercisability terms) as were applicable to the corresponding former Compensatory Warrant immediately prior to the effective time.

As of December 31, 2022, there

was an option to purchase 676,949 shares of common stock issued and outstanding.

In addition, the following

shares will again be available for issuance pursuant to awards granted under our 2021 Plan:

● shares subject to options or SARs granted under our 2021 Plan

that cease to be subject to the option or SAR for any reason other than exercise of the option or SAR;

● shares subject to awards granted under our 2021 Plan that

are subsequently forfeited or repurchased by us at the original issue price;

● shares subject to awards granted under our 2021 Plan that

otherwise terminate without such shares being issued;

● shares subject to awards granted under our 2021 Plan that

are surrendered, cancelled or exchanged for cash or a different award (or combination thereof);

● shares subject to awards under our 2021 Plan that are used

to pay the exercise price of an option or withheld to satisfy the tax withholding obligations related to any award.

shares subject to options or SARs granted under our 2021 Plan that cease to be subject to the option or SAR for any reason other than exercise of the option or SAR;

shares subject to awards granted under our 2021 Plan that are subsequently forfeited or repurchased by us at the original issue price;

shares subject to awards granted under our 2021 Plan that otherwise terminate without such shares being issued;

shares subject to awards granted under our 2021 Plan that are surrendered, cancelled or exchanged for cash or a different award (or combination thereof);

shares subject to awards under our 2021 Plan that are used to pay the exercise price of an option or withheld to satisfy the tax withholding obligations related to any award.

of our 2021 Plan is to provide incentives to attract, retain, and motivate eligible persons whose present and potential contributions

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2021 Plan provides for the grant of awards to our employees, directors, consultants, independent contractors and advisors.

The 2021 Plan

provides for the grant of both incentive stock options intended to qualify under Section 422 of the Code, and non-statutory stock

options to purchase shares of our common stock at a stated exercise price.

Incentive stock options may only be granted to employees, including

officers and directors who are also employees.

The exercise price of stock options granted under the 2021 Plan must be at least equal

to the fair market value of our common stock on the date of grant.

Plan provides for the grant of both incentive stock options intended to qualify under Section 422 of the Code, and non-statutory

stock options to purchase shares of our common stock at a stated exercise price.

Incentive stock options may only be granted to employees,

including officers and directors who are also employees.

The exercise price of stock options granted under the 2021 Plan must be at least

equal to the fair market value of our common stock on the date of grant.

Incentive stock options granted to an individual who holds, directly

or by attribution, more than ten percent of the total combined voting power of all classes of our capital stock must have an exercise

price of at least 110% of the fair market value of our common stock on the date of grant.

or by attribution, more than 10% of the total combined voting power of all classes of our capital stock must have an exercise price of

at least 110% of the fair market value of our common stock on the date of grant.

Subject to stock splits, dividends, recapitalizations,

or similar events, no more than 7,009,980 shares may be issued pursuant to the exercise of incentive stock options granted under the 2021

Options may vest based on service

or achievement of performance conditions.

Our compensation committee may provide for options to be exercised only as they vest or to be

immediately exercisable, with any shares issued on exercise being subject to our right of repurchase that lapses as the shares vest.

maximum term of options granted under our 2021 Plan is ten years from the date of grant, except that the maximum permitted term of incentive

stock options granted to an individual who holds, directly or by attribution, more than ten percent of the total combined voting power

of all classes of our capital stock is five years from the date of grant.

Restricted stock awards.

An RSA is an offer by us to sell shares of our common stock subject to restrictions, which may lapse based on the satisfaction of

Options may vest based on

service or achievement of performance conditions.

Our Compensation Committee may provide for options to be exercised only as they vest

or to be immediately exercisable, with any shares issued on exercise being subject to our right of repurchase that lapses as the shares

The maximum term of options granted under our 2021 Plan is 10 years from the date of grant, except that the maximum permitted term

of incentive stock options granted to an individual who holds, directly or by attribution, more than 10% of the total combined voting

power of all classes of our capital stock is five years from the date of grant.

Restricted stock awards.

RSA is an offer by us to sell shares of our common stock subject to restrictions, which may lapse based on the satisfaction of service

or achievement of performance conditions.

The price, if any, of an RSA will be determined by the Compensation Committee.

of RSAs will have the right to vote and any dividends or stock distributions paid pursuant to unvested RSAs will be accrued and paid when

the restrictions on such shares lapse.

Holders of RSAs

will have the right to vote and any dividends or stock distributions paid pursuant to unvested RSAs will be accrued and paid when the

restrictions on such shares lapse.

Unless otherwise determined by the Compensation Committee at the time of award, vesting will cease

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Stock appreciation rights.

A SAR provides for a payment, in cash or shares of our common stock (up to a specified maximum of shares, if determined by our compensation

SAR provides for a payment, in cash or shares of our common stock (up to a specified maximum of shares, if determined by our Compensation

Committee), to the holder based upon the difference between the fair market value of our common stock on the date of exercise and a predetermined

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SARs may vest based on service or achievement of performance conditions and may not have a term that

is longer than ten years from the date of grant.

is longer than 10 years from the date of grant.

Restricted stock units.

RSUs represent the right to receive shares of our common stock at a specified date in the future and may be subject to vesting based

on service or achievement of performance conditions.

Payment of earned RSUs will be made as soon as practicable on a date determined at

the time of grant, and may be settled in cash, shares of our common stock or a combination of both.

No RSU may have a term that is longer

than ten years from the date of grant.

represent the right to receive shares of our common stock at a specified date in the future and may be subject to vesting based on service

or achievement of performance conditions.

Payment of earned RSUs will be made as soon as practicable on a date determined at the time

of grant, and may be settled in cash, shares of our common stock or a combination of both.

No RSU may have a term that is longer than

10 years from the date of grant.

Performance awards.

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or performance conditions.

award is an award that is denominated in, or payable to an eligible participant solely in, cash.

cash award is an award that is denominated in, or payable to an eligible participant solely in, cash.

Dividend equivalents rights.

Dividend equivalent rights may be granted at the discretion of our compensation committee and represent the right to receive the value

of dividends, if any, paid by us in respect of the number of shares of our common stock underlying an award.

Dividend equivalent rights

will be subject to the same vesting or performance conditions as the underlying award and will be paid only at such time as the underlying

award has become fully vested.

Dividend equivalent rights may be settled in cash, shares or other property, or a combination of thereof

as determined by our compensation committee.

equivalent rights may be granted at the discretion of our Compensation Committee and represent the right to receive the value of dividends,

if any, paid by us in respect of the number of shares of our common stock underlying an award.

Dividend equivalent rights will be subject

to the same vesting or performance conditions as the underlying award and will be paid only at such time as the underlying award has become

fully vested.

Dividend equivalent rights may be settled in cash, shares or other property, or a combination thereof as determined by our

Compensation Committee.

Change of control.

2021 Plan provides that, in the event of a corporate transaction, as defined in the 2021 Plan, outstanding awards under our 2021 Plan

shall be subject to the agreement evidencing the corporate transaction, any or all outstanding awards may be (a) continued by us, if we

are the successor entity;

or (b) assumed or substituted by the successor corporation, or a parent or subsidiary of the successor corporation,

for substantially equivalent awards (including, but not limited to, a payment in cash or the right to acquire the same consideration paid

to the stockholders of the company pursuant to the corporate transaction);

shall be subject to the agreement evidencing the corporate transaction, any or all outstanding awards may be (a) continued by us,

if we are the successor entity;

(b) assumed or substituted by the successor corporation, or a parent or subsidiary of the successor

corporation, for substantially equivalent awards (including, but not limited to, a payment in cash or the right to acquire the same consideration

paid to the stockholders of the company pursuant to the corporate transaction);

awards with substantially the same terms for such outstanding awards;

(d) accelerated in full or in part as to the exercisability or vesting;

(e) settled in the full value of such outstanding award in cash, cash equivalents, or securities of the successor entity (or its parent,

if any) with a fair market value equal to the required amount, followed by the cancellation of such awards;

or (f) cancelled for no consideration.

If applicable, the number and kind of shares and exercise prices of awards being continued, assumed, or substituted shall be adjusted

pursuant to the terms of the 2021 Plan.

of a change in the number of outstanding shares of our common stock without consideration by reason of a stock dividend, extraordinary

(d) accelerated in full or in part as to the exercisability

(e) settled in the full value of such outstanding award in cash, cash equivalents, or securities of the successor entity

(or its parent, if any) with a fair market value equal to the required amount, followed by the cancellation of such awards;

or (f) cancelled

for no consideration.

If applicable, the number and kind of shares and exercise prices of awards being continued, assumed, or substituted

shall be adjusted pursuant to the terms of the 2021 Plan.

the event of a change in the number of outstanding shares of our common stock without consideration by reason of a stock dividend, extraordinary

dividend or distribution, recapitalization, stock split, reverse stock split, subdivision, combination, consolidation reclassification,

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buyout of awards.

Our compensation committee may, with the consent of the respective participants, issue new awards in exchange for

the surrender and cancelation of any or all outstanding awards.

Our Compensation Committee may, with the consent of the respective participants, issue new awards in exchange

for the surrender and cancelation of any or all outstanding awards.

Our Compensation Committee may also reduce the exercise price of options

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Director compensation limits.

No non-employee director may receive awards under our 2021 Plan with a grant date value that when combined with cash compensation

received for his or her service as a director, exceeds $750,000 in a calendar year or $1,000,000 in the calendar year of his or her initial

non-employee director may receive awards under our 2021 Plan with a grant date value that when combined with cash compensation received

for his or her service as a director, exceeds $750,000 in a calendar year or $1,000,000 in the calendar year of his or her initial service.

transferability.

All awards will be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by our board

of directors (or a committee thereof) or required by law during the term of service of the award holder, to the extent set forth in such

policy or applicable agreement.

Except in limited circumstances, awards granted under our 2021 Plan may generally not be transferred in

any manner prior to vesting other than by will or by the laws of descent and distribution.

awards will be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by our Board of Directors

(or a committee thereof) or required by law during the term of service of the award holder, to the extent set forth in such policy or

applicable agreement.

Except in limited circumstances, awards granted under our 2021 Plan may generally not be transferred in any manner

prior to vesting other than by will or by the laws of descent and distribution.

Amendment and termination.

Our board of directors may amend our 2021 Plan at any time, subject to stockholder approval as may be required.

Our 2021 Plan will

terminate ten years from the date our board of directors adopts the plan unless it is terminated earlier by our board of directors.

termination or amendment of the 2021 Plan may adversely affect any then-outstanding award without the consent of the affected participant,

except as is necessary to comply with applicable laws.

Board of Directors may amend our 2021 Plan at any time, subject to stockholder approval as may be required.

Our 2021 Plan will terminate

10 years from the date our Board of Directors adopts the plan unless it is terminated earlier by our Board of Directors.

No termination

or amendment of the 2021 Plan may adversely affect any then-outstanding award without the consent of the affected participant, except

as is necessary to comply with applicable laws.

Separation Agreements

as of June 29, 2022, Mr.

Carchedi resigned from all positions in the Company and all positions of its subsidiaries, including his role

of Chief Executive Officer and as a director of the Company.

Pursuant to the terms set forth in a letter agreement dated June 24, 2022

(the “Carchedi Separation Agreement”), the termination of Mr.

Carchedi’s employment and resignation from his positions

are effective June 29, 2022 (the “Carchedi Separation Date”).

Under the Carchedi Separation Agreement, Mr.

Carchedi will be

entitled to his final pay for wages earned through the Separation Date, plus accrued and unused vacation time.

In addition, pursuant to

the Carchedi Separation Agreement, the Company agreed to provide Mr.

Carchedi with certain payments and benefits comprising of:

(i) continued

payments of his base salary for a certain time period and (ii) COBRA coverage for a certain number of months (“Carchedi Severance

In exchange for the Carchedi Severance Benefits, among other things as set forth in the Carchedi Separation Agreement,

Carchedi agreed to a release of claims in favor of the Company and to certain restrictive covenant obligations, and also reaffirmed

his commitment to comply with his existing restrictive covenant obligations.

In addition, as of the Carchedi Separation Date, Mr.

unvested options were terminated.

Carchedi is entitled to exercise his vested options for a period of 90 days from the Carchedi Separation

Thereafter, all vested options will expire.

Carchedi’s resignation as a director was not the result of any dispute or

disagreement with the Company or the Company’s Board of Directors on any matter relating to the operations, policies or practices

of the Company.

as of June 27, 2022, Mr.

Knudsen resigned from all positions in the Company, and all positions of its subsidiaries, including his role

of Chief Financial Officer of the Company.

Pursuant to the terms set forth in a letter agreement dated June 25, 2022 (the “Knudsen

Separation Agreement”), the termination of Mr.

Knudsen’s employment and resignation from his positions are effective June

27, 2022 (the “Knudsen Separation Date”).

Under the Knudsen Separation Agreement, Mr.

Knudsen will be entitled to his final

pay for wages earned through the Separation Date, plus accrued and unused vacation time.

In addition, pursuant to the Knudsen Separation

Agreement, the Company agreed to provide Mr.

Knudsen with certain payments and benefits comprising of:

(i) continued payments of his base

salary for a certain time period, and (ii) COBRA coverage for a certain number of months (“Knudsen Severance Benefits”).

exchange for the Knudsen Severance Benefits, among other things as set forth in the Knudsen Separation Agreement, Mr.

Knudsen agreed to

a release of claims in favor of the Company and to certain restrictive covenant obligations, and also reaffirmed his commitment to comply

with his existing restrictive covenant obligations.

In addition, as of the Knudsen Separation Date, Mr.

Knudsen’s unvested options

were terminated.

Knudsen is entitled to exercise his vested options for a period of 90 days from the Knudsen Separation Date.

all vested options will expire.

Compensation Decisions

January 12, 2023, upon the approval of the Compensation Committee of the Board, the Company entered into a new separate employment agreement

Cullem, our Chief Executive Officer (the “Cullem Employment Agreement”), and Ms.

Brown, our Chief Financial Officer,

the “Brown Employment Agreement” and together with Cullem Employment Agreement, the “New Employment Agreements”)

in connection with the additional executive officer positions that they were appointed to in June 2022.

effectiveness of the New Employment Agreements are contingent upon the Company securing a new capital raise of at least $7 million dollars

by or before February 15, 2023, unless the capital raise requires audited financial statements for the year ending December 31, 2022,

then on or before April 30,2023 (a “New Financing”).

In the event the New Financing does not occur, Mr.

Cullum’s prior

employment contract as Chief Business Officer of the Company and Ms.

Brown’s employment contract as director of financial reporting

of the Company will continue to remain in full force and effect.

In the event the New Financing occurs, subject to the survival of any

terms as reflected in the Employment agreement, the prior employment agreements will be superseded by the New Employment Agreements.

their respective New Employment Agreements, Mr.

Cullem and Ms.

Brown will, among other things, be (i) entitled to participate in all of

the Company’s employee benefit plans and programs as generally maintained and made available to its executive officers by the Company;

(ii) eligible for grants of equity compensation as determined at the sole discretion of the Compensation Committee;

(iii) entitled to

certain severance and change of control benefits contingent upon such employee’s agreement to a general release of claims in favor

of the Company following termination of employment;

and (iv) entitled to reimbursement of expenses in the course and scope of authorized

Company business.

In addition, each respective employment agreement includes customary confidentiality and assignment of intellectual

property obligations.

Cullem Employment

Cullem Employment Agreement provides for an annual base salary of $425,000 (as of January 1, 2023), which, upon agreement by Mr.

and the Board, Mr.

Cullem may elect to receive up to $30,000 of such base salary in restricted stock grants in the Company.

Any such restricted

stock grants will be made quarterly, at the start of each calendar quarter, at the stock fair market value (“FMV”) on the

1st day of each calendar quarter.

In addition, commencing with the calendar year 2023, Mr.

Cullem will be eligible to receive an annual

bonus representing up to 50% of Mr.

Cullem’s base salary based on the achievement of individual and corporate performance targets,

metrics and/or management-by-objectives to be determined and approved by the Company.

The Board has the discretion to pay such annual

bonus in restricted stock grants in lieu of cash, depending on the financial circumstances of the Company, at the FMV on the date of grant

no later than March 1st of the grant year.

addition, subject to and concurrently with the closing of a New Financing, the Company agreed to grant Mr.

Cullem the following stock

options, which will have an exercise price equal to the FMV of the Company’s shares on the grant date and a term of 10 years, and

be subject to the vesting schedule provided below:

Stock options in the amount of 3.5% of the Company’s issued and outstanding shares of common stock immediately after such closing;

provided, however, that such amount will not exceed 50% of the options available to be granted under the Company’s 2021 Equity Incentive Plan (the “Grant Limitation”).

In addition, such grant will be subject to any shareholder approval required by law, regulation or applicable listing rule (the “Requisite Approval”) and will vest ratably over a 48-month period commencing July 1, 2022.

Stock options for an additional 2.0% of the Company’s issued and outstanding shares of common stock immediately after the closing of such New Financing;

provided however, that such grant will not exceed the Grant Limitation and such grant will be subject to any Requisite Approval.

Such option grant will provide for 100% vesting upon the completion of a Phase 2 clinical trial involving the Company’s drug candidates, Stenoparib or Dovitinib, in combination with another drug or therapeutic candidate in ovarian cancer, renal cell carcinoma, or other indication or therapy determined by the Company’s Board.

the event the stock options exceed the Grant Limitation, the Company agreed to seek shareholder approval at its next annual meeting to

increase the number of options available under the Company’s 2021 Equity Incentive Plan in order to have sufficient options to cover

In consideration of the grant of new options described above, upon grant of such options, all prior vested and unvested options

previously granted to Mr.

Cullem (under any prior employment agreement with the Company) will be deemed waived and forfeited by Mr.

and null and void.

In the event new stock options are not granted to Mr.

Cullem under the Cullem Employment Agreement, all options (vested

and unvested) previously granted under prior employment agreements with Company will remain in full force and effect.

Cullem Employment Agreement can be terminated, in writing with 30 days’ prior written notice, by the Company for or without Cause

(as such term is defined in the Cullem Employment Agreement) and Mr.

Cullem can resign with or without Good Reason (as such term is defined

in the Cullem Employment Agreement).

Cullem is terminated without Cause or resigns with Good Reason or is terminated by the Company

as a result of a Change-of-Control (as such term in defined in the Cullem Employment Agreement), the Company agreed to provide Mr.

with severance pay in an amount equal to 12 months’ pay at Mr.

Cullem’s final base salary rate, payable in the form of salary

continuation.

Such severance payments are conditioned upon Mr.

Cullem’s execution and non-revocation of a general release of claims.

Brown Employment Agreement

Brown Employment Agreement provides for an annual base salary of $250,000 (as of January 1, 2023).

In addition, commencing with calendar

year 2023, Mr.

Brown will be eligible to receive an annual bonus representing up to 40% of Mr.

Brown’s base salary based on the

achievement of individual and corporate performance targets, metrics and/or management-by-objectives to be determined and approved by

The Board has the discretion to pay such annual bonus in restricted stock grants in lieu of cash, depending on the financial

circumstances of the Company, at the stock FMV on the date of grant no later than March 1st of the grant year.

addition, concurrently with the closing of a New Financing, the Company agreed to grant Ms.

Brown stock options in the amount of 0.75%

of the Company’s issued and outstanding shares of common stock immediately after the closing, which grant will be subject to any

Requisite Approval and granted pursuant to the 2021 Equity Incentive Plan.

The exercise price will be the FMV of Company’s shares

on the date of grant.

The stock options will vest ratably over a 48-month period commencing July 1, 2022, and have a term of 10 years.

Brown Employment Agreement can be terminated, in writing with 30 days’ prior written notice, by the Company for or without Cause

(as such term is defined in the Brown Employment Agreement) and Ms.

Brown can resign with or without Good Reason (as such term is defined

in the Brown Employment Agreement).

Brown is terminated without Cause or resigns with Good Reason or is terminated by the Company

as a result of Change-of-Control (as defined in the Brown Employment Agreement), the Company agreed to provide Ms.

Brown with severance

pay in an amount equal to five months’ pay at Ms.

Brown’s final base salary rate, payable in the form of salary continuation.

Such severance payments are conditioned upon Ms.

Brown’s execution and non-revocation of a general release of claims.

Non-Employee Director Compensation

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information concerning the compensation of non-employee directors for services rendered for the year ended December 31, 2022.

also served as our director and Mr.

Carchedi’s compensation as named executive officer is set forth above under “Summary Compensation

our former Chief Executive Officer, also previously served as our director before his resignation in June 2022, and Mr.

compensation as named executive officer is set forth above under “Summary Compensation Table.” Mr.

Thomas Jensen, our Senior

Vice President, Investor Relations and director, did not receive any compensation for his services on the Board.

Awards (1)(2)

(1) Amounts reported represent the aggregate grant date fair

value of stock options granted to such non-employee directors and have been computed based on a Black Scholes model and excludes the

effect of estimated forfeitures.

The assumptions used in calculating the grant date fair values of the equity awards reported in this

column are set forth in Note 18 of our Audited Consolidated Financial Statements for the fiscal year ended December 31, 2021, appearing

at the end of this Annual Report.

The amounts reported in this column reflect the accounting cost for these equity awards and do not

correspond to the actual economic value that may be realized by the directors upon the vesting of the stock options, the exercise of

the stock options or the sale of the securities underlying such stock options.

(2) The table below lists the aggregate number of shares subject

to option awards outstanding for each of the non-employee directors as of December 31, 2021.

(3) Directors have an option to receive their fees paid in equity.

Jensen previously asked for his fees for quarters ended March 31, 2021, and June 30, 2021, be paid in common shares.

As the Company

was unable to facilitate this request, in lieu of payment in the form of equity, the Company paid Mr.

Jensen an additional $27,831 which

was the difference between the share price on July 26, 2021, the time of the request and the share price on August 31, 2021, the

time the payment was settled.

Gerald McLaughlin

compensation amounts are in full numbers and not presented in $1,000’s.

reported represent the aggregate grant date fair value of stock options granted to such non-employee directors and have been computed

based on a Black Scholes model and excludes the effect of estimated forfeitures.

The assumptions used in calculating the grant date fair

values of the equity awards reported in this column are set forth below.

The amounts reported in this column reflect the accounting cost

for these equity awards and do not correspond to the actual economic value that may be realized by the directors upon the vesting of

the stock options, the exercise of the stock options or the sale of the securities underlying such stock options.

The fair value of stock options

granted in the period ended December 31, 2022, were estimated using the Black-Scholes option pricing model, based on the following assumptions:

Exercise price

Risk-free interest

Expected dividend yield

Contractual life (years)

Expected volatility

table below lists the aggregate number of shares subject to option awards outstanding for each of the non-employee directors as of December

Gerald McLaughlin

Director Compensation

Our non-employee directors

are entitled to an annual director fee of $35,000, and an annual grant of 12,500 stock options to purchase shares of common stock, which

will vest at the earlier of (1) twelve (12) months, or (2) next annual meeting so long as the director has served on the board of directors

for at least six (6) months.

In addition, a director who serves as a lead independent director or chair or on a committee of the board

of directors will receive the following additional annual fee:

Chairman of the Board or Lead Independent Director

are entitled to an annual director fee of $50,000.

In addition, a director who serves as a lead independent director or chair or on a

committee of the Board of Directors will receive the following additional annual fee:

Chairman of the Board of Directors or Lead Independent Director

Audit Committee

Compensation Committee

Nominating and Corporate Governance Chair

Nominating and Corporate Governance Committee

Annual fees may be paid in

cash or equity at the option of the director.

In addition, new directors who join the board of directors will receive an initial grant

of 25,000 stock options to purchase shares of common stock, subject to thirty-six (36) month vesting.

Emerging Growth Company Status

We are an “emerging growth

company,” as defined in the JOBS Act.

As an emerging growth company we are exempt from certain requirements related to executive

compensation, including the requirements to hold a nonbinding advisory vote on executive compensation and to provide information relating

to the ratio of total compensation of our President and Chief Executive Officer to the median of the annual total compensation of all

of our employees, each as required by the Investor Protection and Securities Reform Act of 2010, which is part of the Dodd-Frank Act.

In addition, subject to discretion of the Board of Directors and recommendation of the Compensation

Committee, new directors who join the Board of Directors may receive an initial grant of stock options to purchase 23,000 shares of common

stock, subject to vesting of 1/36 per month over 36 months following the grant date and with the

expiration date of five years from date of grant.

In connection with the appointment

McLaughlin as independent directors of the Company, each received an annual retainer fee of $50,000, payable in cash.

In addition, the Board of Directors granted Dr.

McLaughlin options to purchase 23,000 shares of common stock at an exercise

price of $1.28 and $1.10 per share, respectively, which options are subject to vesting of 1/36 per month over 36 months following the

The expiration date for the options is five years from date of grant.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL

OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

RELATED STOCKHOLDER MATTERS

The following table and accompanying

footnotes set forth information the beneficial ownership of our common stock as of May 1, 2022 by:

● each person who is known to be the beneficial owner of more

than 5% of our common stock;

● our current executive officers and each of our current directors;

following table and accompanying footnotes set forth information regarding the beneficial ownership of our Common Stock, including shares

issuable upon the exercise or conversion of securities that entitle the holders to obtain Common Stock upon exercise or conversion) as

of the date of this report, or Record Date, by:

each person who is known to be the beneficial owner of more than 5% of our Common Stock;

each of our current executive officers and each of our current directors;

all of our executive officers and directors as a group.

Beneficial ownership is determined

in accordance with the rules and regulations of the SEC.

