UNITED

STATES

SECURITIES

AND EXCHANGE COMMISSION

Washington,

D.C. 20549

FORM

10-K

☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For

the fiscal year ended December 31, 2021

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission

File Number: 001-41160

ALLARITY

THERAPEUTICS, INC.

(Exact

name of registrant as specified in its charter)

(State or Other Jurisdiction of (I.R.S. Employer

Incorporation or Organization) Identification Number)

(Address of principal executive offices) (Zip Code)

(401)426-4664

(Registrant’s telephone number, including

area code)

Securities registered pursuant to Section 12(b)

of the Act:

Title of Each Class Trading Symbol(s) Name of each exchange on which registered

Common Stock, par value $0.0001 per share ALLR The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g)

of the Act: None

Indicate by check mark if the registrant is

a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No☒

Indicate by check mark if the registrant is

not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No☒

Indicate by check mark whether the

registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the

preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such

filing requirements for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant

has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405

of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐

Indicate by check mark whether the registrant

is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.

See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”

and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☒ Smaller reporting company ☒

Emerging growth company ☒

If an emerging growth company, indicate by check

mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting

standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant

has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial

reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or

issued its audit report. ☐

Indicate by check mark whether the

registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of June 30, 2021, the last business day of

the registrant’s most recently completed second fiscal quarter, the registrant’s securities were not publicly traded and therefore,

the registrant cannot calculate the aggregate market value of its common stock held by non-affiliates as of such date.

As of May 1, 2022, the registrant had

8,842,290 shares of common stock outstanding.

Documents incorporated by reference: None.

Table of Contents

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS ii

NOTE iii

PART I 1

ITEM 1. BUSINESS 1

ITEM 1A. RISK FACTORS 111

ITEM 1B. UNRESOLVED STAFF COMMENTS 169

ITEM 2. PROPERTIES 169

ITEM 3. LEGAL PROCEEDINGS 169

ITEM 4. MINE SAFETY DISCLOSURES 169

ITEM 6. [RESERVED] 172

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 182

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 183

ITEM 9A CONTROLS AND PROCEDURES 183

ITEM 9B. OTHER INFORMATION 185

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTION THAT PREVENTS INSPECTIONS 185

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 186

ITEM 11. EXECUTIVE COMPENSATION 196

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 207

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 209

FINANCIAL STATEMENTS F-1

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This

Annual Report on Form 10-K (the “Annual Report”) contains forward-looking statements that involve substantial risks and

uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the U.S. Private Securities

Litigation Reform Act, Section 21E of the Securities Exchange Act of 1934, as amended, and other federal securities laws. All

statements, other than statements of historical fact, contained in this Annual Report. including statements regarding our strategy,

future preclinical studies and clinical trials, future financial position, projected costs, prospects, plans and objectives of

management, are forward-looking statements. The words “anticipate,” “believe,” “contemplate,”

“could,” “estimate,” “expect,” “intend,” “seek,” “may,”

“might,” “plan,” “potential,” “predict,” “project,”

“target,” “aim,” “should,” ‘will” “would,” or the negative of these

words or other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements

contain these words. Forward-looking statements reflect our current views with respect to future events and are based on assumptions

and subject to risks and uncertainties. If one or more of these risk factors or uncertainties materialize, or if any

underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from any future results,

performance or achievements expressed or implied by these forward-looking statements. Furthermore, we operate in a competitive and

rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all

risks and uncertainties that could have an impact on the forward-looking statements contained in this Annual Report. Given

these uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements relating to

Allarity in this Annual Report include, but are not limited to, statements about:

● our plans to develop and commercialize its drug candidates;

● our ability to generate any revenue or become profitable;

● our ability to retain key employees, consultants and advisors;

● the impact of governmental laws and regulations;

● any future currency exchange and interest rates; and

The

forward-looking statements contained in this Annual Report are made as of the date of this Annual Report, and we do not assume any obligation

to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable

law.

NOTE

Unless the context indicates

otherwise, references in this Annual Report to the “Company,” “Allarity,” “we,” “us,”

“our” and similar terms refer to Allarity Therapeutics, Inc., Allarity Therapeutics A/S (as predecessor) and its respective

consolidated subsidiaries.

Unless otherwise noted or the

context otherwise requires, in this document, reference to:

● “Closing Date” means the date on which the Closing occurred;

● “Code” means the Internal Revenue Code of 1986, as amended;

● “Exchange Act” are to the Securities Exchange Act of 1934, as amended;

● “FDA” are to the U.S. Food and Drug Administration;

● “IND” are to an Investigational New Drug with the FDA;

● “Investor” means 3i, LP, a Delaware limited liability company;

● “NDA” are to a New Drug Application with the FDA.

● “Nasdaq” are to the Nasdaq Stock Market LLC;

iii

● “PMA” are to a Pre-Market Approval with the FDA for a companion diagnostic.

● “Selling Security Holders” means the Investor or its permitted transferees;

● “Securities Act” are to the Securities Act of 1933, as amended; and

● “SEC” are to the Securities and Exchange Commission.

