Filed Pursuant to Rule 424(b)(4)
Registration No. 333-272469
357,223 Shares of Common Stock
357,223 Warrants to purchase up to 357,223 Shares
of Common Stock
2,087,222 Pre-Funded Warrants to purchase up to
2,087,222 Shares of Common Stock
Up to 2,444,445 Shares of Common Stock Issuable
Upon Exercise of Common Warrants
We are offering 357,223 shares
of our common stock, $0.0001 par value per share (“Common Stock”), and 357,223 Common Stock purchase warrants (the “common
warrants”), at an effective combined public offering price of $4.50. Each common warrant is exercisable for one share of Common
Stock, has an exercise price of $4.50 per share, will be exercisable upon issuance and will expire five (5) years from the date of issuance.
The Common Stock and common warrants are immediately separable and will be issued separately in this offering.
We are also offering 2,087,222
pre-funded warrants and 2,087,222 common stock warrants to certain purchasers whose purchase of Common Stock in this offering would otherwise
result in any such purchaser, together with its affiliates, beneficially owning more than 4.99% (or, at the election of such purchaser,
9.99%) of our outstanding Common Stock immediately following the consummation of this offering. The purchase price for each pre-funded
warrant and common warrant equals to the combined public offering price for the Common Stock and accompanying common warrant in this offering
less the $0.001 per share exercise price of each such pre-funded warrant, which is $4.499. Each pre-funded warrant will be exercisable
upon issuance and will not expire prior to exercise. The pre-funded warrants and common warrants are immediately separable and will be
issued separately in this offering.
For purposes of clarity, each
share of Common Stock or pre-funded warrant to purchase one share of Common Stock is being sold together with one common warrant to purchase
one share of Common Stock. The Common Stock or pre-funded warrant to purchase one share of Common Stock, together with one common warrant
to purchase one share of Common Stock is being offered on a best-efforts basis as described in this prospectus for a maximum aggregate
offering amount of $10,997,915. This prospectus also relates to the offering of the shares of our Common Stock issuable upon the
exercise of such pre-funded warrants and common warrants sold in this offering.
Effective June 27, 2023,
our shares of Common Stock are listed on The Nasdaq Capital Market under the symbol “ALLR.” Previously, our shares of Common
Stock were listed on The Nasdaq Global Market. On July 5, 2023, the last reported sale price of our Common Stock on The Nasdaq Capital
Market was $8.28 per share. There is no established trading market for the pre-funded warrants or common warrants and we do not expect
a market to develop. In addition, we do not intend to list the pre-funded warrants or common warrants on The Nasdaq Capital Market, any
other national securities exchange or any other trading system. Without an active trading market, the liquidity of the pre-funded warrants
and common warrants may be limited. Except as otherwise indicated herein, all information in this prospectus, including the number of
shares of Common Stock that will be outstanding after this offering, gives effect to the 1-for-35 reverse stock split effected on March
24, 2023 and the 1-for-40 reverse stock split effected on June 28, 2023 (collectively, the “Share Consolidations”).
We have retained A.G.P./Alliance
Global Partners to act as our sole placement agent in connection with the securities offered by this prospectus. The placement
agent is not purchasing or selling any of these securities nor is it required to sell any specific number or dollar amount of securities,
but has agreed to use its reasonable best efforts to solicit offers to purchase the securities offered by this prospectus. We may not
sell all of the securities in this offering. We have agreed to pay the placement agent the placement agent fees set
forth in the table below. The combined public offering price of the Common Stock and common warrants, and pre-funded warrants and common
warrants we are offering, and the exercise price of the common warrants that we are offering, have been negotiated between us, the placement
agent and the investors in the offering based on a negotiated discount to the trading price of our Common Stock prior to the offering.
3i, LP, the sole holder of
our Series A Preferred Stock and 3i June Promissory Note (as defined herein), and holder of warrants to purchase 481,752 shares of Common
Stock, subject to adjustment upon closing of this offering, will participate in this offering on the same terms and conditions as other
purchasers, and we intend to use the proceeds from the sale of securities to 3i, LP (the “3i Proceeds”), if any, to repurchase
a portion of the shares of Series A Preferred Stock owned by 3i, LP. In addition, a portion of the proceeds from this offering will be
used to redeem the 3i June Promissory Note.
There
is no minimum number of securities or minimum aggregate amount of proceeds for this offering to close. This offering will terminate not
later than fifteen business days following its commencement, subject to our right to terminate earlier. We will deliver all securities
to be issued in connection with this offering delivery versus payment (“DVP”)/receipt versus payment (“RVP”) upon
receipt of investor funds received by the Company. At the request of any investor, we may enter into an arrangement to place such investor
funds in an escrow account or trust account pending closing.
We
are an “emerging growth company” and a “smaller reporting company” under applicable Securities and Exchange Commission
(“SEC”) rules and, as such, have elected to comply with certain reduced public company disclosure requirements for this prospectus
and future filings. See the discussions in the section titled “Summary – Implications of Being an Emerging Growth Company
and a Smaller Reporting Company.”
Investing in our securities
involves a high degree of risk. See section titled “Risk Factors” beginning on page 12.
| |
Per Share of Common Stock and Common Warrant | | |
Per Pre-Funded Warrant and Common Warrant | | |
Total Offering | |
Public offering price | |
$ | 4.500 | | |
$ | 4.499 | | |
$ | 10,997,915 | |
Placement Agent Fees(1) | |
$ | 0.315 | | |
$ | 0.315 | | |
$ | 769,854 | |
Proceeds to us (before expenses)(2) | |
$ | 4.185 | | |
$ | 4.184 | | |
$ | 10,228,061 | |
(1) |
We have agreed to pay the
placement agent a cash fee equal to 7.00% of the gross proceeds that are sold in the offering and to reimburse the placement agent
for certain expenses. See section titled “Plan of Distribution” for additional information. |
(2) |
The amount of offering
proceeds to us presented in this table does not give effect to any exercise of the common warrants or pre-funded warrants. |
Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy
or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
Delivery of the shares of
our Common Stock and pre-funded warrants together with accompanying common warrants, to certain of the investors will be made on July
10, 2023, subject to customary closing conditions.
Sole Placement Agent
A.G.P.
The date of this prospectus is July 5,
2023.
TABLE OF CONTENTS
Neither we nor the placement
agent has authorized anyone to provide you with information other than that contained in this prospectus or any free writing prospectus
prepared by or on behalf of us or to which we have referred you. We and the placement agent take no responsibility for, and can provide
no assurance as to the reliability of, any other information that others may give you. We are offering to sell, and seeking offers to
buy, the securities only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate
only as of the date on the front cover page of this prospectus, or other earlier date stated in this prospectus, regardless of the time
of delivery of this prospectus or of any sale of our securities.
No action is being taken
in any jurisdiction outside the United States to permit a public offering of our securities or possession or distribution of this prospectus
in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to
inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus applicable to that
jurisdiction.
When used herein, unless
the context requires otherwise, references to the “Company,” “we,” “our” and “us” refer
to Allarity Therapeutics, Inc., a Delaware corporation.
MARKET AND INDUSTRY DATA
This prospectus 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 prospectus 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.
PROSPECTUS SUMMARY
This summary highlights
information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your
investment decision. Before investing in our securities, you should carefully read this entire prospectus, including our consolidated
financial statements and the related notes thereto and the information set forth in the sections titled “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report
on Form 10-K for the year ended December 31, 2022, and Form 10-Q for the three months ended March 31, 2023, which are incorporated herein
by reference.
Overview
We are a clinical-stage,
precision medicine biopharmaceutical company actively advancing a pipeline of in-licensed oncology therapeutics for patients with difficult-to-treat
cancers. Our clinical program includes three anti-cancer assets in mid- to late-stage clinical development and one anti-cancer asset
in early stage clinical development. Our programs and partnerships leverage our proprietary, highly accurate Drug Response Predictor
(DRP®) technology to refine patient selection and improve clinical outcomes. Our DRP® technology has been
broadly validated across an extensive array of therapies and tumor types with a high degree of accuracy for matching the right patient
to the right drug. By identifying those patients who will and who will not respond, the DRP® companion diagnostics have
the potential to transform cancer therapeutic development across many indications by increasing clinical success rates with trials involving
a fewer number of patients and improve patient outcomes by matching them to the right drug.
Our pipeline currently consists
of three mid-to-late stage clinical candidates for cancer and one anti-cancer asset in early stage clinical development. We are focused
on the clinical development of three priority programs: dovitinib in combination with stenoparib for the second-line or later treatment
of metastatic ovarian cancer, stenoparib as a monotherapy for ovarian cancer, and Ixempra® as a monotherapy for metastatic
breast cancer. In addition, Allarity is supporting the development of one additional clinical asset through business development activities
which are considered at mid-stage development. Each Allarity pipeline program is being co-developed with a drug specific DRP®
companion diagnostic to select and treat patients most likely to benefit from 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 prospectus, 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 clinical and commercial
development team is advancing our pipeline of targeted oncology therapeutic candidates, all of which have previously succeeded at least
through Phase 1 clinical trials 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 most advanced therapeutic
candidate, dovitinib, is a selective inhibitor of several classes of tyrosine kinases, including FGFR and VEGFR, and was formerly developed
by Novartis Pharma AG (“Novartis”) through Phase 3 clinical trials in numerous indications. We submitted a New Drug Application
(“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 our 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. Based upon the reasons given in the RTF letters and a subsequent Type C meeting with the FDA on May 31, 2022, we anticipate
that the FDA will require a prospective Phase 3 clinical trial as well as additional dose optimization studies before regulatory approval
of Dovitinib as a monotherapy and its companion diagnostic Dovitinib-DRP for the treatment of third-line mRCC can be obtained. While
we have decided that the costs, risks and potential benefits of conducting these studies for dovitinib as a monotherapy for mRCC are
no longer the best path toward commercial success, we continue to evaluate other potential Phase 1b/2 clinical trials for dovitinib combined
with other approved drugs in the mRCC space and in other indications. On March 20, 2023, we announced that we had dosed our first patient
in a Phase 1b clinical study to evaluate the combination of stenoparib and dovitnib for the treatment of advanced solid tumors, including
ovarian cancer. The completion of this offering will provide us with financing to dose additional patients and our ability to continue
these clinical trials will be dependent upon additional financing. Our decision to advance dovitinib as a combination therapy and not
as a monotherapy is based on our belief that both the science and the market for oncology therapies has shifted towards combination therapies
and away from monotherapies for multiple indications of cancer. We further believe that our DRP®-Dovitinib companion diagnostic
is indication agnostic and our retrospective analysis of the clinical data generated in the Novartis clinical studies for mRCC will also
support a companion diagnostic for dovitinib in second-line or later treatment of metastatic ovarian cancer, as well as other indications.
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 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. In addition, upon completion of this offering, we anticipate continuing a stenoparib in combination with dovitinib Phase
1b/2 Clinical Trial for second-line or later treatment of metastatic ovarian cancer.
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 most advanced 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 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 pursuit of clinical-stage
assets: We strive to identify and pursue novel oncology therapeutic candidates that have advanced beyond Phase
1 clinical trials and are preferably Phase 2 to Phase 3 clinical stage assets. Accordingly, the assets we have acquired, and intend
to acquire, 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 often focus our acquisition efforts
on therapeutic candidates that have been the subject of clinical trials conducted by large pharmaceutical companies. Further we intend
to select therapeutic candidates for which we believe we can develop a drug-specific DRP® to advance together with
the therapeutic candidate in further clinical trials as a companion diagnostic to select and treat the patients most likely to respond
to the therapeutic candidate. We further consider whether the licensor or assignor can provide us substantial clinical grade active
pharmaceutical ingredients (“API”) for the therapeutic candidate, at low-to-no cost, for our use in future clinical trials.
The availability of API at low-to-no cost reduces both our future clinical trial costs and the lead time it takes us to start a new
clinical trial for the therapeutic candidate. As an example, our therapeutic candidate, dovitinib, was developed by Novartis through
Phase 2 clinical trials in numerous indications and in Phase 3 clinical trials for RCC before we acquired the therapeutic candidate,
and it came with a substantial API. |
|
● |
Our proprietary DRP®
companion diagnostics: We believe our proprietary and patented Drug Response Predictor (DRP®)
platform provides us with a substantial clinical and commercial competitive advantage for each of the therapeutic candidates in our
pipeline. Our DRP® companion diagnostic platform is a proprietary, predictive biomarker technology that
employs complex systems biology, bio-analytics with a proprietary clinical relevance filter to bridge the gap between in vitro cancer
cell responsiveness to a given therapeutic candidate and in vivo likelihood of actual patient response to that therapeutic candidate.
The 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. We intend to develop and validate a drug-specific
DRP® biomarker for each and every therapeutic candidate in our therapeutic candidate pipeline to serve as a companion
diagnostic to select and treat patients most likely to respond to that therapeutic candidate. Although we are in the early stages
of our companion diagnostic development and have not yet received a PMA from the FDA, our DRP® technology has been
peer-reviewed by numerous publications and we have patented our DRP® platform for more than 70 anti-cancer drugs. 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. |
|
● |
A precision oncology
approach: Our focused strategy is to advance our pipeline of therapeutic candidates, together with DRP®
companion diagnostics, to bring these therapeutic candidates, once approved, to market and to patients through a precision
oncology approach. Our DRP® companion diagnostic platform provides a gene expression fingerprint that we believe reveals
whether a specific tumor in a specific patient is likely to respond to one of our therapeutic candidates and therefore can be used
to identify those patients who are most likely to respond to a particular therapeutic treatment in order to guide therapy decisions
and lead to better treatment outcomes. We believe our DRP® companion diagnostic platform may be used both to identify
a susceptible patient population for inclusion in clinical trials during the drug development process (and to exclude the non-susceptible
patient population), and further to select the optimal anti-cancer drug for individual patients in the treatment setting once an
anti-cancer drug is approved and marketed. By including only patients that have tumors that we believe may respond to our therapeutic
candidate in our clinical trials, we believe our proprietary DRP® companion diagnostics platform has the potential
to improve the overall treatment response in our clinical trials and thereby improving our chances for regulatory approval to market
our therapeutic candidate, while potentially reducing the time, cost, and risk of clinical development. |
The following chart summarizes
our therapeutic candidate pipeline:
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.
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 close of this offering 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
Our former parent, Allarity
Therapeutics A/S, was founded in Denmark in 2004 by our chief scientific officer, Steen Knudsen, Ph.D., and our Director and Senior Vice
President of Investor Relations, 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. On May 20, 2021,
we entered a Plan of Reorganization and Asset Purchase Agreement (the “Recapitalization Share Exchange”), 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. Pursuant to the terms of the Recapitalization Share Exchange, our Acquisition Sub acquired substantially
all of the assets and liabilities of Allarity Therapeutics A/S in exchange for shares of our Common Stock on December 20, 2021, and our
Common Stock began trading on the Nasdaq Global Market on that same day.
Our principal executive offices
are located at 24 School Street, 2nd Floor, Boston, MA 02108 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 prospectus, and
the inclusion of our website address in this prospectus 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 prospectus are the property of their respective owners. Solely for convenience, in some cases, the trademarks,
trade names and service marks referred to in this prospectus are listed without the applicable ®, ™ and
SM symbols, but they will assert, to the fullest extent under applicable law, their rights to these trademarks, trade names and service
marks.
Recent Events
Subsequent to our quarterly
period ended March 31, 2023, we entered into a series of transactions, certain events occurred and we received notifications as follows.
The transactions or events or notifications discussed below, are discussed in more detail in the Current Reports on Form 8-K filed by
us with the SEC and incorporated by reference. See section titled “Incorporation of Certain Information By Reference.”
Secured 3i, LP Bridge Loan
On June 29, 2023, the Company
entered into a Secured Note Purchase Agreement with 3i, LP (the “June 2023 Purchase Agreement”), pursuant to which, on June
30, 2023, 3i, LP purchased a secured promissory note for a principal amount of $350,000 (the “3i June Promissory Note”).
Such note matures on July 31, 2023, and carries an interest rate of 5% per annum, and is secured by all of the Company’s assets
pursuant to that certain security agreement dated June 29, 2023 (the “Security Agreement”). Under the 3i June Promissory
Note, the outstanding obligations thereunder, including accrued interest will be paid in full from the gross proceeds of our next financing
(the “Next Financing”); provided, however, that if the gross proceeds from the Next Financing are insufficient to settle
the payment of the outstanding principal balance of the 3i June Promissory Note, together with all accrued interest thereon, in full,
then the Company will instead be obligated to convert all of the unpaid principal balance of the note, together with all accrued interest
thereon, into 486 shares of Series A Preferred Stock (the “Repayment Shares”). In connection with the Repayment Shares, the
June 2023 Purchase Agreement provides that if the closing sale price of the shares of Common Stock of the trading day immediately prior
to the execution of the June 2023 Purchase Agreement (the “Current Closing Price”) is lower than the initial conversion price
of $30.00 as set forth in Certificate of Designation of Series A Preferred Stock, as amended and currently in effect (the “Series
A COD”) then the conversion price of Series A Preferred Stock will be reduced to the Current Closing Price, pursuant to the voluntary
adjustment provision of Section 8 of the Series A COD (“Downward Adjustment to Conversion Price”) and the Company shall file
a second certificate of amendment to the Series A COD with the Delaware Secretary of State to amend the Series A COD to reflect the Downward
Adjustment to Conversion Price (“Second Certificate of Amendment”). Based on the closing price of the shares of Common Stock
on June 28, 2023, the Downward Adjustment to Conversion Price is equal to $8.00 per share. 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.
June Special Meeting of Stockholders and June
Share Consolidation
On
June 23, 2023, we held a Special Meeting of Stockholders (the “Special Meeting”) for our stockholders of record of our outstanding
shares of Common Stock and Series A Preferred Stock. At the Special Meeting, the stockholders of Common Stock and Series A Preferred
Stock approved an amendment to our Certificate of Incorporation, to, at the discretion of the board, effect a reverse stock split with
respect to our issued and outstanding Common Stock at a ratio between 1-for-15 and 1-for-50 (the “June Reverse Stock Split Proposal”).
Upon stockholder approval, the Board of Directors determined a ratio of 1-for-40 for the reverse stock split (the “June Reverse
Stock Split”). On June 28, 2023 Company filed a Fourth Certificate of Amendment of the Certificate of Incorporation to effect the
June Reverse Stock Split at 4:05 PM ET on June 28 2023 (the “June Share Consolidation”). No fractional shares were issued
in connection with the June Share Consolidation. If, as a result of the June Share Consolidation, a stockholder would otherwise have
been entitled to a fractional share, each fractional share was rounded up to the next whole number. The June Share Consolidation resulted
in a reduction of our outstanding shares of Common Stock from 20,142,633 to approximately 503,566. The par value of our authorized stock
remained unchanged at $0.0001.
April 21, 2023 Public Offering (the “April
Offering”)
On
April 21, 2023, we closed a public offering of 71,734 shares of our Common Stock and 71,734
common stock purchase warrants, each exercisable for one share of Common Stock, at a combined
public offering price of $30.00, and 178,267 pre-funded warrants, each exercisable for one
share of Common Stock, and 178,267 common stock purchase warrants (the common stock purchase
warrants sold in the public offing hereinafter referred to as the “April 2023 Common
Warrants”) at a combined public offering price of $30.00 less the $0.001 for the pre-funded
warrants, for aggregate gross proceeds of approximately $7.5 million, before deducting placement
agents fees and offering expenses payable by the Company. 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 the date of this prospectus, there are no pre-funded warrants outstanding
from the April Offering. For additional information regarding the April 2023 Common Warrants,
see “Description of our Capital Stock”.