A person is a “beneficial owner” of a security if that person has

or shares “voting power,” which includes the power to vote or to direct the voting of the security, or “investment power,”

which includes the power to dispose of or to direct the disposition of the security or has the right to acquire such powers within sixty

The beneficial ownership of shares of our common stock excludes any

common stock underlying any convertible preferred stock issued or owned by the Investor because of its beneficial ownership limitation

The Investor’s beneficial ownership limitation may be adjusted to a beneficial ownership limitation of 9.99% upon 61 days’

prior written notice.

We have not received notice to increase adjustment as of the date hereof.

If there were no beneficial ownership

limitation for the Investor, as of December 20, 2021, the Preferred Shares could be converted into 2,018,958 shares of our common stock

and if the PIPE Warrant could be exercised for up to 2,018,958 shares of common stock.

Under the rules and regulations

of the SEC, a person is a “beneficial owner” of a security if that person has or shares “voting power,” which

includes the power to vote or to direct the voting of the security, or “investment power,” which includes the power to dispose

of or to direct the disposition of the security or has the right to acquire such powers within 60 days.

The beneficial ownership of

our common stock is based on 8,842,290 shares of common stock issued and outstanding as of May 1, 2022.

Unless otherwise noted in the

footnotes to the following table, and subject to applicable community property laws, the persons and entities named in the table have

our Common Stock is based on 30,000,000 shares of Common Stock issued and outstanding as of the Record Date.

As of the Record Date, there

were 50,000 shares of Series C Preferred Stock outstanding which are not reflected in the columns relating to beneficial ownership of

Common Stock below since as of such date no shares of Series C Preferred Stock are convertible into Common Stock because there were not

convertible as of the Record Date.

Unless otherwise noted in

the footnotes to the following table, and subject to applicable community property laws, the persons and entities named in the table have

sole voting and investment power with respect to their beneficially owned Common Stock.

Additionally, except as set forth in the footnote,

the following table does not reflect record or beneficial ownership of any shares of common stock issuable upon exercise of warrants,

options, or convertible preferred stock, to the extent such securities are not exercisable or convertible within sixty (60) days of May

Additionally, in order to illustrate the outstanding

voting power of the respective beneficial owners as of the Record Date, the following table does not reflect record or beneficial ownership

of any shares of Common Stock issuable upon exercise of warrants, options, or convertible preferred stock, to the extent such securities

are exercisable or convertible within 60 days of the Record Date since the Company does not have any shares of Common Stock authorized

to issue upon exercise or conversion.

Name of Beneficial Owner (1)

Percentage of

5% and Greater Holders:

Sass & Larsen ApS (3)

Forsakringsaktiebolaget Avanza Pension (4)

Directors and Executive Officers:

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Steen Knudsen (5)

Thomas Jensen (10)

Duncan Moore (11)

Søren Gade Jensen (12)

Gail Maderis (13)

David Roth (7)

Gerald McLaughlin (8)

All directors and executive officers as a group (7 individuals)

* Less than one percent (1%).

(1) Unless otherwise noted, the business address of each of the

following entities or individuals is c/o Allarity Therapeutics, Inc., 210 Broadway, Suite 201, Cambridge, MA 02139.

(2) Excludes shares of common stock that may be issued to and

acquired by 3i in the PIPE investment.

(3) Based on Schedule 13G filed with the SEC on December 22,

2021, consists of (i) 21,468 shares of common stock held in the name of Leon Sass, and (ii) 1,064,770 shares of common stock owned by

Sass & Larsen ApS.

Leon Sass and Benny Sass are the beneficial owners of Sass & Larsen ApS.

Leon Sass and Benny

Sass each beneficially own 50% of Sass & Larsen ApS, respectively, and may be deemed to beneficially own such shares of common stock

held directly by Sass & Larsen ApS.

Sass & Larsen ApS and Mr.

Benny Sass each disclaim beneficial ownership of securities held

in the name of Mr.

(4) Based on Schedule 13G/A filed with the SEC on January 20,

Address is Box 13129 Stockholm, Sweden 10303.

(5) Interests shown include 347,514 shares of common stock issuable upon exercise of vested options

within sixty (60) days.

(6) Interests shown include 32,744 shares of common stock issuable upon exercise of vested options

within sixty (60) days.

Unless otherwise noted, the business address of each of the following entities or individuals is c/o Allarity Therapeutics, Inc., 24 School Street, 2nd Floor, Boston, MA 02108.

on Schedule 13G jointly filed by 3i, LP, 3i Management LLC and Maier J.

Tarlow (the “Reporting Persons”) with the

SEC on March 2, 2023, reflecting ownership of 2,992,551 shares of common stock.

Interests excludes shares of Common Stock issuable pursuant

to exercise of shares of Series A Preferred Stock and Warrant, subject to the beneficial ownership limitation of 9.99%.

Also excludes

shares of Common Stock issuable upon conversion of Series C Preferred Stock which are not exercisable within 60 days as of the Record

The principal business address of the Reporting Persons is 140 Broadway, 38th Floor, New York, NY 10005.

principal business is that of a private investor.

Maier Joshua Tarlow is the manager of 3i Management, LLC, the general partner of 3i,

L.P., and has sole voting control and investment discretion over securities beneficially owned directly or indirectly by 3i Management,

LLC and 3i, L.P.

Excludes 119,842 shares of Common Stock issuable upon exercise of vested options within 60 days since the Company did not have any authorized shares of Common Stock available for issuance as of the Record Date.

Interests shown include 3,988 shares of Common Stock.

issuable upon exercise of vested options within sixty (60) days.

(8) Interests shown include (i) 3,988 shares of common stock,

and (ii) 37,529 shares of common stock issuable upon exercise of vested options within sixty (60) days.

(9) Interests shown include (i) 124,977 shares of common stock,

and (ii) 37,529 shares of common stock issuable upon exercise of vested options within sixty (60) days.

(10) Interests shown include (i) 17,842 shares of common stock,

and (ii) 77,387 shares issuable upon exercise of vested options within sixty (60) days.

(11) Interests shown include (i) 22,673 shares of

common stock, and (ii) 9,623 shares of common stock issuable upon exercise of vested options within sixty (60) days.

(12) Interests shown include (i) 2,800 shares of common stock, and (ii)

6,160 shares of common stock issuable upon exercise of vested options within sixty (60) days.

(13) Interests shown include 6,160 shares of common stock issuable

upon exercise of vested options within sixty (60) days.

CERTAIN RELATIONSHIPS AND RELATED

TRANSACTIONS AND DIRECTOR INDEPENDENCE

Excludes 53,839 shares of Common Stock issuable upon exercise of vested options within 60 days since the Company did not have any authorized shares of Common Stock available for issuance as of the Record Date.

Interests shown include 124,977 shares of Common Stock.

Interests shown include 17,842 shares of Common Stock.

Excludes 111,027 shares issuable upon exercise of vested options within 60 days since the Company did not have any authorized shares of Common Stock available for issuance as of the Record Date.

Excludes 5,750 shares of Common Stock issuable upon exercise of vested options within 60 days since the Company did not have any authorized shares of Common Stock available for issuance as of the Record Date.

Excludes 4,472 shares of Common Stock issuable upon exercise of vested options within 60 days since the Company did not have any authorized shares of Common Stock available for issuance as of the Record Date.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND

DIRECTOR INDEPENDENCE

Transactions with Related Parties

The Registrant did not enter into a transaction that is required to be disclosed under Item 404 of Regulation

Company did not enter into any related party transaction required to be disclosed under Item 404 of Regulation S-K.

Related Person Transactions Policy

We plan to adopt a new written

We intend to adopt a written

related person transactions policy that sets forth our policies and procedures regarding the identification, review, consideration, and

13 unchanged sentences

identify related person transactions in advance, we will rely on information supplied by our executive officers, directors and certain

significant shareholders.

significant stockholders.

In considering related person transactions, our audit committee will take into account the relevant available

1 unchanged sentence

the risks, costs, and benefits to us;

● the impact on a director’s independence in the event

the related person is a director, immediate family member of a director or an entity with which a director is affiliated;

the impact on a director’s independence in the event the related person is a director, immediate family member of a director or an entity with which a director is affiliated;

the terms of the transaction;

● the availability of other sources for comparable services

● the terms available to or from, as the case may be, unrelated

third parties;

● our audit committee will approve only those transactions that

it determines are fair and in our best interests.

the availability of other sources for comparable services or products;

the terms available to or from, as the case may be, unrelated third parties;

our audit committee will approve only those transactions that it determines are fair and in our best interests.

Director Independence

A majority of our Board of Directors are independent directors, see

the discussion above under the section “Item 10.

Directors, Executive Officers and Corporate Governance–Director Independence.”

A majority of our Board of

Directors are independent directors, see the discussion above under the section “Item 10.

Directors, Executive Officers and Corporate

Governance–Director Independence.”

PRINCIPAL ACCOUNTANT FEES AND SERVICES

the year ended December 31, 2021, the Company’s independent public accounting firm was Marcum LLP.

For the year ended December 31,

2020, the independent public accounting firm for our predecessor, Allarity Therapeutics A/S, was PricewaterhouseCoopers Statsautoriseret

Revisionspartnerselskab (“PwC”).

On September 9, 2022, our Audit Committee approved the engagement of

Wolf & Company as our independent registered public accounting firm.

Wolf & Company re-audited our financial statements for the

year ended December 31, 2021, and audited our financial statements for the year ended December 31, 2022.

Fees Paid to Principal Independent Registered

Public Accounting Firm

The aggregate fees billed by PwC, our former Independent Registered

Public Accounting Firm, for the years ended December 31, 2021 and 2020 are as follows:

Audit fees(1)

All other fees(3)

2020 Audit fees represents statutory audit fees related to our audit of our IFRS financial statements filed while the Company was operating as Oncology Ventures A/S and listed on Nasdaq First North.

2021 Audit fees represent fees for professional services provided in connection with the audit of our annual financial statements and the review of our quarterly financial statements and those services normally provided in connection with statutory or regulatory filings or engagements including comfort letters, consents and other services related to SEC matters.

This information is presented as of the latest practicable date for this annual report.

The audit fees for 2021 also include the services provided in reviewing our Registration Statements on Form S-4 and Form S-1 as well as reviewing the agreements around our reorganization completed on December 20, 2021.

PwC provided us with tax advice and tax planning services as part of our reorganization completed on December 20, 2021, before we became a US domestic filer.

All other fees include fees billed by our independent auditors for products or services other than as described in the immediately preceding two categories.

December 21, 2021, we engaged Marcum as our Independent Registered Public Accounting Firm.

The aggregate fees billed by Marcum, for

the year ended December 31, 2021, is as follows:

The aggregate fees billed

by our current auditors Wolf & Company, P.C.

and our former auditors Marcum LLP and PWC for the years ended December 31, 2022, and

2021 are as follows:

Audit fees (1)

Audit related fees (3)

All other fees(4)

Audit fees represent fees for professional services provided in connection with the audit of our annual financial statements and the review of our quarterly financial statements and those services normally provided in connection with statutory or regulatory filings or engagements including comfort letters, consents and other services related to SEC matters.

2021 Audit fees represent

fees for professional services provided in connection with the audit of our annual financial statements and the review of our quarterly

financial statements and.

This information is presented as of the latest practicable date for this annual report.

Audit-related fees represent fees for assurance and related services

that are reasonably related to the performance of the audit or review of our financial statements and not reported above under “Audit

Marcum did not provide us with tax compliance, tax advice or tax planning services.

All other fees include fees billed by our independent auditors for products or services other than as described in the immediately preceding three categories.

No such fees were incurred during the fiscal years ended December 31, 2021.

The audit fees for

2021 also include the services provided in reviewing our Registration Statement on Form S-1.

Our former auditor PwC provided us with tax advice and tax planning services as part of our reorganization completed on December 20, 2021, before we became a US domestic filer.

All other fees include

fees billed by our independent auditors for products or services other than as described in the immediately preceding two categories

including those services normally provided in connection with statutory or regulatory filings or engagements including comfort letters,

consents and other services related to SEC matters.

Policy on Audit Committee Pre-Approval of Audit

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EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) (1) Financial Statements

The following financial statements

of Allarity, and the Reports of Independent Registered Public Accounting Firms, are included at the end of this report beginning on page

Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

Report of Independent Registered Public Accounting Firm (Marcum, LLP, Philadelphia, PA, PCAOB ID #688)

Report of Independent Registered Public Accounting Firm (PWC, Copenhagen, Denmark, PCAOB ID # 1081)

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

(2) Financial Statement Schedules

(a) The following documents are filed as part of this annual report on Form 10-K:

(1) Financial

The following financial statements of Allarity,

and the Reports of Independent Registered Public Accounting Firms, are included at the end of this report beginning on page F-1:

(2) Financial Statement

All schedules have been omitted because the required

information is included in the financial statements or notes thereto or because they are not required.

required by Item 601 of Regulation S-K are listed in subparagraph (b) below.

The exhibits required by Item 601 of Regulation

S-K are listed in subparagraph (b) below.

(b) Exhibits:

The following exhibits

are filed as part of this Annual Report.

The following exhibits are filed as part of this

Annual Report.

Amended and Restated Plan of Reorganization and Asset Purchase Agreement by and among Allarity Therapeutics, Inc.

3 unchanged sentences

Amended and Restated Bylaws of Allarity Therapeutics, Inc.

Amendment No.

1 to Amended and Restated Bylaws of Allarity Therapeutics, Inc.

Certificate of Designations of Allarity Therapeutics, Inc.

relating to the Series A Convertible Preferred Stock

Amendment to Certificate of Designation of the Series A Convertible Preferred Stock

Certificate of Designation of the Series B Preferred Stock

Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Redeemable Preferred Stock

Certificate of Amendment to Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Redeemable Preferred Stock

Description of Capital Stock

Specimen Common Stock Certificate of Allarity Therapeutics, Inc.

Form of Warrant

Form of Warrant (3i LP)

Allarity Therapeutics, Inc.

14 unchanged sentences

Employment Agreement by and between Allarity Therapeutics, Inc.

and Marie Foegh, M.D.

Purchase Agreement between Allarity Therapeutics, Inc.

Asset Purchase Agreement between Allarity Therapeutics, Inc.

and Allarity Therapeutics A/S dated December 17, 2021

5 unchanged sentences

dated January 2, 2022 (Dovitnib)

Amended and Restated License Agreement among Allarity Therapeutics Europe ApS, LiPlasome Pharma ApS, and Chosa ApS dated M arch 28, 2022

Support A greement between Allarity Therapeutics A/S and LiPlasome Pharma ApS, dated M arch 28, 2022

First Amendment to License Agreement between Novartis Pharma Ag and Allarity Therapeutics Europe ApS

Convertible Promissory Note

Forbearance Agreement and Waiver.

Letter from PriceWaterhouseCoopers, dated August 20, 2021, regarding Change in Independent Registered Public Accounting Firm

and Restated License Agreement among Allarity Therapeutics Europe ApS, LiPlasome Pharma ApS, and Chosa ApS dated March 28, 2022

Agreement between Allarity Therapeutics A/S and LiPlasome Pharma ApS, dated March 28, 2022

Amendment to License Agreement between Novartis Pharma Ag and Allarity Therapeutics Europe ApS

Promissory Note

Agreement and Waiver

Amendment to Forbearance and Waiver dated June 6, 2022

Agreement with Steve Carchedi

Agreement with Jens Knudsen

Amendment to Development Option & License Agreement

Amendment to License Agreement

Note Purchase Agreement

of Secured Promissory Note

Letter Agreement with 3i, LP

Agreement with James G.

Cullem dated January 12, 2023

Agreement with Joan Brown dated January 12, 2023

Letter Agreement with 3i, LP dated January 23, 2023

of Securities Purchase Agreement – Series C Preferred Stock

of Registration Rights Agreement

Waiver Agreement

from Marcum, LLP dated August 23, 2022, regarding Change in Independent Registered Public Accounting Firm

Subsidiaries of the Registrant

Certification of Registrant’s Chief Executive Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002

Certification of Registrant’s Chief Financial Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002

Certification of Registrant’s Chief Executive Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002

Certification of Registrant’s Chief Financial Officer, as required by Section 906 of the Sarbanes-Oxley Act of 2002

Inline XBRL Instance Document.

Inline XBRL Taxonomy Extension Schema Document.

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

Inline XBRL Taxonomy Extension Definition Linkbase Document.

Inline XBRL Taxonomy Extension Label Linkbase Document.

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

(a) Incorporated by reference from the Registration Statement on

Form S-4 filed with the SEC on August 20, 2021.

(b) Incorporated by reference from Amendment No.

1 to Registration

Statement on Form S-4 as refiled with the SEC on October 20, 2021.

2 to Registration

Statement on Form S-4 as refiled with the SEC on October 20, 2021.

(d) Incorporated by reference from Amendment No.

4 to Registration

Statement on Form S-4 as filed with the SEC on November 2, 2021.

(e) Incorporated by reference from Amendment No.

2 to Registration

Statement on Form S-1 as filed with the SEC on December 6, 2021.

(f) Incorporated by reference from Form 8-K as filed with the

SEC on December 10, 2021.

(g) Incorporated by reference from Form 8-K as filed with the SEC

on December 20, 2021.

(h) Incorporated by reference from Form 8-K filed with the SEC on

December 22, 2021.

Certifications

of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act

Certifications

of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act

Certifications

of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act

Certifications

of the Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act

Instance Document.

Inline XBRL Taxonomy Extension

Schema Document.

Inline XBRL Taxonomy Extension

Calculation Linkbase Document.

Inline XBRL Taxonomy Extension

Definition Linkbase Document.

Inline XBRL Taxonomy Extension

Label Linkbase Document.

Inline XBRL Taxonomy Extension

Presentation Linkbase Document.

Cover Page Interactive

Data File (formatted as Inline XBRL and contained in Exhibit 101).

Incorporated by reference from the Registration Statement on Form S-4 filed with the SEC on August 20, 2021.

Incorporated by reference from Amendment No.

1 to Registration Statement on Form S-4 as refiled with the SEC on October 20, 2021.

Incorporated by reference from Amendment No.

2 to Registration Statement on Form S-4 as refiled with the SEC on October 20, 2021.

Incorporated by reference from Amendment No.

4 to Registration Statement on Form S-4 as filed with the SEC on November 2, 2021.

Incorporated by reference from Amendment No.

2 to Registration Statement on Form S-1 as filed with the SEC on December 6, 2021.

Incorporated by reference from Form 8-K as filed with the SEC on December 10, 2021.

Incorporated by reference from Form 8-K as filed with the SEC on December 20, 2021.

Incorporated by reference from Form 8-K filed with the SEC on December 22, 2021.

Incorporated by reference from Form 8-K filed with the SEC on April 18, 2022.

(j) Incorporated by reference from Form 8-K filed with the SEC on May 6,

† Certain portions of this exhibit will be omitted because they

are not material and would likely cause competitive harm to the registrant if disclosed.

Incorporated by reference from Form 8-K filed with the SEC on May 6, 2022.

Incorporate by reference from Form 10-K filed with the SEC on May 17, 2022.

Incorporated by reference from Form 8-K filed with the SEC on June 10, 2022.

Incorporated by reference from Form 8-K filed with the SEC on July 11, 2022.

Incorporated by reference from Form 8-K filed with the SEC on August 12, 2022, as amended on August 24, 2022.

Incorporated by reference from Form 10-Q filed with the SEC on October 7, 2022.

Incorporated by reference

from Form 8-K filed with the SEC on September 30, 2022.

Incorporated by reference

from Form 8-K filed with the SEC on November 25, 2022.

Incorporated by reference from Form 8-K filed with the SEC on January 19, 2023.

Incorporated by reference from Form 8-K filed with the SEC on February 28, 2023.

Certain portions of this exhibit were be omitted because they are not material and would likely cause competitive harm to the registrant if disclosed.

Filed herewith.

Indicates management contract or compensatory plan or arrangement.

+ Certain of the exhibits and schedules to this Exhibit have been

omitted in accordance with Regulation S-K Item 601.

The Registrant agrees to furnish a copy of all omitted exhibits and schedules

to the SEC upon its request.

Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601.

The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.

Form 10-K Summary

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ALLARITY THERAPEUTICS, INC.

/s/ Steve Carchedi

Steve Carchedi

Chief Executive Officer

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the

registrant and in the capacities and on the dates indicated.

/s/ Steve Carchedi

Pursuant to the requirements

of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in

the capacities and on the dates indicated.

Chief Executive Officer and Director

Steve Carchedi

March 10, 2023

( Principal Executive Officer )

/s/ Jens Erik Knudsen

/s/ Joan Brown

Chief Financial Officer

Jens Erik Knudsen

March 10, 2023

( Principal Financial and Accounting Officer )

/s/ Duncan Moore

/s/ Gerald McLaughlin

Chairman of the Board

/s/ Soren Gade Jensen

Soren Gade Jensen

/s/ Gail Maderis

INDEX TO FINANCIAL STATEMENTS

March 10, 2023

Gerald McLaughlin

March 10, 2023

/s/ Thomas Jensen

March 10, 2023

Thomas Jensen

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements

For the years ended December 31, 2022 and 2021

Report of Independent Registered Public Accounting Firm (Marcum, LLP, Philadelphia, PA, PCAOB ID # 688) F-2

Report of Independent Registered Public Accounting Firm (PWC, Copenhagen, Denmark, PCAOB ID # 1081 ) F-3

Report of Independent Registered Public Accounting Firm (PCAOB ID 392 ) F-2

Consolidated Balance Sheets F-3

Consolidated Statements of Operations and Comprehensive Loss F-4

Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity F-6 – F-7

Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) F-5 – F-6

Consolidated Statements of Cash Flows F-7 – F-8

Notes to Consolidated Financial Statements F-9 – F-51

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of

Allarity Therapeutics, Inc.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

To the Shareholders and Board of Directors of Allarity Therapeutics,

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheet of Allarity Therapeutics, Inc.

(the “Company”) as of December 31, 2021, the related consolidated statements

of operations and comprehensive loss, changes in redeemable convertible preferred stock and stockholders’ equity and cash flows

for the year ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021,

and the results of its operations and its cash flows for the year ended December 31, 2021, in conformity with accounting principles generally

accepted in the United States of America.

Explanatory Paragraph – Going Concern

The accompanying consolidated financial statements

have been prepared assuming that the Company will continue as a going concern.

As more fully described in Note 1, the Company has incurred

significant losses, has a significant accumulated deficit and needs to raise additional funds to meet its obligations and sustain its

These conditions raise substantial doubt about the Company's ability to continue as a going concern.

Management's plans in

regard to these matters are also described in Note 1.

The consolidated financial statements do not include any adjustments that might

result from the outcome of this uncertainty.

balance sheets of Allarity Therapeutics, Inc.

(the “Company”) as of December 31, 2022 and 2021, the related consolidated

statements of operations and comprehensive loss, changes in redeemable convertible preferred stock and stockholders’ equity (deficit)

and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the “financial

statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company

as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity with accounting

principles generally accepted in the United States of America.

Emphasis of a Matter Regarding Going Concern

The accompanying financial statements have been

prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the Company has

recurring losses from operations and accumulated deficit that raise substantial doubt about the Company’s ability to continue as a going

Management’s plans in regard to these matters are also described in Note 1.

The financial statements do not include any adjustments

that might result from the outcome of this uncertainty.

Basis for Opinion

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regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the

We conducted our audits in accordance with the

standards of the PCAOB.

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to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding

As part of our audits, we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal

1 unchanged sentence

Accordingly, we express no such opinion.

Our audit included performing procedures to assess

Our audits included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

1 unchanged sentence

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Marcum llp

We believe that our audits provide a reasonable basis for our opinion.

/s/ Wolf & Company, P.C.

We have served as the Company’s auditor since 2022.

Philadelphia, Pennsylvania

Report of Independent Registered Public Accounting

To the Board of Directors and Stockholders of Allarity Therapeutics Inc.

Opinion on the Financial Statements

We have audited the consolidated balance sheet of

Allarity Therapeutics Inc.

and its subsidiaries (the “Company”) as of December 31, 2020, and the related statements of operations

and comprehensive loss, of stockholders’ equity and of cash flows for the year then ended, including the related notes (collectively

referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly,

in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its

cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt about

the Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements

have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the consolidated financial statements,

the Company has incurred significant losses and has an accumulated deficit that raises substantial doubt about its ability to continue

as a going concern.

Management’s plans in regard to these matters are also described in Note 1.

The consolidated financial statements

do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility

of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based

on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and

are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules

and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of these consolidated financial

statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable

assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess

the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the

consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides

a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab

Copenhagen, Denmark

August 20, 2021, except for the effects of the reverse recapitalization

discussed in Note 2a and the restatement discussed in Note 3 to the consolidated financial statements, as to which the date is May 16,

We served as the Company’s auditor from 2006 to 2021.

March 9, 2023

ALLARITY THERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

As at December 31, 2021 and 2020

dollars in thousands, except for share and per share data and where otherwise noted)

As of December 31, 2022 and 2021

dollars in thousands, except for share and per share data)

Current assets:

1 unchanged sentence

Prepaid expenses

Investment in Lantern Pharma Inc.

Tax credit receivable

1 unchanged sentence

Non-current assets:

Investment in Lantern Pharma Inc.

Property, plant and equipment, net

Operating lease right of use assets

Intangible assets, net

Intangible assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Line of credit

Accounts payable

Accrued liabilities

Warrant liability

Income taxes payable

Operating lease liabilities, current

Warrant liability

Convertible debt

1 unchanged sentence

Non-current liabilities:

Convertible promissory note and accrued interest, net

Convertible promissory note and accrued interest, net of debt discount

Derivative liabilities

2 unchanged sentences

Commitments and contingencies (Note 21)

Redeemable convertible preferred stock

Series A Convertible Preferred stock $ 0.0001 par value ( 500,000 shares authorized) 19,800 issued and outstanding at December 31, 2021.

