Allarity Therapeutics, Inc. 10-K

Item 9A. Controls And Procedures. Evaluation of Disclosure Controls and Procedures Under 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 Annual 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 Exchange Act of 1934, as amended (the “Exchange Act”). 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 effective as of December 31, 2024. 79 Table of Contents Management ’ s Report on Internal Control over Financial Reporting Our management 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, 2024, our management assessed the effectiveness of our 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. Based on the results of its evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2024. Because we are a non-accelerated filer and smaller reporting company, Wolf & Company, P.C., our independent registered public accounting firm, is not required to attest to or issue a report on the effectiveness of our internal control over financial reporting. Change in Internal Control over Financial Reporting There have been no changes in our internal controls over financial reporting, as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act, during the fourth quarter of 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. None. Item 9C. Disclosure Regarding Foreign Jurisdiction that Prevents Inspections. Not applicable. 80 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance. The Company has an insider trading policy governing the purchase, sale and other dispositions of the Company’s securities that applies to all Company personnel, including directors, officers, employees, and other covered persons. The Company also follows procedures for the repurchase of its securities. The Company believes that its insider trading policy and repurchase procedures are reasonably designed to promote compliance with insider trading laws, rules and regulations, and listing standards applicable to the Company. A copy of the Company’s insider trading policy is filed as Exhibit 19 to this Annual Report. The remaining information required by this Item will be included in the Company’s definitive proxy statement to be filed with the SEC within 120 days after December 31, 2024, in connection with the solicitation of proxies for the Company’s 2025 annual meeting of stockholders (the “2025 Proxy Statement”), and is incorporated herein by reference. Item 11. Executive Compensation. The information required by this Item will be included in the 2025 Proxy Statement, and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this Item will be included in the 2025 Proxy Statement, and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions and Director Independence. The information required by this Item will be included in the 2025 Proxy Statement, and is incorporated herein by reference. Item 14. Principal Accountant Fees and Services. The information required by this Item will be included in the 2025 Proxy Statement, and is incorporated herein by reference. 81 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules. The following documents are filed as part of this Annual Report: (1) Financial Statements The following financial statements of Allarity, and the Report of Independent Registered Public Accounting Firm, is included at the end of this Annual Report beginning on page F-1: (2) Financial Statement Schedules All schedules have been omitted because the required information is included in the financial statements or notes thereto or because they are not required. (3) Exhibits 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. Exhibit No. Description 2.1 (e) Amended and Restated Plan of Reorganization and Asset Purchase Agreement by and among Allarity Therapeutics, Inc. a Delaware corporation, Allarity Acquisition Subsidiary, a Delaware corporation and Allarity Therapeutics A/S, an Aktieselskab organized under the laws of Denmark, dated as of September 23, 2021 3.1 (a) Certificate of Incorporation of Allarity Therapeutics, Inc. 3.2 (b) Certificate of Amendment to the Certificate of Incorporation of Allarity Therapeutics, Inc. 3.3 (c) Amended and Restated Bylaws of Allarity Therapeutics, Inc. 3.4 (m) Amendment No. 1 to Amended and Restated Bylaws of Allarity Therapeutics, Inc. 3.5 (g) Certificate of Designations of Allarity Therapeutics, Inc. relating to the Series A Convertible Preferred Stock 3.6 (q) Amendment to Certificate of Designation of the Series A Convertible Preferred Stock 3.7 (q) Certificate of Designation of the Series B Preferred Stock 3.8 (s) Certificate of Designation of the Series C Preferred Stock 3.9 (s) Certificate of Amendment to Certificate of Designation of Series C Preferred Stock 3.10 (u) Second Certificate of Amendment to Certificate of Incorporation of Allarity Therapeutics, Inc. 3.11 (v) Third Certificate of Amendment to Certificate of Incorporation of Allarity Therapeutics, Inc. 3.12 (aa) Amended and Restated Certificate of Designations of Series A Convertible Preferred Stock of Allarity Therapeutics, Inc. 3.13 (bb) First Certificate of Amendment to Amended and Restated Certificate of Designations of Series A Convertible Preferred Stock 3.14 (cc) Fourth Certificate of Amendment to Certificate of Incorporation of Allarity Therapeutics, Inc. 3.15 (dd) Second Amendment to Certificate of Designation (Series A Preferred Stock) 3.16 (ff) Third Certificate of Amendment to Certificate of Designation (Series A Preferred Stock) 3.17 (hh) Fourth Certificate of Amendment (Series A Preferred Stock) 3.18 (jj) Fifth Certificate of Amendment (Series A Preferred Stock) 3.19 (ll) Sixth Certificate of Amendment (Series A Preferred Stock) 3.20 (pp) Form of Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Redeemable Preferred Stock 3.21 (qq) Sixth Certificate of Amendment to Certificate of Incorporation of Allarity Therapeutics, Inc. 3.22 (qq) Seventh Certificate of Amendment to Certificate of Incorporation of Allarity Therapeutics, Inc. 3.23 (rr) Certificate of Correction to the Seventh Certificate of Amendment to the Certificate of Incorporation of Allarity Therapeutics, Inc. 4.2 (aa) Warrant to Purchase Common Stock (3i, LP) 4.3 (aa) Form of Pre-Funded Warrant (April 2023) 4.4 (aa) Form of Common Warrant (April 2023) 4.5 (aa) Modification and Exchange Warrant 4.6 (ee) Form of Pre-Funded Warrant (July 2023) 4.7 (ee) Form of Common Warrant (July 2023) 4.8 (ff) Form of Amended and Restated Common Stock Purchase Warrant (July 2023) 4.9 (gg) Form of New Warrant 82 Table of Contents 4.10 (nn) Form of Pre-Funded Warrant 4.11 (nn) Form of Series A Common Warrant 4.12 (nn) Form of Series B Common Warrant 4.13 (jj) Senior Convertible Note 4.14 (ll) Senior Convertible Note, dated as of February 13, 2024 10.1# (e) Allarity Therapeutics, Inc. 2021 Equity Incentive Plan 10.2† (a) Exclusive License Agreement between Oncology Venture A/S and Smerud Medical Research International As Dated as of June 26, 2020 10.3† (a) Amended and Restated License Agreement between Allarity Therapeutics A/S and LiPlasome Pharma ApS, dated January 2021 10.4† (a) Exclusive License Agreement between Oncology Venture, APS and 2-BBB Medicines BV, dated as of March 27, 2017 10.5† (c) Development, Option and License Agreement between Oncology Venture ApS and R-Pharm US Operating LLC, dated March 1, 2019 10.6† (c) Exclusive License Agreement between Oncology Venture, ApS and Eisai, Inc., dated as of July 6, 2017 10.7† (c) License Agreement between Novartis Pharma Ag and Oncology Venture, ApS, dated April 6, 2018 10.8+ (a) Securities Purchase Agreement dated May 20, 2021 between Allarity Therapeutics, Inc. and 3i, LP 10.9 (a) Registration Rights Agreement dated May 20, 2021 between Allarity Therapeutics, Inc. and 3i, LP 10.10† (a) Asset Purchase Agreement dated July 23, 2021 between Allarity Therapeutics A/S and Lantern Pharma Inc. 10.11 (c) First Amendment to the Exclusive License Agreement between Eisai and Allarity Therapeutics A/S dated December 20, 2020. 10.12 (d) Second Amendment to Exclusive License Agreement between Oncology Venture, ApS and Eisai, Inc. dated as of August 3, 2021. 10.13# (f) Employment Agreement by and between Allarity Therapeutics, Inc. and James G. Cullem 10.14# (f) Employment Agreement by and between Allarity Therapeutics, Inc. and Marie Foegh, M.D. 10.15 (h) Asset Purchase Agreement between Allarity Therapeutics, Inc. and Allarity Therapeutics A/S dated December 17, 2021 10.16 (k) Assignment and Assumption Agreement between Allarity Therapeutics, Inc. and Allarity A/S 10.17† (k) Exclusive License Agreement with Oncoheroes Bioscience, Inc. dated January 2, 2022 (Stenoparib) 10.18† (k) Exclusive License Agreement with Oncoheroes Bioscience, Inc. dated January 2, 2022 (Dovitinib) 10.19† (k) Amended and Restated License Agreement among Allarity Therapeutics Europe ApS, LiPlasome Pharma ApS, and Chosa ApS dated March 28, 2022 10.20† (k) Support Agreement between Allarity Therapeutics A/S and LiPlasome Pharma ApS, dated March 28, 2022 10.21 (i) First Amendment to License Agreement between Novartis Pharma Ag and Allarity Therapeutics Europe ApS 10.22 (i) Convertible Promissory Note 10.23 (j) Forbearance Agreement and Waiver 10.24 (l) First Amendment to Forbearance and Waiver 10.25†# (o) Separation Agreement with Steve Carchedi 10.26†# (o) Separation Agreement with Jens Knudsen 10.27 (o) Second Amendment to Development Option & License Agreement 10.28† (p) Second Amendment to License Agreement with Novartis Pharma AG 10.29 (q) Secured Note Purchase Agreement 10.30 (q) Form of Secured Promissory Note 10.31 (q) Security Agreement 10.32# (r) Employment Agreement with James G. Cullem 10.33# (r) Employment Agreement with Joan Brown 10.34 (t) Letter Agreement with 3i, LP dated December 8, 2022 10.35 (t) Letter Agreement with 3i, LP dated January 23, 2023 10.36 +(s) Form of Securities Purchase Agreement Series C Preferred Stock 10.37 (s) Form of Registration Rights Agreement 10.38 (s) Limited Waiver Agreement 10.39 (aa) Form of Securities Purchase Agreement (April Offering) 10.40 (y) Form of Lock-Up Agreement (April Offering) 10.41 (z) First Amendment to Secured Note Purchase Agreement 10.42 (z) First Amendment to Security Agreement 10.43 (z) Form of Secured Promissory Note (2023) 83 Table of Contents 10.44 (aa) Secured Promissory Note 10.45 (aa) Modification and Exchange Agreement 10.46 (aa) Cancellation of Debt Agreement 10.47 (aa) First Amendment to Registration Rights Agreement 10.48 (aa) Limited Waiver Agreement 10.49 (bb) Amendment to Modification and Exchange Agreement 10.50 (ee) Form of Securities Purchase Agreement 10.51 (bb) Fourth Amendment to the Exclusive License Agreement with Eisai, Inc. 10.52 (ee) Third Amendment to the Exclusive License Agreement with Eisai, Inc. 10.53 (ee) Form of Limited Waiver and Amendment Agreement 10.54 (ee) 3i, LP – Limited Waiver and Amendment Agreement 10.55 (dd) June 2023 Secured Note Purchase Agreement 10.56 (dd) Security Agreement 10.57 (dd) Secured Promissory Note 10.58 (ee) Form of Lock-Up Agreement 10.59 (gg) Form of Inducement Letter 10.60 (gg) Limited Waiver between the Company and 3i, LP 10.61 (nn) Form of Securities Purchase Agreement 10.62 (mm) Form of Lock-Up Agreement 10.64 (jj) Securities Purchase Agreement, dated as of January 18, 2024, by and between the Company and the Purchaser listed on the signature page attached thereto 10.65 (kk) Amendment to Securities Purchase Agreement, dated as of January 25, 2024, by and between the Company and the Purchaser listed on the signature page attached thereto 10.66 (ll) Limited Waiver Agreement, dated as of February 13, 2024, by and between the Company and the Purchaser listed on the signature page attached thereto 10.67 (oo) Amendment to Senior Convertible Notes 10.68 (ss) Consulting Agreement (James G. Cullem) 10.69 (ss) Confidential Settlement Agreement and General Release (James G. Cullem) 10.70 (tt) First Comprehensive Amendment to At-The-Market Issuance Sales Agreement, dated May 17, 2024 10.71 (uu) Management Services Agreement, effective as of June 1, 2024 10.72 (pp) Form of Securities Purchase Agreement between the Company and the investors thereto, dated August 19, 2024 10.73 (pp) Form of Registration Rights Agreement by and among the Company and the investors named therein, dated August 19, 2024 10.74 Fifth Amendment to Exclusive License Agreement with Eisai, Inc. 10.75 (pp) Sixth Amendment to Exclusive License Agreement with Eisai, Inc. 10.76 (vv) Second Amendment to At-The-Market Issuance Sales Agreement, dated September 9, 2024 10.77 (vv) Employment Agreement, dated as of September 12, 2024, by and between Allarity Therapeutics, Inc., and Alexander Epshinsky. 10.78 (ww) Employment Agreement, dated as of September 30, 2024, by and between Allarity Therapeutics, Inc., and Jeremy R. Graff. 16 (n) Letter from Marcum, LLP dated August 23, 2022, regarding Change in Independent Registered Public Accounting Firm 19 Policy on Insider Trading 21 (xx) Subsidiaries of the Registrant 31.1 Certifications of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act 31.2 Certifications of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act 32.1* Certifications of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act 32.2* Certifications of the Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act 97 (xx) Allarity Therapeutics, Inc. Clawback Policy 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 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 refiled with the SEC on October 20, 2021. (c) Incorporated by reference from Amendment No. 2 to Registration Statement on Form S-4 refiled with the SEC on October 20, 2021. (d) Incorporated by reference from Amendment No. 4 to Registration Statement on Form S-4 filed with the SEC on November 2, 2021. (e) Incorporated by reference from Amendment No. 2 to Registration Statement on Form S-1 filed with the SEC on December 6, 2021. (f) Incorporated by reference from Form 8-K filed with the SEC on December 10, 2021. (g) Incorporated by reference from Form 8-K filed with the SEC on December 20, 2021. (h) Incorporated by reference from Form 8-K filed with the SEC on December 22, 2021. (i) Incorporated by reference from Form 8-K filed with the SEC on April 18, 2022. 