Pursuant
to a securities purchase agreement entered into with certain investors in the April Offering, we agreed that for a period of 90 days from
the close of the April Offering, that we 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 our securities, subject to certain exceptions. The investors to the securities purchase agreement in the April Offering, excluding
3i, LP, have agreed to waive that provision and permit the offering of our Common Stock, pre-funded warrants and common warrants in exchange
for (i) the repricing of the exercise price of the April 2023 Common Warrant to the exercise price of the common warrant offered in this
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 this offering.
As a result of this offering, investors to the securities purchase agreement in the April Offering, excluding 3i, LP, will have the exercise
price of their April 2023 Common Warrant reduced to $4.50 per share and the exercise period extended to on or around July 10, 2028. 3i,
LP and the Company have entered into a separate limited waiver and amendment agreement, as discussed below.
Amendment to April
2023 Common Warrants Issued in the April Offering
In
connection with this offering, we may amend the terms of the April 2023 Common Warrants, which were previously issued in connection with
the April Offering, to reduce the exercise price of such warrants and to extend the term during which those warrants could remain exercisable.
3i LP Transactions
On
April 19, 2023, 3i, LP, the sole former holder of our Series C Convertible Redeemable Preferred Stock, par value $0.0001 per share (the
“Series C Preferred Stock”) and outstanding secured promissory notes, and sole holder of our Series A Convertible Preferred
Stock, par value $0.0001 per share (the “Series A Preferred Stock”) and the Exchange Warrant (as defined below), provided
the Company with a loan for $350,000, evidenced by a Secured Promissory Note dated April 19, 2023 (the “April Note”), which
required a mandatory conversion of the principal into 486 shares of Series A Preferred Stock (the “Note Conversion Shares”)
subject to and upon the closing of the April Offering. Upon the closing of the April Offering, the Note Conversion Shares were issued
to 3i, LP and the April Note was cancelled.
On
April 20, 2023, the Company entered into a certain Modification and Exchange Agreement, as amended on May 26, 2023 (the “Exchange
Agreement”) with 3i, LP pursuant to which the parties agreed to, among other things, (i) amend and restate the Series A COD, which
among other things, eliminates the Series A Preferred Stock redemption right and dividend (except for certain exceptions as specified
in the Series A COD), and provides for the conversion of Series A Preferred Stock into Common Stock at a conversion price of $30.00 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, LP for 5,577 shares of Series A Preferred Stock (the “Exchange Shares”),
(iii) exchange the warrant issued in a financing on December 20, 2021, (the “PIPE Warrant”) held by 3i, LP for a new warrant
(the “Exchange Warrant”), which reflects an exercise price of $30.00 and represents a right to acquire 315,085 shares of
Common Stock, which is subject to adjustment upon the closing of this offering (“New Warrant Shares”). 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, LP, and the PIPE Warrant and the Series C Shares were cancelled.
In
addition, the Company entered into a Cancellation of Debt Agreement dated April 20, 2023 (the “Cancellation of Debt Agreement”),
which became effective as of the April 21, 2023. Upon the closing of the April Offering, pursuant to the terms of the Cancellation of
Debt Agreement, all of the Company’s outstanding indebtedness under the following four secured promissory notes issued pursuant
to Secured Note Purchase Agreement dated November 22, 2022 between the Company and 3i, LP (collectively the “3i, LP Promissory
Notes”): the first note was for an aggregate principal amount of $350,000 (which purchase price was paid in form of cash was received
in November 2022); the second note was for the principal amount of $1,666,640 and which represents the payment of $1,666,640 due to 3i,
LP in Alternative Conversion Floor Amounts, as defined in the Certificate of Designations of Series A Preferred Stock filed with the
Delaware Secretary of State in December 2021 (the “Original Series A COD”), that began to accrue on July 14, 2022; the third
note was for an aggregate principal amount of $650,000 which purchase price was paid in cash on December 30, 2022; and the fourth note
was for the aggregate principal amount of $350,000 (which purchase price was paid in cash on April 11, 2023) and the Alternative Conversion
Amount (as defined in the Cancellation of Debt Agreement ) due by the Company to 3i, LP were paid in full. Accordingly, any and all obligations
in connection therewith were extinguished without any additional further action on the part of 3i, LP upon payment of $3,347,583 in cash
from a portion of the proceeds from the April Offering. In addition, pursuant to such agreement, 1,550 shares of Series A Preferred Stock
(the “Redemption Shares”) beneficially owned by 3i, LP were redeemed in full for a purchase price of $1,652,416, which redemption
price was paid in cash from the portion of the proceeds from the closing of the April Offering. The
Company also entered into a first amendment to the registration rights agreement dated May 20, 2021 (“RRA”), which became
effective upon the closing of the April Offering to amend certain defined terms under the RRA to include the Exchange Shares, the New
Warrant Shares and the Note Conversion Shares (the “Amended RRA”).
On June 6, 2023, 3i, LP and
Company entered into a separate limited waiver and amendment agreement whereby 3i, LP (“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 (i) amending the conversion price of the Series A
Preferred Stock to equal the public offering price of the shares of Common Stock in this offering if the public offering price of the
shares of Common Stock in this offering is lower than the then-current conversion price of the Series A Preferred Stock; (ii) participating
in this offering, at its option, under the same terms and conditions as other investors, of which proceeds from 3i, LP’s participation
will be used to redeem a portion of shares of Series A Preferred Stock 3i, LP received from the Exchange Agreement; and (iii) (1) the
repricing of the exercise price of the April 2023 Common Warrant to the exercise price of the common warrant offered in this offering
if the exercise price of the common warrant is lower than the then-current exercise price of the April 2023 Common Warrant; and (2) extending
the termination date of the April 2023 Common Warrant to the date of termination of the common warrants offered in this offering. As a
result of 3i Waiver Agreement, upon the consummation of this offering, the conversion price of the Series A Preferred Stock will be reduced
to $4.50 and the exercise price of 3i, LP’s April 2023 Common Warrant will be reduced to $4.50 per share and the exercise period
extended to on or around July 10, 2028.
Series A Preferred Stock Conversions
From March 31, 2023 to July
5, 2023, pursuant to the exercise of conversion by 3i, LP, we issued 479,709 shares of Common Stock to 3i, LP upon the conversion of 7,520
shares of Series A Preferred Stock based on a conversion price ranging from $30.00 to $70.80. No proceeds were received by the Company
upon such conversion. As of July 5, 2023, there were 6,047 shares of Series A Preferred Stock issued and outstanding.
Amended
and Restated Certificate of Designations of Series A Preferred Stock; Amendment
On
April 21, 2023, in connection with the transactions contemplated under the Exchange Agreement, the Company filed the Series A COD with
the Secretary of State of the State of Delaware (the “Delaware Secretary of State”). The Series A COD eliminated
the Series A Preferred Stock redemption right and dividend (except for certain exceptions as specified therein), and provided 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, $30.00 per share, and based on a stated value of $1,080 per share.
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 (“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 $30.00 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) $1,200,000, 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 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 expire automatically on July 31, 2023.
In addition, among other
things, the Reverse Stock Split Proposal, the effectuation of the June Reverse Stock Split, and the amendment to the Company’s
Certificate of Incorporation, are subject to the consent by the holders of a majority of the then outstanding shares of Series A Preferred
Stock. Such consent was received on June 27, 2023.
Notice of Breach From Novartis Pharma AG
Pursuant to a license agreement
with Novartis dated April 6, 2018, through our wholly-owned subsidiary Allarity Therapeutics Europe ApS, we have the right to use dovitinib
used in combination with stenoparib to address the second-line or later treatment of metastatic ovarian cancer. Under the terms of the
license agreement, we are required to make certain milestone payments, including a payment of $1,500,000 which was due on April 1, 2023.
We did not make that milestone payment, and on April 4, 2023, Novartis sent a notice of breach under the license agreement to Allarity
Therapeutics Europe ApS stating that it has 30 days from April 4, 2023, to cure. See “RISK FACTORS -Risks Related to Our Business
-We are in default under our license agreement with Novartis.” We are trying to revise the payment terms of the Novartis
license agreement and in April 2023 we paid Novartis $100,000. As of the date of this prospectus, Novartis has not enforced its default
notice, but no assurance can be given that it will not enforce the default notice in the future.
Stenoparib Exclusive License Agreement with
Eisai Inc.
The
Company previously entered into an Exclusive License Agreement with Eisai effective July
12, 2022 (the “Exclusive License Agreement”). In consideration for extension
of certain deadlines and payment obligations, the Company has entered into several amendments
to the Exclusive License Agreement. 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 “Product”). The Company agreed to pay Eisai in periodic payments as follows:
(i) one hundred thousand dollars ($100,000) which has been paid; (ii) fifty thousand dollars
($50,000) within ten (10) days of execution of the fourth amendment; (iii) one hundred thousand
dollars ($100,000) upon completion of a capital raise; and (iv) eight hundred and fifty thousand
dollars ($850,000) on or before March 1, 2024. The Company will have until April 1, 2024,
to complete enrollment in a further Phase 1b or Phase 2 Clinical Trial of the Product. If
the Company has not achieved successful completion of a further Phase 1b or Phase 2 Clinical
Trial of the Product prior to April 1, 2024, Eisai may terminate the Exclusive License Agreement
in its entirety, in its sole discretion on at least 120 days prior written notice. See “RISK
FACTORS -Risks Related to Our Business -Our License Agreement with Eisai is Subject to Risk.”
Nasdaq Notification and Appeal Hearing
As previously disclosed on
Form 8-K filed with the SEC on October 14, 2022, we received a letter from Nasdaq Listing Qualifications on October 12, 2022 notifying
us that the Company’s stockholders’ equity as reported in its Quarterly Report on Form 10-Q for the period ended June 30,
2022 (the “June Form 10-Q”), did not satisfy the continued listing requirement under Nasdaq Listing Rule 5450(b)(1)(A) for
The Nasdaq Global Market, which requires that a listed company’s stockholders’ equity be at least $10.0 million. As reported
on the June Form 10-Q, the Company’s stockholders’ equity as of June 30, 2022 was approximately $8.0 million. Pursuant to
the letter, we were required to submit a plan to regain compliance with Nasdaq Listing Rule 5450(b)(1)(A) by November 26, 2022. After
discussions with the Nasdaq Listing Qualifications staff, on December 12, 2022, we filed a plan to regain and demonstrate long-term Nasdaq
Listing Qualifications compliance including seeking to phase-down to The Nasdaq Capital Market. On December 21, 2022, we received notification
from the Nasdaq Listing Qualifications staff that they have granted the Company’s request for an extension until April 10, 2023,
to comply with this requirement.
On
April 11, 2023, we received notification from the Nasdaq Listing Qualifications staff that
it has determined that the Company did not meet the terms of the extension. Specifically,
the Company did not complete its proposed transactions and was unable to file a Form 8-K
by the April 10, 2023 deadline evidencing compliance with Nasdaq Listing Rule 5450(b)(1)(A).
As a result, the Company’s securities will be delisted from The Nasdaq Global Market
unless the Company appeals the Nasdaq Listing Qualifications staff’s decision. The
Company filed a notice of appeal and on May 18, 2023 the Company presented its appeal before
the Nasdaq hearings panel.
Subsequent
to the May 18, 2023 hearing, on May 23, 2023, we received notification from the Nasdaq Listing
Qualifications staff that stated because we have not complied with Nasdaq Listing Rule 5450(a)(1)
regarding a bid price of $1.00 by May 22, 2023, this non-compliance will be considered by
the Nasdaq hearings panel as to whether our Common Stock should be delisted on The Nasdaq
Stock Market LLC. We had until May 30, 2023, to present our view to the Nasdaq hearings panel
and we provided additional information to the Nasdaq hearings panel by such date.
On June 6, 2023, we received
a letter from the Nasdaq hearings panel that granted the Company’s request for continued listing on the Nasdaq Stock Market LLC
until July 1, 2023 and the Company’s transfer to The Nasdaq Capital Market, subject to the following conditions: (1) on or before
July 1, 2023, the Company shall demonstrate compliance with Nasdaq Listing Rule 5450(b)(1) dealing with primary equity securities listed
on the Global Market, and on or before July 1, 2023, the Company shall demonstrate compliance with Nasdaq Listing Rule 5450(a)(1) dealing
with a minimum bid of $1.00 per share. The Nasdaq hearings panel reserves the right to reconsider its grant based on any event, condition
or circumstance that exists or develops that would make continue listing of the Company’s securities on The Nasdaq Stock Market
inadvisable or unwarranted. The Company intends to seek further clarification from the Nasdaq hearings panel as to the timing of meeting
the conditions set forth in their letter. No assurance can be given that the Company will meet the conditions set forth in the Nasdaq
hearings panel letter and that our shares of common stock will continue to be listed on The Nasdaq Stock Market LLC. On June 14, 2023,
we received a clarification letter from Nasdaq granting the Company’s request for continued listing on The Nasdaq Capital Market
and transfer to The Nasdaq Capital Market subject to the following: (1) on or before July 10, 2023, the Company will demonstrate compliance
with Listing Rule 5550(a)(2); and (2) on or before July 14, 2023, the Company will demonstrate compliance with Listing Rule 5550(b).
As further discussed below, on June 28, 2023, we received notification from Nasdaq Listing Qualifications that because we transferred
to The Nasdaq Capital Market, we have regained compliance with Listing Rule 5550(a)(5) because our Market Value of Publicly Held Shares
(“MVPHS”) has been $1,000,000 or greater for at least 10 consecutive business days.
Shareholder
Letter
On May 31, 2023, we received
a letter from an attorney purportedly representing a shareholder of the Company questioning certain information contained in our preliminary
proxy statement for our Special Meeting, and questioning our ability under Delaware law to amend the Original Series A COD to provide
for voting rights to the holders thereof without seeking approval from the holders of our common stock. We have clarified any perceived
inconsistent statements regarding voting procedures for the matters to be voted upon at the Special Meeting in our definitive proxy statement
filed with the SEC, and believe that, contractually, we are authorized to provide for voting rights to the holders of the Series A Preferred
Stock without seeking approval by the holders of our common stock.
THE
OFFERING
Common Stock offered by us |
357,223 shares. |
|
|
Common Warrants offered by us |
Common warrants to purchase up to 2,444,445 shares of our Common Stock, which
will be exercisable during the period commencing on the date of their issuance and ending five years from such date at an exercise price
of $4.50 per share of Common Stock. The common warrants will be sold together with the Common Stock but issued separately from the Common
Stock and may be transferred separately immediately thereafter. A common warrant to purchase one share of our Common Stock will be issued
for every share of Common Stock purchased in this offering. |
|
|
Pre-Funded Warrants offered by us |
We are also offering to certain purchasers whose purchase of our Common
Stock in this offering would otherwise result in the purchaser, together with its affiliates, beneficially owning more than 4.99% (or,
at the election of the purchaser, 9.99%) of our outstanding shares of Common Stock immediately following the consummation of this offering,
to purchase 2,087,222 pre-funded warrants (together with the common warrants, the “Warrants”) in lieu of Common Stock that
would otherwise result in any such purchaser’s beneficial ownership exceeding 4.99% (or, at the election of the purchaser, 9.99%)
of our outstanding shares of Common Stock. Each pre-funded warrant will be exercisable for one share of Common Stock. The purchase price
of each pre-funded warrant and the accompanying common warrant equals to the price at which the Common Stock and the accompanying common
warrant are being sold to the public in this offering, minus $0.001, and the exercise price of each pre-funded warrant is $0.001 per share.
The pre-funded warrants will be exercisable immediately and may be exercised at any time until exercised in full. Because we will issue
one common warrant for each share of Common Stock and for each pre-funded warrant to purchase one share of Common Stock sold in this offering,
the number of common warrants sold in this offering will not change as a result of a change in the mix of the shares of our Common Stock
and pre-funded warrants sold. |
|
|
Public Offering Price |
$4.50 per share of Common Stock and accompanying common warrant or
$4.499 per pre-funded warrant and accompanying common warrant, as applicable. |
|
|
Best Efforts |
We
have agreed to issue and sell the securities offered hereby to the purchasers through the placement agent. The placement agent is
not required to buy or sell any specific number or dollar amount of the securities offered hereby, but it will use its reasonable
best efforts to solicit offers to purchase the securities offered by this prospectus. See “Plan of Distribution” on page
38 of this prospectus. |
|
|
Shares
of Common Stock to be Outstanding Immediately After this Offering (1) |
860,789 shares of Common Stock (assuming no exercise of pre-funded
warrants or common warrants sold in this offering). |
|
|
Use of Proceeds |
We estimate that the net proceeds from this offering will be approximately
$9.888 million (assuming no exercise of pre-funded warrants or common warrants issued in connection with this offering) after deducting
the placement agent fees and estimated offering expenses payable by us. We intend to use a portion of the net proceeds to make payments
under each of the Novartis and Eisai license agreements, to conduct our clinical trials, to pay off the 3i June Promissory Note, to pay
account payables and accrued liabilities outstanding, and for working capital and general corporate purposes. As of July 5, 2023, we had
approximately $8,886,000 in account payables and accrued liabilities. The payments from net proceeds will be subject to the discretion
of and timing by the Board of Directors. In addition, 3i, LP, the sole holder of our Series A Preferred Stock and holder of our warrants
to purchase 481,752 shares of Common Stock, may participate in this offering on the same terms and conditions as other purchasers, and
we intend to use the 3i Proceeds, if any, to repurchase a portion of the outstanding shares of Series A Preferred Stock owned by 3i, LP.
See section titled “Use of Proceeds” on page 23 of this prospectus. |
Risk Factors
|
You should
read the “Risk Factors” section beginning on page 12 of this prospectus and in Item 1A “Risk Factors” of
our Annual Report on Form 10-K for the year ended December 31, 2022, and Quarterly Report on Form 10-Q for the three-month period
ended March 31, 2023, which is incorporated herein by reference for a discussion of factors that you should consider before investing
in our securities. |
|
|
Trading Symbol |
Our shares of Common Stock are listed on The Nasdaq Capital Market under the symbol “ALLR.”
There is no established public trading market for the common warrants and pre-funded warrants to be sold in this offering and we
do not expect a market to develop. In addition, we do not intend to apply for listing of the common warrants or pre-funded warrants
on The Nasdaq Capital Market, any other national securities exchange or any other trading system. |
|
|
Transfer Agent |
The transfer agent and registrar for
our Common Stock is Computershare Trust Company, N.A. |
(1) |
The number of shares of Common Stock that will be outstanding after this offering as shown above is based on 503,566 shares of Common Stock outstanding as of July 5, 2023, and excludes the following: |
|
● |
412 shares Common Stock issuable pursuant to options outstanding as of July 5, 2023, with a weighted-average exercise price of $7,633.85; |
|
|
|
|
● |
1,401 shares of Common Stock available under our 2021 Equity Incentive Plan (“2021 Plan”) as of July 5, 2023; |
|
● |
315,085 shares of Common Stock issuable upon the exercise of warrants at an exercise price of $30.00, subject to adjustment based on the public offering price of this offering; |
|
|
|
|
● |
250,000 shares of Common Stock issuable upon the exercise of warrants at an exercise price of $34.00 per share, subject to adjustment based on the public offering price of this offering; |
|
● |
816,345 shares of Common Stock issuable upon conversion of 6,047 shares of Series A Preferred Stock outstanding held by 3i, LP as of July 5, 2023, at the Series A Preferred Stock Conversion Price of $8.00 per share, subject to adjustment based on the public offering price of this offering and based on the stated value of $1,080 per share; |
|
|
|
|
● |
up to 2,087,222 shares of Common Stock issuable upon the exercise of the pre-funded warrants to be issued in connection with this offering; and |
|
● |
up to 2,444,445 shares of Common Stock issuable upon the exercise of the common warrants to be issued in connection with this offering. |
Unless otherwise indicated, all information
in this prospectus assumes:
|
● |
no exercise of the outstanding options, warrants, or conversion of outstanding shares of Series A Preferred Stock described above; and |
|
|
|
|
● |
no exercise of the common warrants or pre-funded warrants sold in this offering. |
SUMMARY HISTORICAL FINANCIAL
INFORMATION
The following summary historical
financial information of Allarity set forth below should be read in conjunction with “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and our historical financial statements and the related notes thereto incorporated
by reference in this prospectus.