Unless specified otherwise,

amounts in this Annual Report are presented in United States (“U.S.”) dollars.

Defined terms in the financial

statements contained in this Annual Report have the meanings ascribed to them in the financial statements.

On April 18, 2022, in connection

with (i) the entry into the First Amendment to License Agreement by Allarity Therapeutics Denmark

ApS (f/k/a OV-SPV2), a subsidiary of Allarity Therapeutics Europe ApS, our wholly-owned subsidiary, and Novartis Pharma AG (“Novartis”),

and (ii) the re-issuance of a Convertible Promissory Note (the “Note”) to Novartis in the principal amount of $1,000,000,

we filed a Current Report on Form 8-K with the SEC disclosing the determination by our Board and its audit committee members, after discussion

with our management, that we will restate our previously issued consolidated financial statements and related disclosures as of and for

the year ended December 31, 2020 to reflect the conclusion that the Note should have been recorded as a liability of OV-SPV2 in 2018 and

that valuation allowance on the deferred tax asset relating to the net operating losses was understated in 2019 and 2020. Please refer

to Note 3, Restatement of Previously Issued Audited Financial Statements of our Notes to Financial Statements included at the end of this

Annual Report for additional information.

PART I

ITEM 1. BUSINESS

Overview

We are a clinical stage biopharmaceutical

company targeting some of the greatest unmet needs in oncology by developing differentiated and novel therapeutic candidates together

with our proprietary DRP® companion diagnostics in a precision medicine approach.

Our business strategy includes a focus on leveraging our proprietary DRP®companion

diagnostics platform to streamline the drug development process and to identify patients that will benefit from therapeutic candidates

that other biotechnology or pharmaceutical companies have abandoned or shelved after initiating clinical trials under an IND application

filed with the FDA, including candidates that have failed to achieve statistical significance on the original endpoints established in

their clinical trials. We use our proprietary DRP® companion diagnostics platform to

advance therapeutic candidates by targeting and evaluating patient sub-populations having gene signatures, determined by our DRP®

companion diagnostics platform, that will potentially correlate with drug efficacy and patient response to treatment. While we have not

yet successfully received regulatory or marketing approval for any of our therapeutic candidates or companion diagnostics, and while we

believe that our approach has the potential to reduce the cost and time of drug development through the identification and selection of

patient populations more likely to respond to therapy, our strategy involves risks and uncertainties that differ from other biotechnology

companies that focus solely on new therapeutic candidates that do not have a history of failed clinical development. By utilizing our

DRP® platform to generate a drug-specific companion diagnostic for each of our therapeutic

candidates, if approved by the FDA, we believe our therapeutic candidates have the potential to advance the goal of personalized medicine

by selecting the patients most likely to benefit from each of our therapeutic candidates and avoid the treatment of non-responder patients.

All of our therapeutic candidates are clinical stage assets and the FDA has not yet approved any of our therapeutic candidates or any

of our DRP® companion diagnostics. As used in this Annual Report, statements regarding

the use of our proprietary DRP® companion diagnostics or our proprietary DRP®

platform or our observations that a therapeutic candidate may have anti-cancer or anti-tumor activity or is observed to be well tolerated

in a patient population should not be construed to mean that we have resolved all issues of safety and/or efficacy for any of our therapeutic

candidates or DRP® companion diagnostic. Issues of safety and efficacy for any therapeutic

candidate or companion diagnostic may only be determined by the U.S. FDA or other applicable regulatory authorities in jurisdictions

outside the United States.

Our DRP® companion

diagnostic platform has been retrospectively validated by us using retrospective observational studies in 35 clinical trials that

were conducted or sponsored by other companies. The FDA considers a retrospective observational study to be one in which the study identifies

the population and determines the exposure/treatment from historical data (i.e. data generated prior to the initiation of the study) with

the variables and outcomes of interest determined at the time the study is designed. See, Framework for FDA’s Real-World Evidence

Program, page 6 (December 2018), https://www.fda.gov/media/120060/download. The FDA has accepted our retrospective validation

in support of two Investigational Device Exemption (“IDE”) applications to conduct clinical trials, one with respect to LiPlaCis®

and one with respect to stenoparib. However, while retrospective studies guide our clinical development of our companion diagnostics,

prospective clinical trials may be required in order to receive a PMA from the FDA

We submitted a New Drug Application

(NDA) to the U.S. Food and Drug Administration (FDA) for our lead therapeutic candidate, dovitinib, a second-generation “pan”-tyrosine

kinase inhibitor (TKI), on December 21, 2021, which was subsequently determined by the FDA to be not sufficiently complete to permit a

substantive review and therefore was not accepted for filing. As discussed further below, we have requested a meeting with the FDA to

discuss the nature and extent of additional clinical data, which is likely to include one or more additional clinical trials, that will

be necessary to substantiate a complete NDA application. Concurrently with the FDA’s conclusion on our NDA, the FDA also made a

similar determination on our application for a PMA on our companion diagnostic for dovitinib. We continue to expand patient enrollment

in our ongoing Phase 2 clinical trials for our two other priority programs, stenoparib, a novel inhibitor of the key DNA damage repair

enzyme poly-ADP-ribose polymerase (PARP), and IXEMPRA® (ixabepilone), a selective microtubule inhibitor. We also intend

to opportunistically acquire other promising oncology assets, which have undergone prior clinical trials by other pharmaceutical companies

with clinical data that helps us evaluate whether these candidates will be well tolerated in the tested patient population, and in some

cases, have observed anti-cancer or anti-tumor activity that would support additional clinical trials using our DRP® platform.