84 Table of Contents (j) Incorporated by reference from Form 8-K filed with the SEC on May 6, 2022. (k) Incorporated by reference from Form 10-K filed with the SEC on May 17, 2022. (l) Incorporated by reference from Form 8-K filed with the SEC on June 10, 2022. (m) Incorporated by reference from Form 8-K filed with the SEC on July 11, 2022. (n) Incorporated by reference from Form 8-K filed with the SEC on August 12, 2022, as amended on August 24, 2022. (o) Incorporated by reference from Form 10-Q filed with the SEC on October 7, 2022. (p) Incorporated by reference from Form 8-K filed with the SEC on September 30, 2022. (q) Incorporated by reference from Form 8-K filed with the SEC on November 25, 2022. (r) Incorporated by reference from Form 8-K filed with the SEC on January 19, 2023. (s) Incorporated by reference from Form 8-K filed with the SEC on February 28, 2023. (t) Incorporated by reference from Form 10-K filed with the SEC on March 13, 2023. (u) Incorporated by reference from Form 8-K filed with the SEC on March 20, 2023. (v) Incorporated by reference from Form 8-K filed with the SEC on March 24, 2023. (x) Incorporated by reference from Form S-1 filed with the SEC on March 14, 2023. (y) Incorporated by reference from Form S-1 filed with the SEC on March 28, 2023. (z) Incorporated by reference from Form 8-K filed with the SEC on April 12, 2023. (aa) Incorporated by reference from Form 8-K filed with the SEC on April 25, 2023. (bb) Incorporated by reference from Form 8-K filed with the SEC on June 1, 2023. (cc) Incorporated by reference from Form 8-K filed with the SEC on June 28, 2023. (dd) Incorporated by reference from Form 8-K filed with the SEC on June 30, 2023. (ee) Incorporated by reference from Amendment No. 1 to Registration Statement on Form S-1 filed with the SEC on June 30, 2023. (ff) Incorporated by reference from Form 8-K filed with the SEC on July 11, 2023. (gg) Incorporated by reference from Form 8-K filed with the SEC on September 15, 2023. (hh) Incorporated by reference from Form 8-K filed on September 27, 2023. (ii) Incorporated by reference from Form S-1 filed on October 30, 2023. (jj) Incorporated by reference from Form 8-K filed with the SEC on January 19, 2024. (kk) Incorporated by reference from Form 8-K filed with the SEC on January 25, 2024. (ll) Incorporated by reference from Form 8-K filed with the SEC on February 14, 2024. (mm) Incorporated by reference from Amendment No. 3 to Registration Statement on Form S-1 filed with the SEC on December 15, 2023. (nn) Incorporated by reference from Amendment No. 1 to Registration Statement on Form S-1 filed with the SEC on December 5, 2023. (oo) Incorporated by reference from Form 8-K filed with the SEC on March 1, 2024. (pp) Incorporated by reference from Form 8-K filed with the SEC on August 21, 2024. (qq) Incorporated by reference from Form 8-K filed with the SEC on September 9, 2024. (rr) Incorporated by reference from Form 8-K filed with the SEC on September 10, 2024. (ss) Incorporated by reference from Form 8-K filed with the SEC on May 14, 2024. (tt) Incorporated by reference from Form 8-K filed with the SEC on May 21, 2024. (uu) Incorporated by reference from Form 8-K filed with the SEC on June 6, 2024. (vv) Incorporated by reference from Form 8-K filed with the SEC on September 13, 2024. (ww) Incorporated by reference from Form 8-K filed with the SEC on October 4, 2024. (xx) Incorporated by reference from Form 10-K filed with the SEC on March 8, 2024. * Furnished herewith. † Certain portions of this exhibit were omitted because they are not material and would likely cause competitive harm to the registrant if disclosed. # Indicates a 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. Item 16. Form 10-K Summary. None. 85 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ALLARITY THERAPEUTICS, INC. By: /s/ Thomas H. Jensen Name: Thomas H. Jensen Title: Chief Executive Officer 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. Signature Title Date /s/ Thomas H. Jensen Chief Executive Officer and Director March 31, 2025 Thomas H. Jensen ( Principal Executive Officer ) /s/ Alexander Epshinsky Chief Financial Officer March 31, 2025 Alexander Epshinsky ( Principal Financial Officer ) /s/ Gerald W. McLaughlin Chairman of the Board March 31, 2025 Gerald W. McLaughlin /s/ Joseph W. Vazzano Director March 31, 2025 Joseph W. Vazzano /s/ Laura E. Benjamin Director March 31, 2025 Laura E. Benjamin 86 Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Pages Consolidated Financial Statements For the years ended December 31, 2024 and 2023 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 (Deficit) F-5 – F-6 Consolidated Statements of Cash Flows F-7 – F-8 Notes to Consolidated Financial Statements F-9 – F-9 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of Allarity Therapeutics, Inc.: Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Allarity Therapeutics, Inc. (the “Company”) as of December 31, 2024 and 2023, 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, 2024 and 2023, 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. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s 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 audits 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 financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. 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 control over financial reporting. Accordingly, we express no such opinion. 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 to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. 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 audits provide a reasonable basis for our opinion. /s/ Wolf & Company, P.C. We have served as the Company’s auditor since 2022. Boston, MA March 31, 2025 F-2 Table of Contents ALLARITY THERAPEUTICS, INC. CONSOLIDATED BALANCE SHEETS As of December 31, 2024 and 2023 (in thousands, except for share and per share data*) December 31, December 31, 2024 2023 ASSETS Current assets: Cash $ 19,533 $ 166 Receivables from ATM sales 1,416 — Other current assets 115 209 Prepaid expenses 507 781 Tax credit receivable 770 815 Total current assets 22,341 1,971 Non-current assets: Property, plant and equipment, net 309 20 Intangible assets — 9,871 Total assets $ 22,650 $ 11,862 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Current liabilities: Accounts payable $ 4,182 $ 8,416 Accrued expenses and other current liabilities 5,232 1,309 Warrant derivative liability 1 3,083 Income taxes payable 74 59 Convertible promissory note and accrued interest 1,350 1,300 Total current liabilities 10,839 14,167 Non-current liabilities: Deferred tax — 446 Total liabilities 10,839 14,613 Commitments and contingencies (Note 16) Stockholders’ equity (deficit) Series A Preferred stock, $ 0.0001 par value, 500,000 authorized, 20,000 designated Series A shares, 0 and 1,417 shares issued and outstanding at December 31, 2024 and 2023, respectively (liquidation preference of $17.54 at December 31, 2023) — 1,742 Common Stock, $ 0.0001 par value, 250,000,000 and 750,000,000 shares authorized, at December 31, 2024 and 2023, respectively; 7,302,797 and 9,812 shares issued and outstanding at December 31, 2024 and 2023, respectively 1 — Additional paid-in capital 131,130 90,369 Accumulated other comprehensive loss ( 354 ) ( 411 ) Accumulated deficit ( 118,966 ) ( 94,451 ) Total stockholders’ equity (deficit) 11,811 ( 2,751 ) Total liabilities and stockholders’ equity (deficit) $ 22,650 $ 11,862 * All common share data has been retroactively adjusted to effect reverse stock splits in 2023 and 2024 (see Note 1). See accompanying notes to the consolidated financial statements. F-3 Table of Contents ALLARITY THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS For the years ended December 31, 2024 and 2023 (in thousands, except for share and per share data*) 2024 2023 Operating expenses: Research and development $ 6,096 $ 7,103 Impairment of intangible assets 9,703 — General and administrative 11,442 10,026 Total operating expenses 27,241 17,129 Loss from operations ( 27,241 ) ( 17,129 ) Other income (expense) Interest income 533 22 Interest expenses ( 653 ) ( 498 ) Foreign exchange gains (losses) ( 212 ) 133 Fair value of inducement warrants — ( 4,189 ) Loss on modification of warrants — ( 591 ) Change in fair value adjustment of warrant derivative liabilities 2,677 10,434 Total other income 2,345 5,311 Loss before income tax expense (benefit) ( 24,896 ) ( 11,818 ) Income tax expense (benefit) ( 381 ) 83 Net loss ( 24,515 ) ( 11,901 ) Deemed dividends on Series A Preferred Stock ( 299 ) ( 8,392 ) Deemed dividend on Series A Convertible Preferred Stock ( 562 ) — Gain on extinguishment of Series A Convertible Preferred Stock 222 — Deemed dividend of on Series C Preferred Stock — ( 123 ) Net loss attributable to common stockholders $ ( 25,154 ) $ ( 20,416 ) Net loss per common share, basic and diluted $ ( 15.65 ) $ ( 6,031.31 ) Weighted average common shares outstanding, basic and diluted 1,606,989 3,385 Other comprehensive loss Net loss $ ( 24,515 ) $ ( 11,901 ) Change in cumulative translation adjustment 57 310 Total comprehensive loss $ ( 24,458 ) $ ( 11,591 ) * All common share data has been retroactively adjusted to effect reverse stock splits in 2023 and 2024 (see Note 1). See accompanying notes to the consolidated financial statements. F-4 Table of Contents ALLARITY THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS ’ EQUITY (DEFICIT) For the years ended December 31, 2024 and 2023 (in thousands, except for share data*) Accumulated Total Series A Series B Series C Convertible Series A Additional Other Stockholders’ Preferred Stock Preferred Stock Preferred Stock Preferred Stock Common Stock Paid in Comprehensive Accumulated Equity Number Value Number Value Number Value Number Value Number Value Capital Loss Deficit (Deficit) Balance, December 31, 2022 13,586 $ 2,001 190,786 $ 2 — $ — — — 19 $ — $ 83,158 $ ( 721 ) $ ( 82,550 ) $ ( 113 ) Issuance of Series C Convertible Preferred Stock, net — — — — 50,000 1,160 — — — — — — — — Deemed dividend of 5 % and accretion of Series C Convertible Preferred Stock to redemption value — — — — — 164 — — — — ( 164 ) — — ( 164 ) Round up of common shares issued as a result of 1-for-35 and 1-for-40 reverse stock splits — — — — — — — — 1 — — — — — Conversion of Series A Preferred Stock into common stock, net ( 9,347 ) ( 1,377 ) — — — — ( 2,705 ) ( 2,522 ) 403 — 3,899 — — 1,377 Redemption of Series B Preferred Stock — — ( 190,786 ) ( 2 ) — — — — — — 2 — — 2 Issuance of common stock, net, April 2023 Financing — — — — — — — — 417 — 6,815 — — 6,815 Fair value of April Warrants allocated to liabilities, net of financing costs — — — — — — — — — — ( 3,772 ) — — ( 3,772 ) Deemed dividends on Series C Preferred Stock — — — — — 123 — — — — ( 123 ) — — ( 123 ) Elimination of Series A redemption rights ( 4,239 ) ( 624 ) — — 4,239 3,952 — — ( 3,328 ) — — 624 Issuance of Series A Preferred Stock as repayment of debt — — — — — — 486 453 — — — — — 453 Deemed dividend on redemption of Series A Preferred Stock and cancellation of debt in conjunction with April 2023 financing — — — — — — ( 1,550 ) ( 1,445 ) — — ( 207 ) — — ( 1,652 ) Deemed dividend on exchange of Series C Preferred stock for Series A Preferred stock — — — — ( 50,000 ) ( 1,447 ) 5,577 5,199 — — ( 3,752 ) — — 1,447 Deemed dividend on July 10, 2023 modification of Series A Preferred stock — — — — — — — 206 — — ( 206 ) — — — Issuance of common stock, net July 2023 financing — — — — — — — — 4,074 — 10,080 — — 10,080 Fair value of July Warrants allocated to liabilities, net of financing costs — — — — — — — — — ( 6,254 ) — — ( 6,254 ) Deemed dividend on redemption of Series A Preferred Stock in conjunction with July 2023 financing — — — — ( 4,630 ) ( 4,474 ) — — ( 526 ) — — ( 5,000 ) September 2023 warrants exercised on inducement, net — — — — — — — — 4,065 — 2,962 — — 2,962 Reclassification of derivative liabilities related to September 2023 warrants exercised — — — — — — — — — — 1,056 — — 1,056 Cashless exercise of Exchange Warrants — — — — — — — — 833 — 1,031 — — 1,031 Deemed dividend on September 2023 modification of Series A Preferred shares — — — — — — — 373 — — ( 373 ) — — — Stock-based compensation expense — — — — — — — — — — 71 — — 71 Currency translation adjustment — — — — — — — — — — — 310 — 310 Net loss — — — — — — — — — — — — ( 11,901 ) ( 11,901 ) Balance, December 31, 2023 — $ — — $ — — $ — 1,417 $ 1,742 9,812 $ — $ 90,369 $ ( 411 ) $ ( 94,451 ) $ ( 2,751 ) * All common share data has been retroactively adjusted to effect reverse stock splits in 2023 and 2024 (see Note 1). See accompanying notes to the consolidated financial statements. F-5 Table of Contents ALLARITY THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS ’ EQUITY (DEFICIT) For the years ended December 31, 2024 and 2023 (in thousands, except for share data*) Series A Convertible Series A Accumulated Total Redeemable Convertible Additional Other Stockholders’ Preferred Stock Preferred Stock Common Stock Paid in Comprehensive Accumulated Equity Number Value Number Value Number Value Capital Loss Deficit (Deficit) Balance, December 31, 2023 — $ — 1,417 $ 1,742 9,812 $ — $ 90,369 $ ( 411 ) $ ( 94,451 ) $ ( 2,751 ) Conversion of preferred stock into common stock, net — — (1,417 ) (1,819 ) 15,976 — 1,819 — — — Extinguishment of preferred stock — — — (222 ) — — 222 — — — Deemed dividend on preferred stock — — — 299 — — ( 299 ) — — — Common stock issued for services — — — — 147,878 — 336 — — 336 Issuance of common stock, net of offering costs under open market sales agreement (ATM) — — — — 6,953,259 4 38,766 — — 38,770 Reverse split (1-for-30) rounding adjustment — — — — 97,216 ( 3 ) 3 — — — Stock-based compensation expense (recoveries) — — — — — — 71 — — 71 Cashless exercise of 3i Exchange Warrants — — — — 78,656 — 405 — — 405 Issuance of convertible redeemable preferred stock, net of offering costs 35,000 2,938 — — — — — — 2,938 Redemption of convertible redeemable preferred stock ( 35,000 ) ( 3,500 ) — — — — — — — ( 3,500 ) Deemed dividend on redeemable preferred stock — 562 — — — — ( 562 ) — — — Currency translation adjustment — — — — — — — 57 — 57 Net loss — — — — — — — — ( 24,515 ) ( 24,515 ) Balance, December 31, 2024 — $ — — $ — 7,302,797 $ 1 $ 131,130 $ ( 354 ) $ ( 118,966 ) $ 11,811 * All common share data has been retroactively adjusted to effect reverse stock splits in 2023 and 2024 (see Note 1). See accompanying notes to the consolidated financial statements. F-6 Table of Contents ALLARITY THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2024 and 2023 (in thousands) 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 24,515 ) $ ( 11,901 ) Reconciliation of net loss to net cash used in operating activities: Depreciation and amortization 9 37 Intangible asset impairment 9,703 — Common stock issued for services 336 — Stock-based compensation expense (recovery) 71 ( 71 ) Unrealized foreign exchange gain ( 126 ) ( 179 ) Non-cash interest expense 230 464 Non-cash finance expense — 1,110 Fair value of inducement warrants — 4,189 Loss on modification of warrants — 591 Change in fair value of warrant derivative liabilities ( 2,677 ) ( 10,434 ) Deferred income taxes ( 446 ) 97 Changes in operating assets and liabilities: Other current assets 94 1,350 Unearned revenue 207 — Tax credit receivable 45 ( 26 ) Prepaid expenses 274 ( 190 ) Accounts payable ( 4,108 ) 2,165 Accrued liabilities 3,536 43 Income taxes payable 15 18 Operating lease liability — ( 8 ) Net cash used in operating activities ( 17,352 ) ( 12,745 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment ( 298 ) — Net cash used in investing activities ( 298 ) — CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from Series C Convertible Preferred Stock issuance, net — 1,160 Proceeds from 3i promissory notes 1,340 1,050 Repayment of 3i debt ( 1,340 ) ( 3,699 ) Proceeds from ATM sales of common stock, net of issuance costs 37,354 — Net proceeds from common stock and pre-funded warrant issuance — 16,895 Net proceeds from warrants exercised in conjunction with price & warrant inducement — 2,243 Redemption of Series A Preferred Stock — ( 6,652 ) Redemption of Series B Preferred Stock — ( 2 ) Proceeds from issuance of Convertible Redeemable Series A Preferred Stock 2,938 — Redemption of Convertible Redeemable Series A Preferred Stock ( 3,500 ) — Net cash provided by financing activities 36,792 10,995 Net increase (decrease) in cash 19,142 ( 1,750 ) Effect of exchange rate changes on cash 225 ( 113 ) Cash, beginning of year 166 2,029 Cash, end of year $ 19,533 $ 166 See accompanying notes to the consolidated financial statements. F-7 Table of Contents ALLARITY THERAPEUTICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (cont.) For the years ended December 31, 2024 and 2023 (in thousands) 2024 2023 Supplemental disclosure of cash flow information Cash paid for income taxes $ — $ 6 Cash paid for interest $ 423 $ 34 Supplemental disclosure of non-cash investing and financing activities: Stock issued in conjunction with consulting agreement $ 90 $ — Issuance of common shares on conversion of 3i Exchange Warrants $ 405 $ — Conversion of Series A Redeemable Preferred Stock to common stock $ 1,819 $ 3,899 Issuance of Series A Preferred Stock in Exchange for Series C Preferred Stock $ — $ 5,199 Issuance of Series A Preferred Stock to extinguish 3i Promissory Note $ — $ 453 Redemption of Series A Preferred Stock as repayment of debt $ — $ 1,445 Deemed dividends on Series A Preferred Stock $ 299 $ 8,392 Gain on extinguishment of Series A Preferred Stock $ 222 $ — Deemed dividend on Series C Convertible Preferred Stock, and accretion of Series C Preferred Stock to redemption value $ — $ 123 Cashless exercise of 3i LP Exchange Warrants in exchange for common stock $ — $ 1,031 Deemed dividend on Convertible Redeemable Series A Preferred Stock $ 562 $ — See accompanying notes to the consolidated financial statements. F-8 Table of Contents ALLARITY THERAPEUTICS, INC. NOTES