The
summary consolidated balance sheet data as of December 31, 2021 and 2022 and summary consolidated
statements of operations and comprehensive loss data for the years ended December 31, 2021
and 2022 are derived from our audited consolidated financial statements incorporated by reference
in this prospectus. The summary consolidated balance sheet data as of March 31, 2022 and
2023 and summary consolidated statements of operations and comprehensive loss data for three
months ended March 31, 2022 and 2023 are derived from our unaudited consolidated financial
statements incorporated by reference in this prospectus. The historical results are not necessarily
indicative of the results to be expected in the future. Share and per share calculations
gives effect to the Share Consolidations.
In thousands, except share data | |
As of December 31, | | |
As
of March 31, | |
| |
2021 | | |
2022 | | |
2022 | | |
2023 | |
Consolidated Balance Sheet Data: | |
| | |
| | |
| | |
| |
Total assets | |
$ | 49,633 | | |
$ | 14,544 | | |
$ | 31,290 | | |
$ | 12,702 | |
Total liabilities | |
| 30,849 | | |
| 12,654 | | |
| 14,416 | | |
| 13,041 | |
Total mezzanine equity | |
| 632 | | |
| 2,003 | | |
| 2,142 | | |
| 2,763 | |
Total stockholders’ equity (deficit) | |
$ | 18,152 | | |
$ | (113 | ) | |
$ | 14,732 | | |
$ | (3,102 | ) |
| |
Year Ended December 31, | | |
Three Months Ended March
31, | |
| |
2021 | | |
2022 | | |
2022 | | |
2023 | |
Consolidated Statements of Operations and Comprehensive Loss Data | |
| | |
| | |
| | |
| |
Revenue | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
| |
| | | |
| | | |
| | | |
| | |
Operating expenses | |
| | | |
| | | |
| | | |
| | |
Research and development | |
| 14,196 | | |
| 6,930 | | |
| 1,289 | | |
| 1,427 | |
Impairment of intangible assets | |
| — | | |
| 17,571 | | |
| 14,007 | | |
| — | |
General and administrative | |
| 12,360 | | |
| 9,962 | | |
| 3,013 | | |
| 2,232 | |
Total operating expenses | |
| 26,556 | | |
| 34,463 | | |
| 18,309 | | |
| 3,659 | |
Loss from operations | |
| (26,556 | ) | |
| (34,463 | ) | |
| (18,309 | ) | |
| (3,659 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other income (expenses) | |
| | | |
| | | |
| | | |
| | |
Gain from the sale of IP | |
| 1,005 | | |
| 1,780 | | |
| 1,780 | | |
| — | |
Interest income | |
| — | | |
| 30 | | |
| — | | |
| 4 | |
Interest expense | |
| (499 | ) | |
| (223 | ) | |
| (39 | ) | |
| (92 | ) |
Finance expenses | |
| (1,347 | ) | |
| — | | |
| — | | |
| (9 | ) |
Loss on investment | |
| (495 | ) | |
| (115 | ) | |
| (36 | ) | |
| — | |
Foreign exchange gains (losses) | |
| (95 | ) | |
| (913 | ) | |
| (269 | ) | |
| 95 | |
Change in fair value adjustment of derivative and warrant liabilities | |
| 2,087 | | |
| 17,579 | | |
| 12,566 | | |
| 309 | |
Penalty on Series A Preferred stock liability | |
| — | | |
| (800 | ) | |
| — | | |
| — | |
Non-cash interest expense related to beneficial conversion
feature of convertible debt | |
| (141 | ) | |
| — | | |
| — | | |
| — | |
Change in fair value of convertible debt | |
| (474 | ) | |
| — | | |
| — | | |
| — | |
Net other income | |
| 41 | | |
| 16,884 | | |
| 14,002 | | |
| 307 | |
Net loss before tax benefit (expense) | |
| (26,515 | ) | |
| (17,579 | ) | |
| (4,307 | ) | |
| (3,352 | ) |
Income tax benefit (expense) | |
| (133 | ) | |
| 1,521 | | |
| 1,227 | | |
| — | |
Net loss | |
| (26,648 | ) | |
| (16,058 | ) | |
| (3,080 | ) | |
| (3,352 | ) |
Deemed dividend of 5% on Series C Convertible Preferred stock | |
| — | | |
| — | | |
| — | | |
| (4 | ) |
Deemed dividend of 8% on Series A Convertible Preferred stock | |
| — | | |
| (1,572 | ) | |
| (1,572 | ) | |
| — | |
Cash obligations on converted Series A
Convertible Preferred stock | |
| — | | |
| (3,421 | ) | |
| — | | |
| — | |
Net loss attributable to common stockholders | |
$ | (26,648 | ) | |
$ | (21,051 | ) | |
| (4,652 | ) | |
| (3,356 | ) |
| |
| | | |
| | | |
| | | |
| | |
Basis and diluted net loss per share applicable
to common stockholders | |
$ | (146.67 | ) | |
$ | (77.36 | ) | |
$ | (19.64 | ) | |
$ | (4.43 | ) |
Basic and diluted weighted average common shares outstanding | |
| 181,686 | | |
| 272,204 | | |
| 236,811 | | |
| 758,144 | |
| |
| | | |
| | | |
| | | |
| | |
Other comprehensive loss, net of tax: | |
| | | |
| | | |
| | | |
| | |
Net loss | |
$ | (26,648 | ) | |
$ | (16,058 | ) | |
$ | (3,080 | ) | |
$ | (3,352 | ) |
Change in cumulative translation adjustment | |
| (1,966 | ) | |
| (121 | ) | |
| (214 | ) | |
| 84 | |
Change in fair value attributable to
instrument specific credit risk | |
| (9 | ) | |
| — | | |
| — | | |
| — | |
Total comprehensive loss attributable to common stockholders | |
$ | (28,623 | ) | |
$ | (16,179 | ) | |
$ | (3,294 | ) | |
$ | (3,268 | ) |
RISK FACTORS
An investment in our securities
is subject to a number of risks, including risks related to this offering, our business and industry, as well as risks related to our
shares of Common Stock. You should carefully consider all of the information in this prospectus and the documents incorporated by reference
into this prospectus, including our financial statements and related notes, before making an investment in our securities The occurrence
of any of the adverse developments described in the following risk factors and risk factors incorporated by reference could materially
and adversely harm our business, financial condition, results of operations or prospects. In that case, the trading price of our Common
Stock could decline, and you may lose all or part of your investment. In addition, please read the information in the section entitled
“Risk Factors” on page 12 of this prospectus and in Item 1A “Risk Factors” of our Annual Report on Form 10-K
for the year ended December 31, 2022 and Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023, which are incorporated
herein by reference, for a more thorough description of these and other risks.
Risks Related to Our Business
We have insufficient
cash to continue our operations, our continued operations are dependent on us raising capital and these conditions give rise to substantial
doubt over the Company’s ability continue as a going concern
As
of March 31, 2023, we had $295,000 in cash, and an accumulated deficit of $85.9 million. We had a working capital deficit of $8.6 million.
On April 21, 2023, the Company completed a public offering financing and received net proceeds (after costs of the April Offering, payment
of 3i, LP Promissory Notes and Redemption Shares) of approximately $1.9 million, which has been determined to be insufficient to fund
the Company’s operations for longer than approximately three months. Further, we believe that our existing cash and cash equivalents
as of July 5, 2023, and our anticipated expenditures and commitments for the next twelve months, will not enable us to fund our operating
expenses and capital expenditure requirements for the twelve months from the date of this prospectus. These conditions give rise to substantial
doubt over the Company’s ability to continue as a going concern. We will need to raise additional capital after to support our operations
and execute our business plan. We will be required to pursue sources of additional capital through various means, including debt or equity
financings. Newly issued securities may include preferences, superior voting rights, and the issuance of warrants or other convertible
securities that will have additional dilutive effects. We cannot assure that additional funds will be available when needed from any source
or, if available, will be available on terms that are acceptable to us and may cause existing shareholders both book value and ownership
dilution. Further, we may incur substantial costs in pursuing future capital and/or financing, including investment banking fees, legal
fees, accounting fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection
with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition and
results of operations. Our ability to obtain needed financing may be impaired by such factors as the weakness of capital markets, and
the fact that we have not been profitable, which could impact the availability and cost of future financings. If the amount of capital
we are able to raise from financing activities is not sufficient to satisfy our capital needs, we may have to reduce our operations accordingly.
We are in default under our license agreement
with Novartis
Pursuant to a license agreement
with Novartis and our wholly-owned subsidiary Allarity Therapeutics Europe ApS dated April 6, 2018, we have the right to use dovitinib
used in combination with stenoparib to address the second-line or later treatment of metastatic ovarian cancer. Under the terms of the
license agreement, we are required to make certain milestone payments, including a payment of $1,500,000 which was due on April 1, 2023.
We did not make that milestone payment, and on April 4, 2023, we received notice from Novartis stating that Allarity Therapeutics Europe
ApS is in breach of the license agreement and has 30 days from April 4, 2023, to cure. Subsequent to our April Offering, at the end of
April 2023, we made a payment of $100,000 to Novartis. We intend to cure this breach by making the milestone payments from proceeds of
this offering and/or working with Novartis on an alternate payment structure. However, no assurance can be given that Novartis will accept
an alternative payment structure and if we fail to make the milestone payments, Novartis does not agree to an alternative payment structure
or we are otherwise in breach of the license agreement, we may lose our right to use dovitinib which will adversely affect our ability
to conduct our clinical trials and to achieve our business objectives and adversely affect our financial results.
We are delinquent in our payment to Eisai
In consideration for extension
of certain deadlines and payment obligations, the Company entered in several amendments to an Exclusive License Agreement with Eisai.
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, under which the Company agreed to pay Eisai in periodic payments as follows: (i) one hundred thousand dollars ($100,000) which
has been paid; (ii) fifty thousand dollars ($50,000) within ten (10) days of execution of the fourth amendment; (iii) one hundred thousand
dollars ($100,000) upon completion of a capital raise; and (iv) eight hundred and fifty thousand dollars ($850,000) on or before March
1, 2024. Under the Exclusive License Agreement, the Company will have until April 1, 2024, to complete enrollment in a further Phase
1b or Phase 2 Clinical Trial of the Product. If the Company has not achieved successful completion of a further Phase 1b or Phase 2 Clinical
Trial of the Product prior to April 1, 2024, Eisai may terminate the Agreement in its entirety, in its sole discretion on at least 120
days prior written notice. In light of our financial condition and dependence on financing for our operations, we may be unable to meet
the payment requirements under the fourth amendment and we may lose our right to use Stenoparib, which will adversely affect our ability
to conduct our clinical trials and to achieve our business objectives and adversely affect our financial results.
Our assets are subject to a Security Agreement
with 3i, LP and an event of default under the 3i June Promissory Note could adversely affect our business, financial condition, results
of operations or liquidity.
Under the 3i June Promissory
Note, 3i, LP is a secured party and upon an event of default under the Security Agreement and the 3i June Promissory Note, 3i, LP, which
among other occurrences including delisting by Nasdaq, will have a right to the collateral granted to them and we may lose our ownership
interest in our assets, including our shares in our wholly owned subsidiaries Allarity Acquisition Subsidiary, Inc. and Allarity Therapeutics
A/S and our intellectual property rights including our patents, trademarks and copyrights. In the event we default under the 3i June
Promissory Note, our default could adversely affect our business, financial condition, results of operations and liquidity.
Risks Related to Owning our Securities and
this Offering
We currently do not satisfy The Nasdaq
Capital Market continued listing requirements and if we fail to regain compliance our Common Stock will be delisted.
The listing of our Common
Stock on The Nasdaq Capital Market is contingent on our compliance with The Nasdaq Capital Market’s conditions for continued listing.
On April 20, 2022, we received notice from the Nasdaq Listing Qualifications stating that because we had not yet filed our Annual Report
on Form 10-K for the year ended December 31, 2021 (the “Form 10-K”) by its due date, we were no longer in compliance with
the listing requirement which requires listed companies to timely file all required periodic financial reports with the SEC. On May 17,
2022, we filed our Form 10-K with the SEC. Subsequent to the filing of the Form 10-K, we were late in filing our Form 10-Q for the quarterly
periods ended March 31, 2022, and June 30, 2022.
On October 12, 2022, we received
a letter from Nasdaq Listing Qualifications notifying us that the Company’s stockholders’ equity as reported in its Quarterly
Report on Form 10-Q for the period ended June 30, 2022 (the “June Form 10-Q”), did not satisfy the continued listing requirement
under Nasdaq Listing Rule 5450(b)(1)(A) for The Nasdaq Global Market, which requires that a listed company’s stockholders’
equity be at least $10.0 million. As reported on the June Form 10-Q, the Company’s stockholders’ equity as of June 30, 2022
was approximately $8.0 million. Pursuant to the letter, we were required to submit a plan to regain compliance with Nasdaq Listing Rule
5450(b)(1)(A) by November 26, 2022. After discussions with the Nasdaq Listing Qualifications staff, on December 12, 2022, we filed a
plan to regain and demonstrate long-term Nasdaq Listing Qualifications compliance including seeking to phase-down to The Nasdaq Capital
Market. On December 21, 2022, we received notification from the Nasdaq Listing Qualifications staff that they have granted us an extension
of time until April 10, 2023, to regain and evidence compliance with Nasdaq Listing Rule 5450(b)(1)(A). On April 11, 2023, we received
notification from the Nasdaq Listing Qualifications staff that it has determined that the Company did not meet the terms of the extension.
Specifically, the Company did not complete its proposed transactions and was unable to file a Form 8-K by the April 10, 2023 deadline,
evidencing compliance with Nasdaq Listing Rule 5450(b)(1)(A), and, as a result, the staff notification indicated that Company’s
Common Stock will be delisted from The Nasdaq Global Market. In that regard, unless the Company requests an appeal of such determination
by April 18, 2023, trading of the Company’s Common Stock will be suspended at the opening of business on April 20, 2023, and a
Form 25-NSE will be filed with the SEC which will remove the Company’s Common Stock from listing and registration on The Nasdaq
Stock Market LLC. The Company requested an appeal for such determination, and on May 18, 2023, the Company had its appeal hearing before
the Nasdaq hearings panel.
On November 21, 2022, the
Company received written notice from Nasdaq Listing Qualifications indicating that the Company is not in compliance with the minimum
bid price requirement of $1.00 per share under the Nasdaq Listing Rules. Based on the closing bid price of the Company’s listed
securities for the last 30 consecutive business days from October 10, 2022 to November 18, 2022, the Company no longer met the minimum
bid price requirement set forth in Listing Rule 5550(a)(2). Under Nasdaq Listing Rules, we are provided with a compliance period of 180
calendar days, or until May 22, 2023, to regain compliance under the Nasdaq Listing Rules. In the event we do not regain compliance by
May 22, 2023, we may be eligible for additional time to regain compliance. On March 24, 2023, we effected the 1-for-35 share consolidation
of our Common Stock in order to attempt to meet the minimum bid requirement of $1.00 per share. On May 23, 2023, we received a
letter from the staff of Nasdaq Regulation that the Company did not regain compliance of the minimum bid price requirement of $1.00 by
May 22, 2023, and as a result, the Nasdaq hearings panel will consider this matter in their decision regarding the Company’s continued
listing on The Nasdaq Global Market. On June 23, 2023, we held the Special Meeting of our stockholders to consider the adoption of an
amendment to our certificate of incorporation to effect a reverse stock split within a range of 15 for 1 to 50 for 1 with the exact ratio
to be determined by the Board and approved by the holder of our Series A Preferred Stock and we have informed the Nasdaq hearings panel
of our Special Meeting. On June 23, 2023, at the Special Meeting, the June Reverse Stock Split Proposal was approved by the stockholders
of the Company and subsequently the Board determined a fixed ratio of 40 for 1. The June Share Consolidation was effectuated on June
28, 2023.
On December 20, 2022, we
received a written notice from Nasdaq Listing Qualifications indicating that we are not in compliance with the minimum MVPHS of $5,000,000
requirement under the Nasdaq Listing Rules Based on our MVPHS for the thirty-one (31) consecutive business days from November 4, 2022
to December 19, 2022, we no longer meet the minimum MVPHS requirement set forth in Listing Rule 5450(b)(1)(C). Under Nasdaq Listing Rules,
we are provided with a compliance period of 180 calendar days, or until June 19, 2023 to regain compliance. To regain compliance under
Nasdaq Listing Rules, our MVPHS must close at $5,000,000 for a minimum of ten (10) consecutive business days. In the event we do not
regain compliance by June 19, 2023, we anticipate receiving a letter from Nasdaq Listing Qualifications seeking our delisting in which
case, we will appeal to the Nasdaq hearings panel. On June 28, 2023, we received notification from Nasdaq Listing Qualifications that
because we transferred to The Nasdaq Capital Market, we have regained compliance with Listing Rule 5550(a)(5) because our MVPHS has been
$1,000,000 or greater for at least 10 consecutive business days.
On February 8, 2023, we received
notice from Nasdaq Listing Qualifications stating that due to the resignation of Soren G. Jensen from the Company’s board and audit
committee, effective on February 4, 2023, the Company no longer complies with Nasdaq’s Listing Rules’ independent director
and audit committee requirements as set forth in Nasdaq Listing Rules 5605(b)(1)(A) and 5605(c)(4) which requires a majority of the board
of directors to be comprised of independent directors and an audit committee of at least three independent directors. The February 8,
2023 Nasdaq Listing Qualification notice has no immediate effect on the listing or trading of the Company’s Common Stock on the
Nasdaq Global Market. In accordance with Nasdaq Listing Rules, we have a cure period to regain compliance as follows: (i) until the earlier
of the Company’s next annual shareholders’ meeting or February 4, 2024; or (ii) if the next annual shareholders’ meeting
is held before August 3, 2023, then the Company must evidence compliance no later than August 3, 2023. The Company’s board is currently
seeking to appoint a new independent director who will also qualify under the Nasdaq Listing Rules to serve as a member of the audit
committee, and intends to regain compliance with the Nasdaq Listing Rules as soon as practicable.