We were founded in Denmark in 2004 by our chief scientific officer, Steen Knudsen, Ph.D., and our Senior Vice President of Information

Technologies, Thomas Jensen, both of whom were formerly academic researchers at the Technical University of Denmark working to advance

novel bioinformatic and diagnostic approaches to improving cancer patient response to therapeutics. We completed our Recapitalization

Share Exchange and listing on Nasdaq acquiring substantially all of the assets and assuming substantially all of the

liabilities of our predecessor, Allarity Therapeutics A/S on December 20, 2021.

Our clinical and commercial

development team is advancing our pipeline of targeted oncology therapeutic candidates, all of which have previously succeeded at least

though Phase 1 clinical demonstrating that the therapeutic candidate is well tolerated. Our three priority assets, dovitinib, stenoparib,

and IXEMPRA® (ixabepilone) are all former drug candidates of large pharmaceutical

companies.

Our lead therapeutic candidate,

dovitinib, is a selective inhibitor of several classes of tyrosine kinases, including FGFR and VEGFR, and was formerly developed by Novartis

Pharmaceuticals through Phase 3 clinical trials in numerous indications. As mentioned above, we submitted an NDA with the FDA on December

21, 2021, for the third line treatment of metastatic renal cell carcinoma (mRCC or kidney cancer) in patients selected by our Dovitinib-DRP®

companion diagnostic. Prior to submission of the NDA, we submitted a Pre-Market Approval (PMA) application to the FDA for approval of

our dovitinib-specific DRP® companion diagnostic for use to select and treat patients likely to respond to dovitinib. On

February 15, 2022, we received Refusal to File (RTF) letters for both our dovitinib NDA and our DRP®-Dovitinib companion

diagnostic PMA. The FDA has asserted that neither our NDA or PMA meets the regulatory requirements to warrant a complete agency review.

The primary grounds of rejection asserted by the FDA relates to Allarity’s use of prior Phase 3 clinical trial data, generated by

Novartis in a “superiority” endpoint study against sorafenib (Bayer), to support a “non-inferiority” endpoint

in connection with the DRP®-Dovitinib companion diagnostic. Allarity anticipates that it may be necessary to conduct a

new, prospective Phase 3 study, to gain approval of dovitinib in the U.S. The Company plans to have discussions with the FDA during the

second quarter of 2022 to clarify a path forward for approval of this lead program.

Our second priority therapeutic

candidate is stenoparib (formerly E7449), a novel inhibitor of the key DNA damage repair enzyme poly-ADP-ribose polymerase (PARP), which

also has an observed inhibitory action against Tankyrases, another important group of DNA damage repair enzymes. Stenoparib was formerly

developed by Eisai, Inc. (Eisai) through Phase 1 clinical trials, and we are currently advancing a Phase 2 clinical trial of this therapeutic

candidate for the treatment of ovarian cancer at the Dana-Farber Cancer Institute (Boston, MA USA), along with additional trial sites

in the U.S. and Europe) together with its stenoparib-specific DRP® companion diagnostic, for which the FDA has previously

approved an Investigational Device Exemption (IDE) application.

Our third priority therapeutic

candidate is IXEMPRA® (ixabepilone), a selective microtubule inhibitor, which has

been shown to interfere with cancer cell division, leading to cell death. IXEMPRA®

(ixabepilone) was formerly developed and brought to market by Bristol-Myers Squibb, is currently marketed and sold in the U.S. by R-PHARM

US LLC, for the treatment of metastatic breast cancer treated with two or more prior chemotherapies. We are currently advancing IXEMPRA®,

together with its drug-specific DRP® companion diagnostic, in a Phase 2 European clinical

trial for the same indication, with the goal of eventually submitting an application for Marketing Authorization (MA) with the European

Medicine Agency (EMA) to market IXEMPRA®, together with its drug-specific DRP®

companion diagnostic, in the European market.

We have in-licensed the intellectual

property rights to develop, use and market our two lead therapeutic candidates, dovitinib and stenoparib. Consequently, we must perform

all of the obligations under these license agreements, including the payment of substantial development milestones payments and royalty

payments on future sales in the event we receive marketing approval for dovitinib or stenoparib in the future. If we fail to perform our

obligations under our license agreements, we may lose the intellectual property rights to these therapeutic candidates which will have

a material adverse effect on our business.