TO FINANCIAL STATEMENTS For the years ended December 31, 2024 and 2023 (in thousands, except for share and per share data and where otherwise noted) 1. Organization and Description of Business Allarity Therapeutics, Inc. and Subsidiaries (the “Company”) is a clinical stage pharmaceutical company that develops drugs for the personalized treatment of cancer using drug specific companion diagnostics 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. The Company’s principal operations are located at Venlighedsvej 1, 2970 Horsholm, Denmark. The Company’s business address in the Unites States is located at 24 School Street, 2nd Floor, Boston, MA 02108. Liquidity The Company has incurred significant losses and has an accumulated deficit of $ 119.0 million. Since inception, the Company's operations have been funded primarily through proceeds received from its collaboration arrangements, sale of equity and debt securities, and the proceeds from the exercise of warrants. The Company has incurred losses from operations and negative cash flows from operating activities since inception and expects to continue to incur substantial losses for the next several years as it continues to fully develop and prepare regulatory filings and obtain regulatory approvals for its existing and new product candidates. The Company's estimates its current cash of $ 19.5 million, based on the Company's current operating plan, is sufficient to enable the Company to fund its activities through at least the next 12 months from the date of this report on Form 10 -K. The Company is subject to industry risks and the expenses associated with any company performing research and development. There is no guarantee that our research and development projects will succeed, that developed products will secure necessary regulatory approvals, or that any approved products will be commercially successful. Furthermore, our industry is characterized by rapid technological advancements, and we heavily rely on the expertise of our employees and consultants. If we fail to achieve profitability or sustain it over time, we may be unable to maintain our operations at current levels and could be forced to scale back our activities. Reverse Stock Splits On March 24, 2023, June 28, 2023, April 9, 2024, and September 11, 2024, the Company effected a 1 -for- 40 reverse stock split, 1 -for- 35 reverse stock split, 1 -for- 20 reverse stock split, and 1 -for- 30 reverse stock split, respectively, of the shares of common stock of the Company (collectively, the “Reverse Stock Splits”). All share and per share information has been retroactively adjusted to give effect to the Reverse Stock Splits for all periods presented, unless otherwise indicated. Proportionate adjustments were made to the per share exercise price and/or the number of shares issuable upon the exercise or vesting of all stock options, restricted stock, preferred stock and warrants outstanding on September 12, 2024, which resulted in a proportional decrease in the number of shares of the Company’s common stock reserved for issuance upon exercise or vesting of such stock options, restricted stock and warrants, and, in the case of stock options and warrants, a proportional increase in the exercise price of all such stock options and warrants. No fractional shares were issued in connection with the Reverse Stock Splits. If, as a result of the Reverse Stock Splits, a stockholder would otherwise have been entitled to a fractional share, each fractional share was rounded up to the next whole number. F-9 Table of Contents 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared on an accrual basis of accounting, in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the ASC and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: Name Country of Incorporation Allarity Acquisition Subsidiary Inc. United States Allarity Therapeutics Europe ApS (formerly Oncology Venture Product Development ApS) Denmark Allarity Therapeutics Denmark ApS (formerly OV- SPV2 ApS) Denmark MPI Inc.* United States OV US Inc.** United States * In the process of being dissolved because inactive. ** OV US Inc. was dissolved effective November 15, 2023. All intercompany transactions and balances, including unrealized profits from intercompany sales, have been eliminated upon consolidation. Use of Estimates 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, 3i Exchange 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. Risks and Uncertainties The Company is subject to risks common to early-stage companies in the biopharmaceutical industry including, but not limited to, uncertainties related to clinical effectiveness of products, commercialization of products, regulatory approvals, dependence on key products, key personnel and third -party service providers such as contract research organizations (“CROs”), protection of intellectual property rights, the need and ability to obtain additional financing and the ability to make milestone, royalty or other payments due under any license, collaboration or supply agreements. 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 Company and its subsidiaries operate mainly in Denmark and the United States. The functional currencies of the Company’s subsidiaries are their local currency. The Company’s reporting currency is the U.S. dollar. The Company translates the assets and liabilities of its Denmark subsidiaries into the U.S. dollar at the exchange rate in effect at the balance sheet date and the results of operations are translated using the average exchange rate for the year. Unrealized translation gains and losses are recorded as a cumulative translation adjustment, which is included in the consolidated statements of changes in redeemable convertible preferred stock and stockholders’ equity as a component of accumulated other comprehensive loss. Monetary assets and liabilities denominated in currencies other than the functional currency are remeasured into the functional currency at rates of exchange prevailing at the balance sheet dates. Non-monetary assets and liabilities denominated in foreign currencies are re-measured into the functional currency at the exchange rates prevailing at the date of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net loss for the respective periods. Adjustments that arise from exchange rate translations are included in other comprehensive loss in the consolidated statements of operations and comprehensive loss as incurred. The Company recorded a foreign exchange translation gain of $ 0.1 million and $ 0.3 million, included in accumulated other comprehensive loss for the years ended December 31, 2024 and 2023 , respectively. F- 10 Table of Contents Concentrations of credit risk and of significant suppliers Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash. The Company maintains its cash in financial institutions in amounts that could exceed government-insured limits. The Company does not believe it is subject to additional credit risks beyond those normally associated with commercial banking relationships. The Company has not experienced losses on its cash accounts and management believes, based upon the quality of the financial institutions, that the credit risk regarding these deposits is not significant. The Company is dependent on third -party manufacturers to supply products for research and development activities in its programs. In particular, the Company relies and expects to continue to rely on a small number of manufacturers to supply its requirements for supplies and raw materials related to these programs. These programs could be adversely affected by a significant interruption in these manufacturing services or the availability of raw materials. Cash The company considers cash equivalents as highly liquid investments with original maturities of three months or less at the date of purchase. The Company had no cash equivalents or restricted cash on December 31, 2024 and 2023 . Property, plant and equipment Property, plant, and equipment are stated at cost, less accumulated depreciation. Depreciation expense is recognized using the straight-line method over the estimated useful lives of the respective assets as follows: Estimated Useful Economic Life (in years) Laboratory equipment 5 Furniture and office equipment 3 Upon retirement or sale, the cost of assets disposed of, and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in loss from operations. As of December 31, 2024 and 2023 , there have been no significant asset retirements to date. Expenditures for repairs and maintenance that do not improve or extend the lives of the respective assets are charged to expense as incurred. Impairment of long-lived assets Long-lived assets consist of property, plant and equipment, and intangible assets. Long-lived assets to be held and used are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets. An impairment loss would be recognized as a loss from operations when estimated undiscounted future cash flows expected to result from the use of an asset group or the estimated return on investment are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset group over its fair value, determined based on discounted cash flow or return on investment calculations. F- 11 Table of Contents Acquired in-process research and development ("IPR&D") Acquired IPR&D represents the fair value assigned to research and development assets that the Company acquired as part of a business combination and have not been completed at the acquisition date. The fair value of IPR&D acquired in a business combination is recorded on the consolidated balance sheets at the acquisition-date fair value and is determined by estimating the costs to develop the technology into commercially viable products, estimating the resulting revenue from the projects, and discounting the projected net cash flows to present value. IPR&D is not amortized, but rather is reviewed for impairment on an annual basis or more frequently if indicators of impairment are present, until the project is completed, abandoned, or transferred to a third -party. Management assesses its acquired IPR&D for impairment at year end date as well as when events and circumstances indicate there is a potential impairment. Significant quantitative indicators considered are the Company’s market capitalization, market share, length of remaining clinical trials, and projected revenue per treatment. The projected discounted cash flow models used to estimate the fair value of partnered assets and cost approach model used to estimate proprietary assets as part of the Company’s IPR&D reflect significant assumptions regarding the estimates a market participant would make to evaluate a drug development asset, including the following: ● Estimates of obsolescence of development expenditure; ● Probability of successfully completing clinical trials and obtaining regulatory approval; ● Estimates of future cash flows from potential milestone payments and royalties related to out-licensed product sales; and ● A discount rate reflecting the Company’s weighted average cost of capital and specific risk inherent in the underlying assets. Once brought into use, intangible assets are amortized over their estimated useful economic lives using the economic consumption method if anticipated future revenues can be reasonably estimated. The straight-line method is used when revenues cannot be reasonably estimated. For the years ended December 31, 2024 and 2023 , the Company has recorded impairment losses of $ 9.7 million and $ 0 respectively on its intangible assets. As of December 31, 2024, the IPR&D intangible assets have been fully amortized and have a $ 0 balance. Fair value measurements of financial instruments The carrying value of the Company’s financial instruments of cash, other current assets, accounts payable and accrued liabilities, approximate their fair value due to their short-term nature. The Company’s other financial instruments include preferred shares, convertible debt, warrant liabilities, and warrant derivative liabilities. The warrant liabilities and derivative liabilities that are freestanding equity-linked financial instruments are fair valued at the end of every period using level 3 inputs. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC Topic 820, Fair Value Measurement (“ASC 820” ), establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three -tier fair value hierarchy that distinguishes between the following: ● Level 1 — defined as observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. F- 12 Table of Contents ● Level 2 — defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and ● 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. In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement. Segment and geographic information Operating segments are defined as components of a business for which separate discrete financial information is available for evaluation by the chief operating decision maker in deciding how to allocate resources and assess performance. The Company operates as a single operating and reporting segment, reflecting our sole focus in developing a treatment for ovarian cancer. Our Chief Executive Officer serves as the Chief Operating Decision Maker (CODM), responsible for assessing the Company's performance and making resource allocation decisions. The CODM evaluates financial information on a consolidated basis, focusing on key metrics such as research and development expense, general and administrative expenses, and other income/expenses. The CODM allocates resources based on the Company's available cash resources, forecasted cash flow, and expenditures on a consolidated basis, as well as an assessment of the probability of success of its research and development activities. Resource allocation decisions are informed by budgeted and forecasted expense information, along with actual expenses incurred to date. The measure of segment assets is reported on the balance sheet as total assets. Disaggregated profit or loss information at the program or functional level is not regularly provided to or relied upon by the CODM, as our integrated operating model emphasizes shared resources and centralized decision-making. The Company operates in two geographic areas: Denmark and the United States. Research and development expenses Research and development ("R&D") costs are expensed as incurred. R&D expenses primarily consist of costs associated with preclinical studies and clinical trials as well as salaries, stock-based compensation and benefits, facilities costs and laboratory supplies, manufacturing expenses and external costs of outside vendors engaged to conduct preclinical development activities and clinical trials. Typically, upfront payments and milestone payments made for the licensing of technology are expensed as research and development in the period in which they are incurred. The Company has entered into various research and development contracts with companies in Europe, the United States, and other countries. General and administrative expenses General and administrative ("G&A") expenses consist primarily of employee-related expenses, such as salaries, stock-based compensation, and benefits for employees engaged in G&A activities. G&A also consists of marketing, advertising, legal and accounting fees, consulting services, and other operating costs relating to corporate matters and daily operations. R&D incentives and receivable Denmark Tax Incentives Denmark allows loss making companies the opportunity to apply for a payment equal to the tax value ( 22% ) of negative taxable income related to R&D costs. The negative taxable income is calculated on the total negative income of the companies participating in the joint taxation. Tax payment according to this rule cannot exceed an amount of DKK 5.5 million, corresponding to a tax loss relating to R&D expenditure of DKK 25 million. The tax credit is recorded as tax receivable and other income within research and development expenses. In each of the years ended December 31, 2024 and 2023 , research