On June 6, 2023, we received
a letter from the Nasdaq hearings panel that granted the Company’s request for continued listing on the Nasdaq Stock Market LLC
until July 1, 2023 and the Company’s transfer to The Nasdaq Capital Market, subject to the following conditions: (1) on or before
July 1, 2023, the Company shall demonstrate compliance with Nasdaq Listing Rule 5450(b)(1) dealing with primary equity securities listed
on the Global Market, and on or before July 1, 2023, the Company shall demonstrate compliance with Nasdaq Listing Rule 5450(a)(1) dealing
with a minimum bid of $1.00 per share. The Nasdaq hearings panel reserves the right to reconsider its grant based on any event, condition
or circumstance that exists or develops that would make continue listing of the Company’s securities on The Nasdaq Stock Market
inadvisable or unwarranted. The Company intends to seek further clarification from the Nasdaq hearings panel as to the timing of meeting
the conditions set forth in their letter. No assurance can be given that the Company will meet the conditions set forth in the Nasdaq
hearings panel letter and that our shares of common stock will continue to be listed on The Nasdaq Stock Market LLC. On June 14, 2023,
we received a clarification letter from Nasdaq granting the Company’s request for continued listing on The Nasdaq Capital Market
and transfer to The Nasdaq Capital Market, subject to the following: (1) on or before July 10, 2023, the Company will demonstrate compliance
with Listing Rule 5550(a)(2); and (2) on or before July 14, 2023, the Company will demonstrate compliance with Listing Rule 5550(b).
In the event we do not meet The Nasdaq Capital Market listing conditions set forth by the Nasdaq hearings panel, we intend to go back
to the Nasdaq hearings panel to seek additional time to comply with such conditions.
If we fail to meet the Nasdaq
listing requirements and do not regain compliance, we will be subject to delisting by Nasdaq. In the event our Common Stock is no longer
listed for trading on The Nasdaq Capital Market, our trading volume and share price may decrease and you may have a difficult time selling
your shares of Common Stock. In addition, we may experience difficulties in raising capital which could materially adversely affect our
operations and financial results. Further, delisting from Nasdaq markets could also have other negative effects, including potential
loss of confidence by partners, lenders, suppliers and employees. Finally, delisting could make it harder for you and the Company to
sell the securities and hard for us to raise capital.
We may not apply the 3i Proceeds in a manner
that will increase the value of your investment.
We intend to use the 3i Proceeds
received in this offering to repurchase a portion of the shares of Series A Preferred Stock owned by 3i, L.P. The use of the 3i Proceeds
to purchase a portion of their shares of Series A Preferred Stock instead of using such proceeds for working capital or otherwise in
furtherance of the Company’s business objectives may not increase the value of your investment. In addition, we intend to use a
portion of the proceeds (other than from 3i, L.P.) from this offering to pay off the 3i June Promissory Note.
There is no public market for the pre-funded
warrants and common warrants to purchase common stock in this offering.
There is no established public
trading market for the pre-funded warrants and common warrants that are being offered in this offering, and we do not expect a market
to develop. In addition, we do not intend to apply to list the pre-funded warrants and common warrants on any national securities exchange
or other trading market. Without an active market, the liquidity of the pre-funded warrants and common warrants will be limited.
The holders of the pre-funded warrants
and common warrants will have no rights as common stockholders until such holders exercise their pre-funded warrants or common warrants
and acquire shares of our common stock.
Except by virtue of such
holder’s ownership of shares of our Common Stock, the holder of a pre-funded warrant and common warrant will not have the rights
or privileges of a holder of our Common Stock, including any voting rights, until such holder exercises the pre-funded warrant and common
warrant. Upon exercise of the pre-funded warrant or common warrant, the holders will be entitled to exercise the rights of a stockholder
of Common Stock only as to matters for which the record date occurs after the exercise date.
Because the public offering price of our
securities will be substantially higher than the pro forma as adjusted net tangible book value per share of our outstanding common stock
following this offering, new investors will experience immediate and substantial dilution.
The combined public offering
price of the Common Stock and pre-funded warrants are substantially higher than the pro forma as adjusted net tangible book value per
share of our Common Stock immediately following this offering based on the total value of our tangible assets less our total liabilities.
The sale of 357,223 shares of Common Stock and common warrants in this offering at the combined public offering price of $4.50 and the
sale of 2,087,222 pre-funded warrants and common warrants at a combined public offering price of $4.499, will cause an immediate and substantial
dilution of $1.71 in the pro forma as adjusted net tangible book value per share of Common Stock as of March 31, 2023. Therefore, as a
result of your purchase of shares of our Common Stock and pre-funded warrants in this offering, you will pay a price per share that substantially
exceeds our pro forma as adjusted net tangible book value per share after this offering. See the section titled “Dilution”
below for a more detailed discussion of the dilution you will incur if you participate in this offering.
Upon the closing of this offering, the
conversion price of the shares of Series A Preferred Stock, exercise price of some of the April 2023 Warrants and Exchange Warrant will
be subject to adjustment based on the public price of this offering.
On June 6, 2023, 3i, LP and
Company entered into the 3i Waiver Agreement pursuant to which 3i, LP 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 (i) amending the conversion price of the Series A Preferred Stock to equal the public offering price of
the shares of Common Stock in this offering if the public offering price of the shares of Common Stock in this offering is lower than
the then-current conversion price of the Series A Preferred Stock; (ii) participating in this offering, at its option, under the same
terms and conditions as other investors, of which proceeds from 3i, LP’s participation will be used to redeem a portion of shares
of Series A Preferred Stock 3i, LP received from the Exchange Agreement; and (iii) (1) the repricing of the exercise price of the April
2023 Common Warrant to the exercise price of the common warrant offered in this offering if the exercise price of the common warrant is
lower than the then-current April 2023 Common Warrant exercise price; and (2) extending the termination date of the April 2023 Common
Warrant to the date of termination of the common warrants offered in this offering. As a result of 3i Waiver Agreement, upon the consummation
of this offering, the conversion price of the Series A Preferred Stock will be reduced to $4.50 and the exercise price of 3i, LP’s
April 2023 Common Warrant will be reduced to $4.50 per share and the exercise period extended to on or around July 10, 2028. In addition,
the Exchange Warrant provides for an adjustment of the shares of common stock underlying the warrant and exercise price if the Company
sells securities below the exercise price of the Exchange Warrant of $30.00. As a result, upon the consummation of this offering, the
exercise price of the Exchange Warrant will be reduce to $4.50, subject to further adjustment. The exercise of such securities based on
the downward adjusted exercise price or conversion price will result in issuance of additional securities and additional dilution to our
stockholders.
We received a request for documents from
the SEC in the investigation known as “In the Matter of Allarity Therapeutics, Inc.,” and, separately, a letter from Nasdaq,
regarding the same matter, the consequences of which are unknown.
In January 2023, we received
a request to produce documents from the SEC that stated that the staff of the SEC is conducting an investigation known as “In the
Matter of Allarity Therapeutics, Inc.” to determine if violations of the federal securities laws have occurred. The documents requested
appear to focus on submissions, communications and meetings with the FDA regarding our NDA for Dovitinib or Dovitinib-DRP. The SEC letter
also stated that investigation is a fact-finding inquiry and does not mean that that the SEC has concluded that the Company or anyone
else has violated the laws. As a result of the disclosure of the SEC request, the Nasdaq staff has requested us to provide them with
the information requested by the SEC. We are providing the information requested by the SEC and Nasdaq staff.
We do not know when the SEC’s
or Nasdaq’s investigation will be concluded or what action, if any, might be taken in the future by the SEC, Nasdaq or their staff
as a result of the matters that are the subject to its investigation or what impact, if any, the cost of continuing to respond to inquiries
might have on our financial position or results of operations. We have not established any provision for losses in respect of this matter.
In addition, complying with any such future requests by the SEC or Nasdaq for documents or testimony would distract the time and attention
of our officers and directors or divert our resources away from ongoing business matters. This investigation may result in significant
legal expenses, the diversion of management’s attention from our business, could cause damage to our business and reputation, and
could subject us to a wide range of remedies, including enforcement actions by the SEC or delisting proceedings by Nasdaq. There can
be no assurance that any final resolution of this or any similar matters will not have a material adverse effect on our financial condition
or results of operations.
If our business developments and achievements
do not meet the expectations of investors or securities analysts or for other reasons the expected benefits do not occur, the market
price of our common stock traded on Nasdaq may decline.
If our business developments
and achievements do not meet the expectations of investors or securities analysts, the market price of Common Stock traded on Nasdaq
may decline. The trading price of our Common Stock could be volatile and subject to wide fluctuations in response to various factors,
some of which are beyond our control. Any of the factors listed below could have a negative impact on your investment in our securities
and our securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our
securities may not recover and may experience a further decline.
Factors affecting the trading
price of our securities may include:
|
● |
adverse regulatory decisions; |
|
● |
any delay in our regulatory
filings for our therapeutic candidates and any adverse development or perceived adverse development with respect to the applicable
regulatory authority’s review of such filings, including without limitation the FDA’s issuance of a “refusal to
file” letter or a request for additional information; |
|
● |
the impacts of the ongoing COVID-19 pandemic
and related restrictions as they may related to our clinical trials; |
|
● |
the commencement, enrollment
or results of any future clinical trials we may conduct, or changes in the development status of our therapeutic candidates; |
|
● |
adverse results from, delays
in or termination of clinical trials; |
|
● |
unanticipated serious safety
concerns related to the use of our therapeutic candidates; |
|
● |
lower than expected market
acceptance of our therapeutic candidates following approval for commercialization, if approved; |
|
● |
changes in financial estimates
by us or by any securities analysts who might cover our securities; |
|
● |
conditions or trends in
our industry; |
|
● |
changes in the market valuations
of similar companies; |
|
● |
stock market price and
volume fluctuations of comparable companies and, in particular, those that operate in the biopharmaceutical industry; |
|
● |
publication of research
reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts; |
|
● |
announcements by us or
our competitors of significant acquisitions, strategic partnerships or divestitures; |
|
● |
announcements of investigations
or regulatory scrutiny of our operations or lawsuits filed against us; |
|
● |
investors’ general
perception of our business prospects or management; |
|
● |
recruitment or departure
of key personnel; |
|
● |
overall performance of
the equity markets; |
|
● |
trading volume of our Common
Stock; |
|
● |
disputes or other developments
relating to intellectual property rights, including patents, litigation matters and our ability to obtain, maintain, defend, protect
and enforce patent and other intellectual property rights for our technologies; |
|
● |
significant lawsuits, including
patent or stockholder litigation; |
|
● |
proposed changes to healthcare
laws in the U.S. or foreign jurisdictions, or speculation regarding such changes; |
|
● |
general political and economic
conditions; and |
|
● |
other events or factors,
many of which are beyond our control. |
In addition, in the past,
stockholders have initiated class action lawsuits against biopharmaceutical and biotechnology companies following periods of volatility
in the market prices of these companies’ stock. Such litigation, if instituted against us, could cause us to incur substantial
costs and divert management’s attention and resources from our business.
The price of our common stock has fluctuated
substantially.
The price of our Common Stock
has fluctuated substantially. Therefore, some investors who have purchased our Common Stock at high prices face the risk of losing a
significant portion of their original investment if they have to sell at a time when the price of our Common Stock has declined. In addition,
the volatility of our stock price could cause other consequences including causing a short squeeze due to the difference in investment
decisions by short sellers of Common Stock and buy-and-hold decisions of longer investors.
You should consider an investment
in our securities to be risky, and you should invest in our securities only if you can withstand a significant loss and wide fluctuations
in the market value of your investment. Some factors that may cause the market price of our Common Stock to fluctuate, in addition to
the other risks mentioned in this “Risk Factors” section and elsewhere in this prospectus, are:
|
● |
sale of
our Common Stock by our stockholders, executives, and directors; |
|
● |
volatility
and limitations in trading volumes of our shares of Common Stock; |
|
● |
our ability
to obtain financings to conduct and complete research and development activities including, but not limited to, our proposed clinical
trials, and other business activities; |
|
● |
possible
delays in the expected recognition of revenue due to lengthy and sometimes unpredictable sales timelines; |
|
● |
the timing
and success of introductions of new drugs by our competitors or any other change in the competitive dynamics of our industry, including
consolidation among competitors, customers or strategic partners; |
|
● |
network
outages or security breaches; |
|
● |
the lack
of market acceptance and sales growth for our therapeutic candidates, if any, that receive marketing approval; |
|
● |
our ability
to secure resources and the necessary personnel to conduct clinical trials on our desired schedule; |
|
● |
commencement,
enrollment or results of our clinical trials for our therapeutic candidates or any future clinical trials we may conduct; |
|
● |
changes
in the development status of our therapeutic candidates; |
|
● |
any delays
or adverse developments or perceived adverse developments with respect to the FDA’s review of our planned NDA, PMA and clinical
trials; |
|
● |
any delay
in our submission for studies or drug approvals or adverse regulatory decisions, including failure to receive regulatory approval
for our therapeutic candidates; |
|
● |
unanticipated
safety concerns related to the use of our therapeutic candidates; |
|
● |
failures
to meet external expectations or management guidance; |
|
● |
changes
in our capital structure or dividend policy and future issuances of securities; |
|
● |
sales of large blocks of Common Stock by our stockholders, including,
but not limited to, sales by 3i, LP as a result of the conversion of Series A Preferred Stock and upon the exercise of the Exchange Warrant
and exercise of our April 2023 Common Warrants issued in connection with the April Offering; |
|
● |
announcements
and events surrounding financing efforts, including debt and equity securities; |
|
● |
our inability
to enter into new markets or develop new drugs; |
|
● |
competition
from existing technologies and drugs or new technologies and drugs that may emerge; |
|
● |
announcements
of acquisitions, partnerships, collaborations, joint ventures, new drugs, capital commitments, or other events by us or our competitors; |
|
● |
changes
in general economic, political and market conditions in or any of the regions in which we conduct our business; |
|
● |
changes
in industry conditions or perceptions; |
|
● |
changes
in valuations of similar companies or groups of companies; |
|
● |
analyst
research reports, recommendation and changes in recommendations, price targets, and withdrawals of coverage; |
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● |
departures
and additions of key personnel; |
|
● |
disputes
and litigations related to intellectual properties, proprietary rights, and contractual obligations; |
|
● |
changes
in applicable laws, rules, regulations, or accounting practices and other dynamics; and |
|
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other
events or factors, many of which may be out of our control. |
In addition, if the market
for stocks in our industry or industries related to our industry, or the stock market in general, experiences a loss of investor confidence,
the trading price of our Common Stock could decline for reasons unrelated to our business, financial condition and results of operations.
If any of the foregoing occurs, it could cause our stock price to fall and may expose us to lawsuits that, even if unsuccessful, could
be costly to defend and a distraction to management.
We are subject to penalties if we fail
to meet certain conditions of the Certificate of Designations of the Series A Preferred Stock.
We are authorized to issue
up to 500,000 shares of preferred stock, 20,000 shares of which have been designated as Series A Preferred Stock. As of July 5, 2023,
there are 6,047 shares of Series A Preferred Stock outstanding. We could issue a series of preferred
stock that could, depending on the terms of the series, impede or discourage an acquisition attempt or other transaction that some, or
a majority, of the holders of our Common Stock might believe to be in their best interests or in which the holders of our Common Stock
might receive a premium over the market price of the Common Stock. Additionally, the issuance of preferred stock may adversely affect
the rights of holders of our Common Stock by restricting dividends on our Common Stock, diluting the voting power of our Common Stock
or subordinating the liquidation rights of our Common Stock.
If certain defined “triggering
events” defined in the Series A COD occur, such as a failure to convert the Series A Preferred Stock into Common Stock when a conversion
right is exercised, failure to issue our Common Stock when the Exchange Warrant is exercised, failure to declare and pay to any holder
any dividend on any dividend date, then we may be required to pay a dividend on the stated value of each share of Series A Preferred
Stock in the amount of 18% per annum, but paid quarterly in cash, so long as the triggering event is continuing.
As a result of these or other
factors, the issuance of the Series A Preferred Stock could diminish the rights of holders of our Common Stock, or delay or prevent a
change of control of the Company, and could have an adverse impact on the market price of our Common Stock.
Our continued operations are dependent
on us raising capital.
We will need to raise additional
capital after this offering to support our operations and execute on our business plan. We will be required to pursue sources of additional
capital through various means, including debt or equity financings. Any new securities that we may issue in the future may be sold on
terms more favorable for our new investors than the terms of this offering. Newly issued securities may include preferences, superior
voting rights, and the issuance of warrants or other convertible securities that will have additional dilutive effects. We cannot assure
that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable
to us and may cause existing shareholders both book value and ownership dilution. Further, we may incur substantial costs in pursuing
future capital and/or financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and
other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible
notes and warrants, which will adversely impact our financial condition and results of operations. Our ability to obtain needed financing
may be impaired by such factors as the weakness of capital markets, and the fact that we have not been profitable, which could impact
the availability and cost of future financings. If the amount of capital we are able to raise from financing activities is not sufficient
to satisfy our capital needs, we may have to reduce our operations accordingly.
Future sales, or the perception of future
sales, by us or our stockholders in the public market could cause the market price for our common stock to decline.
The sale of shares of our
Common Stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of
our Common Stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity
securities in the future at a time and at a price that it deems appropriate. The holders of the Series A Preferred Stock, Exchange Warrant,
and April 2023 Common Warrants issued in connection with the April Offering may convert, exercise or exchange their securities into shares
of Common Stock which sales thereof could adversely affect the market price of shares of our Common Stock.
Because there are no current plans to pay
cash dividends on shares of our common stock for the foreseeable future, you may not receive any return on investment unless you sell
your shares of common stock for a price greater than that which you paid for it.
We intend to retain future
earnings, if any, for future operations, expansion and debt repayment and have no current plans to pay any cash dividends for the foreseeable
future. Any decision to declare and pay dividends as a public company in the future will be made at the discretion of our Board of Directors
and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions and
other factors that our Board of Directors may deem relevant. In addition, our ability to pay dividends may be limited by covenants of
any existing and future outstanding indebtedness we or our subsidiaries incur or from restrictions imposed by any preferred stock we
may issue in the future. As a result, you may not receive any return on an investment in our Common Stock unless you sell your shares
of Common Stock for a price greater than that which you paid for it.
We may incur substantial penalties if we
fail to maintain the effectiveness of our registration statement covering the resale of our common stock issued to 3i, LP upon conversion
of our Series A Preferred Stock.
Under the terms of the Amended
RRA with 3i, LP, if we fail to maintain the effectiveness of the registration statement beyond defined allowable grace periods, we will
incur certain registration delay payments equal to 2% of 3i, LP’s investment that has not yet been converted to Common Stock and
sold pursuant to the registration statement upon our failure to maintain the effectiveness of the registration statement and every thirty
(30) days thereafter. For example, as a result of the Company’s delay in filing its periodic reports with the SEC in 2022, a Triggering
Event under Section 5(a)(ii) of the Original Series A COD, occurred on or about April 29, 2022, and that in consideration for the Registration
Delay Payments that the Company was obligated to pay under the Amended RRA, and additional amounts the Company was obligated to pay under
the Original Series A COD, together with 3i, LP’s legal fees incurred in the preparation of the Forbearance Agreement and Waiver
dated April 27, 2022, the Company agreed to pay 3i, LP an aggregate amount of $538,823 which was paid pursuant to that certain Forbearance
Agreement and Waiver with 3i, LP. In addition, if we fail to file a registration statement related to the Exchange Shares and Exchange
Warrants by a specific date pursuant to the Modification and Exchange Agreement, we will incur registration delay payments equal to 2%
of 3i, LP’s investment on the date of the filing failure and each thirty-day period thereafter until the filing failure is cured.
There is no assurance that an active and
liquid trading market in our common stock will develop.