Stockholders’ equity

Common stock, $ 0.0001 par value ( 30,000,000 shares authorized) 8,096,014 and 4,252,021 shares issued and outstanding at December 31, 2021 and 2020 respectively

Redeemable preferred stock (500,000 shares authorized)

Series A Convertible Preferred stock $ 0.0001 par value (20,000 shares designated) shares issued and outstanding at December 31, 2022 and 2021 were 13,586 and 19,800 , respectively

Series B Preferred stock $ 0.0001 par value ( 200,000 shares designated) shares issued at December 31, 2022 and 2021 were 190,786 and 0 , respectively

Total redeemable preferred stock

Stockholders’ (deficit) equity

Common stock, $ 0.0001 par value ( 30,000,000 shares authorized) shares issued and outstanding at December 31, 2022 and 2021 were 15,897,845 and 8,096,014 , respectively

Additional paid-in capital

Accumulated other comprehensive (loss) income

Accumulated other comprehensive loss

Accumulated deficit

Total stockholders’ equity

Total liabilities, redeemable convertible preferred stock & stockholders’ equity

The accompanying notes are an integral part of the

consolidated financial statements.

Total stockholders’ (deficit) equity

Total liabilities, preferred stock and stockholders’ (deficit) equity

See report of independent registered accounting

firm and accompanying notes to consolidated financial statements.

ALLARITY THERAPEUTICS, INC.

1 unchanged sentence

For the years ended December 31, 2022 and 2021

dollars in thousands, except for share and per share data and where otherwise noted)

dollars in thousands, except for share and per share data)

Operating expenses:

Research and development

Impairment of intangible assets

General and administrative

3 unchanged sentences

Gain from the sale of IP

Interest income

Interest expenses

Finance costs

(Loss) gain on investment

Foreign exchange (losses) gains, net

Change in fair value adjustment of derivative liabilities

Loss on investment

Foreign currency transaction losses, net

Change in fair value adjustment of derivative and warrant liabilities

Penalty on Series A Preferred stock liability

Change in fair value of convertible debt

Loss on extinguishment of convertible debt

Net other income

Net loss for the year before tax expense

Income tax expense

Net loss attributable to non-controlling interests

Net loss attributable common stockholders

Basic and diluted net loss available to common stockholders per common share

Basic and diluted weighted-average number of common shares outstanding

Non-cash interest expense related to beneficial conversion feature of convertible debt

Total other income, net

Net loss before tax recovery (expense)

Income tax recovery (expense)

Deemed dividend of 8 % on Preferred stock

Cash obligations on converted Series A Preferred stock

Net loss attributable to common stockholders

Basic and diluted net loss per share applicable to common stockholders

Basic and diluted weighted-average common shares outstanding

Other comprehensive loss, net of tax:

1 unchanged sentence

Change in fair value attributable to instrument specific credit risk

Total other comprehensive loss

Less comprehensive loss attributable to non-controlling interests

Comprehensive loss attributable to common shareholders

The accompanying notes are an integral part of the

consolidated financial statements.

Total comprehensive loss attributable to common shareholders

See report of independent registered accounting

firm and accompanying notes to consolidated financial statements.

ALLARITY THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

For the years ended December 31, 2022 and 2021

dollars in thousands, except for share data and where otherwise noted)

dollars in thousands, except for share data)

Preferred Stock

1 unchanged sentence

Stockholders’

Non-Controlling

(Loss) Income

Balance December 31, 2019, after effect of reverse recapitalization (Note 4) (restated)

Shares issued for cash

Debt conversion

Settlement of Financing Facility (Note 17(c))

Acquisition of NCI

Income (Loss)

Balance, December 31, 2020 carried forward

Units issued for cash

Fair value of investor warrants (TO3)

Warrants and options exercised for cash

Units issued for share issuance costs

Share issuance costs

Convertible debt conversion and related beneficial conversion feature and settlement of accounts payable

Stock based compensation

Currency translation adjustment

Cumulative translation adjustment

Fair value of instrument specific credit risk

Loss for the year (restated)

Balance, December 31, 2020 (restated)

The accompanying notes are an integral part of the

consolidated financial statements.

Conversion of preferred stock into common stock

Reclassification of derivative liabilities related to converted preferred stock

Balance, December 31, 2021

See report of independent registered

accounting firm and accompanying notes to consolidated financial statements.

ALLARITY THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

For the years ended December 31, 2022 and 2021

dollars in thousands, except for share data and where otherwise noted)

dollars in thousands, except for share data)

Preferred Stock

Comprehensive

Stockholders’

Non- Controlling

(Loss) Income

Balance, December 31, 2020 carried forward (restated)

Units issued for cash

Shares issued for cash – exercise of warrants

Fair value of investor derivative liability warrants

Convertible debt conversion and debt settlement

Shares issued for services

Share issuance costs

Stock based compensation

Currency translation adjustment

Fair value of instrument specific Credit risk

Stockholders’ Equity

Balance, December 31, 2021 carried forward

Conversion of preferred stock into common stock

Loss for the year

Floor price liability

Reclassification of derivative liabilities related to converted preferred stock

Deemed dividend of 8 % on preferred stock

Series B preferred stock dividend

Stock based compensation

Cumulative translation adjustment

Balance, December 31, 2022

The accompanying notes are an integral

part of the consolidated financial statements.

See report of independent registered

accounting firm and accompanying notes to consolidated financial statements.

ALLARITY THERAPEUTICS, INC.

6 unchanged sentences

Depreciation and amortization

Intangible asset impairment

Stock-based compensation

Non-cash lease expense

Non-cash interest

Non-cash finance costs

Loss (gain) on investment

Foreign currency losses (gains), net

Non-cash interest expense

Non-cash finance expense

Loss on investment

Unrealized foreign exchange loss

Loss on extinguishment of convertible debt

Change in fair value adjustment of convertible debt

Change in fair value adjustment of warrant and derivative liabilities

Change in fair value of warrant and derivative liabilities

Deferred income taxes

Changes in operating assets and liabilities:

Accounts receivable

Other current assets

Tax credit receivable

Prepaid expenses

Accounts payable

Income taxes payable

Accrued liabilities

Income taxes payable

Operating lease liability

1 unchanged sentence

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment

Proceeds from the sale of IP

Net cash provided by (used in) investing activities

Purchase of property and equipment

Net cash provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

1 unchanged sentence

Proceeds from common stock units and preferred stock issuance

Proceeds from exercise of warrants

Proceeds from exercise of warrants and stock options for common stock

Share issuance costs

Series A preferred share issuance costs

Proceeds from convertible loan

Cash paid in connection with conversion of Series A Preferred Stock

Penalty on Series A Preferred Stock liability

Proceeds from convertible loans

Loan proceeds

Repayment of loan

Net cash provided in financing activities

Net cash provided by (used in) financing activities

Net increase (decrease) in cash

2 unchanged sentences

Cash, end of year

The accompanying notes are an integral part of the

consolidated financial statements.

See report of independent registered accounting

firm and accompanying notes to consolidated financial statements.

ALLARITY THERAPEUTICS, INC.

6 unchanged sentences

Supplemental disclosure of non-cash investing and financing activities:

Conversion of convertible debt to equity

Conversion of investor warrants

Shares issued to settle accounts payable

Conversion of derivative liability to equity

Offset of payable against receivable from sale of IP

Conversion of floor price liability to convertible debt

Conversion of convertible debt to common stock and settlement of accounts payable

Conversion of derivative liability to common stock

Conversion of Series A Convertible Preferred stock to equity

Acquisition of NCI

Deemed 8 % dividend on Series A Preferred shares

Series B Preferred share dividend

Reclassification of derivative liabilities related to converted preferred stock

Non-cash share issuance costs

Right of use asset modification

The accompanying notes are an integral part of the

consolidated financial statements.

See report of independent registered accounting

firm and accompanying notes to consolidated financial statements.

ALLARITY THERAPEUTICS, INC.

1 unchanged sentence

For the years ended December 31, 2022 and 2021

dollars in thousands, except for share and per share data and

where otherwise noted)

dollars in thousands, except for share and per share data

and where otherwise noted)

Nature of the business

(a) Reorganization

Effective December 20, 2021, and

in connection with the Plan of Reorganization and Asset Purchase Agreement which was amended and restated on September 23, 2021, between

Allarity Therapeutics, Inc.

Effective December 20, 2021,

and in connection with the Plan of Reorganization and Asset Purchase Agreement, which was amended and restated on September 23, 2021,

between Allarity Therapeutics, Inc.

a Delaware corporation (the “Company”), Allarity Acquisition Subsidiary Inc., the Company’s

6 unchanged sentences

of Danish Companies Act.

While Allarity Therapeutics, Inc.

was the legal acquirer of Allarity Therapeutics A/S, for accounting purposes, the Merger is treated similarly to a reverse recapitalization,

whereby Allarity Therapeutics A/S is deemed to be the accounting acquirer, and the historical financial statements of Allarity Therapeutics

A/S became the historical financial statements of Allarity Therapeutics, Inc.

upon the closing of the reorganization.

Under this method

of accounting, Allarity Therapeutics, Inc.

was treated as the “acquired” company and Allarity Therapeutics A/S is treated

as the acquirer for financial accounting purposes.

Accordingly, for accounting purposes, the reorganization was treated as the equivalent

of Allarity Therapeutics A/S issuing stock for the net assets of Allarity Therapeutics, Inc.

accompanied by a recapitalization.

While the Company was the

legal acquirer of Allarity A/S, for accounting purposes, the Merger is treated similarly to a reverse recapitalization, whereby Allarity

A/S is deemed to be the accounting acquirer, and the historical financial statements of Allarity A/S became the historical financial statements

of the Company upon the closing of the reorganization.

Under this method of accounting, the Company was treated as the “acquired”

company and Allarity A/S is treated as the acquirer for financial accounting purposes.

Accordingly, for accounting purposes, the reorganization

was treated as the equivalent of Allarity A/S issuing stock for the net assets of the Company accompanied by a recapitalization.

the reorganization is a common control transaction the net assets and prior year financial statements were stated at historical cost,

with no goodwill or other intangible assets recorded.

In accordance with ASC 805, the legal capital of Allarity Therapeutics A/S has been

retroactively adjusted to reflect the capital of the legal acquirer (accounting acquiree) Allarity Therapeutics, Inc.

In accordance with ASC 805, the legal capital of Allarity A/S has been retroactively

adjusted to reflect the capital of the legal acquirer (accounting acquiree) the Company.

(b) Principal Operations and Activities

1 unchanged sentence

operations are located at Venlighedsvej 1, 2970 Horsholm, Denmark.

The Company’s United States operations are located at 210 Broadway

#201, Cambridge, MA 012139, United States of America.

The Company develops drugs for

the personalized treatment of cancer using drug specific companion diagnostics (cDx) generated by its proprietary drug response predictor

The Company’s United States operations are located at 24

School Street, 2 nd Floor, Boston, MA 02108, United States of America.

The Company develops drugs

for the personalized treatment of cancer using drug specific companion diagnostics (cDx) generated by its proprietary drug response predictor

technology, DRP ® .

Additionally, the Company, through its Danish subsidiary, Allarity Denmark (previously Oncology Venture

ApS), specializes in the research and development of anti-cancer drugs.

Additionally, the Company, through its Danish subsidiary, Allarity Therapeutics Denmark ApS (formerly

OV-SPV2ApS) (“Allarity Denmark,” or “OV-SPV2”), specializes in the research and development of anti-cancer drugs.

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

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

6 unchanged sentences

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

ALLARITY THERAPEUTICS,

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Nature of the business (cont.)

(d) Going Concern

The accompanying consolidated

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and commitments in the ordinary course of business.

The accompanying financial statements do not reflect any adjustments relating to the

recoverability and reclassifications of assets and liabilities that might be necessary if the Company is unable to continue as a going

The Company expects its costs and expenses to increase as it continues to develop its product candidates and progress its current

clinical programs and cost associated with being a public company.

Pursuant to the requirements of

Accounting Standard Codification (ASC) 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,

management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s

ability to continue as a going concern within one year after the date that the financial statements are issued.

This evaluation initially

does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of

the date of these financial statements, and (1) is probable that the plan will be effectively implemented within one year after the date

the financial statements are issued, and (2) it is probable that the plan, when implemented will mitigate the relevant condition or events

that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financials

Certain elements of the Company’s operating plan to alleviate the conditions that raise substantial doubt are outside

of the Company’s control and cannot be included in management’s evaluation under the requirements of accounting Standard Codification

(ASC) 205-40.

Since inception, the Company has

devoted substantially all its efforts to business planning, research and development, clinical expenses, recruiting management and technical

staff, and securing funding via collaborations.

The Company has historically funded its operations with proceeds received from its collaboration

arrangements, sale of equity capital and proceeds from sales of convertible notes.

The accompanying consolidated financial statements do not reflect any adjustments

relating to the recoverability and reclassification of assets and liabilities that might be necessary if the Company is unable to continue

as a going concern.

Nature of the business (cont.)

The Company expects its costs

and expenses to increase as it continues to develop its product candidates and progress its current clinical programs and cost associated

with being a public company.

Pursuant to the requirements

of Accounting Standard Codification (ASC) 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,

management evaluates whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s

ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

This evaluation

initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented

as of the date of these consolidated financial statements, and (1) is probable that the plan will be effectively implemented within one

year after the date the consolidated financial statements are issued, and (2) it is probable that the plan, when implemented will mitigate

the relevant condition or events that raise substantial doubt about the entity’s ability to continue as a going concern within one

year after the date the financial statements are issued.

Certain elements of the Company’s operating plan to alleviate the conditions

that raise substantial doubt are outside of the Company’s control and cannot be included in management’s evaluation under

the requirements of ASC 205-40.

Since inception, the Company

has devoted substantially all its efforts to business planning, research and development, clinical expenses, recruiting management and

technical staff, and securing funding via collaborations.

The Company has historically funded its operations with proceeds received from

its collaboration arrangements, sale of equity capital and proceeds from sales of convertible notes.

The Company has incurred significant losses and has an accumulated

deficit of $ 66.5 million as of December 31, 2021 (December 31, 2020 - $ 39.8 million (restated – Note 3)).

Management expects

to continue to generate operating losses in the foreseeable future, particularly as the Company advances its preclinical activities and

clinical trials for its product candidates in development.

The Company plans to seek 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 these endeavors.

If the Company is unable to obtain funding, the Company could be forced to delay, reduce, or eliminate its research

and development programs, or reduce product candidate expansion, which could adversely affect its business prospects.

As of August 20,

2021, the issuance date of the financial statements for the year ended December 31, 2020, our cash which included the proceeds of our

rights offering in June 2021 was insufficient to fund our current operating plan and planned capital expenditures for at least the next

As of May 16, 2022, our cash is insufficient to fund our current operating plan and planned capital expenditures for at

least the next 12 months.

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

Impact of Covid-19 on our Business

deficit of $ 82.6 million as of December 31, 2022.

Management expects to continue to generate operating losses in the foreseeable

future, particularly as the Company advances its preclinical activities and clinical trials for its product candidates in development.

The Company plans to seek additional funding through public equity, private equity, debt financing, collaboration partnerships, or other

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

If the Company is unable to obtain

funding, the Company could be forced to delay, reduce, or eliminate its research and development programs, or reduce product candidate

expansion, which could adversely affect its business prospects.

Currently, our cash is insufficient to fund our current operating plan

and planned capital expenditures through December 2023 since our current cash reserves are only sufficient for the next 3 months.

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

(e) Impact of Covid-19 on our Business

In March 2020, the World

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quarantines, travel restrictions and other public health safety measures.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Nature of the business (cont.)

As a result of COVID-19, all

the Company’s clinical trials were experiencing significant delays throughout the year ended December 31, 2020.

has been slowly ramping up its clinical trial sites in 2021.

Management continues to closely monitor the impact of the COVID-19 pandemic

on all aspects of the business, including how it will impact operations and the operations of customers, vendors, and business partners.

The extent to which COVID-19 impacts the future business, results of operations and financial condition will depend on future developments,

the Company’s clinical trials experienced significant delays throughout the year ended December 31, 2020.

The Company has been

slowly ramping up its clinical trial sites in 2021.

Management continues to closely monitor the impact of the COVID-19 pandemic on all

aspects of the business, including how it will impact operations and the operations of customers, vendors, and business partners.

extent to which COVID-19 impacts the future business, results of operations and financial condition will depend on future developments,

which are highly uncertain and cannot be predicted with confidence at this time, such as the continued duration of the outbreak, new information

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financial statements.

Impact of the Russia-Ukraine War

Nature of the business (cont.)

(f) Impact of the Russia-Ukraine War

There have been immense flows

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of materials we purchase for our laboratory operations in Denmark, but we cannot predict the impact at this point in time.

Emerging Growth Companies

(g) Emerging Growth Companies

Section 102(b)(1) of

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transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.

The Company has chosen to not make an election to opt out of new or revised accounting standards.

The Company has chosen not to make an election to opt out of new or revised accounting standards.

Summary of Significant Accounting Policies

5 unchanged sentences

authoritative GAAP as found in the ASC and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Summary of Significant Accounting Policies (cont.)

As a result of the recapitalization

share exchange (also described in Notes 1 and 4), to these financial statements, all outstanding shares, warrants, and options were exchanged

on a 50:1 basis as of December 20, 2021, and accordingly, all share, warrant, option and per share disclosure in these financial statements

has been retroactively adjusted to reflect the 50:1 reverse split unless otherwise stated.

share exchange (also described in Notes 1 and 3), to these consolidated financial statements, all outstanding shares, warrants, and options

were exchanged on a 50:1 basis as of December 20, 2021, and accordingly, all share, warrant, option and per share disclosure in these

consolidated financial statements has been retroactively adjusted to reflect the 50:1 reverse split unless otherwise stated.

(b) Organization and

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United States

*In the process of being dissolved because inactive.

All intercompany transactions

and balances, including unrealized profits from intercompany sales, have been eliminated upon consolidation.

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.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Summary of Significant Accounting Policies (cont.)

The preparation of consolidated

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.

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.

(d) Foreign currency and currency translation

The functional currency is

the currency of the primary economic environment in which an entity’s operations are conducted.

The functional currency

is the currency of the primary economic environment in which an entity’s operations are conducted.

The Company and its subsidiaries

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loss as incurred.

The Company recorded a foreign exchange (loss) gain of ($ 1,966 ) and $ 2,452 and a fair value adjustment to instrument

The Company recorded a foreign exchange translation loss of $ 121 and $ 1,966 and a fair value adjustment to instrument

specific credit risk of $ 0 and ($ 9 ), included in accumulated other comprehensive loss for the years ended December 31, 2022 and 2021,

16 unchanged sentences

Cash consists primarily of

highly liquid investments with original maturities of three months or less at date of purchase to be cash equivalents.

The Company had

no cash equivalents or restricted cash on December 31, 2021, and 2020.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

had no cash equivalents or restricted cash on December 31, 2022 and 2021.

Summary of Significant Accounting Policies (cont.)

4 unchanged sentences

useful lives of the respective assets as follows:

Estimated Useful Economic

Estimated Useful Economic Life

Leasehold property improvements

35 unchanged sentences

Assets acquired and liabilities assumed are recorded at their estimated fair values.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Summary of Significant Accounting Policies (cont.)

(k) Non-controlling interest

These financial statements

reflect the application of ASC 810, Consolidations, which establishes accounting and reporting standards that require:

(i) the ownership

interest in subsidiaries held by parties other than the parent to be clearly identified and presented in the consolidated balance sheet

within stockholder’s (deficit) equity, but separate from the parent’s (deficit) equity;

(ii) the amount of consolidated

net income attributable to the parent and the non-controlling interest to be clearly identified and presented on the face of the consolidated

statement of operations and (iii) changes in a parent’s ownership interest while the parent retains its controlling financial

interest in its subsidiary to be accounted for consistently.

Our consolidated financial

statements include all assets, liabilities, incidental service revenues, and expenses of less-than-100%-owned affiliates that we control

or for which we are the primary beneficiary.

We record a non-controlling interest for the allocable portion of income or loss and comprehensive

income or loss to which the non-controlling interest holders are entitled based upon their ownership share of the affiliate.

Distributions

made to the holders of non-controlling interests are charged to the respective non-controlling interest balance.

Losses attributable to

the non-controlling interest in an affiliate may exceed our interest in the affiliate’s equity.

The excess and any further losses

attributable to the non-controlling interest shall be attributed to those interests.

The non-controlling interest shall continue to be

attributed its share of losses even if that attribution results in a deficit non-controlling interest balance.

As of December 31, 2021,

and 2020, the Company had no non-controlling interests.

(l) Acquired Patents

(k) Acquired patents

Acquired patents are measured

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Depreciation methods, useful lives and residual values are reviewed

(m) Acquired In-Process Research and Development (IPR&D)

(l) Acquired in-process research and development (IPR&D)

Acquired IPR&D represents

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Probability of successfully completing clinical trials and obtaining regulatory approval;

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Summary of Significant Accounting Policies (cont.)

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

4 unchanged sentences

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

The Company has not recorded impairment

losses on its intangible assets in either of the years ended December 31, 2021, or December 31, 2020.

(n) Fair value measurements of financial instruments

The Company has recorded impairment

losses of $ 17,571 and $ 0 on its intangible assets in the years ended December 31, 2022 and 2021, respectively.

(m) Fair value measurements of financial instruments

The carrying value of the

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based upon unadjusted quoted prices.

The convertible debt and derivative liabilities are fair valued at the end of every period using

level 3 inputs.

The convertible debt and derivative liabilities that are freestanding equity-linked financial instruments

are fair valued at the end of every period using level 3 inputs.

Summary of Significant Accounting Policies (cont.)

Fair value is defined as the

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Level 3 — defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Summary of Significant Accounting Policies (cont.)

In some circumstances, the

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fair value measurement.

(o) Segment and geographic information

(n) Segment and geographic information

Operating segments are defined

5 unchanged sentences

in two geographic areas:

Denmark and the United States however, as of December 31, 2021 and 2020, the Company has neither revenues

nor long-lived assets outside of Denmark.

(p) Operating lease right-of-use assets

Denmark and the United States.

(o) Operating lease right-of-use assets

The Company determines whether

17 unchanged sentences

which have a lease term of twelve months or less, and instead will recognize lease payments as expense on a straight-line basis over the

(q) Revenue recognition

Summary of Significant Accounting Policies (cont.)

(p) Revenue recognition

The Company’s revenues

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the grant of IP licenses is recognized when probable.

The Company has adopted Financial

Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) Topic 606—Revenue from

Contracts with Customers (“ASC 606”).

This standard applies to all contracts with customers, except for contracts that are

within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments.

Under ASC 606, an

entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration

which the entity expects to receive in exchange for those goods or services.

In determining the appropriate amount of revenue to be recognized

under ASC 606, the Company performs the following steps:

The Company has not recognized revenue to the date of these financial statements.

The Company has adopted ASC

Topic 606—Revenue from Contracts with Customers (“ASC 606”).

This standard applies to all contracts with customers,

except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial

Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount

that reflects the consideration which the entity expects to receive in exchange for those goods or services.

In determining the appropriate

amount of revenue to be recognized under ASC 606, the Company performs the following steps:

identify the promised goods or services in the contract;

determine whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract;

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Summary of Significant Accounting Policies (cont.)

measurement of the transaction price, including the constraint on variable consideration;

1 unchanged sentence

recognition of revenue when (or as) the Company satisfies each performance obligation.

(r) Milestone and royalty revenue recognition

(q) Milestone and royalty revenue recognition

Milestone payments:

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not recognized any royalty revenue resulting from any of its licensing arrangements.

(s) Research contract costs and accruals

Summary of Significant Accounting Policies (cont.)

(r) Research contract costs and accruals

Research and development costs

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or the services are performed.

As of the year ended December 31, 2021, the Company has recorded a milestone payment liability of $ 5,000

as an accrued liability.

There were no milestone payments paid or due in the year ended December 31, 2020.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Summary of Significant Accounting Policies (cont.)

As of December 31, 2022 and 2021, the Company has recorded milestone payment liabilities of $ 1,400

and $ 5,000 , respectively, as accrued liabilities.

The Company has entered into

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

(t) Research and development incentives and receivable

(s) Research and development incentives and receivable

Denmark Tax Incentives

6 unchanged sentences

In the years ended December 31,

2021 and December 31, 2020 the Company recorded $ 875 and $ 908 in tax credits respectively, thereby reducing research and development expenses.

2022 and 2021, the Company recorded $ 711 and $ 875 in tax credits respectively, thereby reducing research and development expenses.

European Agency Grants

The Company, through its subsidiaries

in Denmark, receives reimbursements of certain research and development expenditures as part of a European agency’s research and

development cost reliefs program.

Management has assessed the Company’s research and development activities and expenditures to

determine which activities and expenditures are likely to be eligible under the research and development incentive program described above.

in Denmark, from time-to-time receives reimbursements of certain research and development expenditures as part of a European agency’s

research and development cost relief program.

Management has assessed the Company’s research and development activities and expenditures

to determine which activities and expenditures are likely to be eligible under the research and development incentive program described

At each period end, management estimates the reimbursement available to the Company based on available information at the time.

records these research and development expense reimbursements as a reduction to research and development expenses in the consolidated

The Company records these research and development expense reimbursements as a reduction to research and development expenses in the consolidated

statements of operations and comprehensive loss, as the research and development cost reimbursements are not dependent on the Company

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there is reasonable assurance that the reimbursement will be received.