and development expenses include refundable tax credits of $ 0.8 million. F- 13 Table of Contents Convertible debt instruments The Company follows ASC 480 - 10, Distinguishing Liabilities from Equity in its evaluation of the accounting for a hybrid instrument. A financial instrument that embodies an unconditional obligation, or a financial instrument other than an outstanding share that embodies a conditional obligation, that the issuer must or may settle by issuing a variable number of its equity shares shall be classified as a liability (or an asset in some circumstances) if, at inception, the monetary value of the obligation is based solely or predominantly on any one of the following: (a) a fixed monetary amount known at inception; (b) variations in something other than the fair value of the issuer’s equity shares; or (c) variations inversely related to changes in the fair value of the issuer’s equity shares. Hybrid instruments meeting these criteria are not further evaluated for any embedded derivatives and are carried as a liability at fair value at each balance sheet date with remeasurements reported in change on fair value expense in the accompanying 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 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. Warrants When the Company issues warrants it evaluates the proper balance sheet classification to determine classification as either equity or as a derivative liability on the consolidated balance sheets. In accordance with ASC 815 - 40, Derivatives and Hedging-Contracts in the Entity’s Own Equity (“ASC 815 - 40” ), the Company classifies a warrant as equity so long as it is “indexed to the Company’s equity” and several specific conditions for equity classification are met. A warrant is not considered indexed to the Company’s equity, in general, when it contains certain types of exercise contingencies or adjustments to exercise price. If a warrant is not indexed to the Company’s equity or it has net cash settlement that results in the warrants to be accounted for under ASC 480, Distinguishing Liabilities from Equity, or ASC 815 - 40, it is classified as a derivative liability, which is carried on the Consolidated Balance Sheet at fair value with any changes in its fair value recognized immediately in the Consolidated Statement of Operations and Comprehensive Loss. F- 14 Table of Contents Derivative financial instruments The Company does not use derivative instruments to hedge exposures to interest rate, market, or foreign currency risks. The Company evaluates all its financial instruments to determine if such instruments contain features that qualify as embedded derivatives. Embedded derivatives must be separately measured from the host contract if all the requirements for bifurcation are met. The assessment of the conditions surrounding the bifurcation of embedded derivatives depends on the nature of the host contract. Bifurcated embedded derivatives are recognized at fair value, with changes in fair value recognized in the Consolidated Statements of Operations and Comprehensive Loss each reporting period. Stock-based compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718” ). ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service period in the Company’s Consolidated Statements of Operations and Comprehensive Loss. The Company records the expense for option awards using either a graded or straight-line method. The Company accounts for forfeitures as they occur. For stock-based awards, the measurement date is the date of grant. The compensation expense is then recognized over the requisite service period, which is the vesting period of the respective award. The Company reviews all stock award modifications including when there is an exchange of original award for a new award. In the case of stock award modifications, the Company calculates for the incremental fair value based on the difference between the fair value of the modified award and the fair value of the original award immediately before it was modified. The Company immediately recognizes the incremental value as compensation cost for vested awards and recognizes, on a prospective basis over the remaining requisite service period, the sum of the incremental compensation cost and any remaining unrecognized compensation cost for the original award on the modification date. The fair value of restricted stock units is based on the fair value of the Company's common stock on the date of the grant. The fair value of stock options (“options”) on the grant date is estimated using the Black-Scholes option-pricing model using the single-option approach. The Black-Scholes option pricing model requires the use of highly subjective and complex assumptions, including the option’s expected term and the price volatility of the underlying stock, to determine the fair value of the award. The Company applies the Black-Scholes model as it believes it is the most appropriate fair value method for all option awards. The Black-Scholes model requires several assumptions, of which the most significant are the share price, expected volatility and the expected award term. Since the Company has limited option exercise history, it has generally elected to estimate the expected life of an award based upon the "simplified method" with the continued use of this method extended until such time the Company has sufficient exercise history. The Company has no foreseeable plans to pay dividends on its common stock, and therefore, uses an expected dividend yield of zero in the option pricing model. The risk-free interest rate is based on the yield of U.S. treasury bonds with equivalent terms. The expected share price volatility for the Company's common shares is estimated by taking the average historical price volatility for industry peers. The Company classifies stock-based compensation expense in its Consolidated Statements of Operations and Comprehensive Loss in the same way the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified. F- 15 Table of Contents Accumulated other comprehensive loss Accumulated other comprehensive loss includes net loss as well as other changes in stockholders’ equity (deficit) that result from transactions and economic events other than those with shareholders. The Company records unrealized gains and losses related to foreign currency translation and instrument specific credit risk as components of other accumulated comprehensive loss in the Consolidated Statements of Operations and Comprehensive Loss. For the years ended December 31, 2024 and 2023 , the Company’s other comprehensive loss was comprised of currency translation adjustments. Income taxes The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company’s tax returns. Deferred tax assets and liabilities are determined based on the differences between the consolidated financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. The Company accounts for uncertainty the consolidated financial statements by applying a two -step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than- not -to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that will more likely than not be realized upon ultimate settlement. Any provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits that are considered appropriate. The Company recognizes interest and penalties related to uncertain tax positions in other (income) expenses. Net Loss Per Share Basic net loss per common share is determined by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Diluted net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common stock and common stock equivalents outstanding for the period. The Company adjusts net loss to arrive at the net loss attributable to common stockholders to reflect the amount of dividends accumulated during the period on the Company’s redeemable convertible preferred stock, if any. The treasury stock method is used to determine the dilutive effect of the Company’s stock option grants, restricted stock units, and warrants and the if-converted method is used to determine the dilutive effect of the Company’s redeemable convertible preferred stock and convertible notes. For the years ended December 31, 2024 and 2023 , the Company had a net loss attributable to common stockholders, and as such, all outstanding stock options, unvested restricted stock units, convertible notes, shares of redeemable convertible preferred stock, and warrants were excluded from the calculation of diluted loss per share. Year Ended December 31, 2024 2023 Warrants 8,557 15,893 Options — 9 Unvested restricted stock units 174,038 — Series A Convertible Preferred stock — 2,551 Total 182,595 18,453 F- 16 Table of Contents Recently Adopted Accounting Standards In November 2023, the FASB issued ASU No. 2023 - 07, Segment Reporting (Topic 280 ): Improvements to Reportable Segment Disclosures, which requires that an entity report segment information in accordance with Topic 280, Segment Reporting. The amendment in the ASU is intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The Company adopted ASU 2023 - 07 for the year ended December 31, 2024 retrospectively to all periods presented in the consolidated financial statements. The adoption of this ASU had no impact on reportable segments identified and had no effect on the Company’s consolidated financial position, results of operations, or cash flows. Accounting Standards Not Yet Adopted In December 2023, the FASB issued ASU No. 2023 - 09, Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S. and foreign jurisdictions. The update will be effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact that this guidance will have on its financial statement disclosures. In November 2024, the FASB issued ASU No. 2024 - 03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220 - 40 ): Disaggregation of Income Statement Expenses, which requires new financial statement disclosures in tabular format, in the notes to financial statements, of specified information about certain costs and expenses. The amendments in this update do not change or remove current expense disclosure requirements. The amendments in this update are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of the new standard on its financial statement disclosures. 3. Other Current Assets The Company’s other current assets are comprised of the following: December 31, 2024 2023 Deposits $ 72 $ 56 Salary deposit — 22 Value added tax (“VAT”) receivable 43 131 Total $ 115 $ 209 4. Intangible assets Intangible assets, impairment charges and adjustments are summarized as follows: December 31, 2024 2023 Opening balance $ 9,871 $ 9,549 Impairment recognized during the period ( 9,703 ) — Foreign translation adjustment ( 168 ) 322 Ending balance $ — $ 9,871 As of the year ended December 31, 2024 , as a result of continued downward pressure on the Company’s common stock and updated clinical development plan, the Company performed an impairment assessment on the individual intangible assets utilizing a discounted cash flow model with a weighted average cost of capital of 26 %, and recognized a full impairment charge of $ 9.7 million during the year ended December 31, 2024 . There was no impairment charge in 2023. F- 17 Table of Contents 5. Accrued liabilities The Company’s accrued liabilities are comprised of the following: December 31, 2024 2023 Development cost liability $ 152 $ 114 Accrued interest on milestone liabilities 281 101 Payroll accruals 458 398 Accrued Board member fees — 60 Accrued consulting fees — 150 Accrued audit and legal 1,567 425 Accrued SEC settlement 2,500 — Other 274 61 $ 5,232 $ 1,309 6. Convertible promissory note due to Novartis On April 12, 2022, Allarity Denmark re-issued a Convertible Promissory Note (the “Novartis 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 $ 1.0 million. The Novartis Promissory Note was re-issued pursuant to an amendment of the 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 Novartis Promissory Note were unchanged and remain in full force and effect. The Novartis 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 5 % per annum. Interest shall be calculated on the basis of a 360 -day year for the actual number of days elapsed. The roll forward of the Novartis Promissory Note as of December 31, 2024 and 2023 is as follows: December 31, 2024 2023 Convertible promissory note, opening balance $ 1,300 $ 1,083 Less debt discount, opening — ( 232 ) Plus, accretion of debt discount, interest expense — 38 Convertible promissory note, net of discount 1,300 889 Interest accretion, opening — 245 Interest accrual, expense 50 166 Convertible promissory note, ending balance $ 1,350 $ 1,300 On January 26, 2024, the Company received a termination notice from Novartis due to a material breach of the Original Agreement. Accordingly, under the terms of the Original Agreement, the Company ceased all development and commercialization activities with respect to all licensed products, all rights and licenses granted by Novartis to the Company reverted to Novartis; and all liabilities due to Novartis became immediately due and payable inclusive of interest which is continuing to accrue at 5 % per annum. As of December 31, 2024, the liability is recorded as a current liability on the Company's condensed consolidated balance sheets as follows: $ 3.6 million in accounts payable and $ 1.6 million in convertible promissory notes and accrued interest. During the years ended December 31, 2024 and 2023 , the Company recorded $ 0.2 million and $ 0.2 million, respectively, to interest expense. F- 18 Table of Contents 7. Promissory Notes due to 3i, LP ( "3i" ) 3i Convertible Senior Promissory Notes ( 2024 ) (collectively the "2024 Notes") On January 18, 2024, the Company entered into a Securities Purchase Agreement (the "SPA"), as amended, with 3i, pursuant to which three senior convertible promissory notes were issued as follows: i. On January 18, 2024, in an aggregate principal amount of $ 440,000 due on January 18, 2025, and with a set conversion price of $ 268.50 per share, for an aggregate purchase price of $ 400,000 , representing an approximate 10 % original issue discount (the “First Note”). ii. On February 13, 2024, in an aggregate principal amount of $ 440,0000 due on February 13, 2025, and with a set conversion price of $ 243.00 per share, for an aggregate purchase price of $ 400,000 , representing an approximately 10 % original issue discount (the “Second Note”). iii. On March 14, 2024, in an aggregate principal amount of $ 660,000 due on March 14, 2025, and with a set conversion price of $ 210.00 per share, for an aggregate purchase price of $ 600,000 , representing an approximately 10 % original issue discount (the “Third Note”). The Company agreed to pay interest to 3i on the aggregate unconverted and then outstanding principal amount of the 2024 Notes at the rate of 8 % per annum with interest payments commencing one month after the initial receipt of net proceeds. The 2024 Notes and accrued interest were redeemed in full and cancelled on May 6, 2024. 