Even though our shares of
Common Stock are listed on Nasdaq, there can be no assurance any broker will be interested in trading our Common Stock. Therefore, it
may be difficult to sell any shares you acquire if you desire or need to sell them. We cannot provide any assurance that an active and
liquid trading market in our Common Stock will develop or, if developed, that the market will continue.
Our Certificate of Incorporation and our
by-laws, and Delaware law may have anti-takeover effects that could discourage, delay or prevent a change in control, which may cause
our stock price to decline.
Our Certificate of Incorporation
and our by-laws could make it more difficult for a third-party to acquire us, even if closing such a transaction would be beneficial to
our stockholders. We are authorized to issue up to 500,000 shares of preferred stock, of which 20,000 shares have been designated as Series
A Preferred Stock, of which 6,047 are outstanding as of July 5, 2023, 200,000 shares have been designated as Series B Preferred Stock,
$0.0001 par value per share (“Series B Preferred Stock”) of which none are issued and outstanding, 50,000 shares have been
designated as Series C Preferred Stock, none of which is issued and outstanding. The remaining preferred stock may be issued in one or
more series, the terms of which may be determined at the time of issuance by our Board of Directors without further action by stockholders.
The terms of any series of preferred stock may include voting rights (including the right to vote as a series on particular matters),
preferences as to dividend, liquidation, conversion and redemption rights and sinking fund provisions. The issuance of any preferred stock
could materially adversely affect the rights of the holders of our Common Stock, and therefore, reduce the value of our Common Stock.
In particular, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell
our assets to, a third-party and thereby preserve control by the present management.
Provisions of our Certificate
of Incorporation, by-laws and Delaware law also could have the effect of discouraging potential acquisition proposals or making a tender
offer or delaying or preventing a change in control, including changes a stockholder might consider favorable. Such provisions may also
prevent or frustrate attempts by our stockholders to replace or remove our management. In particular, our Certificate of Incorporation
and bylaws and Delaware law, as applicable, among other things:
|
● |
provide
for a classified board of directors; |
|
● |
provide
the board of directors with the ability to alter the by-laws without stockholder approval; |
|
● |
establishing
advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon
at stockholder meetings; and |
|
● |
provide
that vacancies on the board of directors may be filled by a majority of directors in office, although less than a quorum. |
Our Certificate of Incorporation designates
the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for
the District of Delaware) as the exclusive forum for certain types of claims that the federal courts do not have exclusive jurisdiction,
which may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable.
Article Fourteenth of our
Certificate of Incorporation specifies that unless we consent in writing to the selection of an alternative forum, the court of Chancery
of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware)
shall, to the fullest extent permitted by law, be the sole and exclusive forum for: (a) any derivative action or proceeding brought on
our behalf; any action asserting a claim of breach of fiduciary duty owed by any of our directors, officers or other employees to us
or to our stockholders; (b) any action asserting a claim against us arising pursuant to the Delaware General Corporation Law (“DGCL”)
or Certificate of Incorporation or our by-laws; or (c) or any action asserting a claim against us that is governed by the internal affairs
doctrine. There is uncertainty as to whether a court would enforce this provision with respect to claims under the Securities Act where
the state courts have concurrent jurisdiction and our stockholders cannot waive compliance with the federal securities laws and the rules
and regulations thereunder. The exclusive forum provision may limit a stockholder’s ability to bring a claim in a judicial forum
that it finds favorable for disputes against us and our directors, officers and other employees, which may discourage such lawsuits,
or may require increased costs to bring a claim. The exclusive forum provision does not apply to actions brought to enforce a duty or
liability created by the Exchange Act or any other claim for which federal courts have exclusive jurisdiction.
General Risk Factors
We are an “emerging growth company”
and a “smaller reporting company” and will be able to avail ourselves of reduced disclosure requirements applicable to emerging
growth companies and smaller reporting companies, which could make our common stock less attractive to investors.
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 $1.235 billion or
more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our December 2021
offering; (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 this prospectus and our periodic reports
and proxy statements. We will continue to be a smaller reporting company 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.
We may be at risk of securities class action
litigation.
We may be at risk of securities
class action litigation. In the past, biotechnology and pharmaceutical companies have experienced significant stock price volatility,
particularly when associated with binary events such as clinical trials and drug approvals. If we face such litigation, it could result
in substantial costs and a diversion of management’s attention and resources, which could harm our business and results in a decline
in the market price of our Common Stock.
Financial reporting obligations of being
a public company in the United States require well defined disclosure and procedures and internal control over financial reporting
that Allarity A/S did not have as a Danish company and that are expensive and time-consuming requiring our management to devote substantial
time to compliance matters.
As a publicly traded company
in the U.S., we will continue to incur significant additional legal, accounting and other expenses that Allarity A/S did not incur as
a Danish company. For example, as a Danish company with our ordinary shares listed on the Nasdaq First North Growth Market in Stockholm,
we were not required to have, and did not have, well defined disclosure controls and procedures and internal controls over financial
reporting that are generally required of U.S. publicly held companies. In connection with our review of our previously existing
internal controls as part of our preparations for becoming a U.S. publicly traded company, we determined that our internal control
over financial reporting for prior periods were ineffective and included material weaknesses that needed to be remedied. Although we
have taken, and are continuing to take, additional steps to remedy these material weaknesses in order to assure compliance with our future
financial reporting obligations, there can be no assurance that we will be able to do so in a timely manner or at all, or that additional
material weaknesses may not exist.
These reporting obligations
associated with being a public company in the United States require significant expenditures and will place significant demands
on our management and other personnel, including costs resulting from our reporting obligations under the Securities Exchange Act of 1934,
as amended, (the “Exchange Act”), and the rules and regulations regarding corporate governance practices, including
those under the Sarbanes-Oxley Act of 2002, as amended, (the “Sarbanes-Oxley Act”), the Dodd-Frank Wall Street
Reform and Consumer Protection Act, as amended, (the “Dodd-Frank Act”), and the listing requirements of the stock exchange
on which our securities are to be listed. These rules require the establishment and maintenance of effective disclosure controls and
procedures and internal controls over financial reporting and changes in corporate governance practices, among many other complex rules
that are often difficult to implement, monitor and maintain compliance with. Moreover, despite recent reforms made possible by the JOBS
Act, the reporting requirements, rules, and regulations will make some activities more time-consuming and costly, particularly after
we are no longer an “emerging growth company.” In addition, we expect these rules and regulations to make it more difficult
and more expensive for us to obtain director and officer liability insurance. Our management and other personnel will need to devote
a substantial amount of time to ensure that we comply with all these requirements and to keep pace with new regulations, otherwise we
may fall out of compliance and risk becoming subject to litigation or being delisted, among other potential problems.
If we fail to comply with
the rules under the Sarbanes-Oxley Act related to our disclosure controls and procedures or internal controls over our financial reporting
in the future, or, if we discover additional material weaknesses and other deficiencies in our internal controls over financial reporting,
our stock price could decline significantly and raising capital could be more difficult.
Section 404 of the Sarbanes-Oxley
Act requires annual management assessments of the effectiveness of our internal controls over financial reporting after a transition
period ending with our second annual report on Form 10-K filed under Section 13(a) of the Exchange Act. If we fail
to comply with the rules under the Sarbanes-Oxley Act related to disclosure controls and procedures in the future, or, if in the future
we discover additional material weaknesses and other deficiencies in our internal controls over financial reporting, our stock price
could decline significantly and raising capital could be more difficult.
SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS
This prospectus contains
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks
and uncertainties. Forward-looking statements provide current expectations or forecasts of future events. Forward-looking statements
include statements about Allarity’s expectations, beliefs, plans, objectives, intentions, assumptions and other statements that
are not historical facts. The words “anticipates,” “believe,” “continue,” “could,” “estimate,”
“expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,”
“predicts,” “project,” “should,” “would” and similar expressions may identify forward-looking
statements, but the absence of these words does not mean that a statement is not forward-looking. These statements speak only as of the
date of this prospectus and involve known and unknown risks, uncertainties and other important factors that may cause our actual results,
performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the
forward-looking statements. These statements are based upon information available to us as of the date of this prospectus, and while
we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and these statements
should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.
In addition to factors identified under the section titled “Risk Factors” in this prospectus, factors that may impact such
forward-looking statements include:
|
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our plans to develop and
commercialize our drug candidates; |
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|
|
|
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our ability to generate
any revenue or become profitable; |
|
|
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the initiation, cost, timing,
progress and results of our current and future preclinical studies and clinical trials, as well as our research and development programs; |
|
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the impacts of the ongoing
COVID-19 pandemic and related restrictions as they may related to our clinical trials; |
|
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|
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our estimates regarding
expenses, future revenue, capital requirements and needs for additional financing; |
|
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|
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our ability to meet the Nasdaq continued listing standards; |
|
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|
|
● |
our ability to successfully
acquire or in-license additional product candidates on reasonable terms; |
|
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|
● |
our ability to maintain
and establish collaborations or obtain additional funding; |
|
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|
|
● |
our ability to obtain regulatory
approval of its current and future drug candidates; |
|
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|
|
● |
our expectations regarding
the potential market size and the rate and degree of market acceptance of such drug candidates; |
|
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|
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our expectations regarding
our ability to fund operating expenses and capital expenditure requirements with our existing cash and cash equivalents, and future
expenses and expenditures; |
|
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|
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our
ability to secure sufficient funding and alternative source of funding to support when needed and
on terms favorable to us to support our business objective, product development, other operations
or commercialization efforts;
|
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our
ability to enroll patients in our clinical trials, our clinical development activities;
|
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our ability to retain key
employees, consultants and advisors; |
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our ability to retain reliable
third parties to perform the chemistry work associated with our drug discovery, preclinical activities and to conduct our preclinical
studies and clinical trials in a satisfactory manner; |
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our ability to secure reliable
on third party manufacturers to produce clinical and commercial supplies of API for our therapeutic candidates; |
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our ability to obtain,
maintain, protect and enforce sufficient patent and other intellectual property rights for our therapeutic candidates and technology; |
|
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our anticipated strategies
and our ability to manage our business operations effectively; |
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the impact of governmental
laws and regulations; |
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the possibility that we
may be adversely impacted by other economic, business, and/or competitive factors; and |
|
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any future currency exchange
and interest rates. |
These forward-looking statements
are based on information available as of the date of this prospectus, and current expectations, forecasts and assumptions, and involve
a number of risks and uncertainties. We do not assume any obligation to update any forward-looking statements, Accordingly, forward-looking
statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update
forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information,
future events or otherwise, except as may be required under applicable securities laws.
USE OF PROCEEDS
We estimate that the net
proceeds from this offering will be approximately $9.888 million after deducting the placement agent fees and estimated offering expenses
payable by us, assuming no exercise of the pre-funded warrants or common warrants issued in connection with this offering.
We intend to use a portion
of the net proceeds of this offering to make payments under each of the Novartis and Eisai license agreements, to conduct our clinical
trials, to pay off the 3i June Promissory Note, to pay account payables and accrued liabilities outstanding, and for working capital and
general corporate purposes. The payments from net proceeds will be subject to the discretion of and timing by the Board of Directors.
As of July 5, 2023, we had approximately $8,886,000 in accounts payables and accrued liabilities.
In addition, 3i, LP will participate
in this offering on the same terms and conditions as other purchasers, and we intend to use the 3i Proceeds, to repurchase a portion of
the shares of Series A Preferred Stock owned by 3i, LP.
MARKET INFORMATION FOR
OUR SECURITIES AND DIVIDEND POLICY
Our Common Stock is listed
on the Nasdaq Capital Market under the symbol “ALLR.” Our Common Stock previously was listed on the Nasdaq Global Market prior
to June 27, 2023. Prior to the consummation of the Recapitalization Share Exchange on December 20, 2021, Allarity Therapeutics A/S ordinary
shares were listed on the Nasdaq First North Growth Market: Stockholm under the symbol “ALLR:ST.” As of July 5, 2023, there
was one (1) holder of record of our Common Stock. The foregoing number of stockholders of record does not include an unknown number of
stockholders who hold their stock in “street name.”
On November 22, 2022, our
Board declared a dividend of Series B Preferred Stock to the stockholders of record of Common Stock and Series A Preferred Stock as of
December 5, 2022. On December 5, 2022, each share of Common Stock then outstanding received 0.016 of a share of Series B Preferred Stock
and each share of Series A Preferred Stock outstanding received 1.744 shares of Series B Preferred Stock. All Series B Preferred Stock
were redeemed at $0.01 per share. Pursuant to the terms of the Original Series A COD and Certificate of Designations of Series C Preferred
Stock, the Company recorded a deemed dividend of 8% on the Series A Preferred Stock of $1,572,000 for the year ended December 31, 2022
and a deemed dividend of 5% on the Series C Preferred Stock of $4,000,000 for the quarter ended March 31, 2023.
We do not anticipate declaring
or paying, in the foreseeable future, any cash dividends on our Common Stock. We intend to retain all available funds and future earnings,
if any, to fund the development and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable
future. Any future determination regarding the declaration and payment of dividends, if any, will be at the discretion of our Board of
Directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions,
capital requirements, business prospects and other factors our Board of Directors may deem relevant.
CAPITALIZATION
The following table sets forth our cash and capitalization
as of March 31, 2023:
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on an actual basis reflecting
the Share Consolidations; |
|
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on a pro
forma basis giving effect to the (i) conversion of 8,214 shares of Series A Preferred Stock into 223,857 shares of Common Stock;
(ii) exchange of 50,000 shares of Series C Preferred Stock for 5,577 shares of Series A Preferred Stock; (iii) redemption
of 1,550 shares of Series A Preferred Stock for the cancellation of outstanding indebtedness under secured promissory notes issued
to 3i, LP and amounts owed to 3i, LP for the alternative conversion amount relating to the amount due to 3i LP upon exercise of certain
Series A Preferred Stock; (iv) issuance of 486 shares of Series A Preferred Stock in redemption of $350,000 owed to 3i, LP pursuant
to Secured Promissory Note dated April 19, 2023; (v) issuance of 71,734 shares of Common Stock, 178,267 pre-funded warrants
and 250,000 April 2023 Common Warrants for gross process of $7.5 million in the April Offering; (vi) issuance of 178,267 shares of
Common Stock upon exercise of 178,267 pre-funded warrants at $0.001 per share; (vii) bridge loans on April 11, 2023 and April 19,
2023 of $700,000 in the aggregate and deemed dividend on Series C Preferred Stock; (viii) removal of redemption feature from
Series A Preferred Stock; and (ix) issuance of 3i June Promissory Note; and |
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on a pro forma as adjusted basis to give effect to the issuance and sale of 357,223 shares of our Common Stock and common warrants to purchase up to 357,223 shares of our Common Stock in this offering at a combined public offering price of $4.50 per share of Common Stock and common warrant and the sale of 2,087,222 pre-funded warrants and 2,087,222 common warrants at a combined public offering price of $4.499, less placement agent fees and estimated offering expenses payable by us, for total net proceeds of approximately $9.888 million, assuming no exercise of common warrants and no exercise of pre-funded warrants. |
You should read the forgoing
table together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Company”
and our consolidated financial statements and related notes appearing in our Form 10-K for the year ended December 31, 2022, and Form
10-Q for the quarterly period ended March 31, 2023, incorporated by reference to this prospectus.
| |
As of March 31, 2023 | |
(In thousands, except share data) | |
Actual (unaudited) | | |
Pro Forma | | |
Pro Forma As Adjusted | |
Cash | |
$ | 295 | | |
$ | 3,160 | | |
$ | 9,981 | |
Total long-term liabilities | |
| 1,453 | | |
| 1,453 | | |
| 1,453 | |
Redeemable preferred stock (500,000 shares authorized) | |
| | | |
| | | |
| | |
Series A Convertible Preferred stock, $0.0001 par value (20,000 shares designated) shares issued and outstanding, actual and pro forma and pro forma as adjusted; 9,748, 6,047 and nil | |
| 1,436 | | |
| — | | |
| — | |
Series B Preferred stock $0.0001 par value (200,000 shares designated); shares issued and outstanding, actual and pro forma and pro forma as adjusted; nil, nil and nil | |
| — | | |
| — | | |
| — | |
Series C Convertible Preferred stock, $0.0001 par value (50,000 shares designated) shares issued and outstanding, actual and pro forma and pro forma as adjusted; 50,000, nil and nil | |
| 1,327 | | |
| — | | |
| — | |
Total Redeemable Preferred stock | |
| 2,763 | | |
| — | | |
| — | |
Shareholders’ (deficit) equity | |
| | | |
| | | |
| | |
Series A Convertible Preferred stock, $0.0001 par value (20,000 shares designated) shares issued and outstanding, actual, pro forma, and pro forma as adjusted: 0, 6,047, and 6,047 | |
| — | | |
| 57 | | |
| 57 | |
Common Stock, $0.0001 par value, 750,000,000 shares authorized, shares issued and outstanding, actual; shares issued and outstanding, pro forma and pro forma as adjusted; 29,710; 503,566 and 860,789 | |
| — | | |
| — | | |
| - | |
Additional paid-in capital | |
| 83,437 | | |
| 91,687 | | |
| 101,575 | |
Accumulated other comprehensive loss | |
| (637 | ) | |
| (637 | ) | |
| (637 | ) |
Accumulated Deficit | |
| (85,902 | ) | |
| (85,934 | ) | |
| (85,934 | ) |
Total Stockholders’ (deficit) equity | |
| (3,102 | ) | |
| 5,172 | | |
| 15,061 | |
Total Capitalization | |
$ | (1,649 | ) | |
$ | 6,625 | | |
$ | 16,514 | |
The table and discussion above
are based on 29,710 shares of Common Stock outstanding as of March 31, 2023, and excludes the following:
| ● | 439
shares of Common Stock issuable pursuant to options outstanding as of March 31, 2023,
with a weighted-average exercise price $7,633.85; |
| | |
| ● | 1,401
shares of Common Stock available under our 2021 Plan as of March 31, 2023; |
| | |
| ● | 315,085 shares of Common Stock issuable upon the exercise of Common
Stock warrants at an exercise price of $30.00 per share, subject to adjustment based on the public offering price in this offering; |
| | |
| ● | 250,000
shares of Common Stock issuable upon the exercise of Common Stock warrants at an exercise
price of $34.00 per share, which may be subject to adjustment based on the public offering
price of this offering; |
| | |
| ● | 816,345
shares of Common Stock issuable upon conversion of 6,047 shares of Series A Preferred Stock
outstanding by 3i, LP, at a conversion price of $8.00, subject to adjustment based on the
public offering price of this offering, and based on a stated value of $1,080 per share;
and |
| | |
| ● | up to 2,087,222 shares of Common Stock issuable upon the exercise of
the pre-funded warrants to be issued in connection with this offering; and |
| | |
| ● | up to 2,444,445 shares of Common Stock issuable upon the exercise of
the common warrants sold in this offering. |
DILUTION
If you invest in our securities
in this offering, your ownership interest will be diluted immediately to the extent of the difference between the combined public offering
price per share of our Common Stock and pre-funded warrant and the pro forma as adjusted net tangible book value per share of our Common
Stock immediately after this offering.