Our focused approach to address

major unmet needs in oncology leverages our management’s significant expertise in discovery, medicinal chemistry, manufacturing,

clinical development, and commercialization. As a result, we have created substantial intellectual property around the composition of

matter for our new chemical entities. The foundations of our approach include:

The following chart summarizes

our therapeutic candidate pipeline:

Recent

Recapitalization Share Exchange, Asset Acquisition and Financing

We were previously known as

Oncology Venture A/S and changed our name to Allarity Therapeutics A/S on October 7, 2020. On April 6, 2021, we incorporated Allarity

Therapeutics, Inc., a Delaware corporation, for the purposes of undertaking the Recapitalization Share Exchange, a PIPE Financing with

the Investor, and migrating the trading in our shares from the Nasdaq First North Growth Market: Stockholm to Nasdaq in the U.S. On May

20, 2021, we entered into the Recapitalization Share Exchange, which was amended and restated on September 23, 2021, between us, Allarity

Acquisition Subsidiary, our wholly owned Delaware subsidiary (“Acquisition Sub”), and Allarity Therapeutics A/S, an Aktieselskab

organized under the laws of Denmark (“Allarity Therapeutics A/S, or Allarity A/S”), subject to the approval of the Recapitalization

Share Exchange at an Extraordinary General Meeting (the “EGM”) of the shareholders of Allarity A/S. The shareholders of Allarity

Therapeutics A/S approved the Recapitalization Share Exchange at the EGM on November 22, 2021. On December 17, 2021 and in connection

with the Recapitalization Share Exchange, we entered into the Asset Purchase Agreement with our Acquisition Sub and Allarity A/S (the

“Purchase Agreement”), pursuant to which Allarity A/S agreed to sell, and our Acquisition Sub agreed to purchase, all of Allarity

A/S’ assets and certain specified liabilities in connection with Allarity A/S’ Business (as defined in the Purchase Agreement),

for an aggregate purchase price of 8,075,824 shares of our common stock, plus the assumption of the specified liabilities.

On December 20, 2021, we

consummated the transactions contemplated in the Purchase Agreement, pursuant to which our Acquisition Sub acquired substantially

all of the assets and assumed substantially all of the liabilities of Allarity A/S. In connection with the closing, our Acquisition

Sub acquired substantially all of the assets and liabilities of Allarity A/S in exchange for shares of our common stock issued

pursuant to a Registration Statement on Form S-4 (SEC File No. 333-258968) which was declared effective on November 5, 2021. Upon

the closing of the Recapitalization Share Exchange, all of the shareholders of Allarity A/S became our shareholders, owning

substantially the same percentage ownership in us as they owned in Allarity A/S. All of the business previously owned by Allarity

A/S is owned and conducted by us through our Acquisition Sub.

Because we were formed as a

“business combination related shell company” as defined in SEC Rule 405 for the purposes of undertaking our Recapitalization

Share Exchange, Allarity Therapeutics A/S, our former parent who became our predecessor upon consummation of the Recapitalization Share

Exchange, was deemed to be the accounting acquirer in the Recapitalization Share Exchange. While we are the legal acquirer of Allarity

Therapeutics A/S in the Recapitalization Share Exchange, because Allarity Therapeutics A/S is deemed to be the accounting acquirer, the

historical consolidated financial statements of Allarity Therapeutics A/S became our historical consolidated financial statements upon

the consummation of the Recapitalization Share Exchange.

The Private Placement (PIPE Financing)

Concurrently with the execution

of the Recapitalization Share Exchange on May 20, 2021, we entered into a Securities Purchase Agreement (“SPA”) and related

agreements with the Investor wherein we agreed to sell, and the Investor agreed to purchase, 20,000 shares of our Series A Preferred Stock

(the “Preferred Stock”) and a warrant to purchase additional shares of our common stock (the “PIPE Warrant”) for

an aggregate purchase price of $20 million with a closing conditioned upon the consummation of our Recapitalization Share Exchange and

a listing of our common stock on Nasdaq. Simultaneously with the execution of the SPA, we also entered into a Registration Rights Agreement

(“RRA”) with the Investor wherein we agreed to register a number of shares of our common stock equal to the maximum number

of shares of our common stock that could be issued upon conversion of the Preferred Stock using a conversion price equal to 20% of $80,000,000

divided by the number of shares of common stock then outstanding (the “Floor Price”) price plus 125% of the shares of common

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

resale on a Registration Statement on Form S-1 originally filed with the SEC on September 13, 2021(SEC File No. 333-259484), which was

declared effective on December 20, 2021. Under the terms of the RRA, if we 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 equal to 2% of the Investor’s

investment upon our failure to maintain the effectiveness of the registration statement and every thirty (30) days thereafter. Failure

to maintain the effectiveness of the registration statement also constitutes a “triggering event” under the COD for the Preferred

Shares that would result in the accrual and payment of a dividend and provide the Investor the right to have its remaining Preferred Shares

redeemed for a premium of a minimum of 125% of the Conversion Amount of the Preferred Shares, as more specifically described below.