3i Convertible Secured Promissory Notes ( 2023 ) On 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 “2023 Notes”). Effective November 28, 2022, the Company issued: ( 1 ) a Note in the principal amount of $ 1.7 million as payment of $ 1.7 million 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 $ 0.4 million in exchange for cash. Effective December 30, 2022, the Company issued an additional Note in the principal amount of $ 0.7 million in exchange for cash. Each Note was due to mature on January 1, 2024, carried an interest rate of 5 % per annum, and was secured by all of the Company’s assets pursuant to a security agreement (the “Security Agreement”). On April 19, 2023, 3i provided the Company with a loan for $ 0.4 million, which was evidenced by a Secured Promissory Note dated April 19, 2023 ( the “April Note”). On April 20, 2023, the Company entered into a Cancellation of Debt Agreement with 3i, which became effective as of the April Offering Closing. Upon the closing, pursuant to the terms of the Cancellation of Debt Agreement, all of the Company’s outstanding indebtedness under the Notes (as defined therein) and the Alternative Conversion Amount (as defined therein) due by the Company to 3i were paid in full. Accordingly, any and all obligations in connection therewith were extinguished without any additional further action on the part of 3i upon payment of $ 3.3 million in cash from a portion of the proceeds from the April Offering. On June 29, 2023, the Company entered into a Secured Note Purchase Agreement with 3i, (the “June 2023 Purchase Agreement”), pursuant to which, on June 30, 2023, 3i purchased a secured promissory note for a principal amount of $ 0.4 million (the “June Note”). Such note matured on July 31, 2023, and carried an interest rate of 5 % per annum, and was secured by all of the Company’s assets pursuant to that certain security agreement dated June 29, 2023 (the “Security Agreement”). As contemplated by the June 2023 Purchase Agreement, the Company filed the Second Certificate of Amendment with the Delaware Secretary of State on June 30, 2023. From the proceeds of the July Offering, on July 10, 2023, the Company redeemed the June Note for $ 0.4 million in cash. The roll forward of the April Note and the June Note for the twelve months ended December 31, 2023 is as follows: December 31, 2023 Secured promissory notes $ 2,644 Less debt discount, opening — Plus, accretion of debt discount, interest expense — Carrying value of the Notes 2,644 Interest accretion, opening 10 Interest accrual, expense 33 $ 2,687 Less: repayment April 10, 2023 ( 2,687 ) Plus: June 2023 Promissory Note proceeds and interest 351 Less: July 10, 2023 repayment ( 351 ) Secured promissory note, ending balance $ — The April Note and June Note were repaid in full in 2023. F- 19 Table of Contents 8. Preferred Stock Series A Preferred Stock and Common Stock Purchase Warrants Amendments to Series A Preferred Stock On November 22, 2022, the Company amended Section 12 of the Certificate of Designation of Series A Convertible Preferred Stock (“Series A Preferred Stock”) to provide for voting rights. Subject to a 9.99 % beneficial ownership limitation, the holders of Series A Preferred Stock had 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 expired on February 28, 2023, and thereafter holders of preferred stock shall not have voting rights except as required by law. 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. On January 23, 2023, the Company and 3i amended the letter agreement entered into on December 8, 2022, to provide that the modification of the term Series A Preferred Stock Conversion Price (“Series A Preferred Stock Conversion Price”) to mean the lower of: (i) the Closing Sale Price (as defined in the Certificate of Designations of Series A Preferred Stock (“Series A Certificate of Designations”)) on the trading date immediately preceding the Conversion Date (as defined in the Series A 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 Series A Certificate of Designations) will be in effect until terminated by us and 3i. On April 20, 2023, the Company entered into a certain Modification and Exchange Agreement (the “Exchange Agreement”) with 3i pursuant to which the parties agreed to, among other things, subject to the April Offering Closing, (i) amend the Certificate of Designations for the Series A Convertible Preferred Stock (the “Amended COD”), which among other things, eliminates the Series A Preferred Stock redemption right and dividend (except for certain exceptions as specified in the Amended COD), and provides for the conversion of Series A Preferred Stock into common stock at a conversion price of $ 450.00 which is equal to the price for a share of common stock sold in the April Offering, (ii) exchange 50,000 shares of Series C Preferred Stock (the “Series C Shares”) beneficially owned by 3i for 5,577 shares of Series A Preferred Stock (the “Exchange Shares”), (iii) exchange a warrant to purchase common stock issued on December 20, 2021 to 3i (the “Original Warrant”) for a new warrant (the “Exchange Warrant”), which reflects an exercise price of $ 18,000.00 (the “New Exercise Price”) and represents a right to acquire 526 shares of common stock (the “New Warrant Shares”). In addition to the satisfaction or waiver of customary and additional closing conditions set forth in the Exchange Agreement, the transactions contemplated by the Exchange Agreement were subject to (a) the occurrence of the closing of the Offering and (b) the filing of the Amended COD with the Delaware Secretary of State. On April 21, 2023, the closing of the transactions contemplated by the Exchange Agreement occurred and the Exchange Warrant and the Exchange Shares were issued to 3i, and the Original Warrant and the Series C Shares were cancelled. In addition, on April 21, 2023, the Amended COD was filed with the Delaware Secretary of State. F- 20 Table of Contents On April 20, 2023, the Company also entered into a Cancellation of Debt Agreement as described in Note 7. Pursuant to such agreement, 1,550 shares of Series A Preferred Stock (the “Redemption Shares”) beneficially owned by 3i were redeemed in full for a purchase price of $ 1,652 , which redemption price was paid in cash from the portion of the proceeds from the April Offering. The Company also entered into the First Amendment to the Registration Rights Agreement dated May 20, 2023 ( the “RRA”), which became effective upon the April Offering Closing, to amend certain defined terms under the RRA to include the Exchange Shares, the New Warrant Shares and the Note Conversion Shares. On April 21, 2023, in connection with the transactions contemplated under the Exchange Agreement, the Company filed an Amended and Restated Certificate of Designations of Series A Convertible Preferred Stock of the Company (the “Amended and Restated Series A COD”) with the Delaware Secretary of State. The Amended and Restated Series A COD eliminates the Series A Preferred Stock redemption right and dividend (except for certain exceptions as specified therein) and provides for the conversion of Series A Preferred Stock into Common Stock at a conversion price equal to the price for a share of Common Stock sold in the April Offering, $ 18,000.00 per share, and based on a stated value of $ 1,080 per share. As a result of the Amended and Restated Series A COD, the Company determined that the Series A Preferred Stock met the definition of equity and reclassified it from mezzanine equity. On May 30, 2023, the Company filed an amendment to the Amended and Restated Certificate of Designations for the Series A Preferred Stock with the Delaware Secretary of State (the “Amended COD”) to amend the voting rights of the Series A Preferred Stock which among other things provided additional voting rights to the Series A Preferred Stock. Under the Amended COD, holders of the Series A Preferred Stock have the following voting rights: ( 1 ) holders of the Series A Preferred Stock have a right to vote on all matters presented at the Special Meeting together with the common stock as a single class on an “as converted” basis using the conversion price of $ 18,000.00 and based on stated value of $ 1,080 subject to a beneficial ownership limitation of 9.99 %, and ( 2 ), in addition, holders of Series A Preferred Stock have granted the Board the right to vote, solely for the purpose of satisfying quorum and casting the votes necessary to adopt a reverse stock split of the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split Proposal”) and to adjourn any meeting of stockholders called for the purpose of voting on reverse stock split (the “Adjournment Proposal”) under Delaware law, that will “mirror” the votes cast by the holders of shares of common stock and Series A Preferred Stock, voting together as a single class, with respect to the Reverse Stock Split Proposal and the Adjournment Proposal. The number of votes per each share of Series A Preferred Stock that may be voted by the Board shall be equal to the quotient of ( x ) the sum of ( 1 ) the original aggregated stated value of the Series A Preferred Stock when originally issued on December 20, 2021 ( calculated based on the original stated value of $ 1,000 of the Series A Preferred Stock multiplied by 20,000 shares of Series A Preferred Stock) and ( 2 ) $ 1,200 , which represents the purchase price of the Series C Preferred Stock when originally issued; divided by (y) the conversion price of $ 30.00 . If the Board decides to cast the vote, it must vote all votes created by the Amended COD in the same manner and proportion as votes cast by the holders of Common Stock and Series A Preferred Stock, voting as single class. The Series A Preferred Stock voting rights granted to the holders thereof relating to the Reverse Stock Split Proposal and the Adjournment Proposal 2 expired automatically on July 31, 2023. F- 21 Table of Contents On June 6, 2023, 3i and the Company entered into a separate limited waiver and amendment agreement whereby 3i ( “3i Waiver Agreement”) agreed to waive certain rights granted under a Series A Preferred Stock securities purchase agreement dated December 20, 2021, the Exchange Agreement, and the securities purchase agreement related to the April Offering in exchange for, among other things, amending the conversion price of the Series A Preferred Stock to equal the public offering price of the shares of common stock in the July Offering. Upon the consummation of the July Offering, the conversion price of the Series A Preferred Stock was reduced to $ 2,700.00 . On July 10, 2023, the Company filed a Third Certificate of Amendment to the Amended and Restated Certificate of Designations of Series A Preferred Stock (“Third Amendment”) to effect the change to conversion price. In connection with the September 2023 Inducement Letter and the transactions contemplated therein, the Company and 3i, LP entered into a limited waiver agreement (the “Waiver”) pursuant to which 3i, LP agreed to allow the filing of the Resale Registration Statement not otherwise permitted under certain agreements with 3i, LP. In consideration of entering in the Waiver, the Company agreed to amend the “Conversion Price” of the Series A Convertible Preferred Stock to equal $ 600.00 as soon as practicable. On September 22, 2023, the Company filed the Fourth Certificate of Amendment to the Amended and Restated Certificate of Designations of Series A Convertible Preferred Stock (“Fourth Amendment”) with the Secretary of State of the State of Delaware to reflect the new conversion price of the Series A Preferred Stock of $ 600.00 . On January 14, 2024, pursuant to the terms of the January 14th, 2024, 3i LP Bridge Loan, the Company modified the conversion price of the 3i Exchange Warrants from $ 600.00 to $ 268.50 , thereby increasing the number of Exchange Warrants outstanding from 7,346 at December 31, 2023 to 16,411 outstanding at January 14, 2024. Also on January 14, 2024, the conversion price of the outstanding 1,417 shares of Series A Preferred Stock was revised from $ 600.00 to $ 268.50 . We filed the Fifth Certificate of Amendment to Amended and Restated Certificate of Designations of Series A Convertible Preferred Stock (the “Fifth Amendment”) with the Secretary of State of the State of Delaware to reflect the new conversion price of the Series A Preferred Stock of $ 268.50 . At a stated value of $ 1,080 for each share of Series A Preferred Stock, the revised price of $ 268.50 per share results in the 1,417 shares being convertible into 5,699 common shares as of January 14, 2024. On February 13, 2024, pursuant to the terms of the February 13, 2024, Bridge Loan, the Company modified the conversion price of the 3i Exchange Warrants from $ 268.50 to $ 243.00 and thereby increased the number of Exchange Warrants outstanding from 16,411 on January 18, 2024, to 18,137 on February 13, 2024. The Company also agreed to amend the conversion price of the Series A Preferred Stock to equal $ 243.00 as soon as practicable. We filed the Sixth Certificate of Amendment to Amended and Restated Certificate of Designations of Series A Convertible Preferred Stock (the “Sixth Amendment”) with the Secretary of State of the State of Delaware to reflect the new conversion price of the Series A Preferred Stock of $ 243.00 . At a stated value of $ 1,080 for each share of Series A Preferred Stock, the revised price of $ 243.00 per share results in the 1,296 shares being convertible into 5,760 common shares. On March 14, 2024, pursuant to the terms of the Third Note, the Company modified the conversion price of the 3i Exchange Warrants from $ 4,860.00 to $ 4,200.00 and thereby increased the number of Exchange Warrants outstanding from 907 on February 13, 2024, to 1,383 on March 14, 2024. The Company filed the Seventh Certificate of Amendment to Amended and Restated COD (the “Seventh Amendment”) with the Secretary of State of the State of Delaware to reflect the new conversion price of the Series A Preferred Stock of $ 4,200.00 . As of March 14, 2024, the Company used the Black-Scholes option pricing model to determine the fair value of the then 1,296 Series A Preferred Stock outstanding and concluded there was a gain on extinguishment of $ 0.1 million. At a stated value of $ 1,080 for each share of Series A Preferred Stock, the revised price of $ 4,200.00 per share results in the 1,215 shares being convertible into 893 shares of common stock. During the period April 1, 2024, through May 2, 2024, the Company amended the conversion prices of the Series A Convertible Preferred Stock, the Exchange Warrants and the 2024 Notes to equal the current last sale price of its shares of Common Stock of $ 34.50 as of May 1, 2024. F- 22 Table of Contents 3i Warrants Effective April 21, 2023, pursuant to the terms of an Exchange Agreement, the PIPE Warrant was exchanged for an Exchange Warrant representing a right to acquire 526 shares of common stock, exercisable at $ 18,000.00 per share. The number of shares exercisable under the Exchange Warrant and the exercise price was subsequently adjusted in July 2023 to the right to acquire 15,755 shares of common stock, exercisable at $ 600.00 per share. Effective July 10, 2023, upon the closing of the July Offering, the number of shares exercisable under the Exchange Warrant and the exercise price was adjusted to 3,501 shares of Common Stock and $ 2,700.00 per share, respectively. Subsequently on July 26, 2023, pursuant to Section 2 (e) of the Exchange Warrant, due to the event market price on the 16th day after the June Reverse Stock Split being less than the exercise price of the Exchange Warrant then in effect, the number of shares exercisable under such Warrant and the exercise price was further adjusted to 5,225 shares and $ 1,809.30 per share, respectively. Effective September 14, 2023, the date of the September Induced Warrant offering, the number of shares exercisable under the Exchange Warrant and the exercise price was adjusted to 15,755 shares of common stock and $ 600.00 per share, respectively. On December 5, 2023, 3i exercised 8,410 Exchange Warrants on a cashless basis in exchange for 833 common shares. Accounting Series A Preferred Stock The Company evaluated the 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 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 control. F- 23 Table of Contents Generally, preferred stock that are currently redeemable should be adjusted to their redemption amount at each balance sheet date. If it is probable that the equity instrument will become redeemable, the Company has the option to either accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or to recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The Company recognizes changes in redemption value when redemption becomes probable to occur. Through December 9, 2022, the derivative scope exception under ASC 815 was not met because a settlement contingency was not indexed to the Company’s stock. Therefore, the redemption feature (derivative liability) was bifurcated from the Series A Preferred Stock, valued with a Monte Carlo Simulation model and recorded