The Company has recorded government grants received as a reduction

to research and development expense of $Nil and $ 22 for the years ended December 31, 2021, and 2020, respectively.

(u) Investments

During the years ended December 31, 2022 and 2021, respectively,

the Company has not received or recorded government grants receivable.

(t) Investments

In accordance with ASC 321,

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in equity securities are classified as either current or long-term depending upon management’s intentions.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Summary of Significant Accounting Policies (cont.)

(v) Convertible debt instruments

(u) Convertible debt instruments

The Company follows ASC 480-10, Distinguishing

11 unchanged sentences

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.

reported in change on fair value expense in the accompanying Consolidated 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 (“ASC 825”) 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.

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 (loss) on extinguishment.

When the Company issues warrants

2 unchanged sentences

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.

As of December 31, 2021, and December 31, 2020, the Company had

warrants outstanding for share-based compensation that were classified as equity, and outstanding investor warrants that were classified

as derivative liabilities.

(x) Derivative Financial Instruments

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.

(w) Derivative financial instruments

The Company does not use derivative

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Bifurcated embedded

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

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Summary of Significant Accounting Policies (cont.)

(y) Share-based compensation

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

(x) Share-based compensation

The Company accounts for share-based

5 unchanged sentences

and Comprehensive Loss.

Summary of Significant Accounting Policies (cont.)

The Company records the expense

32 unchanged sentences

costs are classified or in which the award recipient’s service payments are classified.

(z) Accumulated other comprehensive loss

(y) Accumulated other comprehensive loss

Accumulated other comprehensive

5 unchanged sentences

adjustments and fair value adjustments attributable to instrument specific credit risk.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Summary of Significant Accounting Policies (cont.)

(aa) Contingencies

(z) Contingencies

Liabilities for loss contingencies

7 unchanged sentences

and Comprehensive Loss.

(bb) Income taxes

Summary of Significant Accounting Policies (cont.)

(aa) Income taxes

The Company accounts for income

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in other (income) expenses.

(cc) Computation of Loss per Share

(bb) Computation of loss per share

net loss per common share is determined by dividing net loss attributable to common stockholders by the weighted-average number of common

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or when issued, if later.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Summary of Significant Accounting Policies (cont.)

(dd) Recently adopted accounting pronouncements

In August 2020, the FASB

issued ASU No.

2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging —

Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own

Equity, which simplifies accounting for convertible instruments by removing major separation models required under current U.S.

2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope

exception, and it also simplifies the diluted earnings per share calculation in certain areas.

2020-06 is effective for public

companies for annual periods beginning after December 15, 2021, including interim periods within those fiscal years.

The Company early

adopted the provisions of ASU 2020-06 effective January 1, 2021, using the modified retrospective method for transition with no significant

impact to its consolidated financial statements.

In December 2019, the FASB

issued ASU 2019-12:

Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes.

This ASU simplifies accounting for income

taxes by removing the exception to the incremental approach for intraperiod tax allocation when there is a loss from continuing operations

and income or gain for other items, the exception to the requirement to recognize a deferred tax liability for equity method investments

when a foreign subsidiary becomes an equity method investment, the exception to the ability not to recognize a deferred tax liability

for a foreign subsidiary when a foreign equity method investment becomes a subsidiary, and the exception to the general methodology for

calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year.

This ASU also includes

other requirements related to franchise tax, goodwill as part of a business combination, consolidations, changes in tax laws, and affordable

housing projects.

ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within that fiscal

Early adoption is permitted for periods in which financial statements have not yet been issued.

The Company adopted ASU 2019-12

as of January 1, 2021 and has not realized a material impact from the adoption of this new standard on its financial statements.

(ee) Recently issued accounting pronouncements not yet adopted

(cc) Recently adopted accounting pronouncements

In May 2021, the FASB issued

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on its consolidated financial statements and related disclosures.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Summary of Significant Accounting Policies (cont.)

6 unchanged sentences

after December 15, 2021, with early adoption permitted.

The Company is currently evaluating the impact of this standard on its consolidated

financial statements and related disclosures.

Restatement of Previously Issued Audited Financial Statements

The Company has restated its

financial statements as of and for the year ended December 31, 2020, to correct the following errors:

a) The Company identified a convertible promissory note that was previously unrecorded.

The Company assumed this promissory note as part of the 2018 acquisition of Oncology Venture Product Development ApS (the “2018 Merger”).

This promissory note (the “Note”) should have been recorded at fair value at the date of acquisition and accreted over time to its face value.

To correct this error, the Company has made adjustments before tax to:

1) record the cumulative impact of accrued interest, accretion of the discount and a reduction of the bargain purchase gain booked at the time of the acquisition on accumulated losses of $ 699 , as an adjustment to the January 1, 2019 opening balance of accumulated losses on the statement of equity, 2) record an $ 88 adjustment to the January 1, 2020 opening balance of accumulated losses on the statement of equity to reflect accrued interest for the year ended December 31, 2019, 3) record the amortized cost of the Note of $ 880 as a non-current liability as of December 31, 2020, and 4) record the interest and accretion of $ 93 for the year ended December 31, 2020 (see Note 14).

The restatement tax effect of the Note is included in b) below.

b) The Company identified an error in the valuation allowance relating to its deferred tax assets as of December 31, 2020, and the income tax provision for the year ended December 31, 2020.

In determining the valuation allowance in the previously issued financial statements, the Company assumed a reversal time frame for its most significant deferred tax liability related to IPR&D that was inconsistent with the classification of the IPR&D as indefinite-lived intangible assets.

Consequently, an additional valuation allowance of $ 1,532 and $ 81 is necessary as of December 31, 2020 and 2019, respectively.

To correct this error, the Company made adjustments to 1) record the cumulative impact of $ 81 as of January 1, 2020 as an increase in accumulated losses;

2) increase the valuation allowance as of December 31, 2020 by $1,532 , and 3) reduce the tax benefit for the year ended December 31, 2020 by $ 1,451 .

c) The Company corrected certain classification matters related to the presentation of extinguishment of debt.

In addition, the tax credit of $ 908 for the year ended December 31, 2020 was presented as a tax benefit in the income tax provision line.

However, since it is not dependent on the generation of taxable income the presentation has been corrected to reflect the tax credit as a reduction of R&D expenses in the statement of operations.

Balance sheet

Impact of correction of errors

at December 31, 2020

Total current liabilities

Convertible promissory note and accrued interest, net

Total liabilities

Accumulated deficit

Additional paid-in capital

Total stockholders’ equity

Total liabilities & stockholders’ equity

The Company’s opening accumulated deficit

as of January 1, 2020 was corrected as follows:

Total accumulated deficit, as previously reported at January 1, 2020

Convertible promissory note and accrued interest, net

Deferred tax valuation allowance

Total accumulated deficit, as restated at January 1, 2020

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Restatement of Previously Issued Audited Financial Statements

Statement of operations

Impact of correction of errors –

year ended December 31, 2020

Operating expenses

Research and development

General and administrative

Loss from operations

Other income (expense)

Interest expense

Loss on extinguishment of convertible debt

Change in fair value of convertible debt

Net loss before income tax benefit

Income tax benefit (expense)

Basic and Diluted (Loss) per Share

Weighted Average Shares Outstanding - Basic and Diluted

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Statement of Cash Flows

Impact of correction of errors –

year ended December 31, 2020

Loss for the period

Items not affecting cash:

Non-cash interest

Fair value adjustment of convertible debt

Loss on extinguishment of convertible debt

Current income taxes

Deferred income taxes

Tax credit receivable

Net cash used in operating activities

Net cash used in investing activities

Net cash provided in financing activities

Net increase (decrease) in cash

Foreign exchange effect on cash

Cash beginning of period

Cash end of period

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Acquisition of the Assets and Liabilities of Allarity Therapeutics,

The Company adopted this ASU on January 1, 2022, with no significant impact on

its consolidated financial statements and related disclosures.

(dd) Recently issued accounting pronouncements

Changes to GAAP are established

by the FASB in the form of ASUs to the FASB’s Accounting Standards Codification.

The Company considers the applicability and impact

All other ASUs issued through the date of these financial statements were assessed and determined not to be applicable or

are expected to have minimal impact on the Company’s consolidated financial position and results of operations.

Acquisition of the Assets and Liabilities of Allarity A/S

As discussed in Note 1, on

December 20, 2021 (the “Closing Date”), Allarity Therapeutics, Inc., closed the acquisition of Allarity Therapeutics A/S’

assets and business for the aggregate purchase price of 8,075,824 shares of the Company’s common stock plus the assumption of specified

liabilities (the “Reorganization”).

December 20, 2021 (the “Closing Date”), the Company closed the acquisition of Allarity A/S’ assets and business for

the aggregate purchase price of 8,075,824 shares of the Company’s common stock plus the assumption of specified liabilities (the

“Reorganization”).

Pursuant to the Plan of Reorganization

and Asset Purchase Agreement (the “Reorganization Agreement”), the aggregate consideration paid to stockholders of Allarity

Therapeutics A/S at the Closing Date consisted of 8,075,824 shares of Allarity Therapeutics, Inc.

common stock, par value $ 0.0001 per

share (“Common Stock”).

At the effective time of the reorganization and subject to the terms and conditions of the Reorganization

Agreement, each share of Allarity Therapeutics A/S common stock, par value SEK $ 0.05 per share that was convertible into a share of Allarity

Therapeutics A/S at a one-to-one ratio pursuant to the Allarity Therapeutics A/S certificate of incorporation, was converted into common

stock equal to the exchange ratio.

In each case, these share amounts were rounded down to the nearest whole number on a holder-by-holder

basis and any fractional interest will be settled in cash.

The “exchange ratio” means the quotient of the number of Allarity

A/S ordinary shares outstanding in Allarity A/S divided by fifty (50) or 0.02 shares of Delaware Common Stock for each Allarity A/S ordinary

share issued and outstanding (as defined in the Reorganization Agreement), as of immediately prior to the effective time.

A/S at the Closing Date consisted of 8,075,824 shares of the Company’s common stock, par value $ 0.0001 per share (“Common

At the effective time of the reorganization and subject to the terms and conditions of the Reorganization Agreement, each

share of Allarity A/S common stock, par value SEK $ 0.05 per share that was convertible into a share of Allarity A/S at a one-to-one ratio

pursuant to the Allarity A/S certificate of incorporation, was converted into common stock equal to the exchange ratio.

In each case,

these share amounts were rounded down to the nearest whole number on a holder-by-holder basis and any fractional interest will be settled

The “exchange ratio” means the quotient of the number of Allarity A/S ordinary shares outstanding in Allarity A/S

divided by 50 or 0.02 shares of Delaware Common Stock for each Allarity A/S ordinary share issued and outstanding (as defined in the Reorganization

Agreement), as of immediately prior to the effective time.

At the effective time, each

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(each, a “Compensatory Warrant”) that is outstanding immediately prior to the effective time, whether vested or unvested,

was assumed by Allarity Delaware and converted into an option (each, a “Converted Option”) to purchase a number of shares

of Common Stock equal to the product (rounded to the nearest whole number) of (a) the number of ordinary shares of Allarity A/S subject

to such Compensatory Warrant immediately prior to the effective time multiplied by (b) the exchange ratio of 50 to 1, at an exercise

was assumed by the Company and converted into an option (each, a “Converted Option”) to purchase a number of shares of Common

Stock equal to the product (rounded to the nearest whole number) of (a) the number of ordinary shares of Allarity A/S subject to

such Compensatory Warrant immediately prior to the effective time multiplied by (b) the exchange ratio of 50 to 1, at an exercise

price per share (rounded up to the nearest whole cent) equal to (i) the exercise price per share of such Compensatory Warrant immediately

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As part of the reorganization,

the Company is responsible for the liquidation expenses of Allarity Therapeutics, A/S, which is estimated to be approximately $ 200 .

the Company is responsible for the liquidation expenses of Allarity A/S, which is estimated to be approximately $ 200 .

Other Current Assets

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current assets are comprised of the following:

Grant receivable

Salary deposit

Value added tax (“VAT”) receivable

Prepaid Expenses

Prepaid insurance

Other prepayments

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

The Company owns 43,898 common

shares in Lantern Pharma Inc.

because of a prior license agreement made with Lantern Pharma in 2017.

During June 2020 Lantern Pharma

became publicly listed.

As at December 31, 2021 the fair market value of the shares was $ 350 .

Deferred consulting costs

Deferred Directors & Officers insurance expense

The Company owned 43,898

common shares in Lantern Pharma Inc.

(“Lantern Pharma”) because of a prior license agreement made with Lantern Pharma in 2017.

During September 2020 Lantern Pharma became publicly listed.

During July 2022, the Company sold its 43,898 common shares in Lantern

Pharma in exchange for net proceeds of $ 235 and recognized a loss of $ 115 .

Opening balance

(Loss) gain recognition

Less receipt of sale proceeds, net

Loss recognition

Ending balance

Property, plant, and equipment, net

Property, plant, and equipment

are recorded at historical cost, net of accumulated depreciation.

Components of property, plant and equipment, net are summarized as follows

(in thousands):

Laboratory equipment

accumulated depreciation

The Company’s property,

plant and equipment was pledged as collateral to its line of credit loan as disclosed in Note 10.

Depreciation expense was $ 12 and $ 21

for the years ended December 31, 2021, and 2020, respectively.

Operating lease right-of-use assets

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Under the new lease contract, the leased premises were reduced by approximately

137 square meters and the contract period was reduced from an end date of December 31, 2023, to January 31, 2023, with an automatic 12

month renewal period after that date unless termination notice is given.

The exercise of lease renewal options is at the Company’s

sole discretion and is assessed as to whether to include any renewals in the lease term at inception.

The new lease contract was

treated as a modification to the existing lease contract, and we remeasured the lease liability to reflect the modified terms and recognized

a corresponding reduction to the ROU asset in the amount of $ 145 .

137 square meters and the contract period was reduced from an end date of December 31, 2023, to January 31, 2023, with an automatic 12-month

renewal period after that date unless termination notice is given.

The new lease contract was treated as a modification to the existing

lease contract, and we remeasured the lease liability to reflect the modified terms and recognized a corresponding reduction to the ROU

asset in the amount of $ 145 .

The exercise of lease renewal

options is at the Company’s sole discretion and is assessed as to whether to include any renewals in the lease term at inception.

of January 31, 2023, the Company’s Denmark lease contract ended and became open ended until terminated by either party.

the monthly payments will be expensed on a straight-line-basis and not recognized as a right-of-use asset after January 31, 2023.

The following table summarizes

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Non-current operating lease liabilities

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Operating lease right-of-use assets (cont.)

The weighted average remaining

lease term and weighted average operating lease discount rate, for the years ended December 31, 2021, and 2020 are as follows:

Weighted average of remaining operating lease term (years)

Weighted average operating lease discount rate

Future minimum lease payments

under non-cancellable operating leases as at December 31, 2021, are as follows:

Imputed interest

Total lease costs and cash

1 unchanged sentence

Intangible assets

Intangible assets, net of

accumulated amortization, impairment charges and adjustments are summarized as follows:

As of December 31, 2021

Acquired patents

Total intangible assets

As of December 30, 2020

Acquired patents

Total intangible assets

Intangible assets, impairment

charges and adjustments are summarized as follows:

Opening balance

Impairment recognized during the period

Foreign translation adjustment

Ending balance

Intangible assets (cont.)

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 $ 14,007 during the quarter ended March 31, 2022.

the quarter ended December 31, 2022, as a result 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 $ 3,564 .

Individually material development projects in progress are as follows:

The Company’s IPR&D

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Individually material development projects in progress are as follows:

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Line of credit

Effective July 1, 2016

the Company, through its former parent company, Allarity Therapeutics A/S, established a line of credit with Nordea Bank (the “Nordea

Credit Line”) in the amount of $ 84 bearing interest at 8.75 % which was secured against the assets of Allarity Therapeutics A/S.

As of December 20th, 2021, the Nordea Credit Line was repaid and concurrent with the Company’s reorganization on December 20 th ,

2021, the line of credit is no longer accessible to the Company

Accrued liabilities

1 unchanged sentence

liabilities are comprised of the following:

Development cost liability (Notes 20(a) and 26)

Development cost liability (Notes 16(a) and (b))

Payroll accruals

2 unchanged sentences

Effective March 22, 2021,

the Company received a loan of up to $ 2,900 (SEK 25 million), net of a 3 % loan origination fee of $ 87 (SEK 750 thousand), recorded as

finance costs in the consolidated statement of operations and comprehensive loss;

bearing interest at 3 % per month, and due on June 23,

In exchange for the loan, the Company committed to complete a rights offering and issue common shares.

The rights offering was completed

before June 23, 2021, as described in these financial statements.

As of June 23, 2021, the loan balance of $ 2,934 and interest of

$ 204 were paid to the lender.

Effective September 24, 2019,

the Company received a loan of $ 512 bearing interest at 3 % per month and due on November 30, 2019.

The lender agreed to extend the due

date of the loan with no penalty and the balance of the loan, including interest of $ 62 was paid as of January 7, 2020.

The loan agreement

included the Company’s commitment to carry out a common share subscription which was cancelled upon repayment of the loan on January 7,

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

the Company received a loan of up to approximately $ 2,900 , net of a 3 % loan origination fee of $ 87 , recorded as finance costs in the Consolidated

Statement of Operations and Comprehensive Loss, bearing interest at 3 % per month, and due on June 23, 2021.

In exchange for the loan,

the Company committed to complete a rights offering and issue common shares.

The rights offering was completed before June 23, 2021, as

described in these consolidated financial statements.

As of June 23, 2021, the loan balance of $ 2,945 and interest of $ 204 were repaid

to the lender.

Convertible promissory note and accrued interest, net

On April 12, 2022, Allarity

Therapeutics Denmark ApS (“Allarity Denmark,” or “OV-SPV2”), a subsidiary of Allarity Therapeutics Europe ApS

(“Allarity Europe”), which is a wholly-owned subsidiary of Allarity Therapeutics, Inc., re-issued a Convertible Promissory

Note (the “Promissory Note”) to Novartis Pharma AG, a company organized under the laws of Switzerland (“Novartis,”

and together with Allarity Europe, the “License Parties”) in the principal amount of $ 1,000 .

The Promissory Note was re-issued

pursuant to the First Amendment to License Agreement, with an effective date of March 30, 2022 (the “First Amendment”), entered

into by and between the License Parties, which amended the License Agreement dated April 6, 2018 (the “Original Agreement”)

previously entered into by the License Parties relating to the Compound (as defined in the Original Agreement).

The First Amendment amends

and restates Section 11.7 of the Original Agreement to add the revised Note to the list of enforceable claims in the second paragraph

of Section 11.7 making the revised Note enforceable under New York law as a legal obligation of Allarity Denmark (f/k/a OV-SPV2 ApS).

All other provisions of the Original Agreement and Promissory Note were unchanged and remain in full force and effect.

Prior to the 2018 Merger,

on April 6, 2018 (“Effective Date”), Allarity Europe and Novartis entered a license agreement whereby Novartis granted to

Allarity Europe (a) an exclusive, royalty-bearing, sublicensable, assignable license under the Licensed Data (as defined in the License

Agreement) and Product-Specific Patents (as defined in the License Agreement) and (b) a non-exclusive, royalty-bearing, sublicensable,

assignable license under the Platform Patents (as defined in the License Agreement), in the case of (a) and (b) solely to develop and

otherwise commercialize the Licensed Product (as defined in the License Agreement) in any and all field related to therapeutic and/or

diagnostic uses related to cancer in humans worldwide and to manufacture the compound TKI258 (a.k.a.

Dovitinib) for use in a Licensed

Product as of the Effective Date.

In consideration of the

licenses and rights granted, Allarity Europe paid Novartis a one-time, non-refundable, non-creditable upfront payment consisting of $ 1,000

(“Upfront Payment”) and issued to Novartis a Promissory Note with an initial principal balance equal to $ 1,000 , which Allarity

Europe caused its affiliate, OV-SPV2, to issue to Novartis.

In accordance with the terms of the Promissory Note, all payments shall be

applied first to accrued interest, and thereafter to principal.

The outstanding principal amount of the Note, plus any accrued interest

thereon, shall be due and payable on the earlier to occur of:

(i) the seventh (7th) anniversary of April 6, 2018;

and (ii) an event of

default (the “Maturity Date”).

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Denmark re-issued a Convertible Promissory Note (the “Promissory Note”) to Novartis Pharma AG, a company organized under the

laws of Switzerland (“Novartis,” and together with Allarity Therapeutics Europe ApS (“Allarity Europe”), the “License

Parties”) in the principal amount of $ 1,000 .

The Promissory Note was re-issued pursuant to the First Amendment to License Agreement,

with an effective date of March 30, 2022 (the “First Amendment”), entered into by and between the License Parties, which amended

the License Agreement dated April 6, 2018 (the “Original Agreement”) previously entered into by the License Parties relating

to the Compound (as defined in the Original Agreement).

The First Amendment amends and restates Section 11.7 of the Original Agreement

to add the revised Note to the list of enforceable claims in the second paragraph of Section 11.7 making the revised Note enforceable

under New York law as a legal obligation of Allarity Denmark ApS (formerly OV-SPV2 ApS).

All other provisions of the Original Agreement

and Promissory Note were unchanged and remain in full force and effect.

Convertible promissory note and accrued interest, net (cont.)

On April 6, 2018 (“Effective

Date”), Allarity Europe and Novartis entered a license agreement whereby Novartis granted to Allarity Europe (a) an exclusive, royalty-bearing,

sublicensable, assignable license under the Licensed Data (as defined in the License Agreement) and Product-Specific Patents (as defined

in the License Agreement) and (b) a non-exclusive, royalty-bearing, sublicensable, assignable license under the Platform Patents (as defined

in the License Agreement), in the case of (a) and (b) solely to develop and otherwise commercialize the Licensed Product (as defined in

the License Agreement) in any and all field related to therapeutic and/or diagnostic uses related to cancer in humans worldwide and to

manufacture the compound TKI258 (a.k.a.

Dovitinib) for use in a Licensed Product as of the Effective Date.

In consideration of the licenses

and rights granted, Allarity Europe paid Novartis a one-time, non-refundable, non-creditable upfront payment consisting of $ 1,000 (“Upfront

Payment”) and issued to Novartis a Promissory Note with an initial principal balance equal to $ 1,000 , which Allarity Europe caused

its affiliate, Allarity Therapeutics Denmark ApS, to issue to Novartis.

In accordance with the terms of the Promissory Note, all payments

shall be applied first to accrued interest, and thereafter to principal.

The outstanding principal amount of the Note, plus any accrued

interest thereon, shall be due and payable on the earlier to occur of:

(i) the 7th anniversary of the Effective Date;

and (ii) an event

of default (the “Maturity Date”).

The Promissory Note pays

simple interest on the outstanding principal amount from the date until payment in full, which interest shall be payable at the rate of

five percent ( 5 %) per annum.

5 % per annum.

Interest shall be calculated on the basis of a 360-day year for the actual number of days elapsed.

outstanding principal balance of the Promissory Note and all accrued interest shall be fully due and payable on the Maturity Date.

Promissory Note is convertible upon an initial public offering (“IPO”) of OV-SPV2 and allows Novartis a one-time right to

exchange the Convertible Promissory Note for such number of equity securities of OV-SPV2 equal to three percent ( 3 %) of OV-SPV2 outstanding

equity securities, calculated on a fully diluted as-converted to common stock basis, held by all holders of equity securities of OV-SPV2

immediately prior to the closing of the IPO.

As the Promissory Note was

assumed in connection with the 2018 Merger, the Company recognized the Promissory Note and related accrued interest at its fair value.

The Company utilized a third-party valuation specialist to estimate the fair value of the Promissory Note and related accrued interest.

Based on the specialist’s valuation, the Company recognized the Promissory Note and related accrued interest at its estimated fair

value, based upon an equivalent market interest rate of 12.875 %, of approximately $ 787 on December 31, 2019, and recognized interest expense

of $ 93 and $ 99 in the years ended December 31, 2020 and December 31, 2021 respectively and a corresponding increase in liability, resulting

in a net liability of $ 979 and $ 880 at each of December 31, 2021 and December 31, 2020 respectively.

The Company will measure the Note

at amortized cost in subsequent reporting periods.

The Company evaluated the

Promissory Note under ASC 480 and ASC 815 and the identified embedded features inclusive of:

(1) conversion upon an IPO;

(2) mandatory

redemption upon a change of control;

and (3) mandatory redemption in the event of default;

to determine if bifurcation is required pursuant

to ASC 815-15-25-1.

The Promissory Note is considered to be a freestanding instrument that is convertible into shares of the OV-SPV2 ApS’

common (or preferred, as the case may be) equity.

The Promissory Note was not issued in conjunction with any other instrument meaning

that the Promissory Note meets the definition of a freestanding instrument.

Since the conversion feature meets the definition of a derivative

it was evaluated for bifurcation and management determined the conversion feature requires bifurcation but because the value is not material

the conversion feature has not been bifurcated at this time.

The Company will continue to monitor for changes in specific facts and circumstances

which may impact the conclusions reached herein.

The entire outstanding

principal balance of the Promissory Note and all accrued interest shall be fully due and payable on the Maturity Date.

The Promissory

Note is convertible upon an initial public offering (“IPO”) of Allarity Therapeutics Denmark ApS and allows Novartis a one-time

right to exchange the Convertible Pro Allarity Therapeutics Denmark ApS Promissory Note for such number of equity securities of Allarity

Therapeutics Denmark ApS equal to 3 % of outstanding equity securities, calculated on a fully diluted as-converted to common stock basis,

held by all holders of equity securities of Allarity Therapeutics Denmark ApS immediately prior to the closing of the IPO.