Simultaneously with the closing

of its Recapitalization Share Exchange, we closed on the PIPE Investment pursuant to the SPA. On December 20, 2021, we issued 20,000 shares

of Preferred Stock at $1,000 per share and a common stock purchase warrant to purchase 2,018,958 shares of common stock at an initial

exercise price of $9.9061 to the Investor for an aggregate purchase price of $20 million. Each share of Preferred Stock has a right to

convert into shares of our common stock at an initial fixed conversion price of $9.9061. However, if (i) the price of our shares of common

stock trade below $9.9061 (a “Price Failure”) for a specified period of time; or (ii) in the event that the sum of (x) the

aggregate daily dollar trading volume (as reported on Bloomberg) of our common stock on Nasdaq during the ten (10) trading day period

ending on the trading day immediately preceding such date of determination, divided by (y) ten (10), is less than $1,500,000 (a “Volume

Maximum Failure”), each share of Preferred Stock is entitled to convert at a price equal to 90% of the sum of the two (2) lowest

VWAPs during the ten (10) trading day period immediately preceding delivery divided by two (2) (the “90% Conversion Price”),

but not less than the Floor Price, or, at the time of such Price Failure or Volume Maximum Failure, the sum of the average daily U.S.

Dollar volume for our common stock during the ten (10) days previous to conversion divided by ten (10) is less than $2,000,000 (a “Volume

Alternate Failure”), then each share of Preferred Stock is entitled to convert at the lower of the fixed conversion price or a price

equal to 80% of the sum of the two (2) lowest VWAPs during the ten (10) trading day period immediately preceding delivery divided by two

(2) (the “80% Conversion Price”), but not less than the Floor Price (such 90% Conversion Price or 80% Conversion Price, as

the case may be, the “Alternate Conversion Price”). If certain defined “Triggering Events” defined in the COD

occur, such as a breach of the Registration Rights Agreement, suspension of trading, or our failure to convert the Preferred Shares into

common stock when a conversion right is exercised, failure to issue our common stock when the PIPE Warrant is exercised, failure to declare

and pay to any holder any dividend on any dividend date, certain defaults on our debts or contractual obligations, or upon a “bankruptcy

triggering event” (as defined in the COD), then we may be required to pay a dividend that is added to the stated value on the Preferred

Stock in the amount of 18% per annum, but paid quarterly in cash, so long as the triggering event is continuing, or to redeem the Preferred

Stock for cash in an amount of a minimum of 125% of the Conversion Amount (as defined in the COD) of the Preferred Stock or 125% of the

Conversion Amount of the Preferred Stock would be entitled to convert into our common stock at the Alternate Conversion Price. In the

event that we experience a “Change of Control” (as defined in the COD) we may also be required to redeem the Preferred Shares

for cash at a minimum of 125% of their Conversion Amount. In addition, if thirty days after our common stock commences trading on Nasdaq

the sum of the average daily dollar volume for the ten (10) days previous to conversion divided by ten (10) is less than $2,500,000, then

the Preferred Stock shall be entitled to a one-time dividend equal to an 8% increase in the stated value of the Preferred Stock, or an

$80 increase per share in stated value, resulting in a stated value of $1,080 per share of Preferred Stock. This dividend was paid during

the first quarter of 2022. The Certificate of Designations of Series A Convertible Preferred Stock of Allarity Therapeutics, Inc. was

filed as Exhibit 3.4 to the Company’s Registration Statement on Form S-1, as amended, filed with the SEC on September 13, 2021.

On May 4, 2022, the Company

and the Investor entered into a Forbearance Agreement and Waiver, dated April 27, 2022, wherein the Investor confirmed that no Triggering

Event as defined under the COD has occurred prior to April 27, 2022, that a Triggering Event under Section 5(a)(ii) will and has occurred

on April 29, 2022, and that in consideration for the Registration Delay Payments the Company is obligated to pay under the RRA, and additional

amounts the Company is obligated to pay under the COD and the Investor’s legal fees incurred in the preparation of the Forbearance

Agreement and Waiver in the aggregate of $538,823.00 paid upon execution of the Forbearance Agreement and Waiver, and so long as the Company

pays the Registration Delay Payments that become due and payable under the RRA after the execution of the Forbearance Agreement and Waiver,

the Investor has agreed to forbear exercising any rights or remedies that it may have under the COD that arises as a result of a Triggering

Event under Section 5(a)(ii) of the COD and Section 4(c)(ii) of the PIPE Warrant until the earlier to occur of (i) the date immediately

prior to the date of occurrence of a Bankruptcy Triggering Event, (ii) the date of occurrence of any other Triggering Event under Section

5(a) of the COD (excluding any Triggering Event arising solely as a result of Section 5(a)(ii) of the COD and Section 4(c)(ii) of the

PIPE Warrant), (iii) the time of any breach by the Company under the Forbearance Agreement and Waiver, (iv) the Resale Availability Date

as defined therein and (v) June 4, 2022 (such period, the “Forbearance Period”). Provided that the Company is not in breach

of its obligations under Forbearance Agreement and Waiver, effective as of the Trading Day immediately following the date the Company

cures the Triggering Event under Section 5(a)(ii) of the COD, the Investor agrees to waive any rights or remedies that it may have under

the COD that arises as a result of a Triggering Event under Section 5(a) of the COD and Section 4(c)(ii) of the PIPE Warrant that may

have arisen prior to the date of the Forbearance Agreement and Waiver.