as a derivative liability. Subsequent to December 9, 2022, because of the agreed conversion price adjustment, 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. Additionally, because the Series A redemption terms were amended to be entirely within the Company’s control, they have now been classified as permanent equity. Management has fair valued the Series A Preferred Stock prior to and after its modification and because the change in fair value was greater than 10%, has made a policy election to treat the amendment as an extinguishment. Accordingly, the difference in fair value has been recorded as a deemed dividend and reduction in additional paid in capital. Deemed Dividends In the year ended December 31, 2023, the Company, has recorded $ 8.4 million in deemed dividends resulting from using the Black-Scholes model to determine the fair value the Company’s Series A Preferred shares as follows: i. $ 3.3 million on the elimination of Series A redemption rights as of April 21, 2023, ii. $ 4.0 million on the Exchange of 50,000 Series C Preferred Stock for 5,577 Series A Preferred Stock; iii. $ 0.2 million on the July 10, 2023, modification of Series A Preferred Stock; iv. $ 0.5 million on the redemption of Series A Preferred Stock; and v. $ 0.4 million on the September 14, 2023 modification of Series A Preferred Stock. As a result of fair value adjustments during the twelve months ended December 31, 2024, the Company recognized a deemed dividend of $ 0.3 million on the Series A Preferred Stock. Inputs used in the Black-Scholes valuation models utilized to fair value the modification to the Series A Preferred Stock during the year ended December 31, 2024, are as follows: January 14 - March 14, April 5 - May 2, 2024 2024 Initial exercise price 0.67 7 - 0.27 27 0.23 3 - 0.04 04 Stock price on valuation date 0.30 0 - 0.24 24 0.15 5 - 0.04 04 Risk-free rate 5.10 % - 4.82 % 5.47 % - 5.49 % Term (in years) 0.25 - 0.08 0.08 - 0.01 Rounded annual volatility 145 % - 130 % 110 % As of the dates noted below, the Company used the Black-Scholes option pricing model to determine the fair values using the following inputs: Series A Series A Preferred Preferred Shares Shares September 14, July 10, 2023 2023 Number of shares valued 1,417 6,047 Stock Price $ 1.00 $ 3.40 Exercise price pre-modification $ 4.50 $ 8.00 Exercise price post-modification $ 1.00 $ 4.50 Risk fee rate 5.37 % 5.28 % Dividend 0 % 0 % Volatility 119 % 140 % F- 24 Table of Contents During the year ended December 31, 2023, the Company used the Black-Scholes option pricing model to determine the fair values using the following inputs: Series C Preferred Shares Original Debt Settled Exchanged Series A for Series A for Series A Preferred Preferred Preferred Shares Shares Shares Number of shares valued 4,239 5,577 486 Stock Price at April 21, 2023 post 40 to 1 split $ 20.40 $ 20.40 $ 20.40 Exercise price $ 30.00 $ 30.00 $ 30.00 Risk fee rate 5.1 % 5.1 % 5.1 % Dividend 0 % 0 % 0 % Expected liquidity event September 15, 2023 September 15, 2023 September 15, 2023 Volatility 156 % 156 % 156 % 3i Warrants The 3i Warrants were identified 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 rate). Series A Preferred Stock Conversions During the year ended December 31, 2023, 3i exercised its option to convert 12,052 shares of Series A Preferred stock for 404 shares of common stock at the fair value of $ 3.9 million. From the proceeds of the July Offering, on July 10, 2023, the Company redeemed (i) 4,630 shares of Series A Preferred Stock held by 3i, for $ 5.0 million, and (ii) the 3i June Promissory Note (as defined below) for $ 0.4 million in cash. As a result of the payment, the 3i June Promissory Note was paid in full on July 10, 2023. During the year ended December 31, 2024, 3i exercised its option to convert 202 shares of Series A Preferred Stock for 904 shares of common stock at the fair value of $ 0.3 million. 3i exercised its option to convert 1,215 shares of Series A Preferred Stock for 15,072 shares of common stock at the fair value of $ 1.5 million. As of December 31, 2024, there were no shares of Series A Preferred Stock issued and outstanding. F- 25 Table of Contents Series C Convertible Preferred Stock On 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 ($ 6.37 post reverse stock split), 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 ($ 1.295 post reverse stock split) (the “Floor Price”). F- 26 Table of Contents In the event that the Conversion Price on a Conversion Date would have been less than the applicable Floor Price if not for the immediately preceding sentence, then on any such Conversion Date the Company will pay the Holder an amount in cash, to be delivered by wire transfer out of funds legally and immediately available therefor pursuant to wire instructions delivered to the Company by the Holder in writing, equal to the product obtained by multiplying (A) the higher of (I) the highest price that the Common Stock trades at on the Trading Day immediately preceding such Conversion Date and (II) the applicable Conversion Price and (B) the difference obtained by subtracting (I) the number of shares of Common Stock delivered (or to be delivered) to the Holder on the applicable Share Delivery Date with respect to such conversion of Series C Preferred Stock from (II) the quotient obtained by dividing ( x ) the applicable Conversion Amount that the Holder has elected to be the subject of the applicable conversion of Series C Preferred Stock, by (y) the applicable Conversion Price without giving effect to clause ( x ) of such definition. The Offering closed on February 28, 2023. In connection with the 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 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. The Company has evaluated the terms of the Series C Preferred Stock as required pursuant to ASC 570, 480, 815 and ASU 2020 - 06, and concluded the Series C Preferred Stock will be recorded at fair value of $ 1,200 , net of share issuance costs of $ 40 , and accreted dividends at 5 % to redemption value of $ 1,446 on April 21, 2023, using the effective interest method. Effective April 21, 2023, all of the 50,000 shares of Series C Preferred stock were exchanged for 5,577 shares of Series A Preferred Stock at an agreed value of $ 1,652 . The Company has treated the exchange of Series C Preferred Stock for Series A Preferred Stock as an extinguishment as there has been a fundamental change in the nature of the instrument and has applied the derecognition accounting model in ASC 260 - 10 - S99 - 2. Accordingly, the Company has recognized the difference between ( 1 ) the fair value of the consideration transferred to the holders of the preferred shares of $ 5,200 , and ( 2 ) the carrying amount of the preferred shares (net of issuance costs), of $ 1,240 as a deemed dividend of $ 3,959 that is deducted from additional paid in capital and subtracted from net income to arrive at income available to common stockholders in the calculation of loss per common share. The roll forward of the Series C Preferred Stock as of December 31, 2023, is as follows: December 31, 2023 Opening balance at January 1, 2023 $ — Series C Preferred Stock, cash received 1,200 Less debt discount, opening ( 40 ) Plus, 5% dividend and accretion 286 1,446 Exchange of Series C Preferred stock for Series A Preferred stock ( 1,446 ) Series C Preferred Stock – net, ending balance $ — F- 27 Table of Contents August 2024 Series A Convertible Redeemable Preferred Stock On August 19, 2024 ( the "August Closing Date"), the Company entered into a Securities Purchase Agreement (the “August 2024 SPA”) with certain purchasers (the “August 2024 Purchasers”), pursuant to which the Company issued and sold, in a private placement (the “August 2024 Offering”), 35,000 shares of the Company’s Convertible Redeemable Series A Preferred Stock, par value $ 0.0001 per share (the “August 2024 Preferred Stock”), for net proceeds of approximately $ 2.9 million, after the deduction of discounts, fees and offering expenses. In connection with the August 2024 Offering, the Company paid $ 0.2 million to Ascendiant Capital Markets, LLC, the Company’s placement agent. On the August Closing Date, the Company filed a certificate of designation (the “August 2024 COD”) with the Secretary of the State of Delaware designating the rights, preferences and limitations of the August 2024 Preferred Stock. Under the August 2024 COD, for purposes of determining the presence of a quorum at any meeting of the stockholders of the Company at which the August 2024 Preferred Stock were entitled to vote and the voting power of the August 2024 Preferred Stock, each holder of the August 2024 Preferred Stock was entitled to a number of votes equal to shares of the Company’s common stock into which such August 2024 Preferred Stock are then convertible, disregarding, for such purposes, any limitations on conversion. The August 2024 Preferred Stock were entitled to vote on each matter submitted to a vote of the stockholders generally and shall vote together with the common stock and any other class or series of capital stock entitled to vote thereon as a single class and on an as converted to the common stock basis. The holders of the August 2024 Preferred Stock were entitled to dividends, on an as-if converted basis, equal to dividends actually paid, if any, on the common stock. The August 2024 Preferred Stock was convertible, at the option of the holders and, in certain circumstances, by the Company, into common stock, as determined by dividing the net purchase price of $ 90 per share by the conversion price of $ 5.10 , at the option of the holders. On the August Closing Date, the Company and the August 2024 Purchasers also entered into a Registration Rights Agreement (the “August 2024 RRA”), pursuant to which the Company agreed to file a registration statement with the SEC, to register for resale the common stock issuable upon the conversion of the August 2024 Preferred Stock. The registration statement was filed with the SEC on August 30, 2024. All of the August 2024 Preferred Stock was redeemed in September 2024. As a result of the redemption of the August 2024 Preferred Stock, the Company recognized a deemed dividend of $ 0.6 million. 9. 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, 2024 and 2023 , is presented in the following tables: Common Share Purchase 3i Exchange Warrants Warrants Balance as of December 31, 2022 $ — $ 374 Issuance date fair value of April, July & September 2023 Common share purchase warrants 15,161 — Modifications to fair value upon exercise 592 — Fair value adjustments ( 11,911 ) 1,477 Amount transferred to Equity ( 1,579 ) ( 1,031 ) Balance as of December 31, 2023 $ 2,263 $ 820 Change in fair value adjustment of derivative and warrant liabilities ( 2,262 ) ( 415 ) Cashless conversion of 3i Exchange Warrants — ( 405 ) Balance as of December 31, 2024 $ 1 $ — Fair value per Common warrant / 3i Warrant / Series A Preferred share issuable at year end $ 0.09 $ — On December 31, 2024, the Company used the Black-Scholes Merton model to estimate the fair value of the Common Share Purchase Warrants derivative liability at approximately $ 1,000 , using the following inputs: September 2023 April 2023 July 2023 Inducement Warrants Warrants Warrants Initial exercise price $ 600.00 $ 600.00 $ 600.00 Stock price on valuation date $ 1.17 $ 1.17 $ 1.17 Risk-free rate 4.38 % 4.38 % 4.38 % Term (in years) 3.52 3.52 4.2 Rounded annual volatility 123.7 % 123.7 % 123.7 % See Note 10 for the inputs used for the Black-Scholes Merton model to estimate the fair value of the Common Share Purchase Warrants derivative liability in 2023. 3i Exchange Warrants – Valuation Inputs On December 5, 2023, 3i converted 8,410 Exchange Warrants on a cashless basis for 833 shares of our common stock. Therefore, we utilized the reset strike options Type 2 model by Espen Garder Haug and Black-Scholes Merton models to estimate the fair value of the outstanding 15,755 Exchange Warrants immediately before 3i’s conversion to be approximately $ 1.9 million as of December 5, 2023. Accordingly, we recorded a $ 2.0 million reduction in the fair value of the 15,755 Exchange Warrants as a credit to change in fair value of warrants in our consolidated statement of comprehensive loss and $ 1.0 million, being the fair value of the 8,410 converted Exchange Warrants, was recorded as a credit to additional paid in capital. F- 28 Table of Contents On December 31, 2023 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 Exchange Warrants to be approximately $ 0.8 million and $ 0.4 million, respectively. The 3i Exchange Warrants were valued at December 31, 2023 and December 5, 2023 using the following inputs: December 31, December 5, 2023 2023 Exercise price $ 600.00 $ 600.00 Stock price on valuation date $ 330.00 $ 348.00 Risk-free rate 4.71 % 4.92 % Expected life of the Warrant to convert (in years) 0.97 1.04 Rounded annual volatility 127 % 123 % Timing of liquidity event Q1 - 2024 March 31, 2024 Expected probability of event 10 % 10 % 10. Stockholders ’ Equity Common Stock On September 3, 2024, the stockholders of the Company voted at the Company's 2024 annual meeting of stockholders to approve an amendment to the Company's Fifth Amended and Restated Certificate of Incorporation, to decrease the number of authorized shares of common stock by 500,000,000 shares of common stock, bringing the total number of authorized shares of common stock to 250,000,000 shares with a par value of $ 0.0001 , of which 7,302,797 shares of common stock are outstanding as of December 31, 2024. As of December 31, 2023, 750,000,000 shares were authorized and 9,812 shares of common stock were outstanding. 2023 Shelf On November 2, 2023, the Company filed a shelf registration statement (File No. 333 - 275282 ) on Form S- 3, which was declared effective on November 29, 2023 ( the "Shelf"). Approximately $ 10.0 million of securities remain available for sale under the Shelf as of December 31, 2024. ATM Facility On March 19, 2024, the Company entered into an At-The-Market Issuance Sales Agreement, as amended (the “Sales Agreement”) with Ascendiant Capital Markets, LLC (“Ascendiant”) pursuant to which, the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, par value $ 0.0001 per share, having an aggregate gross sales price of up to $ 50 million, to or through Ascendiant. The offer and sale of the shares will be made pursuant to a previously filed shelf registration statement on Form S- 3 (File No. 333 - 275282 ), originally filed with the SEC on November 2, 2023 and declared effective by the SEC on November 29, 2023, and the related prospectus supplement dated September 9, 2024 and filed with the SEC on such date pursuant to Rule 424 (b) under the Securities Act of 1933, as amended (the “Securities Act”). On May 2, 2024, the Company's public float increased above $ 75.0 million and, as a result, the Company is not subject to the limitations contained in General Instruction I.B.6 of Form S- 3. Under the Sales Agreement, Ascendiant may sell shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 (a)( 4 ) under the Securities Act. Ascendiant will use commercially reasonable efforts to sell the shares from time to time, based upon instructions from the Company (including any price, time or size limits or other customary parameters or conditions the Company may impose). The Company agreed to pay Ascendiant a commission of 3.0 % of the gross proceeds from the sales of shares sold through Ascendiant under the Sales Agreement and has provided Ascendiant with customary indemnification and contribution rights. The Company also agreed to reimburse Ascendiant for certain expenses incurred in connection with the Sales Agreement. The Company and Ascendiant may each terminate the Sales Agreement at any time upon specified prior written notice. For the year ended December 31, 2024, the Company sold an aggregate of 6,953,259 shares of its common stock pursuant to the Sales Agreement, resulting in net proceeds of approximately $ 38.8 million, after deducting underwriting discounts. There were no sales of common stock pursuant to the Sales Agreement in 2023. As of December 31, 2024, $ 10.0 million remained available for the sale of the Company's common stock under the ATM program. 