During the years ended December 31, 2022 and 2021,

the Company recorded $ 106 and $ 99 , respectively, to interest expense and increased the convertible promissory note liability by the same

The roll forward of the Promissory Notes as of December 31, 2021, and December 31, 2020, is as follows:

The roll forward of the Promissory Notes as of December 31, 2022 and 2021, is as follows:

Convertible promissory note

3 unchanged sentences

Interest accretion, opening

Interest accretion, expense

Ending balance

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Interest accrual, expense

Convertible promissory note – net, ending balance

Convertible debt

On March 31, 2020, the Company, through its former parent company,

Allarity Therapeutics A/S, entered into a twenty-four-month term agreement to issue up to $ 10,100 (SEK 100,000 ) to be funded in tranches

of ten non-interest-bearing notes (“Notes”) convertible into new shares of the Company, each with a value of $ 1,010 (SEK 10,000 ),

under the following terms:

(a) 3i, LP Convertible Secured Promissory Notes

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

or “3i”), whereby the Company authorized the sale and issuance of three Secured Promissory Notes (each a “Note”

and collectively, the “Notes”).

Effective November 28, 2022, the Company issued:

(1) a Note in the principal amount of $ 1,667

as payment of $ 1,667 due to 3i, LP in Alternative Conversion Floor Amounts that began to accrue on July 14, 2022;

and (2) a Note in the

principal amount of $ 350 in exchange for cash.

Effective December 30, 2022, the Company issued an additional Note in the principal amount

of $ 650 in exchange for cash.

Convertible debt (cont.)

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 a security agreement (the “Security Agreement”).

In addition, the Holder may exchange the Notes for the Company’s

common stock 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 such promissory

Lastly, each Note and interest earned thereon may be redeemed by the Company at its option at any time or the holder may demand

redemption if a) 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 or b) there is an Event of Default (as defined in the Note agreement).

Discounts to the principal

amounts are included in the carrying value of the Notes and amortized to interest expense over the contractual term of the underlying

During 2022, the Company recorded a $ 34 debt discount upon issuance of the Notes related to legal fees paid that were capitalized

as debt issuance costs.

For the year ended December 31, 2022, interest expense on the Notes totaled $ 12 , comprised of $ 10 of contractual

interest and $ 2 for the amortization of the debt discount.

The roll forward of the Notes as of December 31,

2022, is as follows:

Face value of the Notes

Debt discount, net

Carrying value of the Convertible Notes

Accrued interest

(b) March 31, 2020 Convertible Debt (terminated

December 20, 2021)

On March 31, 2020, the

Company, through its former parent company, Allarity A/S, entered into a twenty-four-month term agreement to issue up to $ 10,100 (SEK

100,000 ) to be funded in tranches of ten non-interest-bearing notes (“Notes”) convertible into new shares of the Company,

each with a value of $ 1,010 (SEK 10,000 ), under the following terms:

a) Fees payable include 5% of the $10,100 Commitment in 2 equal installments of $252, paid on the disbursement of each of the first and second Tranches;

3 unchanged sentences

The Investor may in its sole discretion decide to convert the Loan in full or in part (in multiples of $4 (SEK 25) in 1,000’s) into new shares.

c) The Conversion Price of the Notes is 95% of the lowest closing volume weighted average price as reported by Bloomberg (“VWAP”) of the shares during the applicable pricing period preceding the conversion date.

The Conversion Price of the Notes is 95% of the lowest closing volume weighted average price as reported by Bloomberg (“VWAP”) of the shares during the applicable pricing period preceding the conversion date.

Conversion of the Loan Amount shall be made at a rate equal to the Conversion Price.

3 unchanged sentences

If the Investor (contrary to the clear intention in the Agreement) claims repayment of one or more Tranches and not to convert into Shares the Company shall be entitled to deduct the commitment fee in connection with the repayment.

d) Default interest accrues on the overdue amount from the due date up to the date of actual payment at 8% per annum;

Default interest accrues on the overdue amount from the due date up to the date of actual payment at 8% per annum;

calculated on a 360-day year and accrues and compounds on a daily basis.

3 unchanged sentences

of June 30, 2021.

Convertible debt (cont.)

The Company accounted for

3 unchanged sentences

is presented as a single line item within other income (expense) in the accompanying consolidated statements of operations under the caption

change in fair value of convertible notes and derivative liabilities.

change in fair value of convertible debt and derivative liabilities.

We determined the fair value of the Notes using a discounted cash

1 unchanged sentence

The Company estimates the change in fair value attributable to

the instrument specific credit risk of the Notes at 1 % under the fair value option and accordingly has recognized a (recovery) loss of

$( 9 ) and $ 9 in other comprehensive income during the years ended December 31, 2021, and December 31, 2020, respectively.

Changes in fair

value of convertible debt of ($ 474 ) and ($ 573 ) related to the Notes have been recognized in the Company’s statement of

operations for the years ended December 31, 2021, and December 31, 2020, respectively.

And a loss on extinguishment of convertible debt

of $ 141 and $ 108 has been recognized in the Company’s Consolidated Statement of Operations and Comprehensive loss in the years ended

December 31, 2021, and December 31, 2020, respectively.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Convertible debt (cont.)

the instrument specific credit risk of the Notes at 1 % under the fair value option and accordingly has recognized a recovery of $ 9 in

other comprehensive income during the year ended December 31, 2021.

Changes in fair value of convertible debt of ($ 474 ) and

non-cash interest expense related to beneficial conversion feature of convertible debt of $ 141 have been recognized in the Company’s

Consolidated Statements of Operations and Comprehensive loss in the year ended December 31, 2021.

The roll forward of the Notes

as of December 31, 2021, and December 31, 2020, is as follows:

Opening fair value

as of December 31, 2021, is as follows:

Opening fair value balance

Convertible debt issued in the period

6 unchanged sentences

The notes are unlisted and therefore, they are categorized as Level 3 in accordance with

ASC 820, “Fair Value Measurements and Disclosures.” The notes were fully converted to shares as of June 30, 2021, and, concurrent

with the Company’s reorganization on December 20 th , 2021, is no longer accessible to the Company.

Series A Preferred

Stock and Common Stock Purchase Warrants

Series A Preferred Stock Terms

The Notes were fully converted to shares as of June 30, 2021, and concurrent with the Company’s reorganization on December 20 th ,

2021, are no longer accessible to the Company.

Series A Preferred Stock and Common Stock Purchase Warrants

(a) Series A Preferred Stock Terms

On May 20, 2021, we entered

into a Securities Purchase Agreement (the “SPA”) with 3i, LP, a Delaware limited partnership (“3i”) for the purchase

and sale of 20,000 shares of our Series A Convertible Preferred Stock (the “Preferred Shares”) for $ 1,000 per share for an

aggregate purchase price of $ 20 million (the “PIPE Investment”) with accompanying common stock purchase warrants (the “3i

On December 8, 2021, the Board adopted resolutions to create a series of twenty thousand ( 20,000 ) shares of preferred

stock, par value $ 0.0001 , designated as “Series A Convertible Preferred Stock.” On December 14, 2021, we filed a Certificate

of Designations (the “COD”) setting forth the rights, preferences, privileges and restrictions for 20,000 shares of Series

A Convertible Preferred Stock (the “Series A Preferred Stock”).

On December 20, 2021, we issued 20,000 shares of Preferred

Stock at $1,000 per share and a common stock purchase warrant to purchase 2,018,958 shares of common stock at an initial exercise price

of $9.9061 to 3i, LP for an aggregate purchase price of $20 million.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Series A Preferred Stock and Common Stock Purchase Warrants

Except to the extent that

the holders of at least a majority of the outstanding Series A Preferred Stock (the “Required Holders”) expressly consent

to the creation of Parity Stock (as defined below) or Senior Preferred Stock (as defined below), all shares of capital stock are junior

in rank to all Series A Preferred Stock with respect to the preferences as to dividends, distributions and payments upon the liquidation,

dissolution and winding up of the Company (such junior stock is referred to herein collectively as “Junior Stock”).

of all such shares of capital stock of the Company will be subject to the rights, powers, preferences and privileges of the Series A Preferred

Without limiting any other provision of this COD, without the prior express consent of the Required Holders, voting separate as

a single class, the Company will not hereafter authorize or issue any additional or other shares of capital stock that is (i) of senior

rank to the Series A Preferred Stock in respect of the preferences as to dividends, distributions and payments upon the liquidation, dissolution

and winding up of the Company (collectively, the “Senior Preferred Stock”), (ii) of pari passu rank to the Series A Preferred

Stock in respect of the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the

Company (collectively, the “Parity Stock”) or (iii) any Junior Stock having a maturity date or any other date requiring redemption

or repayment of such shares of Junior Stock that is prior to the first anniversary of the December 20, 2021.

In the event of the merger

or consolidation of the Company with or into another corporation, the Series A Preferred Stock will maintain their relative rights, powers,

designations, privileges and preferences provided for herein and no such merger or consolidation will result inconsistent therewith.

and sale of 20,000 shares of our Series A Convertible Preferred Stock (the “Series A Preferred Stock”) for $ 1,000 per share

for an aggregate purchase price of $ 20 million (the “PIPE Investment”) with accompanying common stock purchase warrants (the

“3i Warrants”).

On December 8, 2021, the Board adopted resolutions to create a series of 500,000 shares of preferred stock,

par value $ 0.0001 , of which 20,000 shares were designated as Series A Preferred Stock.

On December 14, 2021, we filed a Certificate of

Designations (the “COD”) setting forth the rights, preferences, privileges and restrictions for 20,000 shares of Series A

Preferred Stock.

On December 20, 2021, we issued 20,000 shares of Series A Preferred Stock at $1,000 per share and a common stock

purchase warrant to purchase 2,018,958 shares of common stock at an initial exercise price of $9.9061 to 3i for an aggregate purchase

price of $20 million.

All shares of capital stock

including other classes of preferred stock are junior in rank to all Series A Preferred Stock with respect to the preferences as to dividends,

distributions and payments upon the liquidation, dissolution and winding up of the Company.

The Series A Preferred Stock

5 unchanged sentences

be entitled to convert into shares of common stock at an initial fixed conversion price of $9.9061 per share, subject to a beneficial

ownership limitation of 4.99% which can be adjusted to a beneficial ownership limitation of 9.99% upon sixty-one (61) days’ prior

written notice.

ownership limitation of 4.99% which can be adjusted to a beneficial ownership limitation of 9.99% upon 61 days’ prior written notice.

Series A Preferred Stock and Common Stock Purchase Warrants

(a) Series A Preferred Stock Terms (cont.)

Under the terms of the COD,

1 unchanged sentence

In the event that (i) the average

of the VWAP of the Company’s shares for each of the five (5) trading days immediately preceding the date of delivery is less than

the fixed conversion price of $9.9061 (a “Price Failure”), or (ii) the sum of (x) the aggregate daily dollar trading volume

(as reported on Bloomberg) of our common stock on Nasdaq during the ten (10) trading day period ending on the trading day immediately

preceding such date of determination, divided by (y) ten (10), is less than $1,500,000 (a (“Volume Maximum Failure”), each

share of Series A Preferred Stock is entitled to convert at a price equal to 90% of the sum of the two (2) lowest VWAPs during the ten

(10) trading day period immediately preceding the date of delivery divided by two (2) (the “90% Conversion Price”), but not

less than the Floor Price (as defined in the COD), or, at the time of such Price Failure or Volume Maximum Failure, the sum of the average

Dollar volume for our common stock during the ten (10) days previous to conversion divided by ten (10) is less than $2 million

then each share of Series A Preferred Stock is entitled to convert at the lower of the fixed conversion price or a price equal to 80%

of the sum of the two (2) lowest VWAPs during the ten (10) trading day period immediately preceding delivery divided by two (2) (the “80%

Conversion Price”), but not less than the Floor Price (such 80% Conversion Price or 90% Conversion Price, as the case may be, the

“Alternate Conversion Price”).

In addition, the COD provides for an adjustment to the conversion price and exercise of the

Warrant in the event of a “new issuance” of our common stock, or common stock equivalents, at a price less than the applicable

conversion price of the Series A Preferred Stock or exercise price of the Warrant.

The adjustment is a “full ratchet” adjustment

in the conversion price of the Series A Preferred Stock equal to the lower of the new issuance price or the then existing conversion price

of the Series A Preferred Stock with few exceptions.

Furthermore, if we fail to maintain an adequate number of authorized and unissued

shares of our common stock in reserve and we are unable to deliver shares or our common stock upon conversion of the Preferred Stock,

we may be required to redeem the shares we were unable to deliver at a price equal to the highest closing price of our common stock during

the time between the failure to deliver shares of our common stock and the redemption date.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Series A Preferred Stock and Common Stock Purchase Warrants

If certain defined “triggering events” defined in the COD

occur, such as a breach of the Registration Rights Agreement (specifically the Company’s Form S-1 as filed on SEC Edgar on September

13, 2021 and subsequently amended), suspension of trading, or our failure to convert the Series A Preferred Stock into common stock when

a conversion right is exercised, failure to issue our common stock when the Warrant is exercised, failure to declare and pay to any holder

any dividend on any dividend date, or upon a “bankruptcy triggering event” (as defined in the COD), then we may be required

to redeem the Series A Preferred Stock for cash in the amount of up to a minimum of 125% of their Conversion Amount (as defined in the

In addition, if thirty (30) days after our common stock commences trading on the Nasdaq Stock Market the sum of the average daily

dollar volume for the ten (10) days previous to conversion divided by ten (10) is less than $ 2.5 million, then the Series A Preferred

of the VWAP of the Company’s shares for each of the five trading days immediately preceding the date of delivery is less than the

fixed conversion price of $9.9061 (a “Price Failure”), or (ii) the sum of (x) the aggregate daily dollar trading volume (as

reported on Bloomberg) of our common stock on Nasdaq during the 10 trading day period ending on the trading day immediately preceding

such date of determination, divided by (y) 10, is less than $1,500 (a “Volume Maximum Failure”), each share of Series A Preferred

Stock is entitled to convert at a price equal to 90% of the sum of the two lowest VWAPs during the 10 trading day period immediately preceding

the date of delivery divided by two (the “90% Conversion Price”), but not less than the Floor Price (as defined in the COD),

or, at the time of such Price Failure or Volume Maximum Failure, the sum of the average daily U.S.

Dollar volume for our common stock

during the 10 days previous to conversion divided by 10 is less than $2 million then each share of Series A Preferred Stock is entitled

to convert at the lower of the fixed conversion price or a price equal to 80% of the sum of the two lowest VWAPs during the 10 trading

day period immediately preceding delivery divided by two (the “80% Conversion Price”), but not less than the Floor Price (such

80% Conversion Price or 90% Conversion Price, as the case may be, the “Alternate Conversion Price”).

In addition, the COD and the

Warrant provides for an adjustment to the conversion price and exercise of the Warrant in the event of a “new issuance” of

our common stock, or common stock equivalents, at a price less than the applicable conversion price of the Series A Preferred Stock or

exercise price of the Warrant.

The adjustment is a “full ratchet” adjustment in the conversion price of the Series A Preferred

Stock and the exercise price of the Warrant equal to the lower of the new issuance price or the then existing conversion price of the

Series A Preferred Stock or exercise price of Warrant, with few exceptions required to redeem the shares we were unable to deliver at

a price equal to the highest closing price of our common stock during the time between the failure to deliver shares of our common stock

and the redemption date.

If certain defined “triggering

events” defined in the COD occur, such as a breach of the Registration Rights Agreement (specifically the Company’s Form S-1

as filed on SEC Edgar on September 13, 2021 and subsequently amended), suspension of trading, or our failure to convert the Series A Preferred

Stock into common stock when a conversion right is exercised, failure to issue our common stock when the Warrant is exercised, failure

to declare and pay to any holder any dividend on any dividend date, or upon a “bankruptcy triggering event” (as defined in

the COD), then we may be required to redeem the Series A Preferred Stock for cash in the amount of up to a minimum of 125 % of their Conversion

Amount (as defined in the COD).

In addition, if 30 days after our common stock commences trading on the Nasdaq Stock Market the sum of

the average daily dollar volume for the 10 days previous to conversion divided by 10 is less than $ 2.5 million, then the Series A Preferred

Stock will be entitled to a one-time dividend equal to an 8 % increase in the stated value of the Series A Preferred Stock, or an $ 80 dollar

increase per share in stated value, resulting in a stated value of $ 1,080 (one thousand and eighty dollars) per Series A Preferred Stock.

Additionally, if any of the triggering events are not addressed on a timely basis, we could be liable to pay and 18 % per annum dividend.

On April 29, 2022, the Company experienced a triggering event as defined in the COD.

See Note 27(e), Subsequent Events.

In the event that the Company experiences a “Change of Control” (as defined in the COD), the Company

may also be required to redeem the Preferred Shares for cash at a minimum of 125 % of their Conversion Amount.

Holders of Series A Preferred

Stock will have no voting rights, except as required by law and as expressly provided in the COD.

On December 21, 2021, 3i exercised

its option to convert 200 shares of Series A Preferred Stock for 20,190 shares of our common stock.

As of December 31, 2021, we had 19,800

shares of Series A Preferred Stock issued and outstanding.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

increase per share in stated value, resulting in a stated value of $ 1,080 per Series A Preferred Stock.

Additionally, if any of the triggering

events are not addressed on a timely basis, we could be liable to pay an 18 % per annum dividend.

If the Company experiences

a “Change of Control” (as defined in the COD), the Company may also be required to redeem the Preferred Shares for cash at

a minimum of 125 % of their Conversion Amount.

Holders of Series A Preferred Stock will have no voting rights, except as required by law

and as expressly provided in the COD.

(b) Amendments to Series A Convertible Preferred Stock

Voting Rights

On November 22, 2022, the

Company amended Section 12 of the Certificate of Designation of Series A Convertible Preferred Stock to provide for voting rights.

to a 9.99 % beneficial ownership limitation, the holders of Series A Preferred Stock shall have 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 $ 9.906 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 Convertible Preferred Stock.

The voting rights described above shall expire on February

28, 2023, and thereafter holders of preferred stock shall not have voting rights except as required by law.

Series A Preferred Stock and Common Stock Purchase Warrants

(b) 3i Warrant Terms

Concurrently with the issuance of our Preferred Stock, the Company

issued warrants to purchase 2,018,958 shares of the Company’s common stock at an exercise price of $ 9.9061 per share, subject to

adjustments (“3i Warrants”).

Conversion Price Adjustment for Series A Preferred Stock

On December 9, 2022, the Company

and 3i entered into a letter agreement which provided that pursuant to Section 8(g) of the Certificate of Designations for the Series

A Preferred Stock, the parties agreed that the Conversion Price was modified to mean the lower of:

(i) the Closing Sale Price on the trading

date immediately preceding the Conversion Date 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 through and inclusive of January 19, 2023.

Any conversion which occurs shall be voluntary

at the election of the Holder, which shall evidence its election as to the Series A being converted in writing on a conversion notice

setting forth the then Minimum Price.

Management determined that the adjustment made to the Conversion Price is not a modification of

the COD which allows for adjustments to the Conversion Price at any time by the Company and the other terms of the Certificate of Designations

remained unchanged.

As more specifically discussed

below, a “Triggering Event” under the COD occurred on April 29, 2022, under Section 5(a)(ii) of the COD, which would have

resulted in the following unless 3i, agreed to forebear and/or waive its rights under the COD:

An 18 % per annum dividend

will start to accrue on the stated value of all outstanding Preferred Shares and will continue to accrue until the Triggering Event has

The accrued dividend is added to the stated value prior to the Dividend Payment Date and paid in cash on the first trading

day of the Company’s next fiscal quarter.

A “Late Charge” in the amount of 18 % per annum will accrue on any amounts

due to be paid to holders of the Preferred Shares if not paid when due, including payments that may be owed under Section (e) of the Registration

Rights Agreement (“RRA”).

A “Triggering Event

Redemption Right” will commence and remain open for a period of 20 trading days from the later of the date either the Triggering

Event is cured or the receipt by 3i of the Triggering Event Notice.

Under the Triggering Event Redemption Right, if elected by the holder

of the Preferred Shares, the Company would be obligated to redeem all or a portion of the Preferred Shares for a minimum of 125 % of the

stated value of the Preferred Shares.

Concurrently, under the provisions of the PIPE Warrant, if elected by 3i, the Company would be obligated

to redeem the PIPE Warrant for the Black Sholes Triggering Event Value as defined in the warrant agreement.

A “Registration Delay

Payment” will accrue on April 22, 2022 (the expiration of the Allowable Grace Period under the RRA) in the amount of 2 % of 3i’s

“Purchase Price” as defined in the Securities Purchase Agreement which is approximately 2 % of $ 20 million, or $ 400 and will

continue to accrue at 2 % every 30 days thereafter.

Additionally, a late charge of 2 % per month will accrue on any payments that are not

paid when due.

The Registration Delay Payments will stop accruing when the post-effective amendment is declared effective by the SEC at

which time the registration statement and its prospectus will again be available for the resale of common stock.

On May 4, 2022, the Company

and 3i entered into a Forbearance Agreement and Waiver, dated April 27, 2022, wherein 3i confirmed that no Triggering Event as defined

under the COD has occurred prior to April 27, 2022, that a Triggering Event under Section 5(a)(ii) will and has occurred on April 29,

2022, and that in consideration for the Registration Delay Payments the Company is obligated to pay under the RRA, and additional amounts

the Company is obligated to pay under the COD and 3i’s legal fees incurred in the preparation of the Forbearance Agreement and Waiver

in the aggregate of $ 539 paid upon execution of the Forbearance Agreement and Waiver, and so long as the Company pays the Registration

Delay Payments that become due and payable under the RRA after the execution of the Forbearance Agreement and Waiver, 3i has agreed to

forbear exercising any rights or remedies that it may have under the COD that arises as a result of a Triggering Event under Section 5(a)(ii)

of the COD and Section 4(c)(ii) of the PIPE Warrant until the earlier to occur of (i) the date immediately prior to the date of occurrence

of a Bankruptcy Triggering Event, (ii) the date of occurrence of any other Triggering Event under Section 5(a) of the COD (excluding any

Triggering Event arising solely as a result of Section 5(a)(ii) of the COD and Section 4(c)(ii) of the PIPE Warrant), (iii) the time of

any breach by the Company under the Forbearance Agreement and Waiver, (iv) the Resale Availability Date as defined therein and (v) June

4, 2022 (such period, the “Forbearance Period”).

Provided that the Company is not in breach of its obligations under Forbearance

Agreement and Waiver, effective as of the Trading Day immediately following the date the Company cures the Triggering Event under Section

5(a)(ii) of the COD, 3i agrees to waive any rights or remedies that it may have under the COD that arises as a result of a Triggering

Event under Section 5(a) of the COD and Section 4(c)(ii) of the PIPE Warrant that may have arisen prior to the date of the Forbearance

Agreement and Waiver.

Series A Preferred Stock and Common Stock Purchase Warrants

On June 6, 2022, the Company

entered into that certain First Amendment to the Forbearance Agreement and Waiver with 3i, (the “Amendment”) to extend the

forbearance period date under subsection 5 of Section 2 of the Forbearance Agreement and Waiver dated April 27, 2022 (the “Original

Agreement”) from June 4, 2022, to June 20, 2022.

In addition, the parties agreed that the forbearance period of June 20,

2022 may also be extended for an additional 15 days to July 5, 2022, provided that, on June 20, 2022 the Company will remove the

restrictive legend on 441,005 shares of common stock of the Company issued in connection with the conversion of certain shares of Series

A Preferred Stock (“Conversion Shares”) by 3i pursuant to the conversion notice dated May 2, 2022, and 3i is able to

sell the Conversion Shares free of restrictions (including volume restrictions) pursuant to SEC Rule 144(b)(1)(i) (the “Legend Removal”).

The Original Agreement was

entered into by the Company and 3i because of a delay under the Registration Rights Agreement dated May 20, 2021.

Under the Original Agreement,

in exchange for certain consideration, 3i agreed to forbear exercising any rights or remedies that it may have had under the COD in connection

with certain Triggering Events (as described therein) until the earlier to occur of (i) the date immediately prior to the date of occurrence

of a Bankruptcy Triggering Event, (ii) the date of occurrence of any other Triggering Event under Section 5(a) of the COD (excluding any

Triggering Event arising solely as a result of Section 5(a)(ii) of the COD and Section 4(c)(ii) of the Warrant), (iii) the time of any

breach by the Company under the Forbearance Agreement and Waiver, (iv) the Resale Availability Date as defined therein and (v) June 4,

2022 (such period, the “Original Forbearance Period”).

As a result of the Amendment, the June 4, 2022, date has been amended

to June 20, 2022, with the option to extend to July 5, 2022, subject to the Legend Removal.

( d) 3i Warrant Terms

Concurrently with the issuance

of our Series A Preferred Stock, the Company issued warrants to purchase 2,018,958 shares of the Company’s common stock at an exercise

price of $ 9.9061 per share, subject to adjustments (“3i Warrants”).

The material terms of the 3i Warrants are as follows:

(i) The warrants have and term of three years and expire on December 20, 2024;

(ii) The exercise of the warrants are subject to a beneficial ownership limitation of 4.99% which can be adjusted to a beneficial ownership limitation of 9.99% upon sixty-one (61) days’ prior written notice ;

(i) The warrants have a term of three years and expire on December 20, 2024;

(ii) The exercise of the warrants are subject to a beneficial ownership limitation of 4.99% which can be adjusted to a beneficial ownership limitation of 9.99% upon 61 days’ prior written notice ;

The exercise price and the number of 3i Warrant shares issuable upon the exercise of the 3i Warrants are subject to adjustment, as follows:

3 unchanged sentences

Voluntary adjustment for the Company to any amount and for any period deemed appropriate by the board of directors of the Company.