Recent Business Development

License Agreements

with Oncoheroes

January 2022, we entered into certain exclusive license agreements (collectively, the “License Agreements”) with Oncoheroes

Biosciences, Inc. (“Oncoheroes”). Under the License Agreements, Oncoheroes will acquire exclusive, global development rights

to our therapeutic candidates Dovitinib, a pan-targeted kinase inhibitor (pan-TKI), and Stenoparib, a PARP inhibitor, and assume responsibility

for their further clinical development in the field of pediatric cancers. As part of the License Agreements, Oncoheroes will receive commercialization

rights for pediatric cancers, subject to our first buy-back option for each program, and we will receive upfront license fees and regulatory

milestones for each program. If we do not re-acquire the pediatric field rights, we will further receive certain clinical/regulatory milestone

payments and royalties on sales of Stenoparib and Dovitinib in the pediatric cancer market from Oncoheroes.

Development Milestone

Payments

Under the License Agreements,

we would also be entitled to receive certain milestone payments relating to the development and commercialization of Dovitinib and Stenoparib

upon the occurrence of the following events: (i) upon the regulatory approval of a product in the United States, and (ii) upon the

regulatory approval of a product in the European Union. Each milestone payment is payable one time only, regardless of the number of

times the corresponding milestone event is achieved by a product and regardless of the number of products to achieve such milestone event.

If all milestones are achieved, then we would be entitled to receive up to $2 million in milestone payments under each respective License

Agreement.

Royalty Payments

addition to the milestone payments described above, Oncoheroes has agreed to pay us royalties based on aggregate annual net sales of all

products derived from Dovitinib and Stenoparib during the royalty term which is determined on a country-by-country and product-by-product

basis, as the period of time commencing on the first commercial sale of any product in such country and expiring upon the latest of (a)

the expiration of the last valid claim of a patent within (i) our intellectual property and/or (ii) the joint intellectual property in

such country (if, but only if, such joint intellectual property arose from activities under the clinical development plan defined in the

agreement), or (b) the fifteenth (15th) anniversary of the date of first commercial sale of such licensed drug in such country. We will

be entitled to royalty payments of between three percent (3%) and eight percent (8%) of annual net sales of between $0 and $100 million,

between six percent (6%) and eleven percent (11%) of annual net sales between $100 million and $200 million, and between eight percent

(8%) and thirteen percent (12%) of annual net sales in excess of $200 million. The royalty amounts we are entitled to receive may be subject

to reduction in the event a product is not covered by a valid claim of a licensed patent in such country.

The

License Agreements with Oncoheroes will continue on a product-by-product and country-by-country basis until the expiration of the applicable

royalty term described above. However, the License Agreements may be terminated by Oncoheroes at any time after the first anniversary

of the effective date of each License Agreement for any or no reason upon (i) ninety (90) days’ written notice if such notice is

provided prior to first commercial sale, and (ii) one hundred eighty (180) days’ written notice if such notice is provided on or

after the first commercial sale. We may also terminate the License Agreements upon sixty (60) days’ written notice if Oncoheroes

challenges any of our licensed patents included under the License Agreements. The License Agreements may also be terminated by either

party upon the material breach of the agreement by the other party if such breach is not cured within sixty (60) days, or in the event

that either party files for bankruptcy.

Amended and Restated

License Agreement with Liplasome and Chosa

On March 28, 2022, Allarity

Therapeutics Europe ApS (“Allarity Europe”), our wholly-owned subsidiary, entered into an amended and restated license agreement

(the “Amended License Agreement”) with LiPlasome Pharma ApS, a company organized under the laws of Denmark (“LiPlasome”),

and Chosa ApS, a company organized under the laws of Denmark (“Chosa”), regarding the development and commercialization of

LiPlaCis®as a cancer treatment drug. The Amended License Agreement assigned, amended and restated the original license

agreement dated February 15, 2016, as subsequently amended and restated as of January 27, 2021, by and between us and LiPlasome (the “Original

Agreement”). Under the Original Agreement, we were granted an exclusive license to develop and commercialize LiPlaCis® as a

cancer treatment drug. Pursuant to the Exclusive License Agreement dated as of June 26, 2020 (the “2020 Sublicense Agreement”)

with Smerud Medical Research International AS, a company organized under the laws of Norway (“Smerud”), we sub-licensed our

exclusive rights to LiPlaCis® and 2X-111 (a Phase 2-stage cancer drug that is a targeted, liposomal formulation of chemotherapeutic

doxorubicin), to Smerud. Under the Amended License Agreement, the parties agreed to terminate the 2020 Sublicense Agreement and replace

Allarity Europe with Chosa, an affiliate of Smerud, as exclusive licensee to further advance clinical development and commercialization

of LiPlaCis®.