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: a. The number of shares designated as Series B Preferred Stock is 200,000; b. The holders of Series B Preferred Stock shall not be entitled to receive dividends of any kind; c. 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. All shares of Series B Preferred Stock outstanding were automatically redeemed in 2023, 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. Series C Preferred Stock On February 24, 2023, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Redeemable Preferred Stock (the “Series C COD”) with the Delaware Secretary of State designating 50,000 shares of its authorized and unissued preferred stock as Series C Preferred Stock (the "Series C Shares") with a stated value of $ 27.00 per share. On February 28, 2023, the Company filed a Certificate of Amendment to the Series C COD (the “COD Amendment”) to clarify the terms of conversion price and floor price based on definitions provided in the Series C COD (the COD Amendment, together with the Series C COD, the “COD”). Each share of Series C Preferred Stock had 620 votes and was subject to certain redemption rights and voting limitations. Pursuant to the terms of a Modification and Exchange Agreement dated April 20, 2023, by and between 3i and the Company, effective April 21, 2023, 3i exchanged 50,000 Series C Shares beneficially owned by 3i for 5,577 shares of Series A Preferred Stock. Common Share Purchase Warrant, Pre-Funded Warrant and 3i Warrant Derivative Liabilities In April 2023, the Company issued 119 shares of our common stock and 119 common stock purchase warrants, each exercisable for one share of common stock, at a combined public offering price of $ 18,000.00 , and 297 pre-funded warrants, each exercisable for one share of common stock, and 297 common stock purchase warrants, each exercisable for one share of common stock only (the common stock purchase warrants sold in the public offering hereinafter referred to as the “April 2023 Common Warrants”) at a combined public offering price of $ 18,000.00 less the $ 0.001 for the pre-funded warrants, for aggregate net proceeds of approximately $ 6.8 million, after deducting placement agents fees and offering expenses payable by the Company, or the April Offering. The Common Stock, pre-funded warrant and April 2023 Common Warrants were sold pursuant to a securities purchase agreement with the purchaser signatory thereto or pursuant to the prospectus which was part of an effective registration statement on Form S- 1 filed with the SEC. The Common Stock, pre-funded warrants and April 2023 Common Warrants are immediately separable and were issued separately in the offering. As of June 30, 2023, all pre-funded warrants from the April Offering were exercised in exchange for 297 common shares. In July 2023, the Company issued 596 shares of our common stock pre-funded warrants to purchase up to 3,478 shares of common stock (the “July Pre-Funded Warrants”), and common warrants to purchase up to 4,075 shares of common stock (the “July 2023 Common Warrants”) at an effective combined purchase price of $ 2,700.00 per share and related common stock purchase warrants for aggregate net proceeds of approximately $ 10 million, after deducting placement agent fees and offering expenses payable by the Company of approximately $ 0.9 million on July 10, 2023 ( “July Offering”). The securities in the July Offering were registered pursuant to the registration statement on Form S- 1, as amended (File No. 333 - 272469 ). The purchase price of each July Pre-Funded Warrant and July 2023 Common Warrant was equal to $ 2,700.00 less the $ 0.001 per share exercise price of each Pre-Funded Warrant. Such securities were sold pursuant to a securities purchase agreement with the purchaser signatory thereto or pursuant to the prospectus which was part of an effective registration statement on Form S- 1 filed with the SEC. As of September 30, 2023, all July Pre-Funded Warrants were exercised prior in exchange for 3,478 common shares. In September 2023, the Company entered into an Inducement Letter dated September 14, 2023 ( the “Inducement Letter”) with each of Armistice Capital Master Fund Ltd. and Sabby Volatility Warrant Master Fund, Ltd. ( “September Investors”) who were the holders of existing common stock purchase warrants issued (i) in the April 2023 Offering (the “April 2023 Warrants”) and (ii) in the July Offering (the “July 2023 Warrants” and together with the April 2023 Warrants, the “Existing 2023 Warrants”). Pursuant to the Inducement Letter, the September Investors agreed to exercise for cash their respective Existing 2023 Warrants to purchase an aggregate of up to 4,065 shares of the Company’s common stock (the “Existing Warrant Shares”), at a reduced exercise price of $ 600.00 per share, in consideration for the Company’s agreement to issue a new unregistered common stock purchase warrant to purchase up to a number of shares of common stock equal to 200 % of the number of Existing 2023 Warrant Shares issued (the "Inducement Warrants"), pursuant to each Existing Warrant exercise, exercisable for 5 years and six months from the issue date, at an exercise price of $ 600.00 , subject to adjustment. Upon execution of the Inducement Letter by each of the September Investors the Company issued the Inducement Warrants to the September Investors pursuant to a private placement (the “September Private Placement”). As of December 31, 2023, the Company received approximately $ 3.0 million, net of costs in exchange for the exercise of 4,065 Existing Warrants. April 2023, July 2023 and September 2023 Common Warrants Subject to certain ownership limitations, the April 2023 Common Warrants are exercisable immediately from the date of issuance. The April 2023 Common Warrants have an exercise price of $ 20,400.00 per share and expire on the 5 -year anniversary of the date of issuance, April 21, 2023, unless otherwise agreed upon by the Company and holder of the warrant. The exercise price of the April 2023 Common Warrants is subject to certain adjustments, including stock dividends, stock splits, combinations and reclassifications of the Company’s common stock. In the event of a fundamental transaction, as described in the April 2023 Common Warrants, each of the holders of the April 2023 Common Warrants will have the right to exercise its April 2023 Common Warrant and receive the same amount and kind of securities, cash or property as such holder would have been entitled to receive upon the occurrence of such fundamental transaction if such holder had been, immediately prior to such fundamental transaction, the holder of shares of the Company’s common stock issuable upon the exercise of its April 2023 Common Warrant. Additionally, in the event of a fundamental transaction within the Company’s control, as described in the April 2023 Common Warrants, each holder of the April 2023 Common Warrants will have the right to require the Company to repurchase the unexercised portion of its April 2023 Common Warrant at its fair value using a variant of the Black Scholes option pricing formula. In the event of a fundamental transaction that is not within the Company’s control, each holder of the April 2023 Common Warrants will have the right to require the Company or a successor entity to redeem the unexercised portion of its April 2023 Common Warrant for the same consideration paid to the holders of the Company’s common stock in the fundamental transaction at the unexercised April 2023 Common Warrant’s fair value using a variant of the Black Scholes option pricing formula. Pursuant to a securities purchase agreement entered into with certain investors in the April Offering, the Company agreed that for a period of 90 days from the close of the April Offering, that the Company would not issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of common stock or securities convertible or exercisable into common stock or file a registration statement with the SEC to register its securities, subject to certain exceptions. The investors to the securities purchase agreement in the April Offering, excluding 3i, have agreed to waive that provision and permit the July offering of the Company's common stock, pre-funded warrants and common warrants (“Offering Waiver”) in exchange for (i) the repricing of the exercise price of the April 2023 Common Warrant to the exercise price of the common warrants offered in the July Offering if the exercise price of the common warrant is lower than the then-current April 2023 Common Warrant exercise price; and (ii) extending the termination date of the April 2023 Common Warrant to the date of termination of the common warrants offered in the July Offering. As a result of the July Offering, investors to the securities purchase agreement in the April Offering, excluding 3i, had the exercise price of their April 2023 Common Warrant reduced to $ 2,700.00 per share and the exercise period extended to on or around July 10, 2028. 3i and the Company entered into a separate limited waiver and amendment agreement, as discussed above. We used the Black-Scholes option pricing model to fair value the April Common Warrants as of July 10, 2023, using the Black-Scholes option pricing model and recorded the incremental value of $ 0.2 million as a fair value modification cost in other income (expenses). Management considered the April 2023 Common Warrants, July 2023 Common Warrants, and Inducement Warrant Shares, which do not represent outstanding shares, and determined that they contain certain contingent redemption features, outside of the Company’s control and at the election of the Holder, which may require the Company to repurchase the September, July and April Common Warrants or Warrant Shares in exchange for cash (i.e., puttable) in an amount as defined in the Warrant Agreements. The Company concluded that the September, July, and April Common Warrants represent liabilities under ASC 480. Accordingly, the September, July and April Common Warrants have been initially recorded at their fair value of $ 4.2 million, $ 6.8 million, and $ 4.1 million, respectively, using the Black-Scholes option pricing model and as a reduction of additional paid in capital. Additionally, the total July financing cost of $ 0.9 million has been proportionately allocated to financing costs and additional paid in capital in the amounts of the amount of $ 0.6 million and $ 0.3 million, respectively; and the total April financing cost of $ 0.7 million has been proportionately allocated to the finance expense and additional paid in capital in the amounts of $ 0.4 million and $ 0.3 million, respectively. The September financing cost of $ 0.2 million has been allocated to a finance expense in general and administration costs. On September 14, 2023, the exercise prices of the April 2023 Common Warrants and July 2023 Common Warrants were reduced to $ 600.00 per share and the exercise period extended to on or about September 14, 2028. We used the Black-Scholes option pricing model to fair value the April 2023 Common Warrants and July 2023 Common Warrants as of September 14, 2023, using the Black-Scholes option pricing model and recorded the incremental value of $ 0.4 million as a fair value modification cost in other income (expenses). Inputs used in the above noted Black-Scholes valuation models for the April 2023 Common Warrants, July 2023 Common Warrants and Inducement Warrants are as follows: December 31, September 14, July 10, April 21, 2023 2023 2023 2023 Initial exercise price $ 1.00 $ 1.00 - 4.50 $ 4.50 - 34.00 $ 34.00 Stock price on valuation date $ 0.55 $ 1.00 $ 3.40 $ 20.40 Risk-free rate 3.84 % 4.32 % - 4.35 % 4.16 % - 4.19 % 3.70 % Term of Warrant (in years) 4.53 - 5.20 4.82 4.78 - 5.00 5.00 Rounded annual volatility 125 % 127 % 122 % - 140 % 126 % On November 8, December 1, and December 5, 2023, a total of 622 , 444 , and 2,290 July 2023 Common Warrants were exercised, respectively, and we used the Black-Scholes option pricing model to fair value the July 2023 Common Warrants at $ 0.1 million, $ 0.1 million, and $ 0.2 million, respectively. On December 5, 2023, a total of 139 April 2023 Common Warrants were exercised, and we used the Black-Scholes option pricing model to fair value the April 2023 Common Warrants at $ 22 thousand. Inputs used in the above noted Black-Scholes valuation models for the exercise of the April 2023 Common Warrants and July 2023 Common Warrants are as follows: December 5, December 1, November 8, 2023 2023 2023 Initial exercise price $ 1.00 $ 1.00 $ 1.00 Stock price on valuation date $ 0.58 $ 0.59 $ 0.50 Risk-free rate 4.14 % 4.14 % 4.14 % Term of Warrant (in years) 4.60 4.61 4.67 Rounded annual volatility 123 % 122 % 122 % F- 29 Table of Contents 11. Stock-based Compensation 2021 Equity Incentive Plan The Company has in effect the Allarity Therapeutics, Inc. 2021 Incentive Plan (as amended, the "2021 Incentive Plan"). The 2021 Incentive Plan was approved by shareholders in connection with the Recapitalization Share Exchange and became effective on December 20, 2021. The 2021 Incentive Plan authorizes the award of stock options, Restricted Stock Awards (“RSAs”), Stock Appreciation Rights (“SARs”), Restricted Stock Units (“RSUs”), cash awards, performance awards and stock bonus awards. Under the 2021 Incentive Plan, the compensation committee of the Company's board of directors is authorized to grant stock-based awards to employees, directors, consultants, independent contractors and advisors. The 2021 Incentive Plan authorizes the issuance of up to 353,163 shares of authorized but unissued common stock and expires 10 years from adoption and limits the term of each option to no more than 10 years from the date of the grant. Total shares available for the issuance of stock-based awards under the Company's 2021 Incentive Plan as of December 31, 2024 was 353,163 . 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. In January 2025, the Board approved an increase of 5 % of the outstanding shares of common stock, or 364,778 shares, increasing the total shares authorized to 717,941 . Restricted Stock Units The following table summarizes restricted stock unit activity for the year ended December 31, 2024: Weighted Average Grant Number of Units Fair Value Unvested balance at December 31, 2023 — — Granted 174,038 2.36 Unvested balance at December 31, 2024 174,038 2.36 For the years ended December 31, 2024 and 2023, stock-based compensation expenses associated with the restricted stock units for employees were approximately $ 68 thousand and $ 0 , respectively. At December 31, 2024, the Company had unrecognized stock-based compensation expense related to restricted stock units of $ 0.3 million, which is expected to be recognized over the remaining weighted-average vesting period of 1.7 years. This expense is recognized over the vesting period of the award. Stock Options The following table summarizes the stock option activity for the years ended December 31, 2024 and 2023: Weighted Weighted Average Aggregate Average Contractual Intrinsic Number Exercise Term Value of Shares Price (in years) (in thousands) Outstanding as of December 31, 2022 10 $ 5,504,400 4.2 $ — Forfeited ( 1 ) 8,397,600 — Outstanding as of December 31, 2023 9 $ 4,725,600 3.2 $ — Forfeited ( 9 ) $ 4,725,600 — Outstanding as of December 31, 2024 — $ — — $ — The aggregate intrinsic value of options is calculated as the difference between the exercise price of the stock options and the fair value of common stock for those options that had exercise prices lower than the fair value of common stock. Upon exercise of stock options, the Company will issue new shares of its common stock. For the years ended December 31, 2024 and 2023, stock-based compensation expenses (recoveries) associated with the options awards for employees and non-employees were approximately $ 3 thousand and ($ 71 ) thousand, respectively. As of December 31, 2024, there was no unrecognized compensation cost for options issued since all outstanding options were forfeited in December 2024. Stock-Based Compensation The following table summarizes stock-based compensation for the years ended December 31, 2024 and 2023 (in thousands): Year ended December 31, ($ in thousands) 2024 2023 Research and development 46 ( 24 ) General and administrative 25 ( 47 ) Total stock-based compensation expense (forfeiture) 71 ( 71 ) ) F- 30 Table of Contents 12. License and Development Agreements License Agreement with Eisai Inc. for Stenoparib The Company holds the exclusive worldwide rights to all preventative, therapeutic and/or diagnostic uses related to cancer in humans and by amendment to the agreement on December 11, 2020, viral infections in humans (including, but not limited to, coronaviruses) for stenoparib from Eisai, Inc. (“Eisai”) pursuant to a license agreement (the “Eisai License Agreement”). Pursuant to the Eisai License Agreement, the Company is solely responsible for the development of stenoparib during the term of the Eisai License Agreement. Eisai License Agreement also provides for a joint development committee consisting of six members, three appointed by the Company and three appointed by Eisai. One of the Company’s 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. 