Our historical negative net
tangible book value as of March 31, 2023, was $(12,831,000), or $(431.28) per share of our Common Stock. Our historical negative net
tangible book value is the amount of our total tangible assets less our total liabilities. Historical negative net tangible book value
per share represents our historical negative net tangible book value divided by the 29,710 shares of our Common Stock outstanding as
of March 31, 2023. After giving effect to the (i) conversion of 8,214 shares of Series A Preferred Stock into 223,857 shares of Common
Stock; (ii) exchange of 50,000 shares of Series C Preferred Stock for 5,577 shares of Series A Preferred Stock; (iii) redemption of 1,550
shares of Series A Preferred Stock for the cancellation of outstanding indebtedness under secured promissory notes issued to 3i, LP and
amounts owed to 3i, LP for the alternative conversion amount relating to the amount due to 3i LP upon exercise of certain Series A Preferred
Stock, (iv) issuance of 486 shares of Series A Preferred Stock repayment of $350,000 owed to 3i, LP pursuant to Secured Promissory Note
dated April 19, 2023; (v) issuance of 71,734 shares of Common Stock, 178,267 pre-funded warrants and 250,000 April 2023 Common Warrants
for gross process of $7.5 million in the April Offering; (vi) issuance of 178,267 shares of Common Stock upon exercise of 178,267 pre-funded
warrants at $0.001 per share; (vii) bridge loans on April 11, 2023 and April 19, 2023 of $700,000 in the aggregate and deemed dividend
on Series C Preferred Stock; (viii) removal of redemption feature from Series A Preferred Stock; and (ix) issuance of 3i June Promissory
Note, our pro forma negative net tangible book value would have been $(4,539,000), or $(9.01) per share.
After giving effect to the
sale of Common Stock and common warrants in this offering at a combined public offering price of $4.50 and $4.499 per pre-funded warrant
and common warrant (which equals to the price per share at which the shares of Common Stock are being sold to the public in this offering,
minus the $0.001 per share exercise price of each such pre-funded warrant) (excluding shares of Common Stock issuable upon exercise of
the pre-funded warrants or common warrants or any resulting accounting associated with the exercise of the pre-funded warrants or common
warrants) and after deducting the estimated placement agent fees and estimated offering expenses payable by us, our pro forma as adjusted
net tangible book value as of March 31, 2023 would have been approximately $5,350,000, or $6.21 per share. This represents an immediate
increase in pro forma net tangible book value of $12.58 per share to existing stockholders and an immediate dilution of $3.75 per share
to new investors. The following table illustrates this per share dilution:
Public offering price per share | |
| | | |
$ | 4.50 | |
Historical negative net tangible book value per share as of March 31, 2023 | |
$ | (431.28 | ) | |
| | |
Pro forma negative net tangible book value per share as of March 31, 2023 | |
$ | (9.01 | ) | |
| | |
Increase (decrease) in the net tangible book value per share attributable to this offering | |
$ | 15.22 | | |
| | |
Pro forma as adjusted net tangible book value per share after this offering | |
| | | |
$ | 6.21 | |
Dilution per share to new investors participating in this offering | |
| | | |
$ | 1.71 | |
If holders of pre-funded warrants
exercise the pre-funded warrants offered hereby, then the pro forma as adjusted net tangible book value per share of our Common Stock
after giving effect to this offering would be $1.81 per share, and the dilution in net tangible book value per share to investors purchasing
common stock in this offering would be $2.69 per share.
The table and discussion
above are based on 29,710 shares of Common Stock outstanding as of March 31, 2023, and excludes, as of that date, the following:
| ● | 439
shares of Common Stock subject to the 2021 Equity Incentive Plan pursuant to the options
outstanding at a weighted-average exercise price $7,633.85; |
| | |
| ● | 1,401
shares of Common Stock available under our 2021 Plan as of March 31, 2023; |
| | |
| ● | 315,085
shares of Common Stock issuable upon the exercise of Common Stock warrants at an exercise
price of $30.00 per share, subject to adjustment based on the public offering price
in this offering; |
| | |
| ● | 250,000
shares of Common Stock issuable upon the exercise of Common Stock warrants at an exercise
price of $34.00 per share, which may be subject to adjustment based on public offering
price of this offering; |
| | |
| ● | 816,345 shares of Common Stock issuable upon exercise of conversion
of 6,047 shares of Series A Preferred Stock outstanding by 3i, LP, at a conversion price of $8.00, subject to adjustment based on the
public offering price of this offering and based on the stated value of $1,080 per share; |
| | |
| ● | up to 2,087,222 shares of Common Stock issuable upon the exercise of
the pre-funded warrants to be issued in connection with this offering; and |
| | |
| ● | up to 2,444,445 shares of Common Stock issuable upon the exercise of
the common warrants sold in this offering. |
The foregoing discussion
and table do not take into account further dilution to new investors that could occur upon the exercise of outstanding options, warrants
or other convertible securities having an exercise price per share less than the offering price per share in this offering. In addition,
we may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient
funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or convertible
debt securities, the issuance of these securities could result in further dilution to our stockholders.
DESCRIPTION OF OUR CAPITAL
STOCK
The following description
of the material terms of our capital stock. We urge you to read the applicable provisions of DGCL and our Certificate of Incorporation
and bylaws carefully and in their entirety because they describe your rights as a holder of shares of our capital stock. This description
gives effect to the Share Consolidations.
General
Our purpose is to engage
in any lawful act or activity for which corporations may now or hereafter be organized under the DGCL. Our Certificate of Incorporation
authorizes capital stock consisting of 750,000,000 shares of Common Stock, par value $0.0001 per share, and 500,000 shares of preferred
stock, par value $0.0001 per share, of which 20,000 shares of preferred stock have been designated Series A Convertible Preferred Stock;
200,000 shares of preferred stock have been designated as Series B Preferred Stock; and 50,000 shares of preferred stock have been designated
as Series C Preferred Stock.
On March 24, 2023, we effected
the 1-for-35 share consolidation of our Common Stock. Subsequently on June 28, 2023, we effected a 1-for-40 share consolidation of our
Common Stock. The par value of our Common Stock remains unchanged.
As of July 5, 2023, we had
503,566 shares of Common Stock, 6,047 shares of Series A Preferred Stock, no shares of Series B Preferred Stock and no shares of Series
C Preferred Stock issued and outstanding.
Common Stock
Holders of our Common Stock
are entitled to one vote for each share held of record on all matters submitted to a vote of shareholders, including the election or
removal of directors, except for any directors who are elected exclusively by the holders of a class of our preferred stock that entitles
that class of stock to elect one or more directors. The holders of our Common Stock do not have cumulative voting rights in the election
of directors.
Upon our liquidation, dissolution
or winding up and after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having
liquidation preferences, if any, the holders of our Common Stock (and the holders of any preferred stock that may then be outstanding,
to the extent required by our Certificate of Incorporation, including any certificate of designation with respect to any series of preferred
stock) will be entitled to receive pro rata our remaining assets available for distribution, unless holders of a majority of the outstanding
shares of Common Stock approve a different treatment of the shares. Holders of our Common Stock do not have preemptive, subscription,
redemption or conversion rights. Our Common Stock will not be subject to further calls or assessment by us. There will be no redemption
or sinking fund provisions applicable to our Common Stock. All shares of our Common Stock that will be outstanding at the effective time
will be fully paid and non-assessable. The rights, powers, preferences and privileges of holders of our Common Stock will be subject
to those of the holders of our Series A Preferred Stock and any other shares of preferred stock we may authorize and issue in the future.
Preferred Stock
Our Certificate of Incorporation
authorizes our Board of Directors to establish one or more series of preferred stock (including convertible preferred stock). Unless
required under the Certificate of Incorporation, or by law or Nasdaq, the authorized shares of preferred stock will be available for
issuance without further action by stockholders. Our Board of Directors may determine, with respect to any series of preferred stock,
the powers including preferences and relative participations, optional or other special rights, and the qualifications, limitations or
restrictions thereof, of that series, including, without limitation:
|
● |
the designation of the
series; |
|
● |
the number of shares of
the series, which our Board of Directors may, except where otherwise provided in the preferred stock designation, increase (but not
above the total number of authorized shares of the class) or decrease (but not below the number of shares then outstanding); |
|
● |
whether dividends, if any,
will be cumulative or non-cumulative and the dividend rate of the series; |
|
● |
the dates at which dividends,
if any, will be payable; |
|
● |
the redemption rights and
price or prices, if any, for shares of the series; |
|
● |
the terms and amounts of
any sinking fund provided for the purchase or redemption of shares of the series; |
|
● |
the amounts payable on
shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding-up of our affairs; |
|
● |
whether the shares of the
series will be convertible into shares of any other class or series, or any other security, of ours or any other corporation, and,
if so, the specification of the other class or series or other security, the conversion price or prices or rate or rates, any rate
adjustments, the date or dates as of which the shares will be convertible and all other terms and conditions upon which the conversion
may be made; |
|
● |
restrictions on the issuance
of shares of the same series or of any other class or series; and |
|
● |
the voting rights, if any,
of the holders of the series. |
We could issue a series of
preferred stock that could, depending on the terms of the series, impede or discourage an acquisition attempt or other transaction that
some, or a majority, of the holders of our Common Stock might believe to be in their best interests or in which the holders of our Common
Stock might receive a premium for your Common Stock over the market price of the Common Stock. Additionally, the issuance of preferred
stock may adversely affect the rights of holders of our Common Stock by restricting dividends on our Common Stock, diluting the voting
power of our Common Stock or subordinating the liquidation rights of our Common Stock. As a result of these or other factors, the issuance
of preferred stock could have an adverse impact on the market price of our Common Stock.
Series A Convertible
Preferred Stock
On December 8, 2021, the
Board adopted resolutions to create a series of twenty thousand (20,000) shares of preferred stock, par value $0.0001, designated as
“Series A Convertible Preferred Stock.” On December 14, 2021, we filed the Original Series A COD for 20,000 shares of Series
A Preferred Stock. On April 21, 2023, in connection with the transactions contemplated under the Exchange Agreement, the Company filed
the Series A COD with the Delaware Secretary of State. The Series A COD eliminated the Series A Preferred Stock redemption right and
dividend (except for certain exceptions as specified therein), and provided for the conversion of Series A Preferred Stock into Common
Stock at an initial conversion price equal to the price for a share of Common Stock sold in the Offering, $30.00 per share and based
on the stated value of $1,080 per share.
On June 6, 2023, 3i, LP and
Company entered into the 3i Waiver Agreement whereby 3i, LP 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 this offering if the public offering price of the shares of Common Stock in this offering is lower than
the then-current conversion price of the Series A Preferred Stock.
On May 30, 2023, the Company
filed the Amended COD with the Delaware Secretary of State 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 $30.00
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 the Reverse Stock Split Proposal and 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 , 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) $1,200,000, 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 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 expire automatically on July 31, 2023.
Except to the extent that
the holders of at least a majority of the outstanding Series A Preferred Stock (the “Required Holders”) expressly consent
to the creation of Parity Stock (as defined below) or Senior Preferred Stock (as defined below), all shares of capital stock are junior
in rank to all Series A Preferred Stock with respect to the preferences as to dividends, distributions and payments upon the liquidation,
dissolution and winding up of the Company (such junior stock is referred to herein collectively as “Junior Stock”). The rights
of all such shares of capital stock of the Company will be subject to the rights, powers, preferences and privileges of the Series A
Preferred Stock. Without limiting any other provision of this Certificate of Designations, without the prior express consent of the Required
Holders, voting separate as a single class, the Company will not hereafter authorize or issue any additional or other shares of capital
stock that is (i) of senior rank to the Series A Preferred Stock in respect of the preferences as to dividends, distributions and payments
upon the liquidation, dissolution and winding up of the Company (collectively, the “Senior Preferred Stock”), (ii) of pari
passu rank to the Series A Preferred Stock in respect of the preferences as to dividends, distributions and payments upon the liquidation,
dissolution and winding up of the Company (collectively, the “Parity Stock”) or (iii) any Junior Stock having a maturity
date or any other date requiring redemption or repayment of such shares of Junior Stock that is prior to the first anniversary from December
21, 2021. In the event of the merger or consolidation of the Company with or into another corporation, the Series A Preferred Stock will
maintain their relative rights, powers, designations, privileges and preferences provided for herein and no such merger or consolidation
will result inconsistent therewith.
The
Series A Preferred Stock has a liquidation preference equal to an amount per Series A Preferred Stock equal to the sum of (i) the Black
Scholes Value (as defined in the Warrants, which was sold concurrent with the Series A Preferred Stock) with respect to the outstanding
portion of all Warrants held by such holder (without regard to any limitations on the exercise thereof) as of the date of such event
and (ii) the greater of (A) 125% of the Conversion Amount of such Series A Preferred Stock on the date of such payment and (B) the amount
per share such holder would receive if such holder converted such Series A Preferred Stock into Common Stock immediately prior to the
date of such payment, and will be entitled to convert into shares of Common Stock at an initial fixed conversion price of $30.00 per
share, subject to a beneficial ownership limitation of 9.99%.
If certain defined “triggering
events” defined in the Series A COD, as amended and restated and amended, occur, or our failure to convert the Series A Preferred
Stock into Common Stock when a conversion right is exercised, failure to issue our Common Stock when the Exchange Warrant is exercised,
failure to declare and pay to any holder any dividend on any dividend date, then we may be required to pay a dividend on the stated value
on the Series A Preferred Stock in the amount of 18% per annum, but paid quarterly in cash, so long as the triggering event is continuing.
As a result of the Company’s
delay in filing its periodic reports with the SEC in 2022, a “triggering event” under Section 5(a)(ii) of the Original Series
A COD, occurred on or about April 29, 2022, and because of the delay the Company was obligated to pay (i) registration delay payments
under the RRA, (ii) additional amounts under the Original Series A COD, and (iii) legal fees incurred in the preparation of the Forbearance
Agreement and Waiver to 3i, LP in an aggregate amount of $538,823 which was paid pursuant to that certain Forbearance Agreement and Waiver
with 3i, LP
On June 6, 2023, 3i, LP and
Company entered into the 3i Waiver Agreement pursuant to which 3i, LP 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 (i) amending the conversion price of the Series A Preferred Stock to equal the public offering price
of the shares of Common Stock in this offering if the public offering price of the shares of Common Stock in this offering is lower than
the then-current conversion price of the Series A Preferred Stock; (ii) participating in this offering, at its option, under the same
terms and conditions as other investors, of which proceeds from 3i, LP’s participation will be used to redeem a portion of shares
of Series A Preferred Stock 3i, LP received from the Exchange Agreement; and (iii) (1) the repricing of the exercise price of the April
2023 Common Warrant to the exercise price of the common warrant offered in this offering if the exercise price of the common warrant
is lower than the then-current April 2023 Common Warrant exercise price; and (2) extending the termination date of the April 2023 Common
Warrant to the date of termination of the common warrants offered in this offering.
On June 29, 2023, the Company
entered into the June 2023 Purchase Agreement with 3i LP pursuant to which on June 30, 2023, 3i, LP purchased the 3i June Promissory
Note for principal amount of $350,000. The terms of the 3i June Promissory Note provides that the outstanding obligations thereunder,
including accrued interest will be paid in full at the Next Financing; provided, however, that if the gross proceeds from the financing
are insufficient to settle the payment of the outstanding balance of the 3i June Promissory Note, together with all accrued interest
thereon, in full, then the Company will instead be obligated to convert all of the unpaid principal balance of the note, together with
all accrued interest thereon, into 486 shares of Series A Preferred Stock, In connection with the Purchase Agreement, the Company and
3i LP agreed to adjust the then conversion price of the Series A Preferred Stock to the Downward Adjustment to Conversion Price. Based
on the closing price of the shares of Common Stock on June 28, 2023, the Downward Adjustment to Conversion Price is equal to $8.00 per
share. In connection therewith, the Company filed the Second Certificate of Amendment to the Series A COD with the Delaware Secretary
of State to amend the Series A COD to reflect the Downward Adjustment to Conversion Price.
Series B Preferred
Stock
On
November 22, 2022, the Board of Directors established the Series B Preferred Stock, par value $0.0001 per share (“Series B Preferred
Stock”). On November 22, 2022, we filed a Certificate of Designations setting forth the rights, preferences, privileges, and restrictions
for 200,000 shares of Series B Preferred Stock. The holders of Series B Preferred Stock are not entitled to receive dividends of any
kind. Each outstanding share of Series B Preferred Stock has 400 votes per share; The Series B Preferred Stock ranks 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 The Series B Preferred Stock shall rank senior to the Common Stock, but junior to the
Series A Preferred Stock. All shares of Series B Preferred Stock that are not present in person or by proxy through the presence of such
holder’s shares of Common Stock or Series A Preferred Stock, in person or by proxy, at any meeting of stockholders held to vote
on the proposals relating to reverse stock split, the Share Increase Proposal and the adjournment proposal as of immediately prior to
the opening of the polls at such meeting (the “Initial Redemption Time”) will be automatically be redeemed by the Company
at the Initial Redemption Time without further action on the part of the Company or the holder thereof (the “Initial Redemption”).
Any outstanding shares of Series B Preferred Stock that have not been redeemed pursuant to an Initial Redemption will be redeemed in
whole, but not in part, (i) if such redemption is ordered by the Board of Directors in its sole discretion, automatically and effective
on such time and date specified by the Board of Directors in its sole discretion or (ii) automatically upon the approval by the Company’s
stockholders of the Reverse Stock Split Proposal and the Share Increase Proposal at any meeting of stockholders held for the purpose
of voting on such proposals. Each share of Series B Preferred Stock redeemed in any Redemption will be redeemed in consideration for
the right to receive an amount equal to $0.01 in cash for each share of Series B Preferred Stock as of the applicable Redemption Time.
Each share of Series B Preferred Stock has 400 votes per share and is entitled to vote with the Common Stock and Series A Preferred Stock,
together as a single class, on the certain proposals. The power to vote, or not to vote, the shares of Series B Preferred Stock is vested
solely and exclusively in the Board of Directors, or its authorized proxy. As of February 3, 2023, all shares of Series B preferred stock
have redeemed and none are issued and outstanding.
Series
C Preferred Stock
On February 24, 2023, the
Board of Directors established the Series C Preferred Stock, and on February 24, 2023, we filed a Certificate of Designations of Series
C Preferred Stock (the “Series C Certificate of Designations”) setting forth the rights, preferences, privileges, and restrictions
for 50,000 shares of Series C Preferred Stock, as amended on February 28, 2023. As a result of
the transactions contemplated by the Exchange Agreement, there are no shares of Series C Preferred Stock issued and outstanding.
Dividends. Under the
terms of the Series C Certificate of Designations, the holders of Series C Preferred Stock will be entitled to receive dividends, based
on the Stated Value, at a rate of five percent (5%) per annum, which shall accrue and be compounded daily, commencing on the date of
first issuance of any Series C Preferred Stock until the date that the Series C Preferred Stock is converted to Common Stock.
Voting Rights. The
Series C Certificate of Designations provides that the Series C Preferred Stock will have no voting rights other than the exclusive right
to vote with respect to the Share Increase Proposal and the Reverse Stock Split Proposal and shall not be entitled to vote on any other
matter except to the extent required under the DGCL, and the right to cast 620 votes per share of Series C Preferred Stock on the Share
Increase and Reverse Stock Split Proposals.
Liquidation. In addition,
upon any liquidation, dissolution or winding-up of the Company, prior and in preference to the Common Stock, holders of Series C Preferred
Stock shall be entitled to receive out of the assets available for distribution to stockholders an amount in cash equal to 105% of the
aggregate Stated Value of all shares of Series C Preferred Stock held by such holder.