Series A Preferred Stock and Common Stock Purchase Warrants

( d) 3i Warrant Terms (cont.)

In the event of either the Company consolidating or merging with or into another entity (the “Fundamental Transaction”), the sale or assignment of substantially all of the Company’s subsidiaries, or a Triggering Event (as defined in the COD), the holder is entitled to require the Company to pay the holder an amount in cash equal to the Black-Scholes value of the 3i Warrants on or prior to the later of the second trading after the date of request for payment and the date of consummation of the Fundamental Transaction;

or at any time after the occurrence of the Triggering Event.

Series A Convertible Preferred Stock

(e) Accounting

Series A Preferred Stock

The Company evaluated the

Series A Convertible Preferred Stock under ASC 480-10 to determine whether it represents an obligation that would require the Company

to classify the instrument as a liability and determined that the Series A Convertible Preferred Stock is not a liability pursuant to

Management then evaluated the instrument pursuant to ASC 815 and determined that because the holders of the Series A Convertible

Preferred Stock may be entitled to receive cash, the Series A Convertible Preferred stock should be recorded as mezzanine equity given

the cash redemption right that is within the holder’s control.

Series A Preferred Stock under ASC 480-10 to determine whether it represents an obligation that would require the Company to classify

the instrument as a liability and determined that the Series A Preferred Stock is not a liability pursuant to ASC 480-10.

Management then

evaluated the instrument pursuant to ASC 815 and determined that because the holders of the Series A Preferred Stock may be entitled to

receive cash, the Series A Preferred stock should be recorded as mezzanine equity given the cash redemption right that is within the holder’s

Generally, preferred stock

7 unchanged sentences

redemption becomes probable to occur.

Through December 9,

2022, the derivative scope exception under ASC 815 is not met because a settlement contingency is not indexed to the Company’s stock.

Therefore, the redemption feature (derivative liability) has been bifurcated from the Series A Preferred Stock and recorded as a derivative

The fair value of the Series A Preferred Stock Redemption Feature (the “Redemption Feature”) derivative is the

difference between the fair value of the Series A Preferred Stock with the Redemption Feature and the Series A Preferred Stock without

the Redemption Feature.

The Series A Preferred Stock Redemption Feature has been valued with a Monte Carlo Simulation model, using the

inputs as described in Note 13(a).

Subsequent to December 9,

2022, because of the agreed conversion price adjustment (see Note 12(b) ii.), although bifurcation of the conversion feature is still

required, the value of the derivative has been determined to be immaterial since the conversion price will always be at market.

The 3i Warrants were identified

as a freestanding financial instrument and are within the scope of ASC 480-10.

Liability-classified contracts are initially measured at

fair value (or allocated value).

Subsequent changes in fair value are recognized through earnings for as long as the contracts continue

to be classified as a liability.

The measurement of fair value is determined utilizing an appropriate valuation model taking into account

all relevant assumptions current at the date of issuance and at each reporting period (i.e., share price, exercise price, term, volatility,

risk-free rate and expected dividend rate.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

as a freestanding financial instrument and meet the criteria for derivative liability classification, initially measured at fair value.

Subsequent changes in fair value are recognized through earnings for as long as the contracts continue to be classified as a liability.

The measurement of fair value is determined utilizing an appropriate valuation model considering all relevant assumptions current at the

date of issuance and at each reporting period (i.e., share price, exercise price, term, volatility, risk-free rate and expected dividend

Series A Preferred Stock and Common Stock Purchase Warrants

(f) Series A Preferred Stock Conversions

Year ended December 31, 2022

During the year ended December

31, 2022, 3i exercised its option to convert 6,214 shares of Series A Preferred stock for 7,801,831 shares of common stock.

As of December

31, 2022, we had 13,586 shares of Series A Preferred Stock issued and outstanding.

The fair value of the derivative liability associated

with the Series A Preferred Stock converted during the year ended December 31, 2022, as determined by Monte Carlo simulations, was $ 954 .

Because the latest nine conversions

in the period January 1, 2022, through December 9, 2022, were completed at less than the agreed floor price, we recorded a floor price

liability and recognized a corresponding reduction of additional paid in capital, as follows:

During the six months ended June 30, 2022, $ 1,511 (paid in cash prior to June 30, 2022);

During the three months ended September 30, 2022, $ 1,646 (See Note 11(a));

On December 9, 2022, we issued 121,018 shares of Common Stock to the Investor upon the conversion of 222 Conversion Shares and recorded a floor price liability of $ 264 .

Additionally, because the

Company’s average daily dollar volume of stock trading was less than $ 2.5 million during a ten-day period in January 2022,

the Company has recorded a one-time deemed dividend of 8 % in the amount of $ 1,572 on preferred stock converted between February 1, 2022

and March 31, 2022 and the balance of Series A Preferred Stock outstanding as at March 31, 2022 as an increase to the value of the Series

A Preferred Stock and a reduction of additional paid in capital.

In addition, under the terms of the Registration Rights Agreement (“RRA”),

during the period January 1, 2022, through December 31, 2022, the Company has also paid 3i an additional $ 800 in Registration Delay Payments.

On December 9, 2022, the Company

and 3i, entered into a letter agreement which provided that pursuant to Section 8(g) of the Certificate of Designations for the Series

A Preferred Stock, 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.

Year ended December 31, 2021

On December 21, 2021, when

4 unchanged sentences

of the carrying amount resulting in a $ 154 decrease in fair value of the derivative liability and a corresponding change in fair value

of derivative liability.

Management further evaluated

the financial instrument and all identified features pursuant to ASC 815 and concluded the Warrants would be classified as a liability

and subsequently measured at fair value in future reporting periods.

Accordingly, a residual fair value method has been applied with respect

to the allocation of proceeds between the Preferred Stock and the Warrants.

On the issuance date, the

Company utilized a Monte Carlo simulation model to estimate the fair value of the Warrants to be approximately $ 11.3 million, using the

following inputs:

Initial exercise price

Stock price on valuation date

Risk-free rate

Expected life of the Warrant to convert (years)

Rounded annual volatility

Timing of liquidity event

Q3 2022 – Q2 2023

Expected probability of event

Probability of dilutive financing (Down-round)

Given the relative short time

between the issuance date (i.e., December 20, 2021) and the Company’s year-end reporting period (i.e., December 31, 2021), the Company

believes there is no material change in the estimated fair value of the Warrants.

of derivative liability in the Consolidated Statement of Operations and Comprehensive Loss.

Series A Preferred Stock and Common Stock Purchase Warrants

The accounting for the Series

A Convertible Preferred Stock and Warrants is illustrated in the table below:

Mezzanine Equity

Comprehensive

change in fair value

A Preferred Stock and Warrants is illustrated in the table below:

Consolidated Balance Sheets

Consolidated Statement of

Operations & Comprehensive

adjustment to

Subscription proceeds received on December 20, 2021

Costs allocated

Costs expensed

Costs allocated and expensed

December 21, 2021 conversion of 200 Series A Preferred Stock

Fair value adjustment at December 31, 2021

Balances at December 31, 2021

* Valuation of the Series A Preferred Derivative Liability is discussed in Note 17(a).

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Balance, December 31, 2021

Consolidated Balance Sheets

Comprehensive

Fair value adjustment to derivative and warrant liabilities

Balances, December 31, 2021

Conversion of 6,214 shares of Series A Preferred Stock into common stock

Reclassification of derivative liability relating to converted Series A Preferred stock

Floor price adjustment on conversion of shares of Series A Preferred stock

8 % deemed dividend on Preferred Stock

Fair value adjustment

Balances, December 31, 2022

* Valuation of the Series A Preferred Derivative Liability is discussed

in Note 12 (e) ii.

Derivative Liabilities

(a) Series A Preferred Stock Conversion Feature

The derivative scope exception

under ASC 815 is not met because a settlement contingency is not indexed to the Company’s stock.

Therefore, the redemption feature

(derivative liability) has been bifurcated from the Series A Preferred Stock and recorded as a derivative liability.

The derivative value

of the Series A Preferred Stock Redemption Feature (the “Redemption Feature”) is the difference between the fair value of

the Series A Preferred Stock with the Redemption Feature and the Series A Preferred Stock without the Redemption Feature.

Preferred Stock Redemption Feature has been valued with a Monte Carlo Simulation model, using the following inputs:

Base case conversion price

(a) Continuity of Warrant Liability and Derivative Liabilities

The derivative liabilities are measured at fair value at each reporting

period and the reconciliation of changes in fair value in the years ended December 31, 2022, and 2021, is presented in the following tables:

Issued December 20, 2021

Balance as of January 1, 2022

Change in fair value

Amount transferred to Equity

Balance as of December 31, 2022

Fair value per 3i Warrant / Series A Preferred share issuable at period end

Warrants for the

termination of the

Financing Facility

December 2019

Balance as of January 1, 2021

Issued during the period

Change in fair value

Amount transferred to Equity

Translation effect

Balance as of December 31, 2021

Fair value per warrant / Series A Preferred share issuable at period end

(b) Series A Preferred Stock Conversion

Feature – Valuation Inputs

The following inputs were

used for the Series A Preferred Stock conversions recorded in the year ended December 31, 2022 and the fair value of the Series A

Preferred Derivative liability determined at September 30, 2022 and December 31, 2021:

September 30,

Initial exercise price

$ 9.05 - $ 9.91

Stock price on valuation date

$ 1.10 - $ 10.75

Risk-free rate

1.03 % - 4.23 %

Time to exercise (years)

2 unchanged sentences

Rounded 10-day average daily volume (in 1,000’s)

On December 21, 2021, 200

Series A Convertible Preferred shares were converted to 20,190 shares of the Company’s common stock and $ 7 and $ 74 respectively

were reclassified from Series A Convertible Preferred Stock and derivative liabilities to equity.

As of December 31, 2021, the Company

recognized a $ 154 fair value adjustment to Series A Preferred Stock derivative liability.

Accordingly, as at December 31, 2021, the Series

A Preferred Stock Redemption Feature is valued at $ 7,181 .

(b) Investor Warrants

The exercise price of our

investor warrants which were issued by Allarity Therapeutics A/S, described below is denominated in SEK;

however, the functional currency

of Allarity A/S is DKK.

Consequently, the value of the proceeds on exercise is not fixed and will vary based on foreign exchange rate

The investor warrants when issued other than as compensation for goods and services are therefore a derivative for accounting

purposes and are required to be recognized as a derivative liability and measured at fair value at each reporting period.

in fair value from period to period are recorded as non-cash gain or loss in the Consolidated Statements of Operations and Comprehensive

Upon exercise, the holders pay the Company the respective exercise price for each investor warrant exercised in exchange for one

common share of the Company and the fair value at the date of exercise and the associated non-cash liability will be reclassified to share

The non-cash liability associated with any investor warrants that expires unexercised is recorded as a gain in the consolidated

statements of comprehensive loss.

There are no circumstances in which the Company would be required to pay any cash upon exercise or expiry

of the investor warrants.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

$ 297 - $ 873

* The agreed conversion price adjustment (see Note 12 (b) ii.) resulted in the Series A Preferred liability value derivative being valued at zero at December 9, 2022.

Therefore, there were no conversions subsequent to September 30, 2022, which impacted the Series A derivative liability.

Derivative Liabilities (cont.)

On December 31, 2022, the

Company utilized the reset strike options Type 2 model by Espen Garder Haug and Black-Scholes Merton models to estimate the fair value

of the 3i Warrants to be approximately $ 374 .

On December 31, 2021, the Company utilized Monte Carlo simulations models to estimate

the fair value of the 3i Warrants to be approximately $ 11,273 .

The 3i Warrants were valued at December 31, 2022 and 2021, using the following

Initial exercise price

Stock price on valuation date

Risk-free rate

Expected life of the 3i Warrant to convert (years)

Rounded annual volatility

Timing of liquidity event

March 15, 2023

Q3 2022 – Q2 2023

Expected probability of event

(d) Investor Warrants

The exercise price of our

investor warrants which were issued by Allarity A/S, described below is denominated in SEK;

however, the functional currency of Allarity

Consequently, the value of the proceeds on exercise is not fixed and will vary based on foreign exchange rate movements.

investor warrants, when issued other than as compensation for goods and services are therefore a derivative for accounting purposes and

are required to be recognized as a derivative liability and measured at fair value at each reporting period.

Any changes in fair value

from period to period are recorded as non-cash gain or loss in the Consolidated Statements of Operations and Comprehensive Loss.

exercise, the holders pay the Company the respective exercise price for each investor warrant exercised in exchange for one common share

of the Company and the fair value at the date of exercise and the associated non-cash liability will be reclassified to share capital.

The non-cash liability associated with any investor warrants that expire unexercised is recorded as a gain in the consolidated statements

of comprehensive loss.

There are no circumstances in which the Company would be required to pay any cash upon exercise or expiry of the

investor warrants.

In connection with subscriptions

of units in the rights issues carried out:

April/May 2019, 403,324 investor warrants (“TO1 warrants”) were granted to investors in connection with subscription of Offer Units in the rights issued carried out April/May 2019.

All Warrants were vested as of the grant date.

A warrant gives the right, during a fixed period to subscribe for one common share in the Company for $ 45 per share.

All TO1 warrants expired unexercised in the period ended December 31, 2020;

October — December 2019, 1,006,822 investor warrants (“TO2 warrants”) were granted to investors.

4 unchanged sentences

During the year ended December 31, 2021, a total of 176 warrants of series TO2 were exercised for total proceeds of $ 6 ;

in June 2021, 2,417,824 investor warrants (“TO3 warrants”) were granted to investors and 482,250 TO3 warrants have been granted to underwriters.

in June 2021, 2,417,824 investor warrants (“TO3 Warrants”) were granted to investors and 482,250 TO3 warrants have been granted to underwriters as a non-cash consideration of the share issuance cost amounting $ 2,384 .

All TO3 Warrants were vested as of the grant date and were exercisable for $ 10 per common shares.

1 unchanged sentence

Any TO3 Warrants unexercised after September 13, 2021, expired without compensation or payment of any kind to the warrant holders.

During the year ended December 31, 2021, 274,386 warrants of series TO3 were exercised for total proceeds of $2,679 and the balance expired unexercised on September 13, 2021.

During the year ended December 31, 2021, 274,386 TO3 Warrants were exercised for total proceeds of $2,679 and the balance expired unexercised on September 13, 2021.

Derivative Liabilities (cont.)

The table below summarizes

1 unchanged sentence

during the year.

Weighted Average

Exercise Price

Weighted Average

Exercise Price

Outstanding at January 1, 2020

2 unchanged sentences

Exercisable at December 31, 2021

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Derivative Liabilities (cont.)

There were no investor warrants

issued or outstanding during the year ended December 31, 2022.

The fair value of the Company’s

TO3 warrant liabilities, which all expired as of September 13, 2021, were estimated based upon Monte Carlo simulations under different

market conditions, as scheduled below, resulting in a probability weighted value of the TO3 warrants of $ 2,000 at June 24, 2021, at the

Warrants exercised on September 13, 2021, were re-valued at $ 206 using a Black-Scholes model with the assumptions noted

Exercise price

Risk-free interest

Expected dividend yield

Contractual life (years)

Expected volatility

(e) Financing

Effective November 29, 2018,

9 unchanged sentences

settled one of the five tranches with a cash payment of $ 673 and in February 2020 the balance of the committed tranches was settled

by receipt of $ 1,000 from the investor in cash, in exchange for a subscription of 186,600 common shares in the Company (Settlement Shares)

valued at $ 2,500 and the issuance of 79,937 investor warrants (Settlement Warrants) valued at $ 625 as of the February 23, 2020, grant

All Settlement Warrants immediately vested on the grant date, were exercisable at $ 20 per common share and expired unexercised as

of December 12, 2021.

(d) Valuation of Derivative Liabilities

The derivative liabilities

are measured at fair value at each reporting period and the reconciliation of changes in fair value is presented in the following tables:

Redemption Feature

Settlement Warrants for the termination of the

Financing Facility

December 2019

Balance beginning

Issued during the period

Change in fair value

Amount transferred to Equity

Translation effect

Balance – end of period

Fair value per warrant / Series A Preferred share issuable at period end

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

by receipt of $ 1,000 from the investor in cash, in exchange for a subscription of 186,600 common shares in the Company (“Settlement

Shares”) valued at $ 2,500 and the issuance of 79,937 investor warrants (“Settlement Warrants”) valued at $ 625 as of

the February 23, 2020, grant date.

All Settlement Warrants immediately vested on the grant date, were exercisable at $ 20 per common share

and expired unexercised as of December 12, 2021.

Derivative Liabilities (cont.)

The fair value of the Company’s

TO3 warrant liabilities, which all expired as of September 13, 2021, were estimated based upon Monte Carlo simulations under different

market conditions, as scheduled below, resulting in a probability weighted value of the TO3 warrants of $ 2,000 at June 24, 2021 at the

And warrants exercised on September 13, 2021, were re-valued at $ 206 using a Black-Scholes model with the assumptions

September 13,

Exercise price

Risk-free interest

Expected dividend yield

Contractual life (years)

Expected volatility

The fair value of the Company’s

Settlement Warrant derivative liabilities, which all expired as of December 31, 2021, were estimated initially and on a quarterly

basis using the Black-Scholes option pricing model and based on the following assumptions:

Settlement Warrants for the

termination of the Financing Facility

Settlement Warrants

termination of the

Financing Facility

Exercise price

$ 20.0 – (SEK 165.0 )

$ 17.0 – (SEK 375.0 )

$ 5.0 – (SEK 40.0 )

$ 13.5 – (SEK 130.5 )

5.0 – (SEK 40.0 )

Risk-free interest

6 unchanged sentences

As a result of the recapitalization

share exchange described in Notes 1 and 4, to these financial statements, all outstanding shares, warrants and options were exchanged

on a 50:1 basis as of December 20, 2021, and accordingly, all share, warrant, option and per share disclosure in these financial statements

has been retroactively adjusted to reflect the 50:1 reverse split unless otherwise stated.

share exchange described in Notes 1 and 4, to these consolidated financial statements, all outstanding shares, warrants and options were

exchanged on a 50:1 basis as of December 20, 2021, and accordingly, all share, warrant, option and per share disclosure in these consolidated

financial statements has been retroactively adjusted to reflect the 50:1 reverse split unless otherwise stated.

Our authorized capital stock

consists of 30,000,000 shares of common stock, par value $ 0.0001 per share, and 500,000 shares of preferred stock, par value $ 0.0001 per

share, of which 20,000 shares of preferred stock, has been designated Series A Convertible Preferred Stock.

share, of which 20,000 shares of preferred stock, have been designated Series A Preferred Stock and 200,000 have been designated as Series

B Preferred Stock (see note 14(a)ii.).

Our Certificate of Incorporation

2 unchanged sentences

optional or other special rights, and the qualifications, limitations, or restrictions thereof, of that series.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Stockholders’ Equity (cont.)

As of December 31, 2022 and

2020 respectively the Company’s total issued, and outstanding common shares were 8,096,014 and 4,252,021 respectively with a par

value $ 0.0001 .

2021, the Company’s total issued, and outstanding common shares were 15,897,845 and 8,096,014 , respectively, with a par value of

The shares are fully paid in.

The shares are not divided into classes, and no shares enjoy special rights.

Establishment

of Series B Preferred Stock

On 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”).

Following is a summary of the terms of the Series B Preferred Stock:

The number of shares designated as Series B Preferred Stock is 200,000 ;

The holders of Series B Preferred Stock shall not be entitled to receive dividends of any kind;

Each outstanding share of Series B Preferred Stock shall have 400 votes per share;

The Series B Preferred Stock

shall rank senior to the Common Stock, but junior to the Series A Preferred stock, as to any distribution of assets upon a liquidation,

dissolution or winding up of the Company, whether voluntarily or involuntarily;

Stockholders’ Equity (cont.)

All shares of Series B Preferred

Stock that are not present in person or by proxy through the presence of such holder’s shares of Common Stock or Series A Preferred

Stock, in person or by proxy, at any meeting of stockholders held to vote on the Reverse Stock Split, the Share Increase Proposal and

the Adjournment Proposal as of immediately prior to the opening of the polls at such meeting (the “Initial Redemption Time”)

shall automatically be redeemed by the Company at the Initial Redemption Time without further action on the part of the Company or the

holder thereof (the “Initial Redemption”);

Any outstanding shares of

Series B Preferred Stock that have not been redeemed pursuant to an Initial Redemption shall be redeemed in whole, but not in part, (i)

if such redemption is ordered by the Board of Directors in its sole discretion, automatically and effective on such time and date specified

by the Board of Directors in its sole discretion or (ii) automatically upon the approval by the Company’s stockholders of the Reverse

Stock Split and the Share Increase Proposal at any meeting of stockholders held for the purpose of voting on such proposals;

Each share of Series B Preferred

Stock redeemed in any Redemption shall be redeemed in consideration for the right to receive an amount equal to $0.01 in cash for each

one whole share of Series B Preferred Stock as of the applicable Redemption Time.

Issuance 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.

Effective February 3, 2023, the Company redeemed 190,786 shares of Series B Preferred

stock in exchange for $0.01 per share.

Share issuances

During the year ended December

31, 2022, the Company issued 7,801,831 common shares valued at $1,156 gross and ($2,265) net of the $3,421 floor price adjustments upon

the conversion of 6,214 shares of Series A Preferred Stock.

During the year ended December

31, 2021, the Company recorded a total of $ 2,475 in share issuance costs and issued:

(a) 295,537 common shares valued at $2,972 upon the exercise of common stock purchase warrants and the receipt of $2,765 in cash;

(a) 295,537 common shares valued at $2,972 upon the exercise of common stock purchase warrants and stock options and the receipt of $2,765 in cash;

Units consisting of 2,417,824 common shares and 2,417,824 common share purchase warrants for $5 per unit;

2 unchanged sentences

628,192 common shares valued at $2,880 upon conversion of debt and payment of accounts payable;

(d) 20,190 common shares valued at $82 upon the conversion of $200 in Series A Preferred shares.

During the year ended December

31, 2020, the Company issued:

(a) 361,359 common shares in exchange for $2,869 in cash and recognized $652 in share issuance costs;

186,600 common shares and 79,937 warrants in exchange for $1,092 in cash in settlement of the Financing Facility dated February 23, 2020;

the fair value of the common shares of $2,504 was recorded in equity and the $625 fair value of the warrants was recorded as a derivative liability which was adjusted to market at the end of every period;

as at December 31, 2021, the warrants have expired unexercised;

510,933 common shares valued at $3,002 on conversion of debt;

518,732 common shares valued at $3,906 in exchange for 37% of the NCI in Allarity Therapeutics Denmark ApS;

(e) 247,675 common shares valued at $2,029 in exchange for 16.09% of the NCI in OV US Inc.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Stockholders’ Equity (cont.)

(b) Non-controlling interests

There were no non-controlling

interests in the year ended December 31, 2021.

The following provides a reconciliation of the beginning and ending balances of the Company’s

non-controlling interests in Allarity Therapeutics Denmark ApS (formerly OV-SPV2 ApS) and OV US Inc.

for the year ended December 31, 2020:

(US$ in thousands)

Non-controlling

Non-controlling interest

Non-controlling Interest

Balance at December 31, 2019

Acquisition of 37 % of Allarity Therapeutics Denmark ApS for shares(see (d) above)

Acquisition of 16.09 % of OV US Inc.

for shares (see (e) above)

Income (loss) for 2020

Foreign currency translation

Balance at December 31, 2020

20,190 common shares valued at $82 upon the conversion of 200 Series A Preferred shares.

Share-based payments

2 unchanged sentences

of the board of directors, employees, and external consultants.

Share-based payments (cont.)

2021 Equity Incentive Plan

15 unchanged sentences

Director warrants were granted with a vesting period of 48 months.

Vested warrants are exercisable over a fixed period from grant date

up to and including November 23, 2027.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Share-based payments (cont.)

Vested warrants are exercisable over a fixed period from the grant

date up to and including November 23, 2026.

During the year ended December 31, 2022, a total of 388,017 of these stock options were forfeited.

Additional Executive Plan

4 unchanged sentences

were granted effective September 15, 2021, and became fully vested on that date.

The options have been valued at $ 1,004 with the Black-Scholes

model using an expected volatility of 97.88 %;

The options have been valued at $ 1,004 with the

Black-Scholes model using an expected volatility of 97.88 %;

expected life of 5 years;

risk free interest rate of ( 0.46 %);

an expected dividend yield

dividend yield of 0 %;

and an exercise price of $ 8.75 .

Vested warrants are exercisable for a fixed period from September 15, 2021, until

November 23, 2026.

During the year ended December 31, 2022, 156,025 options were forfeited.

Warrant plan #7

8 unchanged sentences

share became completely vested as of December 20, 2021.

Vested options are exercisable over a fixed period of 10 years from grant date.

Vested options are exercisable over a fixed period of 10 years from the grant

Warrant plan #6

9 unchanged sentences

Vested options are exercisable over a fixed period of 10 years from grant date.

Share-based payments (cont.)

Warrant plan #5

14 unchanged sentences

Warrant plan #3

On December 17, 2014, the Board

of Directors approved an equity-settled stock option plan, which provides key management personnel and with the option to purchase 570,000

On December 17, 2014, the

Board of Directors approved an equity-settled stock option plan, which provides key management personnel with the option to purchase 570,000

common shares of the Company at market price on the date of grant.