Under

the Amended License Agreement, Chosa replaced Allarity Europe 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.

Development Milestone

Payments

Pursuant

to the Amended License Agreement, we are entitled to receive certain milestone payments from Chosa relating to the development and commercialization

of LiPlaCis®upon the occurrence of the following events, which milestone payments are to be shared with LiPlasome:

(i) upon the regulatory approval of a product in the United States, (ii) upon the regulatory approval of a product in any country in Europe,

including on a centralized filing basis by the EMA, (iii) upon the first achievement on a cumulative basis of net sales of a product in

the United States, and (iv) upon the first achievement on a cumulative basis of net sales of a product in any country in Europe. Each

milestone payment is payable one time only, regardless of the number of times the corresponding milestone event is achieved by a product

and regardless of the number of products to achieve such milestone event. If all milestones are achieved, then we would be entitled to

receive up to $3.5 million in milestone payments under the Amended License Agreement (“Milestone Payments”).

a result of the Amended License Agreement, we no longer have any rights to use or commercialize LiPlaCis®and are

only entitled to receive the Milestone Payments upon the achievement of the respective milestones.

LiPlaCis Support Agreement

with Smerud, Chosa and LiPlasome

March 28, 2022, concurrent with the entry into the Amended License Agreement, we entered into the LiPlaCis Support Agreement with Allarity

Europe, Smerud, Chosa and LiPlasome (the “Support Agreement”). Pursuant to the terms of the Support Agreement, we agreed (i)

to pay to LiPlasome a certain percentage of the Commercialization Proceeds (as defined under the Original Agreement) we received from

Smerud by way of debt cancellation relating to prior work on LiPlaCis®by Smerud, which obligation was to be satisfied

by the payment of 2,273,020 Danish Kroner to LiPlasome upon execution of the Support Agreement, (ii) to equally share the milestone payments

under the terms of the License Agreement, pursuant to which it was contemplated that upon the achievement of all the milestones, our pro

rata share of the Milestone Payments would be up to $3.5 million, (iii) to amend and restate the Original License Agreement, and (iv)

to terminate the 2020 Sublicense Agreement as contemplated by the parties pursuant to the terms of the Support Agreement.

Notwithstanding

the provisions of Section 8.1 of the 2020 Sublicense Agreement regarding the rights relating to the ownership of certain intellectual

property (and the defined terms therein) which was agreed to survive without limitation, pursuant to the terms of the Support Agreement

and in connection with the termination of our exclusive licensee rights to LiPlaCis® under the Amended License Agreement, on March

28, 2022, Smerud and Allarity Europe agreed to terminate the 2020 Sublicense Agreement. However, notwithstanding the termination of the

2020 Sublicense Agreement, we are currently engaged in discussions with Smerud in connection with the further development of 2X-111.

First Amendment to License Agreement with Novartis

April 12, 2022, Allarity Therapeutics Denmark ApS (“Allarity Denmark,” or “OV-SPV2”), a subsidiary of Allarity

Therapeutics Europe ApS (“Allarity Europe”), our wholly-owned subsidiary, re-issued

a Convertible Promissory Note (the “Note”) to Novartis Pharma AG, a company organized under the laws of Switzerland (“Novartis,”

and together with Allarity Europe, the “License Parties”) in the principal amount of One Million Dollars ($1,000,000). The

Note was re-issued pursuant to the First Amendment to License Agreement, with an effective date of March 30, 2022 (the “First Amendment”),

entered into by and between the License Parties, which amended the License Agreement dated April 6, 2018 (the “Original Agreement”)

previously entered into by the License Parties relating to the Compound (as defined in the Original Agreement). The First Amendment amends

and restates Section 11.7 of the Original Agreement to add the revised Note to the list of enforceable claims in the second paragraph

of Section 11.7 making the revised Note enforceable under New York law as a legal obligation of Allarity Denmark (f/k/a OV-SPV2 ApS).

All other provisions of the Original Agreement and Note were unchanged and remain in full force and effect.

Implications of Being an Emerging Growth Company

and a Smaller Reporting Company

We are an “emerging

growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and we intend to take advantage

of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth

companies” including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley

Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from

the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments

not previously approved. In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take

advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying with new or revised accounting

standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those

standards would otherwise apply to private companies. We are not electing to delay such adoption of new or revised accounting standards,

and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is

required for non-emerging growth companies. We cannot predict if investors will find our common stock less attractive because we may rely

on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for

our common stock and our stock price may be more volatile. We may take advantage of these reporting exemptions until we are no longer

an “emerging growth company.” We will remain an “emerging growth company” until the earliest of (i) the last day

of the fiscal year in which we have total annual gross revenues of $1.07 billion or more; (ii) the last day of our fiscal year following

the fifth anniversary of the date of the completion of our Recapitalization Share Exchange; (iii) the date on which we have issued more

than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated

filer under the rules of the SEC.