Conversion. The conversion
price for the Series C Preferred Stock shall initially equal the lower of: (i) $6.37, which is 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 Original Issuance Date; and
(ii) the lower of: (x) the official closing price of the Common Stock on the Nasdaq Global Market (as reflected on Nasdaq.com) on the
Trading Day immediately preceding the Conversion Date or such other date of determination; and (y) the average of the official closing
prices of the Common Stock on the Nasdaq Global Market (as reflected on Nasdaq.com) for the five (5) Trading Days immediately preceding
the Conversion Date or such other date of determination, subject to adjustment herein. In no event shall the Series C Preferred Stock
Conversion Price be less than $1.295 (the “Floor Price”). In the event that the Series C Preferred Stock 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 shall 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 Series C Preferred Stock 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 Series C Preferred Stock Conversion
Price without giving effect to clause (x) of such definition.
Redemption. Each holder
of Series C Preferred Stock shall have the right to cause the Company to redeem in cash all or part of such holder’s shares of
Series C Preferred Stock at a price per share equal to 110% of the Stated Value (i) after the earlier of (1) the receipt of Authorized
Stockholder Approval and (2) the date that is 60 days following the original issue date and (ii) before the date that is 365 days after
the original issue date. Upon receipt of a written notice to the Company by each holder (each, a “Redemption Notice”) setting
forth the number of shares of Series C Preferred Stock that such holder wishes to redeem, the Company shall redeem such shares of Series
C Preferred Stock in accordance with the Redemption Notice no later than 5 days after the date on which the Redemption Notice is delivered
to the Company.
Dividends
The DGCL permits a corporation
to declare and pay dividends out of “surplus” or, if there is no “surplus,” out of its net profits for the fiscal
year in which the dividend is declared and/or the preceding fiscal year. “Surplus” is defined as the excess of the net assets
of the corporation over the amount determined to be the capital of the corporation by the Board of Directors. The capital of the corporation
is typically calculated to be (and cannot be less than) the aggregate par value of all issued shares of capital stock. Net assets equal
the fair value of the total assets minus total liabilities. The DGCL also provides that dividends may not be paid out of net profits
if, after the payment of the dividend, capital is less than the capital represented by the outstanding stock of all classes having a
preference upon the distribution of assets.
Declaration and payment of
any dividend will be subject to the discretion of our Board of Directors. The time and amount of dividends will be dependent upon our
financial condition, operations, cash requirements and availability, debt repayment obligations, capital expenditure needs and restrictions
in our debt instruments, industry trends, the provisions of Delaware law affecting the payment of distributions to shareholders and any
other factors our Board of Directors may consider relevant.
On November 22, 2022, the
Board of Directors declared a dividend of Series B Preferred Stock to the stockholders of record of Common Stock and Series A Preferred
Stock as of December 5, 2022. On December 5, 2022, each share of Common Stock outstanding received 0.016 of a share of Series B Preferred
Stock and each share of Series A Preferred Stock outstanding received 1.744 shares of Series B Preferred Stock.
Pursuant to the terms of
the respective Original Series A COD and Series C Certificate of Designations, the Company recorded a deemed dividend of 8% on the Series
A Preferred Stock of $1,572,000 for the year ended December 31, 2022 and a deemed dividend of 5% on the Series C Preferred Stock of $4,000,000
for the quartered ended March 31, 2023.
We have no current plans
to pay dividends on our Common Stock. Any decision to declare and pay dividends in the future will be made at the sole discretion of
our Board of Directors and will depend on, among other things, our results of operations, cash requirements, financial condition, contractual
restrictions and other factors that our Board of Directors may deem relevant. Because we will be a holding company and will have no direct
operations, we will only be able to pay dividends from funds we receive from our operating subsidiaries. In addition, our ability to
pay dividends may be limited by the agreements governing any indebtedness that we or our subsidiaries incur in the future.
PIPE Warrant and Exchange Warrant
Concurrently with the issuance
of our Series A Preferred Stock, on December 20, 2021, we issued warrants to purchase 1,443 shares of our Common Stock at an exercise
price of $13,868.40 per share, subject to adjustments, PIPE Warrant. The terms of the PIPE Warrant are as follows:
|
● |
The PIPE Warrant has a term of three years and expire
on December 20, 2024; |
|
● |
The exercise of the PIPE
Warrant is subject to a beneficial ownership limitation of 9.99%; |
|
● |
The exercise price and
the number of shares issuable upon the exercise of the PIPE Warrant are subject to adjustment, as follows: |
|
● |
In the event of a stock
dividend, stock split or stock combination recapitalization or other similar transaction involving the Company’s Common Stock
the exercise price will be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding
immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately
after such event; |
|
● |
If the Company sells or
issues any shares of Common Stock, options, or convertible securities at an exercise price less than a price equal to the PIPE Warrant
exercise price in effect immediately prior to such sale (a “Dilutive Issuance”), then immediately after such Dilutive
Issuance, the exercise price then in effect shall be reduced to an amount equal to the new issuance price; |
|
● |
Simultaneously with any
adjustment to the exercise price, the number of shares that may be purchased upon exercise of the PIPE Warrant shall be increased
or decreased proportionately, so that after such adjustment the aggregate exercise price payable for the adjusted number of shares
shall be the same as the aggregate exercise price in effect immediately prior to such adjustment (without regard to any limitations
on exercise) and; |
|
● |
Voluntary adjustment reducing
the exercise price for the Company to any amount and for any period deemed appropriate by the Board of Directors of the Company with
the prior written consent of the Required Holders. |
In the event of either the
Company consolidating or merging with or into another entity (the “Fundamental Transaction”), the sale or assignment of substantially
all of the Company’s subsidiaries, or a Triggering Event (as defined in the Original Series A COD), the holder is entitled to require
the Company to pay the holder an amount in cash equal to the Black-Scholes value of the PIPE Warrant on or prior to the later of the
second trading after the date of request for payment and the date of consummation of the Fundamental Transaction; or at any time after
the occurrence of the Triggering Event.
In connection with the Exchange
Agreement, on April 21, 2023 the PIPE Warrant was exchanged for the Exchange Warrant with the right to purchase 315,085 shares of our
Common Stock at an exercise price of $30.00 per share, subject to adjustment upon closing of this offering. Notwithstanding the foregoing
changes, all other terms of the Exchange Warrant are substantially the same as the terms of the PIPE Warrant.
April 2023 Common Warrants
In
connection with the April 21, 2023 public offering, the Company issued the April 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 $34.00 per share and expire on the 5 year anniversary of the date of issuance, April 21, 2023. 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, we agreed that for a period of 90 days from the close of
the April Offering, that we 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
our securities, subject to certain exceptions. The investors to the securities purchase agreement in the April Offering have agreed to
waive that provision and permit the offering of our Common Stock, pre-funded warrants and common warrants in exchange for (i) the repricing
of the exercise price of the April 2023 Common Warrant to the exercise price of the common warrant offered in this 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 this offering.
On June 29, 2023, we entered
into the June 2023 Purchase Agreement for a bridge loan in order to provide us with more time to secure additional financings. On June
30, 2023, 3i, LP purchased the 3i June Promissory Note for a principal amount of $350,000, which purchase price was paid in cash. Such
note matures on July 31, 2023, and carries an interest rate of 5% per annum and is secured by all of the Company’s assets pursuant
to the Security Agreement. Under the 3i June Promissory Note, the outstanding obligations thereunder, including accrued interest will
be paid in full at the Next Financing; provided, however, that if the gross proceeds from the Next Financing are insufficient to settle
the payment of the outstanding principal balance of the 3i June Promissory Note, together with all accrued interest thereon, in full,
then the Company will instead be obligated to convert all of the unpaid principal balance of the 3i June Promissory Note, together with
all accrued interest thereon, into the Repayment Shares. The June 2023 Purchase Agreement also provides that if the Current Closing Price
is lower than the initial conversion price of $30.00 as set forth in the Series A COD, then the conversion price of Series A Preferred
Stock will be reduced to the Downward Adjustment to Conversion Price and we shall file the Second Certificate of Amendment to the Series
A COD with the Delaware Secretary of State to amend the Series A COD to reflect the Downward Adjustment to Conversion Price. Based on
the closing price of the shares of Common Stock on June 28, 2023, the Downward Adjustment to Conversion Price is equal to $8.00 per share.
Annual Stockholder Meetings
Our bylaws will provide that
annual stockholder meetings will be held at a date, time and place, if any, as exclusively selected by our Board of Directors. To the
extent permitted under applicable law, we may conduct meetings by remote communications, including by webcast.
Dissenters’ Rights of Appraisal and
Payment
Under the DGCL, with certain
exceptions, our shareholders will have appraisal rights in connection with a reorganization or consolidation we may undertake in the
future. Pursuant to the DGCL, shareholders who properly request and perfect appraisal rights in connection with such reorganization or
consolidation will have the right to receive payment of the fair value of their shares as determined by the Delaware Court of Chancery.
Shareholders’ Derivative Actions
Under the DGCL, any of our
shareholders may bring an action in our name to procure a judgment in our favor, also known as a derivative action; provided that the
stockholder bringing the action is a holder of our shares at the time of the transaction to which the action relates or such stockholder’s
stock thereafter devolved by operation of law.
Anti-Takeover Provisions
Our Certificate of Incorporation
and our by-laws could make it more difficult for a third-party to acquire us, even if closing such a transaction would be beneficial
to our stockholders. We are authorized to issue shares of preferred stock, which may be issued in one or more series, the terms of which
may be determined at the time of issuance by our Board of Directors without further action by stockholders. The terms of any series of
preferred stock may include voting rights (including the right to vote as a series on particular matters), preferences as to dividend,
liquidation, conversion and redemption rights and sinking fund provisions. The issuance of any preferred stock could materially adversely
affect the rights of the holders of our Common Stock, and therefore, reduce the value of our Common Stock. In particular, specific rights
granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell our assets to, a third-party
and thereby preserve control by the present management.
Provisions of our Certificate
of Incorporation, by-laws and Delaware law also could have the effect of discouraging potential acquisition proposals or making a tender
offer or delaying or preventing a change in control, including changes a stockholder might consider favorable. Such provisions may also
prevent or frustrate attempts by our stockholders to replace or remove our management. In particular, our Certificate of Incorporation
and bylaws and Delaware law, as applicable, among other things:
|
● |
provide for a classified
board of directors; |
|
● |
provide the board of directors
with the ability to alter the by-laws without stockholder approval; |
|
● |
establishing advance notice
requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder
meetings; and |
|
● |
provide that vacancies
on the board of directors may be filled by a majority of directors in office, although less than a quorum. |
Exclusive Forum
Our Certificate of Incorporation
provides that unless we consent to the selection of an alternative forum, any (1) derivative action or proceeding brought on our
behalf, (2) action asserting a claim of breach of a fiduciary duty owed by any director, officer, stockholder or employee to us
or our shareholders, (3) action asserting a claim arising pursuant to any provision of the DGCL or Certificate of Incorporation
or bylaws or (4) action asserting a claim governed by the internal affairs doctrine or otherwise related to our internal affairs
shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court
does not have subject matter jurisdiction thereof, another state or federal court located within the State of Delaware. Any person or
entity purchasing or otherwise acquiring any interest in shares our capital stock shall be deemed to have notice of and consented to
the forum provisions in our Certificate of Incorporation. In addition, the provisions described above will not apply to suits brought
to enforce a duty or liability arising under the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
Furthermore, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States
shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. We intend
for this provision to apply to any complaints asserting a cause of action under the Securities Act despite the fact that Section 22 of
the Securities Act creates concurrent jurisdiction for the federal and state courts over all actions brought to enforce any duty or liability
created by the Securities Act or the rules and regulations promulgated thereunder. There is uncertainty as to whether a court would enforce
this provision with respect to claims under the Securities Act where the state courts have concurrent jurisdiction and our stockholders
cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
Limitations on Liability and Indemnification
of Officers and Directors
The DGCL authorizes corporations
to limit or eliminate the personal liability of directors to corporations and their shareholders for monetary damages for breaches of
directors’ fiduciary duties, subject to certain exceptions. Our Certificate of Incorporation includes a provision that eliminates
the personal liability of directors for monetary damages for any breach of fiduciary duty as a director, except to the extent such exemption
from liability or limitation thereof is not permitted under the DGCL. The effect of these provisions is to eliminate our rights and the
rights of our shareholders, through shareholders’ derivative suits on our behalf, to recover monetary damages from a director for
breach of fiduciary duty as a director, including breaches resulting from grossly negligent behavior. However, exculpation does not apply
to any director if the director has acted in bad faith, knowingly or intentionally violated the law, authorized illegal dividends or
redemptions or derived an improper benefit from his or her actions as a director.
Our bylaws provide that we
must indemnify and advance expenses to our directors and officers to the fullest extent authorized by the DGCL. We are also expressly
authorized to carry directors’ and officers’ liability insurance providing indemnification for our directors, officers and
certain employees for some liabilities. We believe that these indemnification and advancement provisions and insurance are useful to
attract and retain qualified directors and executive officers.
The limitation of liability,
advancement and indemnification provisions in our Certificate of Incorporation and bylaws may discourage shareholders from bringing a
lawsuit against directors for breach of their fiduciary duty.
These provisions also may
have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful,
might otherwise benefit us and our shareholders. In addition, your investment may be adversely affected to the extent we pay the costs
of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
There is currently no pending
material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors, officers, or control persons, in the opinion of the SEC,
such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Transfer Agent and Registrar
The transfer agent and
registrar for our Common Stock is Computershare Trust Company, N.A. The transfer agent’s address is 150 Royal Street, Canton, MA
02021.
Exchange Listing
Our Common Stock is currently
listed on The Nasdaq Capital Market under the symbol “ALLR.”
DESCRIPTION OF SECURITIES
WE ARE OFFERING
We are offering shares of
Common Stock, common warrants to purchase shares of Common Stock and pre-funded warrants to purchase shares of Common Stock. The shares
of Common Stock and accompanying common warrants are immediately separable and will be issued separately in the offering, and the pre-funded
warrants and the accompanying common warrants are immediately separable and will be issued separately in the offering.
We are also registering the
shares of our Common Stock issuable from time to time upon exercise of the common warrants and pre-funded warrants offered hereby. The
Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to the registration
of this prospectus forms a part, including the shares of Common Stock underlying the common warrants and the pre-funded warrants.
Common Stock
The material terms and provisions
of our Common Stock and each other class of our securities which qualifies or limits our Common Stock are described under the caption
“Description of Our Capital Stock” in this prospectus.
Pre-Funded Warrants
The following summary of
certain terms and provisions of pre-funded warrants that are being offered hereby is not complete and is subject to, and qualified in
its entirety by, the provisions of the pre-funded warrant, the form of which is filed as an exhibit to the registration statement of
which this prospectus forms a part. Prospective investors should carefully review the terms and provisions of the form of pre-funded
warrant for a complete description of the terms and conditions of the pre-funded warrants.
Duration and Exercise
Price. Each pre-funded warrant offered hereby will have an initial exercise price per share equal to $0.001. The pre-funded warrants
will be immediately exercisable and may be exercised at any time until the pre-funded warrants are exercised in full. The exercise price
and number of shares of Common Stock issuable upon exercise is subject to appropriate adjustment in the event of stock dividends, stock
splits, reorganizations or similar events affecting our Common Stock and the exercise price. The pre-funded warrants will be issued separately
from the accompanying common warrants and may be transferred separately immediately thereafter.
Exercisability. The
pre-funded warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise
notice accompanied by payment in full for the number of shares of our Common Stock purchased upon such exercise (except in the case of
a cashless exercise as discussed below). Purchasers of the pre-funded warrants in this offering may elect to deliver their exercise notice
following the pricing of the offering and prior to the issuance of the pre-funded warrants at closing to have their pre-funded warrants
exercised immediately upon issuance and receive shares of Common Stock underlying the pre-funded warrants upon closing of this offering.
A holder (together with its affiliates) may not exercise any portion of the pre-funded warrant to the extent that the holder would own
more than 4.99% of the outstanding Common Stock immediately after exercise, except that upon at least 61 days’ prior notice from
the holder to us, the holder may increase the amount of ownership of outstanding stock after exercising the holder’s pre-funded
warrants up to 9.99% of the number of shares of our Common Stock outstanding immediately after giving effect to the exercise, as such
percentage ownership is determined in accordance with the terms of the pre-funded warrants. Purchasers of pre-funded warrants in this
offering may also elect prior to the issuance of the pre-funded warrants to have the initial exercise limitation set at 9.99% of our
outstanding Common Stock. No fractional shares of Common Stock will be issued in connection with the exercise of a pre-funded warrant.
In lieu of fractional shares, we will round down to the next whole share.
Cashless Exercise.
If, at the time a holder exercises its pre-funded warrants, a registration statement registering the issuance of the shares of Common
Stock underlying the pre-funded warrants under the Securities Act is not then effective or available, then in lieu of making the cash
payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, the holder may elect instead
to receive upon such exercise (either in whole or in part) the net number of shares of Common Stock determined according to a formula
set forth in the pre-funded warrants.
Transferability. Subject
to applicable laws, a pre-funded warrant may be transferred at the option of the holder upon surrender of the pre-funded warrant to us
together with the appropriate instruments of transfer.
Exchange Listing.
There is no trading market available for the pre-funded warrants on any securities exchange or nationally recognized trading system.
We do not intend to list the pre-funded warrants on any securities exchange or nationally recognized trading system.
Right as a Stockholder.
Except as otherwise provided in the pre-funded warrants or by virtue of such holder’s ownership of shares of our Common Stock,
the holders of the pre-funded warrants do not have the rights or privileges of holders of our Common Stock, including any voting rights,
until they exercise their pre-funded warrants.
Fundamental Transaction.
In the event of a fundamental transaction, as described in the pre-funded warrants and generally including any reorganization, recapitalization
or reclassification of our Common Stock, the sale, transfer or other disposition of all or substantially all of our properties or assets,
our consolidation or merger with or into another person, the acquisition of more than 50% of our outstanding Common Stock, or any person
or group becoming the beneficial owner of 50% of the voting power represented by our outstanding Common Stock, the holders of the pre-funded
warrants will be entitled to receive upon exercise of the pre-funded warrants the kind and amount of securities, cash or other property
that the holders would have received had they exercised the pre-funded warrants immediately prior to such fundamental transaction. Notwithstanding
the foregoing, in the event of a fundamental transaction, the holder of the pre-funded warrant will have the right to require us or the
successor entity to purchase the remaining unexercised portion of the pre-funded warrant in cash in an amount equal to a Black Scholes
Value as defined in the pre-funded warrant.
Common Warrants
The following summary of
certain terms and provisions of common warrants that are being offered hereby is not complete and is subject to, and qualified in its
entirety by, the provisions of the common warrants, the form of which is filed as an exhibit to the registration statement of which this
prospectus forms a part. Prospective investors should carefully review the terms and provisions of the form of common warrants for a
complete description of the terms and conditions of the common warrants.
Duration and Exercise Price.
Each common warrant offered hereby will have an initial exercise price per share equal to $4.50. The common warrants will be immediately
exercisable and will expire on the fifth anniversary of the original issuance date. The exercise price and number of shares of Common
Stock issuable upon exercise is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar
events affecting our Common Stock and the exercise price. The common warrants will be issued together with the Common Stock or pre-funded
warrant and may be transferred separately immediately thereafter. A common warrant to purchase one share of our Common Stock will be issued
for every share of Common Stock purchased in this offering.