2 unchanged sentences

Vested warrants are exercisable over a fixed period from grant date up to and including July 1, 2021.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Share-based payments (cont.)

Warrant plans #1 - #6 and 2021 Stock Option Plan

2 unchanged sentences

All share-based payment warrants and stock option plans

During 2021, the total charge

to profit or loss amounted to $ 6,368 (2020:

$ 616 ) of which $ 4,203 (2020:

$ 616 ) are recognized as general and administrative expenses and

$ 2,165 is recognized as research and development expenses.

As of December 31, 2021, total unrecognized compensation cost relating to unvested

options granted was $ 4,526 and is expected to be realized over a period of 2.6 years.

The Company will issue shares upon exercise

of options from shares reserved under the plans.

During the years ended December

31, 2022 and 2021, the total charge to profit or loss amounted to $ 1,752 and $ 6,368 , respectively of which $ 1,156 and $ 4,203 , respectively,

are recognized as general and administrative expenses and $ 596 is recognized as research and development expenses.

As of December 31,

2022, total unrecognized compensation cost relating to unvested options granted was $ 1,003 and is expected to be realized over a period

of 2.6 years.

The Company will issue shares upon exercise of options from shares reserved under the plans.

The table below summarizes

the number of options that were outstanding, their weighted average exercise price and contractual term as of December 31, as well as

the movements during the period.

the number of options that were outstanding, their weighted average exercise price and contractual term as of December 31, 2022, as well

as the movements during the period.

Term (in years)

Balance on January 1, 2022

Outstanding as of December 31, 2022

Outstanding as of December 31, 2021

Options exercisable at December 31, 2022

The intrinsic value of options

outstanding at December 31, 2021 and 2020 was $ 4,149 and $ 0 respectively.

The intrinsic value of exercisable options at December 31, 2021

and 2020 was $ 1,484 and $ 0 respectively.

A total of 45,805 and 27,016 stock options were forfeited in the years ended December 31, 2021,

and December 31, 2020, respectively.

No options expired in the years ended December 31, 2021, or December 31, 2020.

average share price at the date of exercise of stock options in 2021 was $ 39 .

The intrinsic value of all exercised stock options in 2021

The exercise price for options outstanding at the end of 2021 is $ 5.19 – $ 13.30 (2020:

$ 4.5 – $ 15 ).

The weighted average grant

date fair value of options granted in 2021 was $ 6.2 (2020:

$ 6 ) per share.

The total fair value of options vested during the years December

31, 2021, and 2020 was $ 4,223 and $ 616 respectively.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Share-based payments (cont.)

The estimate of the grant

date fair value of each option issued is based on a Black Scholes model.

A total of 544,042 stock options

were forfeited, and no options expired or were exercised in the year ended December 31, 2022.

The intrinsic value of all stock options

outstanding at December 31, 2022 was $ 0 .

The weighted average exercise price for options outstanding at the end of 2022 is $ 6.55 .

The weighted average grant

date fair value per share of options granted in 2022 and 2021 was $ 1.19 and $ 10.25 , respectively.

The total fair value of options vested

during the years December 31, 2022 and 2021, was $ 1,328 and $ 4,223 , respectively.

The estimate of the grant date fair value of each option

issued is based on a Black-Scholes model.

The assumptions used in our valuations are summarized as follows:

7 unchanged sentences

3.05% - 4.09 %

(0.45)% - (0.46) %

Expected Term —

3 unchanged sentences

Risk-Free Interest Rate

— The risk-free interest rate is based on the U.S.

Treasury yield curve in effect at the date of grant for zero-coupon U.S.

Treasury notes with maturities approximately equal to the options’ expected term.

— The risk-free interest rate is based on the 5 years government bond yield rate of Denmark at the date of grant maturities

approximately equal to the options’ expected term.

Dividend Rate —

3 unchanged sentences

License and Development Agreements

a) License Agreement with Novartis Pharma for Dovitinib

(a) License Agreement with Novartis for Dovitinib

We hold the exclusive worldwide

rights to all therapeutic and/or diagnostic uses related to cancer in humans for dovitinib from Novartis Pharma AG (“Novartis”)

pursuant to a license agreement.

Pursuant to the agreement, we are solely responsible for the development of dovitinib during the term

of the agreement.

rights to all therapeutic and/or diagnostic uses related to cancer in humans for dovitinib from Novartis pursuant to a license agreement.

Pursuant to the agreement, we are solely responsible for the development of dovitinib during the term of the agreement.

On September 27, 2022,

Allarity Therapeutics Europe Aps (“Allarity Europe”), a wholly-owned subsidiary of the Company, entered into a Second Amendment

to License Agreement (the “Second Amendment”) with Novartis Pharma AG, a company organized under the laws of Switzerland (“Novartis”),

which amended the terms of the License Agreement dated April 6, 2018 (the “Original Agreement”), as amended by that certain

First Amendment to License Agreement effective as of March 30, 2022 (“Amendment” and together with the Original Agreement,

the “Agreement”) and that certain Promissory Note dated April 6, 2018, which was re-issued by Allarity Therapeutics Denmark

ApS, a subsidiary of Allarity Europe, in favor of Novartis on March 30, 2022, to modify the terms and timing of the Outstanding Milestone

Payment (as defined in the Second Amendment), including an increase in such milestone payment by $ 500 (paid on or about December 25, 2022),

in addition to the $ 5,000 which is included in accounts payable at September 30, 2022, and originally expensed in the year ended December

The Second Amendment became effective upon receipt by Novartis of the first portion of the Outstanding Milestone Payment ($ 1,000 ),

which was paid on or about September 28, 2022.

As of December 31, 2022, the Company has an outstanding milestone payment of $ 4 million

due to Novartis recorded in accounts payable.

License and Development Agreements (cont.)

Under Clause 7.2 of the Original

Agreement, the Company agreed to pay Novartis a milestone payment in one lump sum (“Third Milestone Payment”) upon submission

of the first NDA with the FDA for a Licensed Product in the United States (the “Third Milestone”).

The Second Amendment restructured

the terms of the Third Milestone Payment to an installment plan (with the final installment due in 2023), allowing the Company more time

to make the Third Milestone Payment.

In addition, the Second Amendment

amended (1) Clause 1.1 of the Agreement to include the definitions of Financing Transaction, Phase 1 Clinical Trial and Phase 1b/2 Clinical

Trial, (2) Clause 2.1 of the Agreement to clarify that the Company would not be permitted to sublicense any rights granted to the Company

prior to completion of a Phase II Clinical Trial without the prior written consent of Novartis, and (3) Clause 7.3 to provide for the

acceleration of certain milestone payments in the event the Company enters into a Financing Transaction (as defined in the Second Amendment).

If all milestones under the Second Amendment are achieved, the Company may be obligated to pay Novartis up to a maximum of $ 26,500 .

Development Milestone Payments

10 unchanged sentences

approval) for a licensed product in one or more specified European countries.

If all milestones have been achieved, we may be obligated

to pay Novartis up to a maximum of $ 26 million.

As of December 31, 2021, we have accrued a milestone payment of $ 5 million in current

liabilities and included $ 5 million in our research and development expenses in the year ended December 31, 2021.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

License and Development Agreements (cont.)

Royalty Payments

1 unchanged sentence

payments described above, we have agreed to pay Novartis royalties based on annual incremental sales of product derived from dovitinib

in an amount between five percent ( 5 %) and ten percent ( 10 %) of annual sales of between $ 0 and $ 250 million, between six percent ( 6 %)

and thirteen percent ( 13 %) of annual sales between $ 250 million and $ 500 million, between seven percent ( 7 %) and thirteen percent ( 13 %)

of annual sales between $ 500 million and $ 750 million, and between thirteen percent ( 13 %) and fifteen percent ( 15 %) of annual sales in

in an amount between 5 % and 10 % of annual sales of between $ 0 and $ 250 million, between 6 % and 13 % of annual sales between $ 250 million

and $ 500 million, between 7 % and 13 % of annual sales between $ 500 million and $ 750 million, and between 13 % and 15 % of annual sales in

excess of $ 750 million.

4 unchanged sentences

or, (ii) the expiration of regulatory-based exclusivity for such licensed product in such country or (iii) the

ten (10) year anniversary of the date of first commercial sale of such licensed product in such country.

However, the agreement may be

sooner terminated without cause by us upon 120 days prior written notice, or upon written notice of a material breach of the agreement

by Novartis that is not cured within 30 days.

10 year anniversary of the date of first commercial sale of such licensed product in such country.

However, the agreement may be sooner

terminated without cause by us upon 120 days prior written notice, or upon written notice of a material breach of the agreement by

Novartis that is not cured within 30 days.

Novartis also has the right to terminate the agreement upon written notice of a material

7 unchanged sentences

the term of the agreement.

The agreement also provides for a joint development committee consisting of six (6) members, three (3) appointed

by us and three (3) appointed by Eisai.

One of our members of the joint development committee is designated chair of the committee

and has the power to break any deadlock in decisions by the committee that must be made by a majority vote with each representative having

one (1) vote.

The purpose of the committee is to implement and oversee development activities for stenoparib pursuant to the clinical

development plan, serves as a forum for exchanging data, information and development strategy.

The agreement also provides for a joint development committee consisting of six members, three appointed by

us and three appointed by Eisai.

One of our members of the joint development committee is designated chair of the committee and has the

power to break any deadlock in decisions by the committee that must be made by a majority vote with each representative having one vote.

The purpose of the committee is to implement and oversee development activities for stenoparib pursuant to the clinical development plan,

serving as a forum for exchanging data, information and development strategy.

License and Development Agreements (cont.)

Effective July 12, 2022, the

Company’s July 6, 2017 Exclusive License Agreement with Eisai Inc.

(the “Third Amendment”), the terms of the original

exclusive license were further amended in order to (1) further postpone the due date of the Extension Payment and extend the deadline

for the Company’s successful completion of its first Phase 1b or Phase 2 clinical trial for Stenoparib (the “Product”)

beyond December 31, 2022;

and (2) amend terms related to Eisai’s right of termination of development.

In consideration of the extended

timeframe, and the Company not achieving the minimum patient enrollment, by July 1, 2022, set out in the Second Amendment, the Company

is obligated to pay Eisai an extension payment as follows:

$100 within 10 days of the execution of the Third Amendment (paid during the period ended September 30, 2022);

$900 on or before April 1, 2023 (recognized as a milestone expense in the year ended December 31, 2022, and recorded as an accrued development cost liability at December 31, 2022).

Once the extension payment

is paid in full, the Company shall have until April 1, 2024, to complete enrollment in a further Phase 1b or Phase 2 Clinical Trial of

If the Company has not achieved successful completion of a further Phase 1b or Phase 2 Clinical Trial of the Product prior

to April 1, 2024, Eisai may terminate this Agreement in its entirety, in its sole discretion on at least 120 days prior written notice.

Development Milestone Payments

Pursuant to the agreement, we have agreed to make milestone payments

to Eisai in connection with the development of stenoparib by us or our affiliates, or by a third-party Program Acquirer that assumes control

of the stenoparib development program from us corresponding to:

(i) successful completion of a Phase 2 clinical trial;

dosing of the first patient in the first Phase 3 clinical trial;

(iii) upon submission of the first NDA with the FDA;

(iv) submission

of an MAA to the EMA;

Pursuant to the agreement,

we have agreed to make milestone payments to Eisai in connection with the development of stenoparib by us or our affiliates, or by a third-party

Program Acquirer that assumes control of the stenoparib development program from us corresponding to:

(i) successful completion of

a Phase 2 clinical trial;

(ii) Upon dosing of the first patient in the first Phase 3 clinical trial;

(iii) upon submission of

the first NDA with the FDA;

(iv) submission of an MAA to the EMA;

(v) submission of an NDA to the MHLW in Japan;

(vi) upon receipt of authorization by the FDA to market

and sell a licensed product;

(vii) upon receipt of approval of an MAA by the EMA for a licensed product;

and (viii) upon receipt

of approval by the MHLW in Japan for a licensed product.

If all milestones have been achieved, we may be obligated to pay Eisai up to

a maximum of $ 94 million.

In addition, we have agreed to pay Eisai a one-time sales milestone payment in the amount of $ 50 million the

first time our annual sales of licensed product is $ 1 billion or more.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

License and Development Agreements (cont.)

receipt of authorization by the FDA to market and sell a licensed product;

(vii) upon receipt of approval of an MAA by the EMA for

a licensed product;

and (viii) upon receipt of approval by the MHLW in Japan for a licensed product.

If all milestones have been

achieved, we may be obligated to pay Eisai up to a maximum of $ 94 million.

In addition, we have agreed to pay Eisai a one-time sales milestone

payment in the amount of $ 50 million the first time our annual sales of licensed product is $ 1 billion or more.

Royalty Payments

1 unchanged sentence

payments described above, we have agreed to pay Eisai royalties based on annual incremental sales of product derived from stenoparib in

an amount between five percent ( 5 %) and ten percent ( 10 %) of annual sales of between $ 0 and $ 100 million, between six percent ( 6 %)

and ten percent ( 10 %) of annual sales between $ 100 million and $ 250 million, between seven percent ( 7 %) and eleven percent ( 11 %)

of annual sales between $ 250 million and $ 500 million, and between eleven percent ( 11 %) and fifteen percent ( 15 %) of annual

sales in excess of $ 500 million.

an amount between 5 % and 10 % of annual sales of between $ 0 and $ 100 million, between 6 % and 10 % of annual sales between $ 100 million and

$ 250 million, between 7 % and 11 % of annual sales between $ 250 million and $ 500 million, and between 11 % and 15 % of annual sales in excess

of $ 500 million.

We are obligated to pay royalties

under the agreement on a country-by-country and product-by-product basis for a period that commences with the first commercial sale of

a product until the later of (i) the expiration of the last to expire valid claim of any licensed patent covering such licensed product

in such country;

a product until the later of (i) the expiration of the last to expire valid claim of any licensed patent covering such licensed

product in such country;

or, (ii) the expiration of regulatory-based exclusivity for such licensed product in such country or (iii) the

fifteen (15) year anniversary of the date of first commercial sale of such licensed product in such country.

However, the agreement may

be sooner terminated without cause by us upon 120 days prior written notice, or upon written notice of a material breach of the agreement

by Eisai that is not cured within 90 days (30 days for a payment default).

Eisai also has the right to terminate the agreement

upon written notice of a material breach of the agreement by us that is not cured within 90 days (30 days for a payment default)

15 year anniversary of the date of first commercial sale of such licensed product in such country.

However, the agreement may be terminated

sooner without cause by us upon 120 days prior written notice, or upon written notice of a material breach of the agreement by Eisai

that is not cured within 90 days (30 days for a payment default).

Eisai also has the right to terminate the agreement upon

written notice of a material breach of the agreement by us that is not cured within 90 days (30 days for a payment default)

or if we file for bankruptcy.

3 unchanged sentences

Notwithstanding the foregoing, in the event we

fail to enroll and dose at least thirty (30) patients with the first dose of cancer drug in the ongoing Phase 2 Ovarian Cancer Clinical

Trial by July 1, 2022 then the Extension Payment will be due and payable in fully by July 30, 2022.

In addition, if we fail to achieve

successful completion of first Phase 2 Clinical Trial prior to December 31, 2022, and do not elect to pay the Extension Payment then Eisai

may terminate the agreement in its sole discretion pursuant to the terms of the amendment.

fail to enroll and dose at least 30 patients with the first dose of cancer drug in the ongoing Phase 2 Ovarian Cancer Clinical Trial

by July 1, 2022, then the Extension Payment will be due and payable in fully by July 30, 2022.

In addition, if we fail to achieve successful

completion of first Phase 2 Clinical Trial prior to December 31, 2022, and do not elect to pay the Extension Payment then Eisai may terminate

the agreement in its sole discretion pursuant to the terms of the amendment.

License and Development Agreements (cont.)

Option to Reacquire Rights to Stenoparib

For the period commencing

with enrollment of the first five (5) patients in a Phase 2 clinical trial pursuant to the clinical development plan and ending ninety

(90) days following successful completion of such Phase 2 clinical trial, Eisai has the option to reacquire our licensed rights to develop

stenoparib for a purchase price equal to the fair market value of our rights, giving effect to the stage of development of stenoparib

that we have completed under the agreement.

We commenced a Phase 2 clinical trial April 15, 2019, and as of the date of these consolidated

financial statements, Eisai has not indicated an intention to exercise its repurchase option.

c) Development, Option and License Agreement with R-Pharm for

with enrollment of the first five patients in a Phase 2 clinical trial pursuant to the clinical development plan and ending 90 days following

successful completion of such Phase 2 clinical trial, Eisai has the option to reacquire our licensed rights to develop stenoparib for

a purchase price equal to the fair market value of our rights, giving effect to the stage of development of stenoparib that we have completed

under the agreement.

We commenced a Phase 2 clinical trial April 15, 2019, and as of the date of these consolidated financial statements,

Eisai has not indicated an intention to exercise its repurchase option.

On March 1, 2019, the Company

3 unchanged sentences

By an amendment to the

agreement dated June 15, 2021, for no consideration, the term of the option will expire on September 1, 2022, if not exercised by us before

agreement dated August 4, 2022, for no consideration, the term of the option will expire on September 1, 2023, if not exercised by us

The agreement provides a right of extension, should we elect, for an additional $ 250 thousand.

As a condition to the exercise of

the Option, we are required to offer R-Pharm a right to re-acquire the licensed rights from us on terms to be mutually agreed upon, including

the payment to us of the fair market value of the licensed rights.

Pursuant to the Option, we are solely responsible for the development

of IXEMPRA ® during the term of the Option within the Territory.

The agreement also provides for a joint development committee

consisting of four (4) members, two (2) appointed by us and two (2) appointed by R-Pharm.

Decisions by the committee that

must be made by a unanimous consent of the parties, with us having the tie breaking vote on matters involving our DRP Biomarker, patient

selection in the mBC clinical trial and the commercialization plan and R-Pharm having the tie breaking vote on all other matters.

purpose of the committee is to implement and oversee development activities for IXEMPRA ® pursuant to the clinical development

plan, serves as a forum for exchanging data, information, and development strategy.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

License and Development Agreements (cont.)

As a condition to the exercise

of the Option, we are required to offer R-Pharm a right to re-acquire the licensed rights from us on terms to be mutually agreed upon,

including the payment to us of the fair market value of the licensed rights.

Pursuant to the Option, we are solely responsible for the

development of IXEMPRA ® during the term of the Option within the Territory.

The agreement also provides for a joint development

committee consisting of four members, two appointed by us and two appointed by R-Pharm.

Decisions by the committee that must be made by

a unanimous consent of the parties, with us having the tie breaking vote on matters involving our DRP Biomarker, patient selection in

the mBC clinical trial and the commercialization plan and R-Pharm having the tie breaking vote on all other matters.

The purpose of the

committee is to implement and oversee development activities for IXEMPRA ® pursuant to the clinical development plan, serves

as a forum for exchanging data, information, and development strategy.

Development Milestone Payments

12 unchanged sentences

payments described above, once we have exercised the Option, we have agreed to pay R-Pharm royalties based on annual incremental sales

of product derived from IXEMPRA ® in an amount between five percent ( 5 %) and eight percent ( 8 %) of annual sales of

between $ 0 and $ 30 million, and between eight percent ( 8 %) and twelve percent ( 12 %) of annual sales over $ 30 million.

of product derived from IXEMPRA ® in an amount between 5 % and 8 % of annual sales of between $ 0 and $ 30 million, and between

8 % and 12 % of annual sales over $ 30 million.

After the Option is exercised,

3 unchanged sentences

or, (ii) the expiration of regulatory-based exclusivity for such licensed

product in such country or (iii) the seven (7) year anniversary of the date of first commercial sale of such licensed product in

such country.

However, the agreement may be sooner terminated without cause by us upon 90 days prior written notice, or upon written

notice of a material breach of the agreement by R-Pharm that is not cured within 90 days (30 days for a payment default).

also has the right to terminate the agreement upon written notice of a material breach of the agreement by us that is not cured within

90 days (30 days for a payment default) or in the event that we file for bankruptcy.

product in such country or (iii) the seven year anniversary of the date of first commercial sale of such licensed product in such

However, the agreement may be sooner terminated without cause by us upon 90 days prior written notice, or upon written notice

of a material breach of the agreement by R-Pharm that is not cured within 90 days (30 days for a payment default).

has the right to terminate the agreement upon written notice of a material breach of the agreement by us that is not cured within 90 days

(30 days for a payment default) or if we file for bankruptcy.

License and Development Agreements (cont.)

(d) Development costs and Out-License Agreement with Smerud

11 unchanged sentences

of LiPlaCis ® products, as contemplated in the Amended License Agreement.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

License and Development Agreements (cont.)

LiPlaCis Support Agreement with Smerud, Chosa and LiPlasome

4 unchanged sentences

a certain percentage of the Commercialization Proceeds received from Smerud by way of debt cancellation relating to prior work on LiPlaCis ®

by Smerud, which obligation was to be satisfied by the payment of USD $338 thousand (2,273 thousand DKK) to LiPlasome upon execution of

the Support Agreement, (ii) to equally share the milestone payments under the terms of the License Agreement, pursuant to which it was

contemplated that upon the achievement of all the milestones, our pro rata share of the Milestone Payments would be up to $3.5 million,

(iii) to amend and restate the Original License Agreement, and (iv) to terminate the 2020 Sublicense Agreement as contemplated by the

parties pursuant to the terms of the Support Agreement.

by Smerud, which obligation was to be satisfied by the payment of USD $338 (2,273 thousand DKK) to LiPlasome upon execution of the Support

Agreement, (ii) to equally share the milestone payments under the terms of the License Agreement, pursuant to which it was contemplated

that upon the achievement of all the milestones, our pro rata share of the Milestone Payments would be up to $3.5 million, (iii) to amend

and restate the Original License Agreement, and (iv) to terminate the 2020 Sublicense Agreement as contemplated by the parties pursuant

to the terms of the Support Agreement.

Development costs

Under the terms of the June

2020 Out-License agreement, the Company is liable for development costs of Smerud Medical Research International (“Smerud”)

in the approximate amount of $ 1,264 (one million two hundred and sixty-four thousand) which has been accrued as of December 31, 2021 and

is payable as Smerud was unable to identify investors to fund development of in-licensed products from the Company by December 31, 2021.

Subsequent to December 31,

2021 and pursuant to the terms of the March 28, 2022 Amended License Agreement, the $ 1,264 thousand liability was forgiven in exchange

for a payment to LiPlasome.

Consequently, as at March 31, 2022, the Company recognized a gain on debt forgiveness of $ 926 thousand

and recorded a balance due to LiPlasome of $ 338 thousand ( 2,273 thousand DKK), which was paid on April 1, 2022.

However, notwithstanding

the termination of the out-license agreement, we are currently engaged in discussions with Smerud in connection with the further development

Development Milestone Payments

Pursuant to the Amended License

Agreement, we are entitled to receive certain milestone payments from Chosa relating to the development and commercialization of LiPlaCis ®

upon the occurrence of the following events, which milestone payments are to be shared with LiPlasome:

(i) upon the regulatory approval

of a product in the United States, (ii) upon the regulatory approval of a product in any country in Europe, including on a centralized

filing basis by the EMA, (iii) upon the first achievement on a cumulative basis of net sales of a product in the United States, and (iv)

upon the first achievement on a cumulative basis of net sales of a product in any country in Europe.

Each milestone payment is payable

one time only, regardless of the number of times the corresponding milestone event is achieved by a product and regardless of the number

of products to achieve such milestone event.

If all milestones are achieved, then we would be entitled to receive up to $3.5 million in

milestone payments under the Amended License Agreement (“Milestone Payments”).

As a result of the Amended

License Agreement, we no longer have any rights to use or commercialize LiPlaCis ® and are only entitled to receive the

Milestone Payments upon the achievement of the respective milestones.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Under the terms of the

June 2020 Sublicense agreement (the “2020 Sublicense Agreement”) between the Company and Smerud Medical Research International

AS (Norway) (“Smerud”), the Company is liable for development costs incurred by Smerud in the approximate amount of $ 1,264 ,

which has been accrued as of December 31, 2021, as payable to Smerud.

However, effective March 28, 2022, the Company terminated

its LiPlasome rights through the following agreements:

A Letter Agreement between

Chosa Oncology Ltd.

(England), Chosa ApS (Denmark) (collectively “Chosa”), Smerud, and the Company, which references the following

Development costs

The 2022 Amended and Restated License Agreement between LiPlasome Pharma Aps (Denmark) (“LiPlasome”), Chosa, and the Company’s subsidiary Allarity Therapeutics ApS, which amended the original February 15, 2016 LiPlasome License Agreement (as amended January 27, 2021), whereby Chosa replaced the Company as licensee of LiPlasome in exchange for Smerud’s cancellation of the Company’s $ 1,309 liability to Smerud and the Company’s agreement to pay $ 338 to LiPlasome.

Consequently, in 2022, the Company recorded a balance due to LiPlasome of $ 338 in accrued liabilities (paid on April 1, 2022) and recorded other income of $ 971 which was recognized as a gain on sale of IP.

The LiPlacis Support Agreement between Allarity Therapeutics Europe, Smerud, Chosa and LiPlasome.

Terms of the Support Agreement provide that each of Smerud and the Company agreed that the 2022 Sublicense Agreement is terminated in its entirety.

License and Development Agreements (cont.)

e) Sale of Irofulven

On July 23, 2021, the Company,

and Lantern Pharma Inc.

(“Lantern”) entered into an exclusive agreement under which Lantern will reacquire global rights to

Irofulven (“LP-100”) and assume full authority to manage and guide future clinical development and commercialization for $2

The Company received an upfront payment of $1 million from Lantern in the year ended December 31, 2021, and Lantern is withholding

$1 million in escrow with applicable amounts to be released upon the achievement of certain agreed targets as described in Note 27(c).