Additionally, we are a “smaller

reporting company” as defined in Item 10(f)(1) of Regulation S-K. Even after we no longer qualify as an emerging growth company,

we may still qualify as a “smaller reporting company,” which would allow us to continue to take advantage of many of the same

exemptions from disclosure requirements, including presenting only the two most recent fiscal years of audited financial statements and

reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We may continue to be a

smaller reporting company after the Recapitalization Share Exchange is consummated if either (i) the market value of our stock held by

non-affiliates is less than $250 million or (ii) our annual revenue was less than $100 million during the most recently completed fiscal

year and the market value of our stock held by non-affiliates is less than $700 million. To the extent we take advantage of such reduced

disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.

Corporate Information

On April 6, 2021, we were

incorporated as Allarity Therapeutics, Inc., a Delaware corporation, for the purposes of undertaking our Recapitalization Share Exchange,

our PIPE Financing, and migrating the trading in our shares from the Nasdaq First North Growth Market: Stockholm to Nasdaq in the U.S. Upon the consummation of our Recapitalization Share Exchange in December 2021, we acquired substantially all of the

assets and assumed substantially all of the liabilities of our parent, Allarity Therapeutics A/S. As a result, our parent became our predecessor

upon consummation of the Recapitalization Share Exchange. Our parent was originally organized as Oncology Venture A/S, an Aktieselskab

organized under the laws of Denmark and changed its name to Allarity Therapeutics A/S on October 7, 2020.

Our principal executive offices

are located at 210 Broadway, Suite 201, Cambridge, MA 02139 and our telephone number is (401) 426-4664. Our corporate website

address is www.allarity.com. Information contained on or accessible through our website is not a part of this Annual Report, and

the inclusion of our website address in this Annual Report is an inactive textual reference only.

Allarity and its subsidiaries

own or have rights to trademarks, trade names and service marks that they use in connection with the operation of their business. In addition,

their names, logos and website names and addresses are their trademarks or service marks. Other trademarks, trade names and service marks

appearing in this Annual Report are the property of their respective owners. Solely for convenience, in some cases, the trademarks, trade

names and service marks referred to in this Annual Report are listed without the applicable ®, TM and

SM symbols, but they will assert, to the fullest extent under applicable law, their rights to these trademarks, trade names and service

marks.

BUSINESS

This Annual Report contains

estimates, projections and other information concerning our industry, our business and the markets for our therapeutic candidates, including

data regarding the estimated size of such markets and the incidence of certain medical conditions. We obtained the industry, market and

similar data set forth in this Annual Report from our internal estimates and research and from academic and industry research, publications,

surveys and studies conducted by third parties, including governmental agencies. In some cases, we do not expressly refer to the sources

from which this data is derived. Information that is based on estimates, forecasts, projections, market research or similar methodologies

is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances that are

assumed in this information. While we believe our internal research is reliable, such research has not been verified by any third party.

Overview

We are a clinical stage biopharmaceutical

company targeting some of the greatest unmet needs in oncology by developing differentiated and novel therapeutic candidates together

with our proprietary DRP® companion diagnostics in a precision medicine approach. Our business strategy includes a focus

on leveraging our proprietary DRP®companion diagnostics platform to streamline the drug development process and to identify

patients that will benefit from therapeutic candidates that other biotechnology or pharmaceutical companies have abandoned or shelved

after initiating clinical trials under an IND application filed with the FDA, including candidates that have failed to achieve statistical

significance on the original endpoints established in their clinical trials. We use our proprietary DRP® companion diagnostics

platform to advance therapeutic candidates by targeting and evaluating patient sub-populations having gene signatures, determined by our

DRP® companion diagnostics platform, that will potentially correlate with drug efficacy and patient response to treatment.

While we have not yet successfully received regulatory or marketing approval for any of our therapeutic candidates or companion diagnostics,

and while we believe that our approach has the potential to reduce the cost and time of drug development through the identification and

selection of patient populations more likely to respond to therapy, our strategy involves risks and uncertainties that differ from other

biotechnology companies that focus solely on new therapeutic candidates that do not have a history of failed clinical development. By

utilizing our DRP® platform to generate a drug-specific companion diagnostic for each of our therapeutic candidates, if

approved by the FDA, we believe our therapeutic candidates have the potential to advance the goal of personalized medicine by selecting

the patients most likely to benefit from each of our therapeutic candidates and avoid the treatment of non-responder patients. All of

our therapeutic candidates are clinical stage assets and the FDA has not yet approved any of our therapeutic candidates or any of our

DRP® companion diagnostics. As used in this Annual Report, statements regarding the use of our proprietary DRP®

companion diagnostics or our proprietary DRP® platform or our observations that a therapeutic candidate may have anti-cancer

or anti-tumor activity or is observed to be well tolerated in a patient population should not be construed to mean that we have resolved

all issues of safety and/or efficacy for any of our therapeutic candidates or DRP® companion diagnostic. Issues of safety

and efficacy for any therapeutic candidate or companion diagnostic may only be determined by the U.S. FDA or other applicable regulatory

authorities in jurisdictions outside the United States.