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 beyond December 31, 2022; and ( 2 ) amend terms related to Eisai’s right of termination of development. On May 26, 2023, the Company and Eisai entered into a fourth amendment to the Exclusive License Agreement with an effective date of May 16, 2023, to postpone the extension payment, restructure the payment schedule and extend the deadline to complete enrollment in a further Phase 1b or Phase 2 Clinical Trial for the stenoparib. The Company agreed to pay Eisai in periodic payments as follows: (i) $ 100,000 , which has been paid; (ii) $ 50,000 within 10 days of execution of the fourth amendment, which has been paid; (iii) $ 100,000 upon completion of a capital raise, which has been paid; and (iv) $ 850,000 on or before March 1, 2024. On February 26, 2024, in exchange for an additional $ 0.2 million, paid as of May 1, 2024, the Company and Eisai entered into a fifth amendment to the Exclusive License Agreement to postpone the payment of $ 850,000 . The Company agreed to make a one -time payment to Eisai of $ 850,000 upon completion of a ten -million dollar capital raising campaign, no later than September 1, 2024. The Company paid Eisai $ 850,000 on August 20, 2024 and no payments are currently outstanding. On August 2, 2024, the Company and Eisai entered into a sixth amendment to the Exclusive License Agreement with an effective date of August 2, 2024. The terms of the amended exclusive license were further amended in order to ( 1 ) amend the definition of a successful completion and ( 2 ) amend the terms related to Eisai's right of termination for development. F- 31 Table of Contents Development Milestone Payments The Company has agreed to make milestone payments to Eisai in connection with the development of stenoparib by the Company or its affiliates, or by a third -party program acquirer that assumes control of the stenoparib development program from the Company 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, the Company may be obligated to pay Eisai up to a maximum of $ 94 million. In addition, the Company has agreed to pay Eisai a one -time sales milestone payment in the amount of $ 50 million the first time the Company’s annual sales of licensed product is $ 1 billion or more. Royalty Payments In addition to the milestone payments described above, the Company has agreed to pay Eisai royalties based on annual incremental sales of product derived from stenoparib in 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. The Company is 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 in such country and expiring on the later of (i) the expiration of the last valid claim of any and all Eisai patents, Company patents and joint patents covering such product in such country; or, (ii) the 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 the Company 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 the Company that is not cured within 90 days ( 30 days for a payment default) or if the Company files for bankruptcy. Option to Reacquire Rights to Stenoparib For the period commencing 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 the Company's licensed rights to develop stenoparib for a purchase price equal to the fair market value of the Company's rights, giving effect to the stage of development of stenoparib that the Company has completed under the agreement. The Company commenced a Phase 2 clinical trial April 15, 2019, and as of the date of the Financial Statements, Eisai has not indicated an intention to exercise its repurchase option. License Agreement with Novartis for Dovitinib On January 26, 2024, we received a Termination Notice from Novartis due to a material breach of our license agreement. Accordingly, under the terms of the Agreement (i) we shall cease all development and commercialization activities with respect to all licensed products; (ii) all rights and licenses granted by Novartis to Allarity shall revert to Novartis; and all liabilities due to Novartis became immediately due and payable in the amount of $ 5.0 million inclusive of interest which is continuing to accrue at 5 % per annum. As of December 31, 2024 , the liability is recorded as a current liability on our Consolidated Balance Sheets as follows: $ 3.6 million in accounts payable and $ 1.4 million convertible promissory note and accrued interest. Development costs and Out-License Agreement with Smerud Pursuant to the terms of the amendment on March 28, 2022 to the out-license agreement with Smerud Medical Research International (the "Amended License Agreement"), Chosa ApS, a company organized under the laws of Denmark (“Chosa”), replaced us as the exclusive licensee to the LiPlaCis ® technology. In addition, we also granted Chosa an exclusive, royalty-free, transferable and sublicensable license for (i) our DRP ® Companion Diagnostics that are specific for Cisplatin or LiPlaCis ® (a liposomal formulation of Cisplatin) for the research and development of LiPlaCis ® products, and (ii) the use of any and all know-how and intellectual property rights owned by us for Chosa’s use of our DRP ® Companion Diagnostics that are specific for Cisplatin or LiPlaCis ® (a liposomal formulation of Cisplatin) for the development and commercialization of LiPlaCis ® products, as contemplated in the Amended License Agreement. In 2024, the Company signed service agreements with external biotech clients for both DRP® analysis and gene expression services. Leveraging its gene expression and diagnostic capabilities, its laboratory will provide the services to the external clients. The Company received down payments in 2024 totaling approximately $ 0.2 million, is actively preparing the laboratory and required samples, and expects to start recognizing revenue in 2025. F- 32 Table of Contents 13. Income Tax The reconciliation of the statutory rate to the effective tax rate is as follows: 2024 2023 Tax computed on the loss before tax at a tax rate of 21.0 % for the years ended December 31, 2024 and 2023 $ ( 5,228 ) $ ( 2,482 ) Foreign rate differential ( 164 ) ( 73 ) Tax value of derivative warrants ( 562 ) ( 1,187 ) Special tax deduction on research and development expenses ( 645 ) ( 559 ) Loss offset to research and development incentive 798 798 Other adjustments 106 17 Adjustment of tax concerning previous years 320 45 Change in valuation allowance 4,994 3,524 $ ( 381 ) $ 83 The components of net loss before income taxes were as follows: Year ended December 31, 2024 2023 Denmark $ ( 16,376 ) $ ( 6,234 ) United States ( 8,520 ) ( 5,584 ) $ ( 24,896 ) $ ( 11,818 ) The components of the provision for income taxes from operations were as follows: Year ended December 31, 2024 2023 Current: Denmark $ — $ — United States — — Total — — Deferred: Denmark ( 381 ) 83 United States — — Total ( 381 ) 83 $ ( 381 ) $ 83 F- 33 Table of Contents Deferred tax comprises: 2024 2023 Property, plant and equipment $ ( 24 ) $ ( 25 ) Intangible assets 719 ( 1,405 ) Stock compensation 800 790 Other accruals 15 16 Capitalized R&E costs 243 — Net operating losses 19,325 16,952 Total deferred tax 21,078 16,328 Valuation allowance ( 21,078 ) ( 16,774 ) Net deferred tax liabilities $ — $ ( 446 ) Tax on profit/loss for the year: 2024 2023 Change in deferred tax $ ( 381 ) $ 83 Tax (benefit) expense $ ( 381 ) $ 83 Tax losses carried forward of approximately $ 89.4 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, 2024 , 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, 2019 , 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. 14. Related parties During the year ended December 31, 2023, Thomas H. Jensen, a director of the Company, was paid $ 0.1 million in fees as a consultant. Effective December 12, 2023, the Company announced the appointment of Thomas H. Jensen as CEO. F- 34 Table of Contents 15. Financial Instruments The following tables present information about the Company’s financial instruments measured at fair value on a recurring basis and indicate the level of the fair value hierarchy used to determine such fair values: Fair Value Measurements as of December 31, 2024, Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ — $ ( 1 ) $ ( 1 ) Derivative warrant liability — — — — $ — $ — $ ( 1 ) $ ( 1 ) Fair Value Measurements as of December 31, 2023, Using: Level 1 Level 2 Level 3 Total Liabilities: Warrant liability $ — $ — $ ( 2,263 ) $ ( 2,263 ) Derivative warrant liability — — ( 820 ) ( 820 ) $ — $ — $ ( 3,083 ) $ ( 3,083 ) Methods used to estimate the fair values of our financial instruments, not disclosed elsewhere in these consolidated financial statements, are as follows: When available, the Company's marketable securities are valued using quoted prices for identical instruments in active markets. If the Company is unable to value its marketable securities using quoted prices for identical instruments in active markets, the Company values its investments using broker reports that utilize quoted market prices for comparable instruments. Accordingly, its investment is considered a Level 1 financial asset. The Company has 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 derivative liabilities as level 3 and values its derivatives using the methods discussed below. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using terms in the notes that are subject to volatility and market price of the underlying common stock of the Company. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. The Company’s policy is to recognize transfers into and out of levels within the fair value hierarchy at the date the actual event or change in circumstances that caused the transfer occurs. When a determination is made to classify an asset or liability within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement. There were no transfers between level 1 or level 2 during the years ended December 31, 2024 , or 2023 . During the year ended December 31, 2023 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 3i Exchange Warrant derivative liability at $ 0.8 million. 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. During the years ended December 31, 2024 and 2023, 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. 16. Commitments and Contingencies Indemnification In accordance with its certificate of incorporation, bylaws, and indemnification agreements, the Company has indemnification obligations to its officers and directors for certain events or occurrences, subject to certain limits, while they are serving at the Company’s request in such capacity. SEC Investigation On July 19, 2024, the Company received a “Wells Notice” from the Staff of the SEC relating to the Company’s previously disclosed SEC investigation. The Wells Notice related to the Company’s disclosures regarding meetings with the United States Food and Drug Administration (the “FDA”) regarding the Company’s NDA for Dovitinib or Dovitinib-DRP, which was submitted to the FDA in 2021. The Company understands that all conduct relating to the SEC Wells Notice occurred during or prior to fiscal year 2022. The Company also understands that three of its former officers received Wells Notices from the SEC relating to the same conduct. A Wells Notice is neither a formal charge of wrongdoing nor a final determination that the recipient has violated any law. The Wells Notice informed the Company that the SEC Staff has made a preliminary determination to recommend that the SEC file an enforcement action against the Company that would allege certain violations of the federal securities laws. Nasdaq Delisting Notifications On June 18, 2024, the Company received a letter from the Nasdaq Listing Qualifications Staff (the “Staff”) of Nasdaq indicating that the Company has not complied with the Nasdaq Listing Rule 5550 (a)( 2 ) (the “Bid Price Rule”) which is the requirement that for 30 consecutive business days the bid price for the Company’s common stock close above the $1 per share minimum bid price requirement for continued inclusion on Nasdaq. On July 30, 2024, the Company attended a hearing before a Nasdaq Hearings Panel (the “Panel”), and by decision date August 15, 2024, the Panel granted the Company’s request for an extension through September 6, 2024 to obtain shareholder approval for a reverse split at a ratio that will allow the Company to demonstrate compliance with the Bid Price Rule. This approval was granted by Allarity’s shareholders at the Company’s Annual Meeting of Stockholders on September 3, 2024. On October 9, 2024, the Company was formally notified by the Staff that the Company has evidenced compliance with the Bid Price Requirement for continued listing on the Nasdaq, as set forth in Nasdaq Listing Rule 5550 (a)( 2 ). Class Action On September 13, 2024, a purported class action captioned Osman Mukeljic v. Allarity Therapeutics, Inc., et al, 1:24 -cv- 06952, was filed in the United States District Court for the Southern District of New York against the Company and certain of its current and former officers. The complaint alleged, among other things, that defendants made false and misleading statements and/or failed to disclose information related to Dovitinib NDA’s continued regulatory prospects and purported misconduct in connection with the Dovitinib NDA and/or the Dovitinib-DRP PMA. The complaint asserted violations of Section 10 (b) of the Securities Exchange Act of 1934 and Rule 10b - 5 thereunder against all defendants as well as violations of Section 20 (a) of the Securities Exchange Act of 1934, as amended, against the individual defendants. 17. Subsequent Events Class Action On February 26, 2025, the Company issued a press release announcing the dismissal of the aforementioned class action lawsuit. SEC Investigation On March 13, 2025, the Company issued a press release that the Company has reached a final settlement with the SEC relating to the Company's previously disclosed SEC investigation, and as part of the settlement, the Company has agreed to pay a one -time civil penalty of $ 2.5 million. ATM Facility During the period January 1, 2025 through March 25, 2025, the Company had sold 9,719,173 shares of it's common stock for net proceeds of 9.7 million. As of March 26, 2025, there were no more shares of the Company's common stock available for sale under the ATM program. Share Buyback On March 3, 2025, the Company’s board of directors authorized a share repurchase program, allowing for the repurchase of up to $ 5 million of the Company’s common stock through February 28, 2026. The Company expects the purchases to be made from time to time through open market transactions or other methods as permitted by securities laws and regulations, including Rule 10b - 18 under the Securities Exchange Act of 1934, as amended. F-35