The agreement voids all prior obligations from the original 2015 in-license agreement and provides for additional development and regulatory

milestone fees, and tiered royalties on future sales of Irofulven.

If all milestones are achieved,

then we will be entitled to receive up to $ 16 million in milestone payments under the Asset Purchase Agreement.

In addition to the milestone

payments, Lantern Pharma has agreed to pay us royalties in the low mid-digits based on annual incremental net sales of product derived

from Irofulven, on a country-by-country basis, in an amount equal to percentages of annual sales based on a tiered progression.

(e) Oncoheroes

Effective January 2, 2022,

the Company entered into an Exclusive License Agreement with Oncoheroes Biosciences Inc.

(the “Oncoheroes Agreement”) to grant

Oncoheroes an exclusive royalty-bearing global license to both dovitinib and stenoparib in pediatric cancers.

Oncoheroes will take responsibility

for pediatric cancer clinical development activities for both clinical-stage therapeutics.

The Company will support Oncoheroes’

pediatric clinical trials by providing clinical-grade drug inventory at cost and by facilitating DRP ® companion diagnostic

screening of pediatric patients for each drug.

Under the licenses, Oncoheroes will receive commercialization rights for pediatric cancers,

subject to the Company’s first buy-back option for each program, and the Company will receive an upfront license fee and regulatory

milestones for each program, specifically one for dovitinib and one for stenoparib, as follows:

A one-time upfront payment of $250 and $100 for stenoparib and dovitinib respectively, within 5 business days after January 2, 2022 ($350 received as of April 4, 2022) and recorded in other income as a gain on sale of IP;

two milestone payments of $1 million each due and payable upon receipt of regulatory approval of a product in the United States, and of a product in Europe, respectively.

Pursuant to the Oncoheroes

Agreement the Company is also entitled to tiered royalties on aggregate net product sales (“Sales”) of between 7% and 12%

on net sales of products as follows:

7% on Sales less than $100 million;

10% on Sales of greater than $100 million and less than $200

and 12% on Sales greater than $200 million.

(f) Lantern Pharma, Inc.

– Irofulven Agreement

On July 23, 2021, we entered

into an Asset Purchase Agreement with Lantern Pharma, Inc.

relating to our inventory of Irofulven active pharmaceutical ingredients, our

clinical research data relating to Irofulven developed by us during the drug development program under the May 2015 Drug License and Development

Agreement for Irofulven and terminated our obligation to further advance the development of Irofulven under the May 2015 agreement.

the Asset Purchase Agreement, Lantern Pharma agreed to pay us $1 million on closing of the transaction, and additional amounts:

when the inventory of Irofulven API is recertified with a longer shelf life;

upon the initiation of treatment of the first patient in an investigator-led “compassionate use” ERCC2/3 mutation subgroup study using Irofulven in certain agreed upon investigators;

upon the initiation of treatment of the first patient within twenty-four months after the closing of the transaction in any human clinical trial of Irofulven initiated by Lantern Pharma;

upon the initiation of treatment of the second patient within an agreed upon time period after the closing of the transaction in any human clinical trial of Irofulven initiated by Lantern Pharma.

In addition to the sale of

our inventory of Irofulven API and Data to Lantern Pharma, we also granted Lantern Pharma a non-exclusive, worldwide license to use our

putative Irofulven DRP ® companion diagnostic to advance the development and commercialization of Irofulven and other Illudins

(sesquiterpenes with anti-tumor properties produced by some mushrooms).

We have also agreed not to engage in any drug development program

for Illudins or any of its analogues or any use thereof for a period of five years.

Effective March 18, 2022,

pursuant to clause (i) the inventory was recertified with a longer shelf life and as of March 31, 2022, and we received $ 459 which was

recorded in other income as a gain on sale of IP.

The reconciliation of the statutory rate to the effective

1 unchanged sentence

Reconciliation of effective tax rate:

Tax computed on the loss before tax at a tax rate of ( 21.0 % and 22.0 % for the years ended December 31, 2021 and 2020 respectively)

Tax computed on the loss before tax at a tax rate of 21.0 % for the years ended December 31, 2022 and 2021

Foreign rate differential

9 unchanged sentences

Effective tax rate

The components of income (loss) before income taxes were

(in $1,000’s)

The components of net loss before income taxes were as follows:

United States

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

The components of the provision for income taxes from operations

were as follows:

(in $1,000’s)

United States

10 unchanged sentences

Tax on profit/loss for the year:

Current income tax

Current income tax (benefit) expense

Change in deferred tax

Adjustment of tax concerning previous years

Tax received under the tax credit scheme

Tax losses carried forward of approximately $ 41.6 million can be carried

forward indefinitely.

Deferred tax has been provided corresponding to the statutory tax rate applied.

Tax (benefit) expense

Tax losses carried forward

of approximately $ 59.6 million can be carried forward indefinitely.

Deferred tax has been provided corresponding to the statutory tax

rate applied.

The statute of limitations

for re-assessment of tax returns in Denmark is three years and five years for transfer pricing.

As of December 31, 2021, the Company’s

December 31, 2017 through 2020 tax years remain open and the Company does not believe it has any uncertain tax positions that would result

in the Company having a liability to the taxing authorities.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

As of December 31, 2022, the tax years

that remain subject to examination by the major tax jurisdictions, under the statute of limitations, are from the year ended December

31, 2017, forward.

The Company does not believe it has any uncertain tax positions that would result in the Company having a liability

to the taxing authorities.

Related parties

Transactions with related parties

During the year ended December

31, 2022, a Director of the Company was paid $ 269 in fees as a consultant.

During the year ended December 31, 2021, a member of the Company’s

Board of Directors participated in the June 2021 rights offering and purchased a total of 11,336 shares for $ 84 .

During the year ended

December 31, 2020, the Company’s former CEO and certain of his family members provided research and development and investor relations

services to the Company and were compensated in the amount of $ 156 .

Acquisition of NCI

On June 8, 2020, the Company

issued 518,732 shares in the Company at a value of $ 3,906 to Sass Larsen, an entity with significant influence over the Company in exchange

for the purchase of the remaining 37 % interest in Allarity Therapeutics Denmark ApS (formerly OV SPV2 ApS).

On July 13, 2020, the Company

acquired the remaining ownership ( 16.09 %) in Oncology Venture US Inc.

for 247,675 common shares valued at $ 2,029 out of which Sass Larsen

was issued 65,625 common shares in the Company valued at $ 538 , and Marie Foegh, our executive officer, received 3,988 ordinary shares

valued at $ 33 .

Segment information

The Company is domiciled in

the United States of America and its operations are in Denmark and operates as one operating segment.

Our Chief Executive Officer (CEO),

as the chief operating decision-maker, manages and allocates resources to the operations of our Company on a total Company basis.

and allocating resources on a total company basis enables our CEO to assess the overall level of resources available and how to best deploy

these resources across functions, therapeutic areas and research and development projects that are in line with our long-term company-wide

strategic goals.

Consistent with this decision-making process, our CEO uses consolidated, single-segment financial information for purposes

of evaluating performance, forecasting future period financial results, allocating resources, and setting incentive targets.

has neither revenues from external customers outside Denmark, nor long-term assets in geographical areas other than Denmark.

Board of Directors participated in the June 2021 rights offering and purchased a total of 11,336 shares for $ 84 and a consultant was paid

a total of $ 93 in fees.

Basic and diluted net loss per share

4 unchanged sentences

Net loss per share attributable to common shareholders – basic and diluted

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Basic and diluted net loss per share (cont.)

The Company’s potentially

7 unchanged sentences

for the periods indicated because including them would have had an anti-dilutive effect:

Basic and diluted net loss per share (cont.)

As of December 31,

2 unchanged sentences

Convertible debt*

* Estimated based on $ 2,667 at $ 0.1825 per share.

Financial Instruments

4 unchanged sentences

Warrant liability

Series A Convertible Preferred Stock Redemption Feature

Fair Value Measurements as of December 31, 2021, Using:

Convertible debt

Financing Facility

Derivative warrants

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Financial Instruments (cont.)

Warrant liability

Series A Convertible Preferred Stock Redemption Feature

Methods used to estimate the

fair values of our financial instruments, not disclosed elsewhere in these financial statements, are as follows:

When available, our marketable securities are valued using quoted prices

for identical instruments in active markets.

If we are unable to value our marketable securities using quoted prices for identical instruments

in active markets, we value our investments using broker reports that utilize quoted market prices for comparable instruments.

our investment is considered a Level 1 financial asset.

We have no financial assets or liabilities measured using Level 2 inputs.

assets and liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies,

or similar techniques, and at least one significant model assumption or input is unobservable.

fair values of our financial instruments, not disclosed elsewhere in these consolidated financial statements, are as follows:

When available, our marketable

securities are valued using quoted prices for identical instruments in active markets.

If we are unable to value our marketable securities

using quoted prices for identical instruments in active markets, we value our investments using broker reports that utilize quoted market

prices for comparable instruments.

Accordingly, our investment is considered a Level 1 financial asset.

We have no financial assets

or liabilities measured using Level 2 inputs.

Financial assets and liabilities are considered Level 3 when their fair values are determined

using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input

is unobservable.

The Company recognizes its

13 unchanged sentences

inputs to the overall fair value measurement.

There were no transfers between level 1 or level 2 during the year ended December 31,

During the year ended December 31, 2020, the Company’s investment in Lantern Pharma shares was transferred from Level 3 to

Level 1 when Lantern became publicly listed on Nasdaq.

The Company used Monte Carlo

simulation models to measure the fair value of the warrant liability and Series A convertible preferred stock redemption feature at $ 11,273

and $ 7,181 respectively on December 31, 2021, and will subsequently remeasure the fair value at the end of each period and record the

change of fair value in the Consolidated Statements of Operation and Comprehensive Loss during the corresponding period.

in the Company’s stock price are a primary driver for the changes in the derivative valuations during each reporting period.

the year ended December 31, 2021, the Company’s stock price decreased from initial valuation.

As the stock price decreases for each

of the related derivative instruments, the value to the holder of the instrument generally decreases.

Stock price is one of the significant

unobservable inputs used in the fair value measurement of each of the Company’s derivative instruments.

There were no transfers between level 1 or level 2 during the years ended December 31,

2022 or 2021.

Financial Instruments (cont.)

During the years ended December

31, 2022 and 2021, the Company used Monte Carlo simulation models to measure the fair value of the Series A Preferred Stock redemption

feature at $ 0 and $ 7,181 , respectively.

During the year ended December 31, 2022, the Company utilized the reset strike options Type 2

model by Espen Garder Haug and Black-Scholes Merton models to measure the fair value of the warrant liability at $ 374 .

On December 31,

2021, the Company used the Black-Scholes Merton model to measure the fair value of the warrant liability at $ 11,273 .

All changes in fair

value were recorded in the Consolidated Statements of Operation and Comprehensive Loss during the corresponding period.

Fluctuations in

the Company’s stock price are a primary driver for the changes in the derivative valuations during each reporting period.

the years ended December 31, 2022 and 2021, the Company’s stock price decreased from its initial valuation.

As the stock price decreases

for each of the related derivative instruments, the value to the holder of the instrument generally decreases.

Stock price is one of the

significant unobservable inputs used in the fair value measurement of each of the Company’s derivative instruments.

Commitments and Contingencies

Development costs

On November 10, 2020, the

Company entered into a cost sharing agreement with Smerud for the development of Ixempra whereby Smerud will be entitled to 7.5 % royalties

on future revenue in exchange for funding half of the development costs.

As of December 31, 2021, Smerud has performed work valued at

$ 155 and is entitled to a very low amount of future royalties which is not probable or estimable at of the date of these financial statements.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Commitments and Contingencies (cont.)

License Agreement with 2-BBB Medicines B.V.

for Stenoparib

On March 27, 2017, we in-licensed

3 unchanged sentences

Upon execution of the agreement, we paid 2-BBB a one-time, non-refundable,

non-creditable payment of $ 500,000 (five hundred thousand).

Pursuant to the agreement, we are solely responsible for the development of

2X-111 during the term of the agreement.

non-creditable payment of $ 500 .

Pursuant to the agreement, we are solely responsible for the development of 2X-111 during the term of

the agreement.

Development and Sales Milestone Payments

23 unchanged sentences

and/or diagnostic uses related to cancer in humans.

Commitments and Contingencies (cont.)

Royalty Payments

1 unchanged sentence

payments described above, we have agreed to pay 2-BBB royalties based on annual incremental sales of product derived from 2X-111 in an

amount between five percent (5%) and ten percent (10%) of annual sales of between $0 and $100 million, between six percent (6%) and thirteen

percent (13%) of annual sales between $100 million and $250 million, and between seven percent (7%) and thirteen percent (13%) of annual

sales in excess of $250 million.

We are obligated to pay royalties under the agreement on a product-by-product and country-by-country

basis, from the period of time commencing on the first commercial sale of any product in such country and expiring upon the latest of

(a) the expiration of the last valid claim of a patent within (i) the 2-BBB intellectual property and/or (ii) the joint intellectual property

in such country (if, but only if, such joint intellectual property arose from activities under the clinical development plan), or (b)

the tenth (10 th ) anniversary of the date of first commercial sale of such product in such country.

However, the agreement may

be sooner terminated without cause by us upon 120 days prior written notice, or upon written notice of a material breach of the agreement

by 2-BBB that is not cured within 90 days.

2-BBB also has the right to terminate the agreement upon written notice of a material breach

of the agreement by us that is not cured within 90 days (30 days for a payment default) or if we file for bankruptcy.

2-BBB also has the

right to terminate the agreement in the event we challenge a 2-BBB patent and we have the right to terminate the agreement upon 30 days’

notice for specified safety reason.

amount between 5% and 10% of annual sales of between $0 and $100 million, between 6% and 13% of annual sales between $100 million and

$250 million, and between 7% and 13% of annual sales in excess of $250 million.

We are obligated to pay royalties under the agreement

on a product-by-product and country-by-country basis, from the period of time commencing on the first commercial sale of any product in

such country and expiring upon the latest of (a) the expiration of the last valid claim of a patent within (i) the 2-BBB intellectual

property and/or (ii) the joint intellectual property in such country (if, but only if, such joint intellectual property arose from activities

under the clinical development plan), or (b) the 10 th anniversary of the date of first commercial sale of such product in such

However, the agreement may be sooner terminated without cause by us upon 120 days prior written notice, or upon written notice

of a material breach of the agreement by 2-BBB that is not cured within 90 days.

2-BBB also has the right to terminate the agreement upon

written notice of a material breach of the agreement by us that is not cured within 90 days (30 days for a payment default) or if we file

for bankruptcy.

2-BBB also has the right to terminate the agreement in the event we challenge a 2-BBB patent and we have the right to

terminate the agreement upon 30 days’ notice for specified safety reasons.

Subsequent Events

For its consolidated financial

statements as of December 31, 2021, and for the year then ended, the Company evaluated subsequent events through the date on which

these financial statements were issued.

All subsequent events not otherwise disclosed in these financial statements are as follows:

(a) Impairment

of Intangible Assets

At the end of March 31, 2022,

the Company’s share price has declined significantly, resulting in a market valuation well below the carrying value of the Company’s

intangible assets.

Consequently, the Company will be testing its intangible assets for impairment as of the end of March 31, 2022.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Subsequent Events (cont.)

(b) Oncoheroes

Effective January 2, 2022,

the Company entered into an Exclusive License Agreement with Oncoheroes Biosciences Inc.

(the “Oncoheroes Agreement”) to grant

Oncoheroes an exclusive royalty-bearing global license to both dovitinib and stenoparib in pediatric cancers.

Oncoheroes will take responsibility

for pediatric cancer clinical development activities for both clinical-stage therapeutics.

Allarity will support Oncoheroes’ pediatric

clinical trials by providing clinical-grade drug inventory at cost and by facilitating DRP ® companion diagnostic screening

of pediatric patients for each drug.

Under the licenses, Oncoheroes will receive commercialization rights for pediatric cancers, subject

to the Company’s first buy-back option for each program, and the Company will receive an upfront license fee and regulatory milestones

for each program, specifically one for dovitinib and one for stenoparib, as follows:

A one-time upfront payment of $250,000 and $100,000 (two hundred and fifty thousand and one hundred thousand respectively) for stenoparib and dovitinib respectively, within 5 business days after January 2, 2022 ($350,000 (three hundred and fifty thousand) received as of April 4, 2022);

two milestone payments of $1 million each due and payable upon receipt of regulatory approval of a product in the United States, and of a product in Europe, respectively.

Pursuant to the Oncoheroes

Agreement Allarity is also entitled to tiered royalties on aggregate net product sales (“Sales”) of between 7% and 12% on

net sales of products as follows:

7% on Sales less than $100 million;

10% on Sales of greater than $100 million and less than $200 million;

and 12% on Sales greater than $200 million.

– Irofulven Agreement

On July 23, 2021, we entered

into an Asset Purchase Agreement with Lantern Pharma, Inc.

relating to our inventory of Irofulven active pharmaceutical ingredients, our

clinical research data relating to Irofulven developed by us during the drug development program under the May 2015 Drug License and Development

Agreement for Irofulven and terminated our obligation to further advance the development of Irofulven under the May 2015 agreement.

the Asset Purchase Agreement, Lantern Pharma agreed to pay us $ 1 million on closing of the transaction, and additional amounts:

when the inventory of Irofulven API is recertified with a longer shelf life;

upon the initiation of treatment of the first patient in an investigator-led “compassionate use” ERCC2/3 mutation subgroup study using Irofulven in certain agreed upon investigators;

upon the initiation of treatment of the first patient within twenty-four months after the closing of the transaction in any human clinical trial of Irofulven initiated by Lantern Pharma;

upon the initiation of treatment of the second patient within an agreed upon time period after the closing of the transaction in any human clinical trial of Irofulven initiated by Lantern Pharma.

ALLARITY THERAPEUTICS, INC.

NOTES TO FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

dollars in thousands, except

for share and per share data and where otherwise noted)

Subsequent Events (cont.)

In addition to the sale of

our inventory of Irofulven API and Data to Lantern Pharma, we also granted Lantern Pharma a non-exclusive, worldwide license to use our

putative Irofulven DRP ® companion diagnostic to advance the development and commercialization of Irofulven and other Illudins

(sesquiterpenes with anti-tumor properties produced by some mushrooms).

We have also agreed not to engage in any drug development program

for Illudins or any of its analogues or any use thereof for a period of five (5) years .

Effective March 18, 2022,

pursuant to clause (i) the inventory was recertified with a longer shelf life and as of March 31, 2022, we received $ 459 .

(d) Series A Preferred Stock Conversions

Between January 1, 2022, and

March 31, 2022, 1,973 Series A Preferred shares (gross value of $ 2,119 ) were converted into 746,276 shares of our common stock and accordingly

the balance of outstanding Series A Preferred shares was reduced to 17,827 at March 31, 2022.

The latest three conversions in March 2022

were completed at less than the agreed floor price and accordingly, we recorded a liability of $ 134 .

(e) Series A Preferred Stock Triggering Event

As more specifically discussed

below, a “Triggering Event” under the COD occurred on April 29, 2022, under Section 5(a)(ii) of the COD, which would have

resulted in the following unless 3i, LP agreed to forebear and/or waive its rights under the COD:

An 18 % per annum dividend

will start to accrue on the stated value of all outstanding Preferred Shares and will continue to accrue until the Triggering Event has

The accrued dividend is added to the stated value prior to the Dividend Payment Date and paid in cash on the first trading

day of the Company’s next fiscal quarter.

A “Late Charge” in the amount of 18 % per annum will accrue on any amounts

due to be paid to holders of the Preferred Shares if not paid when due, including payments that may be owed under Section 2(e) of the

Registration Rights Agreement (“RRA”).

A “Triggering Event

Redemption Right” will commence and remain open for a period of 20 trading days from the later of the date the Triggering Event

is cured or the receipt by 3i, LP of the Triggering Event Notice.

Under the Triggering Event Redemption Right, if elected by the holder

of the Preferred Shares, the Company would be obligated to redeem all or a portion of the Preferred Shares for a minimum of 125% of the

stated value of the Preferred Shares.

Concurrently, under the provisions of the PIPE Warrant, if elected by 3i, the Company would be obligated

to redeem the PIPE Warrant for the Black Sholes Triggering Event Value as defined in the warrant agreement.

A “Registration Delay

Payment” will accrue on April 22, 2022 (the expiration of the Allowable Grace Period under the RRA) in the amount of 2 % of 3i, LP’s

“ Purchase Price” as defined in the Securities Purchase Agreement which is approximately 2% of $20 million, or $400 and will

continue to accrue at 2% every 30 days thereafter.

Additionally, a late charge of 2% per month will accrue on any payments that are not

paid when due.

The Registration Delay Payments will stop accruing when the post-effective amendment is declared effective by the SEC at

which time the registration statement and its prospectus will again be available for the resale of common stock.

On May 4, 2022, the Company

and 3i, LP entered into a Forbearance Agreement and Waiver, dated April 27, 2022, wherein 3i, LP confirmed that no Triggering Event as

defined under the COD has occurred prior to April 27, 2022, that a Triggering Event under Section 5(a)(ii) will and has occurred on April

29, 2022, and that in consideration for the Registration Delay Payments the Company is obligated to pay under the RRA, and additional

amounts the Company is obligated to pay under the COD and 3i, LP’s legal fees incurred in the preparation of the Forbearance Agreement

and Waiver in the aggregate of $ 538,823.00 paid upon execution of the Forbearance Agreement and Waiver, and so long as the Company pays

the Registration Delay Payments that become due and payable under the RRA after the execution of the Forbearance Agreement and Waiver,

3i, LP has agreed to forbear exercising any rights or remedies that it may have under the COD that arises as a result of a Triggering

Event under Section 5(a)(ii) of the COD and Section 4(c)(ii) of the PIPE Warrant until the earlier to occur of (i) the date immediately

prior to the date of occurrence of a Bankruptcy Triggering Event, (ii) the date of occurrence of any other Triggering Event under Section

5(a) of the COD (excluding any Triggering Event arising solely as a result of Section 5(a)(ii) of the COD and Section 4(c)(ii) of the

PIPE Warrant), (iii) the time of any breach by the Company under the Forbearance Agreement and Waiver, (iv) the Resale Availability Date

as defined therein and (v) June 4, 2022 (such period, the “Forbearance Period”).

Provided that the Company is not in breach

of its obligations under Forbearance Agreement and Waiver, effective as of the Trading Day immediately following the date the Company

cures the Triggering Event under Section 5(a)(ii) of the COD, 3i, LP agrees to waive any rights or remedies that it may have under the

COD that arises as a result of a Triggering Event under Section 5(a) of the COD and Section 4(c)(ii) of the PIPE Warrant that may have

arisen prior to the date of the Forbearance Agreement and Waiver.

(a) Redemption of Series B Preferred Stock

Upon conclusion of the 2023

Annual Meeting of Stockholders on February 3, 2023, all of the 190,786 shares of Series B Preferred Stock outstanding 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.

(b) Series A Preferred Stock Conversions

to December 31, 2022, pursuant to the exercise of conversion by the 3i, we issued 14,102,155 shares of Common Stock to the 3i 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.

As of the date of these financial statements, we had 10,650 shares of Series A Preferred Stock issued

and outstanding.

As of the date of this report, we have no

shares of common stock available for issuance.

A Preferred Stock

On January 23, 2023, the Company

and 3i, LP amended the letter agreement entered into on December 9, 2022, to provide that the modification of the term Conversion Price

(as defined therein) will be in effect until terminated by the Company and 3i, LP.

(d) Request for documents from the SEC

January 2023, the Company received a letter to produce documents from the SEC and that stated that the staff of the SEC is conducting

an investigation known as “In the Matter of Allarity Therapeutics, Inc.” to determine if violations of the federal securities

laws have occurred.

The documents requested appear to focus on disclosures relating to submissions, communications and meetings with

the FDA regarding our NDA for Dovitinib or Dovitinib-DRP.

The SEC letter also stated that investigation is a fact-finding inquiry and

does not mean that that the SEC has concluded that the Company or anyone else has violated the laws.

We do not know when the SEC’s

investigation will be concluded or what action, if any, might be taken in the future by the SEC or its staff as a result of the matters

that are the subject to its investigation or what impact, if any, the cost of continuing to respond to inquiries might have on our financial

position or results of operations.

(e) Establishment

and sale of Series C Preferred Stock

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”).

of Series C Preferred Stock has 620 votes and is subject to certain redemption rights and voting limitations.

February 28, 2023, the Company 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 (“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 “Offering”).

The 50,000 shares of Series C Preferred Stock (the “Shares”) are convertible into shares of the Company’s common stock,

subject to the terms of the COD.

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 Trading Days immediately preceding the Conversion Date (as defined in the COD) or such

other date of determination, subject to adjustment (the “Conversion Price”).

In no event will the Conversion Price be less

than $ 0.0370 (the “Floor Price”).

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.

connection with the Offering, concurrently with the SPA, the Company entered into a registration rights agreement with 3i (the “RRA”)

pursuant to which the Company is required to file a registration statement with the Securities and Exchange Commission (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 the Company fails to 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’s subscription amount of the Shares pursuant to the SPA.

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 Offering, the Company and 3i entered into a limited waiver agreement (the “Waiver”) pursuant to which 3i 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 agreements with 3i.

Special Meeting of Stockholders

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, or as otherwise set forth in

the Company’s notice and proxy statement for the Special Meeting.

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.

Each holder 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.

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 9A. Controls and Procedures