Exercisability. The
common warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise
notice accompanied by payment in full for the number of shares of our Common Stock purchased upon such exercise (except in the case of
a cashless exercise as discussed below). A holder (together with its affiliates) may not exercise any portion of the common warrant to
the extent that the holder would own more than 4.99% of the outstanding Common Stock immediately after exercise, except that upon at
least 61 days’ prior notice from the holder to us, the holder may increase the amount of ownership of outstanding stock after exercising
the holder’s common warrants up to 9.99% of the number of shares of our Common Stock outstanding immediately after giving effect
to the exercise, as such percentage ownership is determined in accordance with the terms of the common warrants. No fractional shares
of Common Stock will be issued in connection with the exercise of a common warrant. In lieu of fractional shares, we will round down
to the next whole share.
Cashless Exercise.
If, at the time a holder exercises its common warrants, a registration statement registering the issuance of the shares of Common Stock
underlying the common warrants under the Securities Act is not then effective or available and an exemption from registration under the
Securities Act is not available for the issuance of such shares, then in lieu of making the cash payment otherwise contemplated to be
made to us upon such exercise in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise
(either in whole or in part) the net number of shares of Common Stock determined according to a formula set forth in the common warrants.
Transferability. Subject
to applicable laws, common warrants in physical form may be transferred upon surrender of the common warrant together with the appropriate
instruments of transfer.
Exchange Listing.
There is no established public trading market for the common warrants, and we do not expect a market to develop. In addition, we do not
intend to list the common warrants on any securities exchange or nationally recognized trading system. Without an active trading market,
the liquidity of the common warrants will be limited.
Right as a Stockholder.
Except as otherwise provided in the common warrants or by virtue of such holder’s ownership of shares of our Common Stock, the
holders of the common warrants do not have the rights or privileges of holders of our Common Stock, including any voting rights, until
they exercise their common warrants.
Fundamental Transaction.
In the event of a fundamental transaction, as described in the form of common warrant, and generally including any reorganization,
recapitalization or reclassification of our Common Stock, the sale, transfer or other disposition of all or substantially all of our
properties or assets, our consolidation or merger with or into another person, the acquisition of more than 50% of our outstanding Common
Stock, or any person or group becoming the beneficial owner of 50% of the voting power represented by our outstanding Common Stock, the
holders of the common warrants will be entitled to receive upon exercise of the common warrants the kind and amount of securities, cash
or other property that the holders would have received had they exercised the common warrants immediately prior to such fundamental transaction.
Notwithstanding the foregoing, in the event of a fundamental transaction, the holder of the common warrant will have the right to require
us or the successor entity to purchase the remaining unexercised portion of the common warrant in cash in an amount equal to a Black
Scholes Value as defined in the common warrant.
PLAN OF DISTRIBUTION
Pursuant to a placement agency
agreement dated July 5, 2023, we have engaged A.G.P./Alliance Global Partners (“A.G.P.”) to act as our exclusive placement
agent to solicit offers to purchase the securities offered by this prospectus on a reasonable best-efforts basis. The placement agent
is not purchasing or selling any securities, nor is it required to arrange for the purchase and sale of any specific number or dollar
amount of securities, other than to use its “reasonable best efforts” to arrange for the sale of the securities by us. Therefore,
we may not sell the entire amount of securities being offered, or any at all. The placement agent may engage one or more subagents or
selected dealers in connection with this offering.
We will enter into a securities
purchase agreement directly with the investors, at the investor’s option, who purchase our securities in this offering. Investors
who do not enter into a securities purchase agreement shall rely solely on this prospectus in connection with the purchase of our securities
in this offering.
We will deliver the securities
being issued to the investors upon receipt of investor funds for the purchase of the securities offered pursuant to this prospectus.
We will deliver the securities being offered pursuant to this prospectus upon closing.
We will pay the placement
agent a cash transaction fee equal to 7.0% of the aggregate gross proceeds to us from the sale of the securities in the offering. In addition,
we will reimburse the placement agent for its accountable legal expenses incurred in connection with this offering in the amount of up
to $125,000, as well as non-accountable expenses of up to $25,000, including, but not limited to, IPREO software related expenses, background
check(s), tombstones, marketing related expenses and any other expenses incurred by the placement agent in connection with this offering.
The placement agency agreement, however, provides that in the event this offering is terminated, the placement agent will only be entitled
to the reimbursement of out-of-pocket accountable expenses actually incurred in accordance with Financial Industry Regulatory Authority,
Inc. (“FINRA”) Rule 5110(f)(2)(C).
The following table shows
the public offering price, placement agent fees and proceeds, before expenses, to us, assuming the purchase of all the securities we
are offering. Because there is no minimum offering amount required as a condition to closing in this offering, the actual total placement
agent fees, if any, are not presently determinable and may be substantially less than the maximum amount set forth below.
| |
Per
Share of
Common
Stock and
Common
Warrant | | |
Per
Pre-Funded
Warrant and
Common
Warrant | | |
Total
Offering | |
Public offering price | |
$ | 4.500 | | |
$ | 4.499 | | |
$ | 10,997,915 | |
Placement Agent Fees (7.0%) | |
$ | 0.315 | | |
$ | 0.315 | | |
$ | 769,854 | |
Proceeds, before expenses, to us | |
$ | 4.185 | | |
$ | 4.184 | | |
$ | 10,228,061 | |
We estimate that the total
expenses of the offering, including registration, filing and listing fees, printing fees and legal and accounting expenses, but excluding
the placement agent commission, will be approximately $ 340,000 , all of which are payable by us. This figure includes the placement
agent’s out-of-pocket expenses, including, but not limited to, legal fees for placement agent’s legal counsel, that we have
agreed to pay at the closing of the offering, up to $150,000.
3i, LP Participation in this Offering
3i, LP, the sole holder of
our Series A Preferred Stock and holder of our warrants to purchase 481,752 shares of Common Stock, subject to adjustment upon closing
of this offering, may participate in this offering on the same terms and conditions as other purchasers. We intend to use a portion of
the net proceeds of this offering (other than from 3i, L.P.), to pay off the 3i June Promissory Note. In addition, we intend to use the
3i Proceeds, if any, to repurchase a portion of the outstanding shares of Series A Preferred Stock owned by 3i, LP. See section titled
“Use of Proceeds” on page 23 of this prospectus.
Lock-Up Agreements
With the exception of 3i,
LP, we and our directors, officers and shareholders who beneficially own 5.0% or more of our outstanding Common Stock have agreed with
the placement agent, for a period of ninety (90) days after the closing of this offering, not to offer for sale, issue, sell, contract
to sell, pledge grant any option to purchase, make any short sale or otherwise dispose of, directly or indirectly any shares of our Common
Stock or any securities convertible into or exchangeable for our Common Stock either owned as of the date of the placement agent agreement
or thereafter acquired without the prior written consent of the placement agent, subject to certain exceptions. The placement agent may,
in its sole discretion and at any time or from time to time before the termination of the lock-up period, without notice, release all
or any portion of the securities subject to lock-up agreements.
Indemnification
We have agreed to indemnify
the placement agent against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that the
placement agent may be required to make for these liabilities.
Determination of Offering Price and Warrant
Exercise Price
The combined public offering
price of the Common Stock and common warrants, and pre-funded warrants and common warrants, we are offering, and the exercise price of
the common warrants that we are offering, have been negotiated between us, the placement agent and the investors in the offering based
on the trading price of our Common Stock prior to the offering, among other things, including a to be negotiated discount to the trading
price. Other factors considered in determining the combined public offering price of the Common Stock and common warrants, and pre-funded
warrants and common warrants, we are offering, as well as the exercise price of the common warrants that we are offering, include our
history and prospects, the stage of development of our business, our business plans for the future and the extent to which they have been
implemented, an assessment of our management, the general conditions of the securities markets at the time of the offering and such other
factors as were deemed relevant.
Right of First Refusal and Certain Post-Offering Investments
There is an ongoing right
of first refusal in favor of A.G.P., as set forth in that certain placement agency agreement by and between the Company and A.G.P., dated
April 19, 2023, which shall remain in place until April 21, 2024. In addition to (and separately from) such ongoing right of first refusal,
subject to the closing of this offering and certain conditions to be set forth in the placement agent agreement, for a period of twelve
(12) months after the closing of the offering, A.G.P. shall have a right of first refusal to act as sole managing underwriter and sole
book runner, sole placement agent, or sole sales agent, for any and all future public or private equity, equity-linked offerings for
which we retain the service of an underwriters, agent, advisor, finder or other person or entity in connection with such offering during
such twelve month period, or any successor to us or any subsidiary of ours, on terms that are the same or more favorable to us comparing
to terms offered us by an institution other than A.G.P. If we receive terms from an institution other than A.G.P., A.G.P. will have the
first right to match the terms. If A.G.P. is unsuccessful in matching said terms, we will not be bound by such right of first refusal
and will be allowed to engage the offering institution without any obligations to A.G.P.
Regulation M
The placement agent may be
deemed to be an underwriter within the meaning of Section 2(a)(11) of the Securities Act, and any commissions received by it and any
profit realized on the resale of the securities sold by it while acting as principal might be deemed to be underwriting discounts or
commissions under the Securities Act. As an underwriter, the placement agent would be required to comply with the requirements of the
Securities Act and the Exchange Act, including, without limitation, Rule 10b-5 and Regulation M under the Exchange Act. These rules and
regulations may limit the timing of purchases and sales of our securities by the placement agent acting as principal. Under these rules
and regulations, the placement agent (i) may not engage in any stabilization activity in connection with our securities and (ii) may
not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted
under the Exchange Act, until it has completed its participation in the distribution.
Trading; The Nasdaq Capital Market
Our Common Stock is listed
on The Nasdaq Capital Market under the symbol “ALLR.” The pre-funded warrants and common warrants are not and will not be
listed on an exchange and there will be no public market for the pre-funded warrants nor common warrants.
Electronic Distribution
A prospectus in electronic
format may be made available on a website maintained by the placement agent. In connection with the offering, the placement agent or
selected dealers may distribute prospectuses electronically.
Other than the prospectus
in electronic format, the information on the placement agent’s website and any information contained in any other website maintained
by the placement agent is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been
approved and/or endorsed by us or the placement agent in its capacity as placement agent and should not be relied upon by investors.
Certain Relationships
The placement agent and its
affiliates may in the future provide, from time to time, investment banking and financial advisory services to us in the ordinary course
of business, for which they may receive customary fees and commissions.
LEGAL MATTERS
The validity of securities
offered hereby has been passed upon for us by Lewis Brisbois Bisgaard & Smith LLP, Los Angeles, California. Sullivan & Worcester
LLP, New York, New York is acting as counsel to the placement agent in connection with certain legal matters related to this offering.
EXPERTS
The consolidated financial
statements of Allarity Therapeutics, Inc. appearing in our Annual Report on Form 10-K for the years ended December 31, 2022, and 2021
have been included herein by reference in reliance on the report of Wolf & Company, P.C., independent registered public accounting
firm, given on the authority of such firm as experts in accounting and auditing.
CHANGE IN REGISTERED PUBLIC
ACCOUNTING FIRMS
Current Auditor
On
September 9, 2022, our Audit Committee approved the engagement of Wolf & Company, P.C. (“Wolf”) as our independent registered
public accounting firm for the fiscal year ending December 31, 2022. Subsequently, the Board approved the engagement of Wolf as our independent
registered public accounting firm for the fiscal year ending December 31, 2021. During the two most recent fiscal years ended December
31, 2020 and December 31, 2021 and through the subsequent interim period to September 9, 2022, neither the Company, nor anyone on its
behalf, consulted with Wolf regarding any accounting or auditing issues involving the Company, including (i) the application of accounting
principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered with respect
to the consolidated financial statements of the Company; or (ii) any matter that was the subject of a “disagreement” (as
defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a “reportable event” (as that term is defined
in Item 304(a)(1)(v) of Regulation S-K).
Former Auditor
On
August 8, 2022, our former independent registered public accounting firm, Marcum LLP (“Marcum”) notified us in writing that
our client-auditor relationship had ceased to be effective as of August 5, 2022. Marcum’s reports on the financial statements for
the year ended December 31, 2021, did not contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as
to uncertainty, audit scope, or accounting principles but it included an explanatory paragraph concerning the uncertainty of the Company’s
ability to continue as a going concern.
In
our Form 8-K filed with the SEC on August 12, 2022, we reported that during the fiscal year ended December 31, 2021, and subsequent interim
period preceding Marcum’s resignation on August 5, 2022, there were no disagreements with Marcum on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction
of Marcum, would have caused it to make reference to the subject matter of the disagreement(s) in connection with its report. Additionally,
during this time period, there were no reportable events as described in Item 304(a)(1)(v) of Regulation S-K, except that, as previously
disclosed in our Form 10-K for the year ended December 31, 2021, and Form 10-Q for the quarterly period ended March 31, 2022, we identified
material weaknesses in our internal controls over financial reporting because we did not have a formal process for period end financial
closing and reporting, we historically had insufficient resources to conduct an effective monitoring and oversight function independent
from our operations and we lacked accounting resources and personnel to properly account for accounting transactions such as the issuance
of warrants with a derivative liability component.
On
August 12, 2022, we provided Marcum with a copy of the disclosures that we were making in response to Item 4.01 on the Form 8-K, and
requested that Marcum furnish us with a letter addressed to the SEC stating whether it agrees with our statements contained in the Form
8-K and, if not, stating the respects in which it does not agree.
On
August 23, 2022, Marcum provided a letter regarding our disclosure contained in our Form 8-K filed on August 12, 2022, which agreed with
our statements made in the third sentence of the preceding paragraph regarding the existence of material weaknesses in our internal control
over financial reporting; however, Marcum disagreed regarding the description of such material weaknesses. Marcum indicated that the
material weaknesses as disclosed in our Form 10-K for the year ended December 31, 2021, and Form 10-Q for the quarterly period ended
March 31, 2022, were as follows: (i) a lack of accounting resources required to fulfill US GAAP and SEC reporting requirements; (ii)
a lack of comprehensive US GAAP accounting policies and financial reporting procedures; (iii) lack of adequate procedures and controls
to appropriately account for accounting transactions including liability and the valuation allowance on the deferred tax asset relating
to the net operating losses; and (iv) a lack of segregation of duties given the size of the finance and accounting team. In addition,
Marcum stated that our disclosure did not include any reference to its resignation because of the impairment of its independence. Finally,
Marcum indicated that our disclosure did not provide disclosure of a reportable event under Item 304(a)(1)(v)(C) of Regulation S-K, as
Marcum indicated that information had come to its attention during the time period covered by Item 304(a)(1)(iv) of Regulation S-K, that
if further investigated may have caused Marcum to be unwilling to rely on management’s representations or be associated with our
financial statements; however, due to the Marcum’s resignation as a result of the impairment of its independence, Marcum did not
conduct such further investigation.
With
regards to Marcum’s August 23, 2022, letter as it relates to material weaknesses in our internal controls over financial reporting,
we believe that we have provided the information required under Item 304(a)(1)(v)(A) in the Form 8-K. With regards Marcum’s statement
in its August 23, 2022, letter regarding management’s representations, we respectfully disagree that there were events that occurred
that rose to a level that would have impaired independence, or there was information, if further investigated, would require disclosure
under Item 304(a)(1)(v)(C). Prior to its resignation, Marcum did not inform the Audit Committee of the information stated in their letter
and if they had done so, we believe that we would have addressed any issues Marcum would have raised with the Audit Committee to the
satisfaction of Marcum. A copy of Marcum’s letter to the SEC required by Item 304(a) of Regulation S-K is included as Exhibit 16.1
to the registration statement of which this prospectus forms a part.
WHERE YOU CAN FIND ADDITIONAL
INFORMATION
We have filed with the SEC
a registration statement on Form S-1 under the Securities Act with respect to the Common Stock, pre-funded warrants, and common warrants
and the Common Stock issuable upon exercise of the pre-funded warrants and Common Stock warrants offered by this prospectus. This prospectus,
which constitutes a part of the registration statement, does not contain all the information set forth in the registration statement,
some of which is contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further
information with respect to us and our securities, we refer you to the registration statement, including the exhibits filed as a part
of the registration statement. Statements contained in this prospectus concerning the contents of any contract or any other documents
are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, please see the copy
of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit
is qualified in all respects by the filed exhibit. The SEC maintains an Internet site that contains reports, proxy and information statements,
and other information regarding issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov.
We are subject to the information
reporting requirements of the Exchange Act, and we file reports, proxy statements and other information with the SEC. These reports,
proxy statements and other information will be available at website of the SEC referred to above.
We also maintain a website
at www.allarity.com. Information contained in, or accessible through, our website is not a part of this prospectus, and the inclusion
of our website address in this prospectus is only as an inactive textual reference.
INCORPORATION OF CERTAIN
INFORMATION BY REFERENCE
The SEC allows us to “incorporate
by reference” information that we file with them. Incorporation by reference allows us to disclose important information to you
by referring you to those other documents. The information incorporated by reference is an important part of this prospectus, and information
that we file later with the SEC will automatically update and supersede this information. Statements in this prospectus regarding the
provisions of certain documents filed with, or incorporated by reference in, the registration statement are not necessarily complete
and each statement is qualified in all respects by that reference. The documents we are incorporating by reference into this prospectus
are:
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our Annual Report on Form
10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 13, 2023; |
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our Quarterly Report on
Form 10-Q for the period
ended March 31, 2023, filed with the SEC on May 11, 2023; |
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our Current Reports on
Form 8-K filed with the SEC on July 5, 2023, June
30, 2023; June 28,
2023; June 23,
2023; June 20,
2023; June 1,
2023; May 26, 2023; May
2, 2023; April 25,
2023; April 12, 2023; March
24, 2023; March 20,
2023 (related to amendment to certificate of incorporation and votes at Special Meeting); February
28, 2023; February 10,
2023; February 6, 2023; January
23, 2023; January 20,
2023; January 19,
2023 and January 18,
2023 ; and |
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our Definitive Proxy Statement
on Schedule
14A, filed with the SEC on June 6, 2023.
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In addition, all documents
subsequently filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act on or after the date of this prospectus but
before the completion or termination of this offering (excluding any information not deemed “filed” with the SEC), are deemed
to be incorporated by reference into, and to be a part of, this prospectus. In no event, however, will any of the information, including
exhibits, that we disclose under Item 2.02 and Item 7.01 of any Current Report on Form 8-K that has been or may, from time to time, be
furnished to the SEC to be incorporated into or otherwise become a part of this prospectus.
Any statement contained in
a previously filed document is deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained
in this prospectus or in a subsequently filed document incorporated by reference herein modifies or supersedes the statement, and any
statement contained in this prospectus is deemed to be modified or superseded for purposes of this prospectus to the extent that a statement
contained in a subsequently filed document incorporated by reference herein modifies or supersedes the statement. Any statement so modified
or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
You should rely only on information
contained in, or incorporated by reference into, this prospectus. We have not authorized anyone to provide you with information different
from that contained in this prospectus or incorporated by reference therein. We are not making offers to sell the securities in any jurisdiction
in which such an offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to
do so or to anyone to whom it is unlawful to make such offer or solicitation.
Up to 357,223 Shares of Common Stock
Up to 357,223 Warrants to purchase up to 357,223
Shares of Common Stock
Up to 2,087,222 Pre-Funded Warrants to purchase
up to 2,087,222 Shares of Common Stock
Up to 2,444,445 Shares of Common Stock Issuable
Upon Exercise of Common Warrants
ALLARITY THERAPEUTICS, INC.
Prospectus
Sole Placement Agent
A.G.P.
July 5, 2023
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